What Drives Philanthropic Success?

Peter Frumkin is the author of Strategic Giving, an excellent book that I reviewed last year. Earlier this week, Peter wrote a post on the Philanthropy Central blog calling into question some of his own assumptions about what drivers are most important to successful philanthropy.

Peter wrote:

…I am increasingly troubled by a recurrent worry. It is a worry about what actually drives philanthropic success.

Let’s define two categories of philanthropic processes. The first is technocratic, rationalistic, and ordered: It includes program positioning and issue research, alignment and coordination across initiatives, logic model drafting, white paper or concept paper development, proposal reviewing, adapting and applying new information technologies, program evaluation design and implementation, and all the other day-to-day professional work that goes into modern philanthropy…

Now consider what might be called the more humanistic, interpretive, and adaptive work in philanthropy, which really comes down to judging the capacity, character, resilience, intelligence, and resourcefulness of the people who seek philanthropic funds. This is the kind of ill-defined and untheorized work that comes down to judgment and gut assessment by the donor of the person sitting across the desk from them. Call this Category Two work.

Now to my worry: What if Category One philanthropic work really only explained a small part of philanthropic effectiveness and social impact? What if Category Two work explained a vastly larger percent of outcomes? If this were a social science morel, we might ask what the r-square statistics of these two types of philanthropic work are if the dependent variable is effectiveness. The r-square statistic ranges between 0 and 1 and tells us how much variation in the dependent variable is attributable to changes in the independent variable (here, that would be Category One and Two philanthropic work).

My concern is that the growing philanthropic industrial complex—made up of consultants, researchers, trainers, and advisors—believes, earnestly believes, that the r-square statistic for Category One work is high, perhaps up to .75, and this justifies the substantial amounts of money invested in building up and supporting this work. But I have come to doubt this assumption over time and now think the r-square statistic might actually be very low for Category One work. I am more and more of the belief that Category Two work has the big r-square and explains a lot more of the achieved social impact than anyone wants to admit. The problem is that Category One work has an army of salespeople out and about selling tools and frameworks, while there is virtually no infrastructure to support Category Two work.

What I think the field really needs is a systematic guide to the difficult art of assessing the innate ability and capacity of grant seekers  to conceive wisely a vision and then actually carry out their plans. If donors cannot judge character and capacity correctly, all the tricks of the philanthropic trade will not help them achieve their goals. What such a guide would look like I do not know, but I doubt the current philanthropic industrial complex has the will to design and deliver it.

This is a dramatic declaration on Peter’s part. Peter is the kind of academic who talks about r-squared statistics in blog posts. For him to write that the “untheorized work that comes down to judgment and gut assessment… explains a lot more of the achieved social impact than anyone wants to admit,” is a shot across the bow of the philanthropy industry from someone who should more naturally side with the philanthropic process folks.

Personally, I think Peter is right. It isn’t comfortable to believe that the intangible art of judgment and gut assessment is the most important driver of philanthropic success. It would be far easier if we could all just learn specific, repeatable processes, that while complicated, insured that our giving was effective. But I think the evidence from other fields fully supports the importance of judgment over process.

In investing, Warren Buffett has a process, but it is his intangible gift for spotting value that makes him great. If the reverse was true, then anyone who read the vast literature covering the process that Buffett uses could fully expect to replicate his success.

In writing, novelists around the world study the writing styles of the greats. But The Elements of Style won’t make you Ernest Hemingway.

In economics, thousands of men and women run rigorous studies in an attempt to predict how the economy will behave. Yet we know that this process fails them time and again and fails to even adequately explain historical events.

This is not to suggest that process doesn’t matter. In the book Blink: The Power of Thinking Without Thinking, Malcolm Gladwell explains the incredibly important role of judgment and gut assessment in expert decision making. But he does not declare process and rigor is not important. In seems to me that systematic processes are necessary but not sufficient building blocks on which to develop effective philanthropy.

Unless we heed Peter’s warning that “judgment and gut assessment… explains a lot more of the achieved social impact than anyone wants to admit",” all the efforts to build a more effective philanthropy will do nothing more than create elegant mental models that sound great, but fail to make the world a better place.


  1. David Lynn says:

    So just like any other business, it’s really all about the people… which of course is harder to measure. And would seem to imply that the other discussions like Glass Pockets and other forms of funder transparency are highly important. The rest of us may not be able to easily replicate what Hewlett or our friend John Smith (or shameless plug: SVP) do to pick charities, but if they are picking ones that “appear” to be successfully delivering outcomes, then we may just want to follow their money.


  2. “Following the smart money” is a very common way that for-profit investors operate. I think it is a great element of anyone’s process. But I also think that especially at the local level , individual donors might know much better than well resourced institutions about who is doing great work. That was the message of the classic investing book One Up On Wall Street in which Peter Lynch argued that individual investors had an edge over institutions if they “bought what they know” and focused on investing in companies that produced stuff that the individuals had personal experience with.

  3. David Lynn says:

    Perhaps this role is one community foundations could better adopt: helping the community know what their individual donors are doing. More than “buying what I know”, I want to buy what my whole network knows.


  4. Lisa Machesky says:

    As someone who runs a non-profit, I believe the “category 2” work is essential to outcomes. For instance, we run an after school program that can document true success but the real reason it works is that the people who run it are absolutely amazing and lead with their heart. They know when to follow the book and when to throw out the book.

    Adaptability and meeting the true needs of those we serve can’t be documented. If the people leading the program were different they could probably follow the book but it wouldn’t have the same outcome. This gets into some of Seth Godin talk about factories and linchpins which is pretty relevant.

  5. I think that’s right Lisa. One thing I worry about though is that anyone can claim they have amazing people and insist that it can’t be documented. So how can donors figure our who has the Category Two skills that are needed?

  6. Lisa Machesky says:

    I think one of the most important things to do before giving is to visit or at the very least have a phone conversation. Too much happens just by words (paper and electronic) without any opportunity to gather the category 2 data (I chose the word data deliberately). You gather a lot of information by watching and feeling.

  7. Rachael Barrett says:

    Sean, didn’t the drive to category 1 thinking develop in earnest with the realization that despite the money funders (public or private) were throwing at organizations, activities, etc., there was little to show in terms of impact? change on the ground?

    Perhaps the scale has tipped too far over to category 1, but we cannot forget what drove us there in the first place.

    Ideally, there will be some acceptance of good practice and an understanding that for some programs may not be well suited for significant outcomes. For example, an after school program is limited in terms of having a significant impact on a kids’ reading level, if only because the program has the kid for a few hours a week. But, the after school program can expose the kids to a range of activities and keep them safe.

    Another element to consider is that with the onset of metrics, unless a nonprofit tries to “game” the system (see any workforce program), well designed metrics can motivate employees in a good way — and accordingly, with an engaged employee, the programming (whatever sector) will improve. Hearts are nice, hearts are good…but, we need to keep our heads and the metrics demanded by category 1 funders should be used as an organizational tool to motivate the nonprofit staff to excel.

  8. Important point you’ve raised Rachael. I tried to strike a balance when I wrote:

    “This is not to suggest that process doesn’t matter. In the book Blink: The Power of Thinking Without Thinking, Malcolm Gladwell explains the incredibly important role of judgment and gut assessment in expert decision making. But he does not declare process and rigor is not important. In seems to me that systematic processes are necessary but not sufficient building blocks on which to develop effective philanthropy.”

    I don’t think this is about “heart” so much as it is about valuing the Right Brain (while of course, not dismissing the importance that the Left Brain plays).

  9. Peter Frumkin calls for “a systematic guide to the difficult art of assessing the innate ability and capacity of grantseekers.”

    The way I assess ability is to meet the person on their turf, to see what they have done so far in their life, to ask them a million questions based on what they have done, and propose to do, so that the pieces start to fall together and make sense.

    People may exaggerate a little in what they propose to do, but that’s OK and understandable. The job of assessment is to judge whether or not they can do the project, and whether the project is a worthwhile endeavor. If the person has written anything, I will try to read it. I might ask others about the program and get their assessment. In addition to reference people, I will try to reach out to people served by the person and see what they say.

    In the meetings with the person or with reference people, I always try to create a partnership relationship versus a funder/applicant relationship. I can’t emphasize enough how important this is and how often this opportunity is missed. Mutual respect goes a long way.

    All the while I am calling on my intuition to help me assess things. Do I have a sense of confidence in the person, what is their energy level like, does the person reflect integrity, does the person have a vision for the future, does the person have passion?

    All of the above, plus a large portion of trust, gives me everything I need to make a funding decision. So far it has worked for 35 years.

    Bill Somerville
    Executive Director
    Philanthropic Ventures Foundation

  10. Frumkin asserts a dichotomy that in fact doesn’t exist. Good, relevant data and solid logic contributes to better philanthropic decisions. And, of course, there is an interpretative and adaptive element that is important to good decision-making also. Why must we pretend as if things are mutually exclusive when they are not?

    For a different perspective on intuition, I recommend the book Think Twice: Harnessing the Power of Counterintuition by Michael Mauboussin.

    Phil Buchanan

  11. Mazarine says:

    Oh WOW.

    Thank you for highlighting Peter Frumkin! I interviewed him last year, and was totally shocked by what he said. He said that nonprofits succeed not because of their excellent fundraisers, but because of their ability to fulfill their missions, and the community’s perception of this.

    To hear him say that the people are more important than the process in grantmaking is fascinating.

    I wish that more nonprofit leaders realized this, that their people are their most important asset.

    Perhaps a way to get funders to recognize the individual contribution would be to create a measurement tool to see how the nonprofit employees are empowered to make their own decisions, and allowed to make mistakes within their jobs. If the passion of the people is the most important, as well as capacity and resourcefulness, then there needs to be an emphasis on this in grantmaking, not just on the resumes of the people involved, but in their own words, why they believe the work is important, and what they intend to do to make the mission succeed.


  12. John says:

    I find myself in agreement with all of your article. Banks and businesses are by their nature risk averse. They have to be to report to their shareholders. Philanthropy also has shareholders, but by its nature it allows for and should encourage risk taking by nonprofits. Of course risk should be grounded in evidence that points to why an idea might work. A good program officer will be able to sense that after a few interactions with the grantee. Clearly evaluation is important to determine what worked and why and equally important what did not work and why not. The latter is information that is critical knowledge that the field has yet to figure out how to share well.
    Thanks for your thoughts.

    John Mullaney
    The Nord Family Foundation