Facing Reality in Philanthropy

A lot of people like to pretend that philanthropy is easy. That every grant meets its objectives and that not only do foundations innovate and take risk, but they still manage to knock the ball out of the park with every decision.

Except innovating and never failing are mutually exclusive. In fact doing anything of note while at the same time consistently avoiding failure is impossible. If you never fall and skin your knee, then while you might not admit it to yourself, you’re hanging out in the kiddie section of the playground.

Jim Canales, the CEO of The James Irvine Foundation, isn’t one of these people. He embraces the idea that “failure” is not a mark of someone to look down your nose at, but a mark of someone who is taking risks and doing difficult things. Last year at the 2007 Council on Foundations conference, Jim was a panelist at the Demonstrating Impact session along with Joel Fleishman, author of The Foundation: A Great American Secret and James Knickman of the New York State Health Foundation. While the session was nominally about showing the world how much impact philanthropy is having, at its core the argument was that by being transparent and honest about what works and does not work in philanthropy, we will truly demonstrate impact.

Yesterday, Jim was back at it, this time with the brilliant Phil Buchanan of the Center for Effective Philanthropy. The session was called “The Advantage of Sharing Failures”. Phil pointed out as the session began that while the COF Conference has long booked sessions about innovations, a couple of years ago you would not have seen a session about failure.

Jim went through a list of the pros and cons of sharing failure:


  • You share knowledge. As foundations, knowledge and capital is all we have, so we must effectively share both.
  • You help others avoid the repetition of common mistakes.
  • Improve your own work by placing a value on self reflection and on learning.
  • Reinforces your commitment to impact and effectiveness.


  • Potentially harm your grantees.
  • You might damage your reputation.
  • By highlighting the difficulties you run into, you might discourage others from taking on high risk ventures.
  • Provide fodder for people who are against foundations.

While I think that all of the Pros are correct, I think only the potential to harm your grantees is a legitimate Con (and even this I think should be overcome by a foundation’s obligation to protect people that the grantee are serving over protecting the grantees). The other items are legitimate fears, but are not true risks (although Jim stuck with his point of view that they were when I asked him how real these risks were during the Q&A).

While there is a certain risk to reputational damage if all of your colleagues refuse to ever talk about mistakes and we slide back into a time where foundations pretend that they are infallible forces for good, I will simply point to Jim Canales and Paul Brest (from Hewlett) who both published reports on their mistakes last year. As far as reputational risk, what they got for their trouble was coverage in the New York Times, an op-ed in the Chronicle of Philanthropy and an enhancement of their already stellar reputations. And they got all of this even though for the most part, their colleauges haven’t followed their lead. Effectively hanging them out to dry, the lack of other foundations taking similar steps has made Jim (in his own words), “The poster child for failure in philanthropy”. And yet still he hasn’t suffered any reputational damage. Instead he’s asked to lead sessions at the COF conference.

I think highlighting difficulties and then having nothing bad happen to you (as is the case with Brest and Canales and will likely be the case in 99% of future cases), encourages people to take risks. With Canales leading the way, it is the people who are not joining him in sharing failures that are discouraging other people (ie “Everyone applauded Jim, but they aren’t following suit and sharing. Maybe I shouldn’t either.”)

Does talking about failure provide fodder for people who are anti-foundations? Last year at the Demonstrating Impact session, a member of the audience who identified herself as a professor of marketing stood up to say that people who admit their mistakes publicly are viewed with more trust afterwards. ‘Nuff said.

At the Demonstrating Impact session, panelist James Knickman summed it all up for me:

“We need to frame our release of “failures” as an attempt to learn. No one tells scientists they are a failure when one of their experiments don’t work!”

And my comment at the time, which I stand by now was:

That’s it right there. What philanthropy is engaged in is an experiment. An experiment in how we can all make the world a better place. We don’t know what the right answer is. In fact, the “answer” is probably evolving as quickly as we can design experiments. But by being transparent, by sharing successful ideas and failed ideas. By judging ourselves not on the outcomes of each grant, but on the body of knowledge that we contribute to the field, we will truly transform philanthropy.

Look, I know that this stuff is hard. But moderator Toni Freeman of the Duke Endowment told a wonderful story that highlighted the fact that this is hard, but that you can do it. She described how she had decided to take a “firefighter training class” as part of a leadership training. She was told “you are going to climb up to the 7th floor and jump out the window”. She thought “that sounds good!”, but standing on the ledge, every fiber of her body was telling her not to jump. But she did. And then she climbed back up and jumped out of the window two more times.

And each time it was easier.


  1. Fair points, Sean, but I think Canales and Brest have a form of first-mover advantage. The innovators get lauded for their bravery, but for the third, thirtieth, or three-hundredth in line, the novelty has worn off in others’ eyes, so the focus is on the failure itself rather than the bravery. Perhaps that’s why there hasn’t been follow-up…which is a shame, because Canales and Brest’s Chronicle piece is really terrific.

  2. They do if you think what they did was a reputation enhancer. But until other people start, than other people will be worried of damaging their reputation. So Paul and Jim also have the first mover disadvantage of sticking their neck out first. Once everyone is doing it, than the risk will be gone, but the benefit to the field will still be there.


    While no one can argue that surfacing philanthropy’s failings wouldnt create a platform for improvement, all the talk is at the big-time national or statewide foundations that have very little contact with anyone on the community level. Does the average person know or care about the work of RWJ? No. Do they care about the successes or failing of a philanthropy in their community? Quiet possibly. Would admitting failures to a community possibly impact, for example, the business and social standing of a foundation board member. Yes(I have seen it).Its fine to talk about transparency when your only audiences are super-educated philanthropists, journalists and board members that have only the briefest interaction with the local folk. The important part of this discussion is to push it down to local or regional foundations where most of the action is.

  4. Sure, absolutely. All the research I’ve ever seen in the corporate world and political world show that when people admit mistakes early, apologize and explain how they are rectifying the situation, the public’s trust in them goes up.

    But if your reason for discussing failures is to help others learn from your mistakes, then it seems to me that the core audience should be other foundations since they’re the ones who can learn most directly from other foundations.

  5. Good points, BEEN THERE. We all agree that the type of truth-telling Brest and Canales did is critical and should happen more. The key is to understand the incentives different foundations have, which means understanding the context in which they operate.

    The costs and benefits of admitting mistakes are shaped by the context. The benefits we’ve talked about in this thread, but let’s consider the costs for a moment – again, in the spirit of understanding the incentives foundation leaders have, so that we can offer more targeted advice/solutions/ideas that will promote greater communication around mistakes.

    In the corporate and political worlds, there’s already an existing degree of visibility/exposure, so your mistakes are out there, people probably know about them, so a response is expected. Sean’s last point applies to that situation: early response is better and builds trust.

    But in the foundation world, the level of visibility is not the same. In this context, a public admitting of a mistake may be the first time large parts of the public have ever even heard of the institution. So this can create a problem for leaders of that foundation to be willing to step forward.

    This problem is compounded in some cases by a point BEEN THERE brings up: some foundations are dependent on donors for their continued operation. An additional vulnerability. What’s more, most foundations are local, so the focus of negative feedback is more concentrated.

    So we have a number of categories that it’s important to keep in mind in promoting greater foundation transparency and communication around mistakes:
    * Private foundations are less vulnerable to negative feedback from admitting mistakes than public charities and corporate foundations/giving programs
    * National/regional foundations are less vulnerable than local foundations
    So it follows that we’d expect community foundations to have the hardest time admitting mistakes, because they’re local and depend on donors. And we’d expect private, national/regional foundations, like Hewitt and Irvine, to have the (relatively) easiest time doing so: hence Brest and Canales taking the lead.

    Now, with a better understanding of the potential costs of admitting mistakes, let’s go back to the benefits. And it’s here that the institutions that bear the greatest potential costs can also reap the greatest potential benefits. Community foundations have the advantage of relatively higher levels of visibility in the community. They’re also committed to the community for the long term. So there’s a context of good work in the past, present, and future against which mistakes can be judged by the public.

    The answer is more communication overall. If your message is out there in the community about the good things you’re enabling nonprofits to do through your giving, then a mistake can be seen in context. Lack of communication about success breeds lack of communication about failure. So get out there and tell your story in good times, so you can also tell it in bad times without paying reputational costs. And everyone will benefit: your community, your grantees, other foundations – heck, maybe even your own conscience….

  6. Chris, very well thought out and well said. One piece that I wonder about is the idea that foundations are insulated due to lack of public awareness. While that is true in a large sense, the public also generally believes that foundations are tax havens for the rich and does not believe they do very much. Their belief is so pervasive, that politicians now see foundations are ready sources to tap for tax dollars because they know the public is unsupportive or noncommittal at best when it comes to foundations.

    So I think it is key that foundations start communicating about what a great job they do AND the mistakes they makes. The first without the second is just PR. The second without the first might make things worse. Doing both, will I believe, lead to the increasing influence of foundations.

  7. Good point, Sean, the relative insulation of private foundations is not irreversible. All the more reason it was wise, and perhaps prescient, for Canales and Brest to take the lead the way they did.