Is Effective Philanthropy More Than Business Strategy?

In response to my post on the Center for Effective Philanthropy’s approach to effecting philanthropy, reader Bruce Trachtenberg (@bsttrach) responds via twitter:

I’m not sure what to make of the fact that such basic performance stuff isn’t yet standard philanthropic practice.

CEP themselves seemed to acknowledge the “basic” level of their framework when during the presentation Lisa Jackson said:

You might think that to say foundation goals should be clear and specific is so obvious that it need not be said. But if that were true, we wouldn’t see so many examples of foundations that simply aren’t there yet.

Personally, I would say that CEP’s framework lays out necessary but not sufficient conditions for effective philanthropy. But rather than write my own post, I’d like to share a post from early today written by Jeff Trexler (@jefftrexler), a professor of Social Entrepreneurship at Pace University. Jeff wrote the post after a back and forth with me over Twitter.

Jeff writes:

Sean Stannard-Stockton has provided an excellent overview of The Center for Effective Philanthropy‘s three basic principles of, well, effective philanthropy:

  1. clear goals;
  2. Coherent, well-implemented strategies;
  3. Relevant performance indicators.

If you come to charity by way of the business world, this formula no doubt sounds familiar. In fact, it’s the staple of many an intro entrepreneurship class–including my own–as well as the foundation of leading how-to books for start-ups.

Which isn’t to say it’s bad advice–quite the contrary. Whether you’re running a charitable foundation or a social business funded by earned income, these three basic principles are essential for success.

However, that doesn’t mean they’re in themselves sufficient to succeed. As important as these principles are, the fact remains that a charitable venture can be faithful to all three and still end up a failure–not in spite of its goals, strategies and performance indicators, but because of them.

The problem isn’t that these are business principles inapplicable to charity–that’s a false dichotomy, as unhelpful as saying that the mundane rules of meter and rhythm are irrelevant for creating sublime poetry. Rather, the danger lies in reducing any corporate environment–whether charitable or commercial–to a set of tasks and rules.

Formulae such as this fall short of addressing the relation between part and whole. On one level, they tend to frame a social issue in such a way as to isolate it from its broader social context. In so doing they create micro-solutions that can actually exacerbate macro-problems, if not fail to reach the target goal itself.

Marshall McLuhan was wont to say that the specialist is someone who never makes small mistakes while moving toward the grand fallacy, and we tend to see a similar phenomenon in charity. As I’ve said elsewhere, it’s like telling ourselves that we’ll be happy if we reach our target weight–we can reduce philanthropy to a clear goal with coherent strategies and relevant metrics, and yet at the end of our diet find ourselves twice as unhappy as when we began.

This brings me to a deeper problem with such principles–namely, their insufficiency for creating an environment that relates to us as human beings. We consist of an array of transactional rules, from blood flow to heartbeat to language norms to systems of exchange. At the same time we are all more than that, from the collectives we inhabit to our inner sense of self. A business with a sterile mechanistic culture breeds dissatisfaction and in so doing generates systemic inefficiencies; a charity even more so, given its stronger transformative valence.

This, in short, is the irony of our present models of effective charity: the more we reduce charity to efficient transaction-based problem-solving, the less efficient charity is likely to become. For such principles to function as we’d like, we need to understand how they work together to create something more.

As I mentioned earlier, one of the impressive things about CEP’s conference was that after the presentation I summarized on Tuesday, the audience was given an extended period of time to ask questions. And ask questions they did. Tough questions. And Lisa Jackson and Phil Buchanan didn’t try to deflect the questions but rather took them head on.

What tough questions do you have about CEP’s framework for effective philanthropy?


  1. Discuss: is effective philanthropy more than biz strategy? via @tactphil

  2. Mike Edwards says:

    An excellent post from Jeff Trexler, and thanks for raising the issue of CEP’s methodology Sean. I only wish Jeff’s position was more widely-supported in the rush towards metrics and markets in philanthropy, and hopefully CEP – by adding in more nuance and sophistication to their work – can contribute to that process. My own question at the CEP conference concerned whether “changing community ethics” (an example they raised in their opening presentation) was an “acceptable goal” from the CEP point of view. Their answer was “no”; my answer was “yes”, despite the difficulty in measuring progress towards it. I used the example of action against tobacco to support my position, which was made possible as a result of gradual changes in public or community norms about smoking over 25 years or more, much of which was made possible by philanthropic investments in various advocacy and education campaigns. My worry is that by excluding or de-legitimizing a worthy and achievable goal like this (but then, I’m not a smoker…), CEP may unwittingly drive resources OUT of “high-performing” areas.

  3. I largely agree with both Bruce and Jeff: with Bruce, that the elements we described are necessary but not sufficient; with Jeff that we should be weary of, as Warren Buffet put it, “geeks bearing formulas.” In fact, Lisa and I said as much in the much longer presentation from which Sean quoted a part.

    Much of Jeff’s post responds to an argument we are not making. We are not advocating for a set of “transactional rules.” Nor are we advocating for small, incremental approaches that are isolated from a larger context. On the contrary. The example we highlighted in our presentation of smart strategy, well-implemented (the Stuart Foundation’s child welfare work) illustrated the need to understand the larger context. One of the aspects of that example that we emphasized was its basis both in data and analysis and in the experience and perspectives of those on the ground — including grantees and those served by grantees. It’s worth noting that the success of Stuart’s work in child welfare would never have come about without the deep passion and commitment of some pretty amazing people, too.

    I’ll look into getting audio or video of our full presentation online sooner rather than later. In the meantime, I’d just note that foundations and other funders aren’t the only ones that have difficulty articulating clear goals, implementing coherent strategies, or devising and learning from relevant performance indicators. There are all too many all too recent examples of business and government leaders failing on these counts, too. But, for all kinds of reasons I won’t list here, it’s more complicated for funders.

    Oh — one final point regarding Mike Edward’s post. Changing a community ethic can be a very important thing to do, and we weren’t suggesting otherwise. But it’s more of a strategy than a goal. On the tobacco example, the goal was to reduce rates of smoking. Part of the strategy was changing the community ethic. You have to know with some specificity what you’re driving toward: that’s the point.

    Thanks for the feedback.

  4. Mike Edwards says:

    tks Phil but one person’s goal will always be another person’s strategy, and the relationship between the two changes over time even in the same project. If I understand you correctly “achieving civil rights” would not have been a legitimate goal in the CEP model but “passing the civil rights act” would. You can see where I’m heading. Here’s hoping for a more substantive reply….Mike

  5. Mike: Huh? You do not understand me correctly. This is not remotely what we were saying.

    The example of an unspecific goal we highlighted in our presentation was this: “To catalyze the development of a community ethic in support of children.” This is a level of generality way, way beyond something like securing civil rights for a population – which is actually quite a specific goal. We cited the “community ethic in support of children” example in the context of noting, simply, that more specific goals are helpful in ensuring that all the relevant players understand what the foundation is aiming to achieve. They are also helpful in being able to determine whether you have met them or not.

    In fact, in our 2007 report on strategy, Beyond the Rhetoric, the exemplar we highlight is the Gill Foundation, which is focused on civil rights for gays and lesbians. You can read the case study we wrote on that foundation’s very strategic approach and see the video we did of an interview with the Foundation’s then executive director at

  6. Paul Botts says:

    “Achieving civil rights” is an obviously legitimate goal statement, and is just as obviously not a useful one. Such vague generalities are lovely for purposes such as preaching to choirs and making the preachers feel righteous; but for the purpose of accomplishing actual change in the real world, not so much. Hence actual civil rights leaders, at least the successful ones, declare and press for clear specific outcomes (e.g. the right to vote, equal opportunities in housing and employment, the right to marry, etc.).

    I take CEP’s broad points to be that the latter approach is far more likely to actually improve the world than the former and that too many funders are still settling for the former. I’m not sure honestly that Phil has yet found quite the right language with which to get that across, but that doesn’t make it any less true.

  7. Pete Manzo says:

    Very interesting post by Jeff Trexler and good debate in the comments.

    I wasn’t able to attend the CEP presentation, so I’m not sure if this was covered, but I’d be interested in whether there was any discussion about whether goals, in addition to being measurable, also must be something more. Paula, the last commenter above, refers to effective philanthropy amounting to efforts that are “far more likely to actually improve the world.” Improving the world (and for whom?) may seem an obvious point, and it may be presumed in CEP’s framework– it’s certainly implied in the examples that Phil Buchanan refers to child welfare programs supported by Stuart Foundation, and LGBT civil rights in the case of the Gill Foundation. But without some expressed principle regarding the kind or quality of change philanthropy seeks, aren’t the CEP principles fairly sterile?

    To tell from Sean’s initial post about the CEP principles, it sounds like CEP very admirably asks philanthropists to get as specific as possible about who they want to benefit. I assume that taking a value neutral approach was a smart strategic decision, it may help more people embrace the CEP principles, but I wonder if it also helps us all avoid questions that are more sensitive and controversial precisely because they are so important. We can imagine a coherent philanthropic approach – one that has measurable goals, well executed strategy and sound indicators that the objectives are being achieved and bringing the goal within reach – but that seeks to achieve more power for the powerful, or more wealth for the wealthy. Somehow I get the sense that many of us would not call that good philanthropy, or perhaps not even philanthropy at all. So isn’t that “improving the world” piece an indispensable part of determining whether philanthropy is effective or not?

    In the interest of full disclosure, I am a board member of NCRP, and I support our Criteria for Philanthropy at its Best. To my mind, encouraging philanthropic leaders to reexamine their goals is the thing we most wanted to do by publishing the Criteria. We don’t want to legislate or dictate which ends are good (let alone permissible, more properly the subject of law), but like CEP, we do want philanthropists to ask for whom they seek to improve the world, and then carry that decision forward in their grantmaking. We offered a clear statement of the high priority we put on social justice, and while we hope it is persuasive, we also thought it was important to put out there even as a starting point, something to reject or adapt. If foundations or philanthropists want to ensure they are as effective as possible and turn to the CEP framework for help, will that framework encourage them to question and examine their assumptions about their goals, and does it provide any guidance to them in thinking those questions through? I imagine CEP has indeed anticipated these concerns, and I would be delighted to hear more about that.

  8. Thanks, Pete, for these very thoughtful comments, which echo discussions CEP’s Board has had over the years. I agree, of course, that careful consideration of which goals to choose is vital and I personally would like to see more foundations pursuing certain kinds of goals.

    However, we don’t see it as our role, at CEP, to champion the pursuit of some goals over others. So, yes, we have chosen to stay neutral on the question of whether, for example, a foundation should prioritize global warming as a focus area over, say, the arts.

    It seems to me that one of the strengths of our country’s nonprofit sector is the freedom it allows foundations and nonprofits to pursue the goals they deem most important. As John Gardener put it, the nonprofit sector at its best is a sector in which we can “honor the worthy and smite the rascals with everyone free to define worthiness and rascality.”
    We see our role, at CEP, as to help foundations to be effective in pursuit of whatever goals they have chosen. We have come to the conclusion that this is the best role for us with an awareness of – and appreciation for – the other organizations, such as NCRP, that do seek to influence that choice, as is very much their right.

    And those of us on the staff here feel fortunate that, in our work providing assessment tools to about 200 foundations, we have rarely – if ever –found ourselves feeling personally uneasy with the goals of the foundations we were seeking to help. (We have not yet come across the foundation that seeks “more power for the powerful” or “more wealth for the wealthy.”)

    Thanks again, Pete, for your comments.

  9. Jeff Trexler says:

    A most interesting discussion–and one that actually illustrates the very problem that I highlighted.

    The key word is “goal.” Framing charity (or philanthropy or social enterprise or whatever other words you may prefer) in teleological terms obscures the extent to which charity is for many of its adherents not a goal but a role–it is primarily a form of identity. Specific modes of doing good flow out of that, but these are second-order symptomatic phenomena. In this context, focusing on how best to achieve a goal can actually be a self-subverting act, as people grow alienated from an environment that appears to reduce charity to mere means of production.

    This isn’t to say that trying to make charities more effective is inherently counterproductive. Rather, we need to think more expansively about how to go about it.

  10. Jeff, I wonder to what extent your comment highlights an important distinction between personal and institutional philanthropy. Does the board of a foundation have a right to think about the foundation’s giving as an expression of their self-identity? I can see many legal reasons why they can’t and yet I admit to being drawn to the idea that they would practice better philanthropy if they did.

    Is the CEP framework appropriate for individual philanthropists? I can tell you from my experience advising individual donors that few would be interested in this sort of framework, yet almost all have a desire to be effective.

    Maybe for it to be relevant to individual donors, the CEP framework needs to be repackaged.

  11. Pete Manzo says:

    Sean, Jeff, Phil and all,

    I think Sean’s question gets us closer to the crux of the controversy about whether we can or should take the substance of donors’ interests and missions into account in offering a framework to guide donors in designing effective strategies:

    (1) What are the interests of the donor that we must respect? Must we as a society honor the donor’s “self actualization,” or her/his desire to create a better world and her/his best judgment about what goals, if achieved, will do that?; and

    (2) what are the responsibilities of the donor (or in the case of foundation trustees, the donor’s designees) in terms of setting goals, which would then become the guiding stars for designing effective strategies under an approach like CEP’s.

    If I read Phil’s response to my earlier questions correctly, the CEP framework does not address the first question about whether the point by design, and as Phil mentions, there are several good reasons for this. In his recent remarks in Los Angeles, Paul Brest took a similar position, and if I recall correctly, he made two very interesting points (among many others): Paul argued that we can no more question a donor’s choice of interests than we can question anyone’s tastes, including our own, and he also said he believes that while society can have something to say about the means with which a donor pursues her/his/its mission, we should not attempt to prescribe the ends – the choice of ends should be left up to the donor. So both CEP’s and Paul’s frameworks take the donor’s choice of interests or mission as a given.

    In terms of law or regulation, Paul’s and Phil’s approach seems to me quite correct. I would not want legislators or lawyers getting involved in determining which donor interests and goals are best – rather, the law should only outline the boundaries of what is permissible (for purposes of tax exemption, compliance requirements for private foundations or public charities), and within those very broad outlines, leave well enough alone.

    In terms of our debate about what is effective philanthropy, however, or as NCRP puts it, what in our view is good philanthropy (full disclosure, again – I am an NCRP board member), I think we need to be able to say more than that the donor’s mission and goals are permissible. In my view, advancing social justice can be both a means and an end . (As Amartya Sen has argued convincingly, developing the capacities of people to live as they choose is both a means and the true end of economic development, for example.) Within almost any choice of end, from preventing catastrophic climate change to promoting pure scientific research to preserving and continuing any forms of cultural or artistic expression, there should be ways for donors to advance their missions by also advancing social justice.
    So again, while I agree with Paul that from a legal and regulatory perspective we should not try to interfere in a donor’s decision about ends, from a moral perspective, I think we can very well demand that donor’s consider justice in designing their goals and strategies. We can applaud or criticize their choices, as we like, but the most important thing is that they engage those questions in the first place, and that to the extent they find that advancing social justice through their work also advances their mission, that they’ll then use frameworks like Phil’s or Paul’s and act on them.

    Returning to Sean’s question about how these issues may play out differently between an individual donor and an institution, I look forward to hearing Jeff’s response. For my two cents, I would invert Sean’s emphasis a bit. I don’t think the issue is whether foundation board members have a right to approach their decisions from the point of view of their own self identity (they should be self-actualized, as any of us should, but that’s their personal concern). I don’t think they have that right, unlike the original individual donor (corporate foundations are an interesting case here, since the company functions like a live donor and often gives the corporation’s interests considerable weight, and I’d want to argue that deserves less deference than an individual donor’s self-actualization). Foundation board members do have a responsibility, I think, to take society’s needs (and justice, especially) into account when trying to interpret and carry forward an individual donor’s mission. From that point we get into considerations of whether board members are bound by more restrictive trust law or a more flexible fiduciary duty, on the legal side.

  12. Mike Edwards says:

    Excellent discussion – tks to all who posted. I am just catching up after a trip to Northern Ireland. I like the idea (which I take from the last couple of comments, hopefully correctly!) of putting together a more nuanced approach to goals, strategy and measurement in philanthropy that tries to accommodate different visions and experiences without becoming “all things to all people.” I hope CEP takes up that challenge. I will also be working on similar issues in the international context through a new network I’m putting together at Manchester University, New York University and elsewhere. It’s an open network so anyone is welcome to contact me for further details at Mike