The Practice of Philanthropy

This has to be the only philanthropy blog that never discusses any particular cause. It’s not just that I don’t advocate for particular causes, it’s that causes just don’t even make it into the daily discourse. That’s because I’m interested in the practice of philanthropy. Sure, I have causes that I personally care about, but what interests me more than anything is the way that philanthropy works. This might come out of my background as a professional money manager. One of the most interesting things about analyzing stocks is the various approaches to stock picking. There are people who make a living finding inexpensive stocks, finding high growth stories or even looking at patterns in how stocks trade.

The same is true for philanthropy. I’m less interested in the causes I care about then I am the way in which philanthropy works. Because of this bent, I was more than a little worried that I wouldn’t find many COF sessions that interested me. There are four “tracks” to the conference: Poverty, Public Health, Environment and Disaster Preparedness. The issue-based approach to planning the conference makes sense, but it doesn’t coincided with my set of interests. Without any obvious choice for the afternoon slot yesterday, I chose the Combating Poverty session just so I could see William Schambra speak.

I was electrified…

I’m the first to say that we need to focus on root causes, that Band-Aid solutions are nothing more than temporary relief and that as an industry we need to identify the cause of the problem and attack that cause rather than simply repairing the symptoms of the diseases. My focus on root causes isn’t something special. In fact, many people have defined philanthropy as the practice of dealing with root causes rather than the derisively referred to “charity” which is "just about managing symptoms".

Schambra thinks I’m all wrong. And listening to him, I’m tempted to agree. He argued that by focusing on root causes (which he rightly points out we tend to identify and then change our minds about every couple of years) we are missing nonprofits that are actually doing the heavy lifting of making change. He cited the nonprofit Family House, which he says does a tremendous job of caring for seniors in a poverty stricken neighborhood, but which has gotten no funding from large foundations because it is just a “charity”, it’s not focused on curing the root cause. The fact that the staff of Family House has lived with and helped seniors in poor neighborhoods actually works against them because foundations think they are “too emotional and close to the events”, that it would be preferable if they were “coolly removed and appraising the situation” in the way that foundations deem important.

All of this reminded me of the difference on Wall Street between “strategists” who often discuss the market in terms of long-term “themes” and actual money managers, who care most about what works. I’m attracted to academic “themes”. I like the elegance of well thought out theories that explain why certain problems exist and therefore show where we need to focus our efforts if we hope to stamp out those problems. But as an investment professional, I also know that the single most important thing is figuring out what works. Where and how can I make money? Where and how can I reduce social problems or enhance social programs? That’s the question. And the best answers often come from the people on the ground who are actually making the money or solving the problem. Does company X have the end all solution for a certain economic issues? Does nonprofit X have the end all solution for a certain social problem? Maybe we should just focus on whether something works. If so, invest in that company, fund that nonprofit and leave it at that.

PS: I couldn’t leave out one unrelated note. Deepak Bhargava, executive director of Center for Community Change, announced half way through the program that he was going to paraphrase Margaret Mead and got a huge laugh from the audience:

Never underestimate the power of a small group of people… with billions of dollars in their endowments… to change the world.


  1. Bill is a great thinker and a great rhetorician. I very much wanted to catch his latest ideological excesses but was prevented by another appointment. From your description, however, I sense his talk was a variation on his usual stump speech which consists of five parts straw-manning, one part conservative sloganeering, and ten parts pure baloney.

    To begin with, national foundations don’t generally fund community-based work for two reasons: (1) many foundation executives believe – rightly, in my view – that it’s the role of government, not the role of private philanthropy, to guarantee the health and well-being of seniors, and (2) if there’s room for other kinds of investments in these community-based organizations, they should be made largely by local donors (I include foundations in this category). It’s a howler of the first magnitude to claim that large foundations don’t fund the charity you mention because the charity’s leaders are “too emotional and close to the events.” Are you telling me that nobody in the room split his sides laughing when he heard that claim? If so, we are living in dark times indeed.

    Just as an aside: I’m guessing that many programs like those described by Bill are in fact supported by national foundations. Did he marshal any evidence for his claim?

    Many people have drunk Bill’s small government Koolaid down to the dregs. He masks the poison with heartfelt appeals to heroic and generous local action by local communities, free from the tax-devouring, ineffectual bete noire of Big Gubmint.

    Big phooey.

  2. Phil says:

    Follow the logic to the end, where Schambra’s funders sit. We get private charity to take over from dwindling goverment programs. We cut taxes. And the rich are free to give or not give as they see fit. Let the bleeding hearts take up the slack.

    Bill is a great rhetorician as Phil A. says, a former speech writer for Ed Meese. His brilliance expresses itself best in polemic. He would have been a great professor. To his credit, he knows that he is writing to confound his enememies. He appreciates the give and take, and probably does not take too seriously anyone who takes him too seriously.

    Root causes of social ills hire Schambra to defend them from change.

  3. WCT staff writer Sally Wilde got a hold of Schambra’s remarks and blogged them here.