“Everyone is managing against the perception that nonprofits are supposed to be low-cost and low-overhead,”.... The only way for nonprofits to increase their working capital is to take on more projects, which in turn keeps increasing the amount of capital they need — a “vicious cycle that perpetually starves them of capacity”.
The article goes on to cite the work of Grantmakers for Effective Organizations, Social Venture Partners International, The Center for Effective Philanthropy, the Edna McConnell Clark Foundation, The Hewlett Foundation, Compasspoint and the Meyer Foundation.* All of this work, and the focus on general operating support, is worthy of note. My only real question is whether or not it adds up to a trend or has enough heft to act as a countervailing force against what Caruso calls the
"... stance that the return on charitable dollars should be tangible and measurable, and should drive capital flow in much the same way that earnings figures do in commerce."
In fairness, Caruso only points to the research and foundations she cites as "... a small and increasingly vocal group of foundation leaders [ ] challenging the benefits of this approach." In other words, she doesn't burden their work with being a trend or countervailing force - I threw that in. Why? Because the question that intrigues me includes that which Caruso is asking and goes up a few thousand feet higher in altitude - what is happening overall in philanthropic capital markets?
Fly up to 35,000 feet with me and the view gets really interesting - there is a lot of experimentation and variation underway in philanthropy right now. As we fly over the "landscape" of funding for public good, we see an increasingly varied and dynamic topography:
From this altitude we can see Caruso's group focused on general operating support, as well as those focused on project-specific metrics. We also spot the various efforts at accountability and transparency, a few on knowledge sharing, and several that are trying out new ways of using technology. And over there - out that window - can you spot the efforts to directly connect small donors with international projects? They're there, just next to the corporate social responsibility movement - over by cause marketers. Just beyond them - out another window, if you will - is the increasingly organized microfinance community. From another window we see the growing range of donor advised funds. Look over there, we can see on the horizon the socially responsible investing movement and as we continue along social entrepreneurs, double/triple bottom line investment companies, and social venture capital firms are coming into view. Wait - over there - way on the horizon - is that the carbon trade movement coming into view?
As we fly along we notice all along the way the interspersed tens of thousands of small foundations, organized around a family legacy or values, working hard to advance the causes they care about and not bothering with all the tumult around them. We also spot banks and trust companies, attorneys and accountants, consulting firms, wealth managers and multi-family offices - all providing philanthropic advising and management services. And, look! Over there! Media companies and magazines that help frame the discussions about philanthropy. Out every window we see the hundreds of millions of individuals who make a daily, weekly or at least annual practice of giving some amount of their time or money to make life a little better for someone else.
And on and on. You get my point (I hope). Philanthropy is not a static thing - it is (perhaps) more dynamic, robust, and diverse than it has ever been. It is global and institutional, local and individual. It is influenced by commercial interests and ageless, religious tenets. It is personal, passionate, and, sometimes, rational. There are organized influences and individualistic drivers. There are common metrics and areas of profound disagreement; active leaders in the field as well as actors who have no interest in being part of a larger field - they are focused like lasers on their own work. Foundations are bound together by legal and regulatory guidelines, but not really much more than that. Some work together, some are actively trying to influence others and share information, and some are not. Foundations are themselves a varied topographical feature on a complicated landscape of philanthropy. Philanthropy is also only one feature on a broader landscape of funding for public good. I think we need to zoom in and look close at these features - it is in this spirit that I highly recommend Caruso's article.
And then we can fly back out for a panoramic view and see this whole, beautifully complicated landscape. When I do so I am reminded of how necessary - and yet small - each piece of the whole really is. I hope as we build expertise in each of the topographical components (foundations, double bottom line investment firms, metrics, etc) we also can find conceptual ecologists or system thinkers, chaos theorists or "bio"-diversity experts who can help us consider the interactions and dynamism, as both characteristics of and influences on the whole. Thinking about the systems helps us to see how each of the pieces, and the interactions between them, really matter. This can help us move the discussion away from "old and new," "them and us," "good and bad." When your analysis focuses on the interactions then the mainstay practices matter as much as the experiments. The failures matter as much as the successes. The edges and the center both matter. And the view is really fascinating.
Of course, just as you think we might be ready to land this flight, we remember where all this private investment for public good fits into yet a larger landscape. The story of which - paradoxes, dangers, warning signs and possibilities - is told quite nicely also in today's Times, in this look at the differences between private and public investments in the city of New Haven, CT.
Fly up to 35,000 feet with me and the view gets really interesting - there is a lot of experimentation and variation underway in philanthropy right now. As we fly over the "landscape" of funding for public good, we see an increasingly varied and dynamic topography:
From this altitude we can see Caruso's group focused on general operating support, as well as those focused on project-specific metrics. We also spot the various efforts at accountability and transparency, a few on knowledge sharing, and several that are trying out new ways of using technology. And over there - out that window - can you spot the efforts to directly connect small donors with international projects? They're there, just next to the corporate social responsibility movement - over by cause marketers. Just beyond them - out another window, if you will - is the increasingly organized microfinance community. From another window we see the growing range of donor advised funds. Look over there, we can see on the horizon the socially responsible investing movement and as we continue along social entrepreneurs, double/triple bottom line investment companies, and social venture capital firms are coming into view. Wait - over there - way on the horizon - is that the carbon trade movement coming into view?
As we fly along we notice all along the way the interspersed tens of thousands of small foundations, organized around a family legacy or values, working hard to advance the causes they care about and not bothering with all the tumult around them. We also spot banks and trust companies, attorneys and accountants, consulting firms, wealth managers and multi-family offices - all providing philanthropic advising and management services. And, look! Over there! Media companies and magazines that help frame the discussions about philanthropy. Out every window we see the hundreds of millions of individuals who make a daily, weekly or at least annual practice of giving some amount of their time or money to make life a little better for someone else.
And on and on. You get my point (I hope). Philanthropy is not a static thing - it is (perhaps) more dynamic, robust, and diverse than it has ever been. It is global and institutional, local and individual. It is influenced by commercial interests and ageless, religious tenets. It is personal, passionate, and, sometimes, rational. There are organized influences and individualistic drivers. There are common metrics and areas of profound disagreement; active leaders in the field as well as actors who have no interest in being part of a larger field - they are focused like lasers on their own work. Foundations are bound together by legal and regulatory guidelines, but not really much more than that. Some work together, some are actively trying to influence others and share information, and some are not. Foundations are themselves a varied topographical feature on a complicated landscape of philanthropy. Philanthropy is also only one feature on a broader landscape of funding for public good. I think we need to zoom in and look close at these features - it is in this spirit that I highly recommend Caruso's article.
And then we can fly back out for a panoramic view and see this whole, beautifully complicated landscape. When I do so I am reminded of how necessary - and yet small - each piece of the whole really is. I hope as we build expertise in each of the topographical components (foundations, double bottom line investment firms, metrics, etc) we also can find conceptual ecologists or system thinkers, chaos theorists or "bio"-diversity experts who can help us consider the interactions and dynamism, as both characteristics of and influences on the whole. Thinking about the systems helps us to see how each of the pieces, and the interactions between them, really matter. This can help us move the discussion away from "old and new," "them and us," "good and bad." When your analysis focuses on the interactions then the mainstay practices matter as much as the experiments. The failures matter as much as the successes. The edges and the center both matter. And the view is really fascinating.
Of course, just as you think we might be ready to land this flight, we remember where all this private investment for public good fits into yet a larger landscape. The story of which - paradoxes, dangers, warning signs and possibilities - is told quite nicely also in today's Times, in this look at the differences between private and public investments in the city of New Haven, CT.
*FULLEST POSSIBLE (511) DISCLOSURE: I have worked with, in some fashion, almost every individual and organization mentioned in Caruso's article. I have championed Caruso's book as as a "must read" and a critical resource for philanthropy. I have read all of the studies she mentions in her piece and may have even contributed to some of them in some small way, shape, or form. Oh, let me not forget that I've spent time in New Haven and met with some of the folks mentioned in that story also. If I have somehow omitted or mischaracterized an affiliation or attribution, I have done so only in error, not as an attempt to mislead.
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3 comments:
The 35,000 foot philanthropic view is quite exciting. From there it is possible to see all the creativity that can be brought to bear on social issues. The 35,000 foot level is where I believe every actor in the philanthropic play should go between acts. At 35,000 feet you can see the linkages between players globally. At ground level you can only see the success or failure of your own charity. At 35,000 feet you are focused on the cause you are trying to affect. At ground level you are focused on the metrics of your own charity, whether those metrics are on a project or on the overall charity does not matter. At 35,000 all the players are working together to create a play that is greater than themselves. At ground level the players are focused on their own performance and lose site of the fact they are in a play. Let's not lose sleep over general grants or not. Let's focus on how we can make the 30,000 view a success for the multitude of actors in the play.
nice to see by your "disclosure" that you really understand the problem with what your confrere holden karnofsky did. an impressive feat of transparency! your hundreds of thousands of dollars of higher education did not go to waste, obviously.
Lucy, This is a terrific post. It is a really limpid distillation of a turbulent and often cloudy pool. I will be sharing the link widely here at CompuMentor and elsewhere.
I'll layer some additional conclusions on what you wrote. By taking the 35K foot view and seeing all these forces at work, vailing and countervailing, I think we can see and *should* see (a) There's a huge amount of trendiness in philanthropy. Funders get near-fixated on the latest and greatest fix to the huge problems that ail us. Accountabilty! Metrics! Transparency! Social Entrepreneurism! Operating Support vs. Project Support! Every dog of a buzzword will have its day--and every one of these has something to offer conceptually. But every one is a piece of a solution, not the whole of it, not The One True Way. (b) Ultimately, we--nonprofits, philanthropists and all those who care about building a better world--should make our north star passionate, smart, committed people with good ideas trying to make a difference. Without passion, brains and commitment nothing meaningful will happen. With them, organizations and causes can overcome resource constraints and even arguably errant procedures and foment important, constructive change.
Just to be clear: I'm not arguing for obliviousness to new tools, approaches, best practices and even mandates for nonprofit work. I'm arguing for starting with the core building blocks of brains, passion and commitment, and, if these in place, supporting openheartedly (and if possible openhandedly) the people who are doing the work, offering them your expertise/opinions (and energy and funds, if you have them), and trusting them to learn from what you offer and adapting it as appropriate to the missions they are carrying out in real time.
There's too much of "do it my way and then I'll help you," these days and not enough, "I respect what you've done, how can I help and, by the way, have you considered these ideas which might enable me and people like me to help even more."
Thanks again for the enjoyable flight.
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