The Meaning of “Strategy” in Philanthropy

In my earlier posts about being an effective Charitable Giver or Philanthropic Investor, I made the claim that neither needed to be “strategic”. While discussing the posts with George Overholser I’ve been convinced that this claim is confusing, so I thought I’d publish a clarification.

The word strategy means: 1) A careful plan or method, or 2) The art of devising or employing plans towards a goal.

Clearly all donors, employing any of the approaches I’m describing should have a plan. There are better and worse ways to execute the various approaches and giving thought to how a donor will execute their philanthropy is important.

When I wrote that Charitable Givers and Philanthropic Investors need not be strategic, I was using the word in the way it is used in the phrase “strategic philanthropy”. Strategic philanthropy does not simply mean having a plan for your philanthropy. According to Paul Brest’s book Money Well Spent, strategic philanthropists devise ways to solve problems and select grant recipients who can best carry out the approaches donors think will work best. I believe that this is the accepted way the term strategic philanthropy is understood.

To devise ways to solve a problem is to create a “theory of change”. My statement that Charitable Givers and Philanthropic Investors need not be strategic was meant to argue that they need not develop a theory of change. Instead, from the perspective of a Charitable Giver or Philanthropic Investor, the nonprofit enterprise is the entity charged with developing a theory of change.

The for-profit parallel to a theory of change is a business plan. The metaphor isn’t perfect, since nonprofits need a business plan in addition to a theory of change. But this is only because the nonprofit world is more complicated than the for-profit world. The success of the for-profit business plan results in the desired outcome (profit) because the two things are one and the same. Nonprofit business plans (the plan for financing the organization) may succeed even while their theory of change fails because they need a sustainable way to finance their activities AND successfully transform those finances into positive social outcomes.

For-profit investors and for-profit consumers don’t need a business plan. Charitable Givers and Philanthropic Investors don’t need a theory of change.

For-profit enterprises, whether they execute their activities internally or via outsourcing, need a business plan. Social Entrepreneurs and Strategic Philanthropists need a theory of change.

But clearly Philanthropic Investors and Charitable Givers should have a plan to guide their activities just as for-profit investors and savvy consumers should have a plan to guide their investing and purchasing. The elements of that plan however should focus on how to best select nonprofit enterprises to provide with philanthropic equity or how to best “comparison shop” to maximize the value of Charitable Giving.


  1. Chris Pautler says:

    Longtime reader – agree with the need for simplification. ALthough a supporter of Theory of Change – I still think this feels too complicated. Many nonprofits actually create workplans – doing more of what they know how to do. A strategic plan is divergent by its nature. It can simply be a change in condition – we are going to be much more intentional in our organizational efforts, or truly ground breaking and attack a problem in a new way. Long and short of it – 20 meetings are not needed, word-smithing can kill the energy. Just draw a map on the wall. Where are we – where are we headed and what are the many paths to get there. Some paths we know by heart, other paths are only revealed with the right people in the room in a safe environment. The power of status quo should never be underestimated – are we focusing on our results or favorite and comfortable activities? Tradition and habit must be balanced by healthy divergent thinking – operationally and at the board level.

    Simple is harder but very energizing. Energy is the secret, much more so than money.

    Also, as a pet peave I think complexity is an excuse – for profit or non-profit face different but equally complex issues.

  2. Chris Pautler says:

    Part 2 – missed the last paragraph 🙁

    A philanthropist should do the same exercise as a nonprofit. What change are they buying and what are the chances they will get it? Draw the map. Their plan certainly should be strategic – divergent in its thinking. If not, they are just contributing to more of the same – incremental change or maintaining existing systems of change. (Of course, this may be acceptable to some) Be divergent – if as a philanthropist you want more high school graduates – do the research, it appears that third grade math is one of the strongest predictors of high school graduation. Invest in third graders to insure high school graduates.

  3. Through discussions with foundation CEOs and program officers, the Center for Effective Philanthropy has developed a definition of strategy that is relevant to the philanthropic context – and can be used to differentiate between the less strategic and the more strategic. Our definition, which we elaborate on in our research reports, “Beyond the Rhetoric: Foundation Strategy” and “Essentials of Foundation Strategy,” is:

    Strategy: A framework for decision-making that is

    1. focused on the external context in
    which the foundation works, and

    2. includes a hypothesized causal
    connection between use of foundation
    resources and goal achievement.

    Both reports can be downloaded from

  4. I was very glad to see this follow up post, Sean. The words “strategic” and “philanthropy” are so frequently paired that it makes it tough to use to them to mean something very specifically defined.

    Because nobody wants to be accused of not being “strategic” (often read as “thoughtful”) in their giving, using this term as a title could distract from the very useful discussion you want to ignite of “Do you want to be an “investor”? a social entrepreneur? a charitable giver? or a philanthropist who puts their resources behind a specific approach to an issue?” I work with philanthropists in Spain, a market where philanthropy is just starting to pick up steam, so I’m particularly sensitive to using terms that can be confusing for donors who are learning about the field. They all want to be “estratégicos” but being a philanthropic investor or a charitable giver may be the approach that´s the best fit for them. Although descriptive, to me “theory of change” giving smacks of foundation-speak and is unlikely resonate with individual donors. Any other candidates for a title for the strategic giver approach anyone?

    Thanks for all of your thoughtful contributions to the field. It´s a pleasure to read your blog.

  5. Khhardy says:

    Determining how you will measure success also determines how you will allocate resources to achieve success. Therefore, an integral part of this approach is devising effective metrics for success (based on mission fulfillment, of course!).