Thanks to everyone who braved the crazy Bay Area weather to make it out to the Tactical Philanthropy Forum last night. The room was packed and we got excellent audience questions. Bill Schambra, Paul Shoemaker and Bill Somerville unsurprisingly pulled no punches as they debated the potential of philanthropy to solve truly “unconstrained” problems.
You can see raw video footage of the Forum here. We’ll be releasing edited video in a couple of weeks.
The response to the Forum was so strong that we’re definitely going to continue hosting these events. If you have ideas for topics or speakers you would like to see, let us know via comment or email.
Great panel, Sean! I definitely want to attend the next one.
There was a common theme that kept coming up, and I’ve heard this same lament at numerous panels on the shortcomings of philanthropy, but I have yet to hear a viable solution.
Foundations, as we all know, are too conservative. Instead of taking risks, like VC’s , they behave more like banks (or like banks used to behave before the days of stated-income mortgages). Like banks, they require lots of paperwork and reporting to get a little bit of money and only give money to people who don’t need it.
Ok, all true. But what’s the solution? Foundations are governed by boards who have a fiduciary responsibility to a) protect the 95% of the foundations endowment and b) use the 5% payout in support of the mission. Most foundations are not interested in picking winners, only in ensuring that they don’t pick any losers. If a foundation takes a risk and is the lead funder in an organization that breaks new ground in support of the mission, there a small upside for the foundation – They can talk about it in reports, to the press, etc. However, if the foundation funds a real loser, say an organization that takes a risk and ends up causing more harm than good, then there is a HUGE downside for the foundation’s staff, management and board.
There’s also a big difference in the downside risk in capital markets, where VC’s play vs. social markets, where foundations play. A VC invests in a startup. The venture tries a wacky new idea. It tanks. The VC loses money and decides the business isn’t going to make it so they pull the plug on funding. A handful of people who worked at the startup lose their jobs and the world has to wait 3 more years for someone else to try the wacky new idea again.
In the social markets, the downside risk is much greater: If a foundation funds an innovative nonprofit and things don’t go well, what happens to the clients of that organization? What if the organization’s approach does more harm in a community than good? What if the organization is downright corrupt? As a result, progress is made incrementally. And so, social funding – along with social progress — comes in drips and drabs.
Finally, I think there is a valid case to be made that big funding for big projects/organizations should have formal structures in place to track and report outcomes. Otherwise, how would foundation leadership know whether the $50 million they give to an organization is being used wisely and couldn’t be put to better use elsewhere.? What has happened, sadly, is that small foundations, that give out a bunch of $5,000 grants want to act like the big grownup foundations. So they require the same onerous oversight that a larger organization does. And this is what drives everyone nuts.
Believe me, I’m not a fan of the current system… I’m just waiting for someone to come up with a suggestion of how to change it.
Thanks for a lively event last night Sean! I came away with a few thoughts:
1. Bill Schambra really, really hates logic models!
2. There seemed to be agreement among the panelists (at least from Bill and Bill) about “funding the person”. I don’t necessarily agree with that. I want to fund organizations that are having an impact, or that show the promise of having a positive impact in the future. Great leaders build great teams, and the organization should still be doing great work long after the Founder/CEO has moved on to the next thing. If I “funded the person” then when the CEO left, so would my dollars. I hope that the Harlem Children’s Zone continues to receive funding long after Geoffrey Canada has retired.
3. I heard a lot about how measurement wasn’t very important. I think it is very important to measure the work. Sure, we can learn from anecdotal stories and site visits, but we also learn a lot from real data. Information is an excellent tool, and it can help us replicate programs that are having a positive impact or to course-correct when our hypothesis about a certain intervention is proven wrong. However, I do agree that a grant of $5,000 shouldn’t require a RCT and a 20 page report on how the dollars were spent.
Carrie, John, these are great points and I could not agree more. I look forward to a discussion!
I take issue with John’s statement (which my sense is is taken at face value in general) that for innovation “in the social markets, the downside risk is much greater.” I think we make it much greater. Instead, we have to accept that nobody knows the answers, and the only way to make real progress is to take small, calculated, different bets (some risky, some more incremental) and improve continuously, accepting that the vast majority of these bets will not pan out. That is not called failure, that is called learning. This approach is working great for us at Philanthropedia, with the patient guidance of Hewlett of course.
However, it seems that in the majority of cases, leaders and grant makers are paralyzed by the inevitable failure that comes when trying something new. And while I certainly don’t want to suggest we go ahead and recklessly try silly ideas, I can’t help but wonder what would happen if we embrace a process of continuous innovation. Sure, the vast majority of things will probably fail and possibly do some harm, but as long as we are smart and thoughtful about the way we approach social innovation, I firmly believe that the few big wins that will come out of the many failed attempts will more than make up for the risks and harm.