My column about Leap of Reason, Give Smart and idea that “underperformance is the natural state of philanthropy” set off a debate among readers. Both Mario Marino, the author of Leap of Reason and Tom Tierney, the author of Give Smart, weighed in with comments that I want to highlight here.
By Tom Tierney
Like Mario, I appreciate the time people have taken to view and comment on Sean’s column on Leap of Reason and Give Smart: Philanthropy that Gets Results. And similarly, I agree with many of the points and sentiments expressed in the remarks. I would mention that in writing Give Smart, we did indeed seek to highlight, learn from and celebrate philanthropic initiatives that are succeeding (or have succeeded) in achieving results. In fact, our book is deeply grounded in an historic perspective of such accomplishments, enhanced by an effort to identify common attributes of success—the most important of which is a willingness to confront a handful of tough questions (For a further look into how today’s philanthropists are wrestling with some of those questions, read my colleague Susan Wolf Ditkoff’s recent blog.
Our conclusion that ‘the natural state of philanthropy is underperformance’ does indeed reflect the structural realities that make it challenging for donors to achieve results through their giving. ‘Structural realities’ in this sense are unavoidable facts of life for philanthropists—facts that will routinely impede efforts to achieve impact. They can probably be lumped into at least three buckets:
1) Because all philanthropy is inherently personal (and voluntary) what one hopes to achieve by giving money away can vary enormously. People give to organizations they are involved with; people give to ‘give back’; people give for recognition; people give because they are asked; people give to feel good (or feel less guilty); people (e.g. foundation executives) may even give to ‘make payout’ – all of which at some level is a wonderful testament to human spirit and generosity. That said, imbedded in the act of giving is an inherent choice about exactly what (if anything) one expects the money to accomplish. In other words, ‘results are a choice’—a personal choice that one may argue is neither right nor wrong—but a choice nonetheless. ‘Give Smart’ focused on philanthropic initiatives where the donor had chosen to pursue specific results. It is relatively easy to imagine that where results are not the motivating force behind giving, the gift will often fall short of what it could otherwise achieve (that is, not to say all other philanthropic motivations fail to achieve results, but that they do so with less frequency because results are not the aim in the first place)
2) A second ‘structural reality’ of philanthropy (that Sean highlights) is that market forces are subdued or distorted. The phrase ‘market forces’ includes all forms of natural feedback loops that can inform and guide a philanthropist motivated to achieve results. In business, customers provide continuous feedback that enables a business to learn and improve; competitors force that business to continuously improve to meet customer needs; capital markets further enforce this behavior by awarding capital to businesses that perform well and withholding capital from others. These market signals are relentless and unforgiving—and evident through all manner of financial and operational data, usually on a daily basis. This is not to say that business and business markets are perfect (e.g. they frequently fail to fully capture externalities; often business can overreact to short term market pressures, etc); it is simply to say that market forces are generally useful elements of driving results. All of this is in stark contrast to philanthropy where there are no real market forces, where accurate and timely performance data is hard to come by and where feedback loops tend to be highly distorted to the positive (when someone gives money away, people tend to say nice things).
3) A third root cause of philanthropic underperformance has to do with direct consequences: even if one is highly motivated to deliver results through one’s giving—and even if one works hard to create and learn from useful feedback loops—there is still no real consequence to the donor of underperformance (defined here as not achieving the desired results). This is just an obvious fact about the voluntary act of giving; philanthropists don’t fire themselves, private foundations don’t fail due to competitive pressures. The implication is that in philanthropy, excellence is self imposed: if one really wants to achieve results, one has to take personal accountability to do so. This is not easy, yet it is another ‘structural reality’ that causes philanthropy’s natural state to be underperformance.
The reason it is important to acknowledge these and other dynamics that create a ‘natural state of philanthropic underperformance’ is to better understand and address real world challenges —and thus increase the frequency with which philanthropy achieves real results for the ultimate beneficiaries—for the people, communities, and problems we aim to serve. It is fundamentally harder to change lives than to make widgets. Wishful thinking – underestimating the degree of difficulty – is a trap beneficiaries need philanthropists to avoid as much as possible. This is especially true given the harsh economic realities of today, when philanthropists and the nonprofit organizations they support are confronting greater needs and constrained resources.