Monthly Archives: April 2009

A Better Word for Philanthropy

A few days ago I asked readers what “philanthropy” meant to you. In the post I cited a Center for High Impact Philanthropy study that showed that even donors who give over $1 million a year do not think of themselves as “philanthropists”. My sense is that philanthropy is a word that use to have powerful meaning, but which no longer resonates with the vast majority of donors. Words have power and what some is called (or calls themselves) can change their behavior. I wonder if we need to find a new word to replace “philanthropist” if we want individual donors to embrace a proactive, engaged, strategic approach to their giving.

Words like New Philanthropy, Philanthropy 2.0 or even Venture Philanthropy have been used as shorthand to label the behaviors and approaches to philanthropy that are currently in vogue. But calling some “new” X or X 2.0 is a lazy way to label something. For instance, “social media” is a far more powerful label than “web 2.0” because social media is descriptive and captures the differentiating element of the “new web”.

In response to my question to readers last week, Jeff Trexler offered this explanation for why the word “philanthropy” has lost meaning:

Jeff wrote:

One reason why the word “philanthropy” may no longer resonate is that it is a word out of its time. A few hundred years ago, using a Greek derivative to convey a regard for humanity had ethical, philosophical and class connotations that are now all but lost. The narrowing of the term by the late 19th century reflects, in part, a subtle mode of legitimizing new mercantile and industrial wealth by associating it with the language of the educated elite. In short, the cultural factors that gave the word a distinct valence have long since receded, leave us with a term that has relatively weak signaling value.

Another factor contributing to the term’s apparent fade is the growing perceived incoherence of segregating charity–and in particular, the act of making charitable donations–from other forms of social benefit. This in turn reflects broader trends in cultural convergence that break down artificial divisions in both concepts and social class.

In this context, perhaps rather than shoring up the definition of philanthropy we may want to consider retiring the word altogether!

Renata Rafferty offered a similar point:

Renata wrote:

Any of us who work with rich people who give a lot of it to charity know that those folks never use the word “philanthropist” to describe themselves.

It’s a word the media put into vogue years ago when trying to establish nomenclature for members of the society set who gave lots of money to charity, but who had no precise “job” or title in the for-profit world which could be used as an ‘identifier’ when writing a story.

That is, a “philanthropist” was understood to be a “mogul” or “tycoon” (or the wife of a mogul or tycoon’s) who gave lots of money — and usually very publicly — to charity.

So, no, the high-net-worth do not use the term “philanthropist” to describe themselves any more than they use terms like “mogul,” “tycoon,” or even “rich” (how gauche!).

Back to the original question — few persons seem to have a problem with stating that they want to make change in the community or in the world… I tend to use the term “changemaking” as it incorporates goal, action, and noticeable result… “Changemaking” also removes the monetary component in the common understanding of “philanthropy.”

What if we wanted to propagate a new label to designate people who gave money in an effective, strategic, engaged way? What would it be?

Philanthropy Daily Digest

Philanthropy Daily Digest

Philanthropy Daily Digest

Philanthropy’s Exit Strategy

Many people view the role of philanthropy as something akin to venture capital. Philanthropy is suppose to find promising new nonprofits and help them grow. But their is a missing piece in this analogy. Venture capitalists eventually sell their investments to later stage investors (who are interested not so much in startups, but in more mature, stable businesses). This is called the “exit strategy.”

So what’s philanthropy’s exit strategy?

One promising way to make the analogy work is to view government as philanthropy’s exit strategy. While the government might be wary to invest in a startup nonprofit with no proven results, they can much more confidently fund organizations that have grown along a path towards sustainable, evidence based effectiveness with the support of philanthropic funders. What’s interesting is that proponents of both liberal and conservative approaches to government’s social assistance responsibility can buy into this argument.

If you believe that the government has an obligation to provide extensive social benefit programs, than it is easy to see the attractiveness of the government locking in a pipeline of vetted social benefit organizations. But someone who believes the government should play a more limited role may find themselves attracted to the idea that private capital is funding the “venture” stage of social benefit experimentation and government funds are being deployed only to vetted, mature programs (and the programs are executed by “private” nonprofits rather than via government programs).

This of course already happens. The government is the major funder of nonprofit activity. But too often this funding comes as a result of effective advocacy from the recipients rather than via an intentional scaling process where early stage philanthropic investors view an eventual handoff to government funding as the exit strategy.

This brings me to an excellent new report from the Bridgespan Group (co-authored by Edna McConnell Clark Foundation head Nancy Roob) titled Scaling What Works: The implications for philanthropists, policymakers and nonprofit leaders.

The report begins:

Included in the $787 billion stimulus package and in the $3.5 trillion budget that Congress passed on April 2 are billions of dollars intended to fulfill President Obama’s commitment to advance government that “works” and “expand successful programs to scale.” The risk is that five years from now we look back and see that billions were spent without clear results. Consider the challenge: National, state and local governments not only have to identify promising programs and help them expand to scale – but they need to do it fast. Such urgency leaves little room, but lots of opportunities, for errors we can ill afford. To avoid these missteps, the public sector and the philanthropic and nonprofit sector must invent new ways of working together in close partnership.

The report examines EMCF’s work (along with other funders) to scale Nurse-Family Partnerships and the successful adoption of the model by the government:

The Obama administration can move forward with confidence because NFP’s leadership and its philanthropic funders have consistently been committed to proving the program works. Unfortunately, there are not nearly enough such evidence-focused investors. And, for the most part, neither government nor philanthropy is immune to favoritism in choosing the organizations and programs it funds. Both sectors, as well as American taxpayers, could benefit from a healthier respect for proven results.

What makes all of this so relevant right now is that this afternoon the Serve America Act will be signed. The Act includes the creation of a Social Innovation Fund that:

…awards competitive matching grants to social entrepreneur venture funds in order to provide community organizations with the resources to replicate or expand proven solutions to community challenges, including a new focus on leveraging public private partnerships in small communities and rural areas. (Examples of service organizations that were launched by social entrepreneurs include Teach for America, City Year, Citizen Schools, Jump Start, Working Today, an organization that provides affordable, portable health benefits to 100,000 Americans, and the SEED school, the nation’s first public urban boarding school.)

This fund is basically a government venture philanthropy fund that will co-fund privately vetted and funded deals (rather than picking the organizations themselves). This vehicle can help the government and philanthropy work together to create a pipeline of vetted, evidence based social benefit programs. The end result is better, more cost effective social benefit programs that are designed using private capital and only funded with tax payer dollars once the programs are mature and proven.

Philanthropy Daily Digest

The Googlization of Philanthropy

This is the newest edition of my column appearing in the Chronicle of Philanthropy this week. This column was an outgrowth of conversations here on Tactical Philanthropy and I’m appreciative to the readers who left comments on those original posts and informed my thinking on this concept. You can find an archive of my past columns here.

Philanthropy’s Information Revolution
April 23, 2009|Link to Chronicle of Philanthropy article

By Sean Stannard-Stockton

Two years ago, Carla Dearing, then chief executive of Community Foundations of America, wrote an opinion essay in Worth magazine titled, “The Schwabification of Philanthropy.”

She argued that philanthropy was going through a transformation as the Internet not only reduced the cost of making philanthropic gifts to both donors and nonprofit organizations but also made it easier for donors to do their own research on potential beneficiaries rather than seek help from community foundations, the United Way, and other long-established institutions.

Just as Charles Schwab & Company had disrupted the business of investment management in the 1970s by lowering transaction costs and unbundling financial advice from transactions, so, too, would that change happen in philanthropy, Ms. Dearing predicted

That trend has proved to have staying power, and the Schwabification of philanthropy became a reality. Online donations, commercial donor-advised funds, and Web sites like Kiva.org and DonorsChoose are all direct results.

Now a new trend has taken hold: the Googlization of philanthropy.

If Schwabification focused on automating and reducing the costs of transactions, Googlization focuses on enabling collaboration and participation by unbundling the process of creating information from its distribution. Since philanthropy is improved exponentially as more information is shared about which social-benefit efforts work — and which ones fail — this is a big moment for philanthropy.

Philanthropy is unlike industries in which the Internet has destroyed business models that relied on the information producer’s maintaining control of distribution. The very technology that is killing newspapers and record companies will revolutionize philanthropy for the better.

According to Google, the company’s mission is to organize the world’s information and make it universally accessible and useful. While it does not produce much information itself, Google is the first place many people turn when they want to find information.

Without needing the cooperation of people who produce articles and other content, Google has organized valuable information so well that seekers of information turn to Google rather than go directly to content producers. What this means for philanthropy is that as philanthropic knowledge is captured and put online, third-party groups can organize this information and make it accessible and useful.

Today both PubHub, a project of the Foundation Center, and IssueLab aggregate publicly available research about organizations that serve the social good. PubHub focuses on foundation-financed research, while IssueLab focuses on research conducted by other types of nonprofit groups

Recently, Tony Wang, an employee at Blueprint Research & Design, a philanthropy consulting firm, spent a few hours of his spare time playing with Google’s Custom Search service and created a tool called PhilanthropySearch.org. It scans the Web sites of the 100 largest foundations, philanthropy consulting firms, university research centers, and other sites about philanthropy. If a foundation or other philanthropically oriented organization posts information on its Web site, the search tool will index it.

What is interesting about PhilanthropySearch.org is, first, how little time and money it took to create, and second, that it was created by an information seeker rather than an organization. The power of using online information tools in philanthropy is that they can organize the knowledge accumulated by nonprofit organizations and make it universally accessible.

But just as Schwabification was not an argument for one entity to dominate philanthropic transactions, the Googlization of philanthropy does not suggest that Google should come to dominate philanthropic knowledge aggregation.

The newly redesigned GuideStar Web site and the efforts of Charity Navigator to incorporate data about charities’ results in its evaluations expand on efforts to aggregate philanthropic information. But for those efforts to be successful, valuable information must be available in a digitized form.

Both groups are trying to find ways to encourage nonprofit groups to submit information that is not readily accessible. But all charities, foundations, and other organizations that serve the social good need to recognize the importance of knowledge sharing and to post as much information as possible, so that third parties can find ways to make it accessible and useful.

One group already capitalizing on the explosion of digitized philanthropic information is SocialActions.com. Its Web site aggregates more than 50 sources of online social activity, including Change.org, GlobalGiving, Razoo, and VolunteerMatch. Over time, people interested in giving money, volunteering, or taking some sort of action online may find SocialActions.com their first destination.

The Schwabification of philanthropy was about lowering the cost of administering philanthropy and thereby giving charitable financial tools to more individuals.

The Googlization of philanthropy is about organizing knowledge to allow for smarter giving by more people. Most important, the Googlization of philanthropy means that organizing the information will not be done by the information creators, but by third parties and — excitingly — the people who want to consume that information.

Sean Stannard-Stockton, a regular columnist for The Chronicle of Philanthropy, is a principal and director of tactical philanthropy at Ensemble Capital Management and author of the blog Tactical Philanthropy.

Philanthropy Daily Digest

What Does Philanthropy Mean to You?

Read to the end for your chance to win a book from the Tactical Philanthropy Bookstore or a gift to your favorite nonprofit.

In their fascinating study “I’m Not Rockefeller,” The Center for High Impact Philanthropy at the University of Pennsylvania showed that most high net worth philanthropists (defined in the study as people who gave over $1 million a year) said they did not identify with the word “philanthropist.”

So my question to you is what words do you identify with what is generally referred to as “philanthropy”? A couple to get things rolling:

  • Impact
  • Inspiration
  • Giving
  • Community
  • Social
  • Good
  • Charity
  • Mission

I’d love to get your thoughts. Frankly, I’m open to made up words! Given my post from earlier suggesting that philanthropy is a blend of art and science, I’m interested particularly in words that manage to capture the multi-dimensional meaning of philanthropy.

From the suggestions that are submitted via a comment to this post, I’ll pick a winning entry and you can pick a book from the Tactical Philanthropy Bookstore as your prize or I’ll make a $25 gift to the nonprofit of your choice.

Philanthropy: Science, Art or… Music?

Sometimes (ok, a lot) the vision of philanthropy advanced by people like me seems to suggest that philanthropy is a science. To me, philanthropy is “tactical”. To Matthew Bishop it blends with “capitalism”. Paul Brest advances a “strategic” view. Leslie Crutchfield & Heather McLeod Grant focus on “impact”. All of these words seem most at home in scientific world view.

But philanthropy is not a science. To people like Phil Cubeta, Bill Somerville and Tracy Gary, philanthropy is an art. Words like “love,” “inspiration,” and “intuition” dominate their conversations.

While I’m guilty of gravitating to the language of business and science when I write about philanthropy, I think it is actually a blend of art and science. But even that doesn’t capture it. Philanthropy is really something else entirely.

Recently I’ve been thinking about how music is maybe the best metaphor for philanthropy. Music is an art, sure, but it is an art based in math. Google “the science of music” and you’ll get 222,000,000 results. Music is driven by passion, but even though anyone can pick up an instrument and play it, it is broadly agreed that making good music is a talent and something that can be learned.

While music is a personal taste, we also have broad agreement around the idea of what is considered truly great music. Yet great music doesn’t always “go to scale” and in fact certain types of music reach their fullest potential when they are intentionally kept small.

Can you think about how to be tactical or strategic in how you produce music? Yes. Does capitalism have anything to do with music? No doubt. Is “love”, “inspiration” and “intuition” relevant to music? Of course. If you want to make beautiful music that changes the world and is a joy to play, you must understand music as both an art and a science. Same thing with philanthropy. Without heart, music and philanthropy are superficial. You can’t “prove” that great music or great philanthropy is truly great. Both philanthropy and music benefit the player and the listener, the giver and the receiver. The joy that a musician takes from her music does not diminish its value to the listener, it enhances it. Same thing with philanthropy. But the fact that a musician spends years trying to understand what works, analyzing other efforts and intentionally trying to craft something amazing does not diminish their work either. We expect that music is hard and that great music does not happen on accident. We should expect the same in philanthropy.

So queue up Beethoven’s Ode to Joy or the version by The Deadly Snakes if that’s more your thing. But while you’re listening check out the book This is Your Brain on Music: The Science of a Human Obsession.

Happy Friday!