Strategic Philanthropy
posted on: Wednesday, November 19, 2008
By Aaron Dorfman
Discussions about strategic philanthropy are all the rage these days.
Paul Brest, president of the William and Flora Hewlett Foundation, has just released a new book on the subject and has become the most visible proponent of foundations being strategic in their giving. He advocates having clear goals and a sound, step-by-step plan to achieve those goals.
Brest and William Schambra held a debate last week at the Philanthropy Roundtable conference about whether or not foundations should be strategic in their giving. Schambra is the Director of the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal. In his prepared remarks, Schambra argued that foundations would be better off just getting the money into the hands of local grassroots nonprofits who are trying to do good work. He was critical of the social engineering that he sees at heart of strategic philanthropy and of the hoops foundations make nonprofits jump through to qualify for grants.
Tactical Philanthropy, a thoughtful blog on relevant issues in the sector, will be hosting an offline forum with Brest and Bill Somerville, president of the Philanthropic Ventures Foundation. Somerville’s recent book argues for a grantmaking process centered on finding great people and investing in them, rather than on having a strategy that drives foundation decisions.
I was asked to weigh in on these issues for a session a few weeks ago at the Ohio Grantmakers Forum annual conference. The challenge for the session was to figure out how grantmakers can be both strategic and responsive.
In my opening remarks for the session, I said, “I actually agree with about 80 or 90 percent of Brest’s book. When foundations are NOT strategic, they waste some of the precious resources with which they have been entrusted. … But here’s where I differ with Paul Brest. … When taken to its extreme, strategic philanthropy becomes overwhelmingly controlling. It’s as if the foundation is a puppet master, pulling the strings of nonprofits in order to produce a desired result. In the extreme, strategic philanthropy reduces nonprofits to being contractors working to achieve the vision put forward by the foundation. This type of control, I believe, leads to less impact from philanthropy, not greater impact.”
So what’s the solution? Foundations can do four things to be both strategic and responsive: 1) Prioritize giving to marginalized communities; 2) Invest in funding community organizing, advocacy and civic engagement; 3) Give in ways that promote nonprofit effectiveness; and 4) Add grantee perspective to foundation boards. Read my remarks for more on these ideas that bring together the best of both worlds.
Are there other ways you think foundations can do to be both responsive and strategic in their grantmaking?
Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy (NCRP).
Discussions about strategic philanthropy are all the rage these days.
Paul Brest, president of the William and Flora Hewlett Foundation, has just released a new book on the subject and has become the most visible proponent of foundations being strategic in their giving. He advocates having clear goals and a sound, step-by-step plan to achieve those goals.
Brest and William Schambra held a debate last week at the Philanthropy Roundtable conference about whether or not foundations should be strategic in their giving. Schambra is the Director of the Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal. In his prepared remarks, Schambra argued that foundations would be better off just getting the money into the hands of local grassroots nonprofits who are trying to do good work. He was critical of the social engineering that he sees at heart of strategic philanthropy and of the hoops foundations make nonprofits jump through to qualify for grants.
Tactical Philanthropy, a thoughtful blog on relevant issues in the sector, will be hosting an offline forum with Brest and Bill Somerville, president of the Philanthropic Ventures Foundation. Somerville’s recent book argues for a grantmaking process centered on finding great people and investing in them, rather than on having a strategy that drives foundation decisions.
I was asked to weigh in on these issues for a session a few weeks ago at the Ohio Grantmakers Forum annual conference. The challenge for the session was to figure out how grantmakers can be both strategic and responsive.
In my opening remarks for the session, I said, “I actually agree with about 80 or 90 percent of Brest’s book. When foundations are NOT strategic, they waste some of the precious resources with which they have been entrusted. … But here’s where I differ with Paul Brest. … When taken to its extreme, strategic philanthropy becomes overwhelmingly controlling. It’s as if the foundation is a puppet master, pulling the strings of nonprofits in order to produce a desired result. In the extreme, strategic philanthropy reduces nonprofits to being contractors working to achieve the vision put forward by the foundation. This type of control, I believe, leads to less impact from philanthropy, not greater impact.”
So what’s the solution? Foundations can do four things to be both strategic and responsive: 1) Prioritize giving to marginalized communities; 2) Invest in funding community organizing, advocacy and civic engagement; 3) Give in ways that promote nonprofit effectiveness; and 4) Add grantee perspective to foundation boards. Read my remarks for more on these ideas that bring together the best of both worlds.
Are there other ways you think foundations can do to be both responsive and strategic in their grantmaking?
Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy (NCRP).
posted by NCRP at
8:25 AM
3 Comments:
One of the best ways I have seen a foundation respond to grantees both strategically and effectively is to help in promoting nonprofit effectiveness.
Case in point is Mission Increase Foundation, in Lake Oswego, OR. They have a free, 2 year training program that NFP's can sign up for.
Nonprofits are taken through a series of classes that help them with things such as developing a donor database to working with a board. These classes are produced in a two-part format so that the theory is presented and then it is followed up with a chance to apply it in labs.
After successfully attending a series of these classes, qualified nonprofits are invited to apply for a matching grant.
The theory is that people are in nonprofit because they want to make a difference in the world. The reality is that what often happens is you get a group of people with passion, passion, passion yet very little idea of how to implement and execute their passion for real change.
The training at Mission Increase acts as a sort of vetting process. If you want to get funded, you need to make sure you are ready/worthy. If you really are open and willing to do whatever it takes to improve your nonprofits effectiveness, you'll sign up for as many classes as are offered.
If not, then you probably still operate under the false assumption that money is the answer to your nonoprofits problems. You won't be open to new ideas or suggestions from those who have valuable insight. You'll stubbornly cling to your ideas, your way at the expense of the vision you claim called to serve.
It's having this inside view as to which NFP's are a good risk and which aren't that I think gives Mission Increase the edge in foundation effectiveness.
The results are amazing. Grantees are connected with each other, knowledge and best practices are shared, support is given and accountability is fostered.
In my mind, the approach that MIF has adopted is probably the most important thing going on in philanthropy today.
By
Leanne Stewart, at 4:29 PM
I appreciate Aaron’s comments. Let me focus on the 10-20 percent area of disagreement and see how great it actually is.
In Chapter 7 of Money Well Spent Hal Harvey and I discuss the different forms of funding that philanthropists can use. At one end of the spectrum is unrestricted, core, or general operating support, where the funder buys into an organization’s mission with no interference. Aaron accurately describes the other end of the spectrum when he characterizes it as “contracting.” And there are many points between.
The basic point of our chapter is that the form of support depends on the alignment between the foundation’s goals and the mission and activities of its grantees.
Let me give examples from the Hewlett Foundation’s efforts to reduce air pollution in California’s San Joaquin Valley—a problem that has a particularly drastic impact on communities of color in the Valley.
Where the alignment is strong, general operating support is in everyone’s best interests. It gives the nonprofit organization great autonomy and avoids unecessary paperwork for both the organization and its funder. Thus, the Foundation provides general operating support to the Coalition for Clean Air and to some regional and local organizations that are focused on air pollution.
On the other hand, the Foundation contracted with Professor Jane Hall, an economist at California State University at Fullerton, to conduct a specific study of the health costs of pollution. An update of Professor Hall’s study, showing that pollution costs the California economy $28 billion yearly, has just made headline news in the California press.
Why general support in one case and a contract in the other?
The Coalition for Clean Air’s work is almost perfectly aligned with the Foundation’s goals—and any differences are outweighed by the value of general operating support. But the Foundation does not have a general interest in supporting Cal State Fullerton or even in supporting all of Professor Hall’s varied research agenda—as valuable as both are. Our concern is with air pollution. Hence, the contract for a particular project whose scope was clearly defined by both parties.
The Hewlett Foundation’s grants to the Latino Issues Forum (LIF) for its Sustainable Development Program lies midway on the spectrum between general operating support and support for individual projects. While our work in the Valley focuses on air pollution, LIF covers a broad range of issues including Education and Consumer Protection. Because there is a close alignment of our concerns with LIF’s Sustainable Development Program, the Foundation provides that program with core support.
Hal and I argue for a presumption in favor of general operating support when alignment is pretty good—it need not be perfect. Unrestricted support to an organization’s unit, such as LIF’s Sustainable Development Program, is next best. But depending on a foundation’s goals and the organization’s mission and activities, the support of particular projects sometimes makes the most sense all around.
Of course, when making project grants, foundations should also pay the reasonable overhead, or indirect costs, that go with a grant. After all, the university must provide Professor Hall with an office and keep its lights on when she works on our project late at night.Beyond this, a number of foundations, including Hewlett, provide “organizational effectiveness” or “capacity building” grants that organizations can apply for to strengthen critical aspects of their work, for example, strategic planning, fundraising, or board governance. It seems that the Mission Increase Foundation described in Leanne Stewart's comment specializes in grants of this sort.
By
Paul Brest, at 11:06 AM
We have a few college students online from college of California State University Dominguez Hills and we love your blog postings,
so well add your rss or news feed for them, Thanks and please post us and leave a comment back and well link to you. Thanks Jen ,
Blog Manager,California State University Fullerton
By
California State University Fullerton, at 6:59 AM
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