Philanthropic risk: It’s personal

Written by: Allen Smart

Date: August 23, 2018

Two ways that grantmakers can encourage more risk-taking among leaders and staff

Philanthropy has an uncertain relationship with risk. Foundations big and small couch their strategies around innovation – often complemented by statements about their willingness to take risks in pursuit of those strategies. However, given funders’ current interest in evidence-based work and easily quantifiable results, most haven’t demonstrated an actual willingness or ability to embrace risk.

Much of the conversation about risk relates to the risk of a “failed” grant or grantmaking strategy and risk associated with programmatic focus. Few funders are at the forefront on thorny issues, and even fewer are willing to put themselves out in public in service to the greater good. This is a particular problem on the local and state levels where foundation actions are viewed in the context of history and relationships.

There is one important philanthropic risk that never gets talked about: a risk that likely is the most powerful and overriding influence on foundation actions. It’s a risk that is not programmatic, legal or compliance-focused. It isn’t even particularly about the reputation of the funder. It’s the risk of the personal.

Personal risks

Jobs in the foundation world are few and far between. Few people leave philanthropy willingly. Entry points are scarce. So are opportunities to move up the career ladder. Yet for those lucky enough to secure them, philanthropy jobs pay well. They typically come with good retirement and health care benefits, in addition to personal and professional clout that are envied by many. And even on the worst days, having a job where “doing good” is the primary focus can be personally fulfilling.

The fact that foundation jobs are so desirable creates an interesting juxtaposition: Very few people are willing to jeopardize the comfort, security and fulfillment of their philanthropic jobs by taking the lead on philanthropic risks.

This creates an interesting dynamic: While funders purport to seek leaders who are risk-takers and innovators to solve entrenched problems, few funders provide the true support needed for personal risk-taking. It is worth noting that nonprofits and, importantly, individuals working on the front lines to address inequities and injustice in their communities are risking their social, intellectual and financial capital in ways that foundations often don’t match.

A cycle of risk-aversion

Instead, a cycle of false homage to innovation and risk occurs: Search firms describe how a foundation is looking for someone not afraid of failure or someone willing to make the big bets that make a difference. Candidates will be told that the board is pleased with the current direction but wants to take more chances. Successful candidates will convince the board that a bold and visionary leader is exactly what they need to ensure a legacy of philanthropic effectiveness. The brave new leader will be hired, but once he or she slips inside the foundation walls, the reality hits.

The new leader embarks on a journey of focus groups, listening sessions and due diligence intended to inform the funder’s ability to be innovative, bold and take risks. The foundation will issue a new strategic direction with a “bold” agenda informed by community, yet no specific public commitment to trying work that hasn’t been tested or prescribed. The funder may spend years methodically pursuing its plan but without much relevance or urgency for its communities, stakeholders and nonprofit partners – until a “new” strategy is issued with fanfare about risk and innovation only to start the cycle over again.

A few years of this and risk aversion becomes deeply embedded in the culture of the foundation. Board members become accustomed to and comfortable with the low-risk environment. Senior staff focus more on managing the board’s tolerance for risk than evaluating the need for risk-taking. And program staff express guarded interest or skepticism in a new idea, since enthusiasm in an “unproven” idea or organization may come across as too risky.

Breaking the cycle

So how can foundations break this cycle?

First, board and senior leaders should ask themselves: Are we playing it too safe? How willing are staff and board members to risk their own status in service to a potentially change-making idea? Moreover, what does risk mean for a funder?

Sadly, I’ve seen a statewide health funder dedicated to serving the access needs of disadvantaged populations refuse to sign on to simple petitions to support both Medicaid expansion and 2020 census advocacy. I have witnessed a local education funder that tinkered with issues of student achievement deem it too risky to talk about segregation. And then there was a social justice funder that was hesitant to elevate the issues within a growing Latino community for fear of being accused of supporting illegal behavior.

Imagine what might have happened if they allowed (or even encouraged) individual staff and board to ask, “Are we taking enough risk?”

Second, foundations can create environments that acknowledge and provide support for personal risk-taking. This could come in the form of:

  • Making risk-taking a laudable part of job performance rather than a punishable one.
  • Ensuring that risk-taking is a whole-team exercise, so that staff and board are aligned and support one another when the going gets risky.
  • Encourage staff and board to be transparent about when they feel an action may carry uncomfortable risk to themselves.
  • Celebrating “failures” (as some foundations have done) as opportunities to learn and build knowledge of frontline staff who experience the results of risk-taking to further the collective wisdom of the entire foundation.

I invite funders to acknowledge that philanthropic work can – and probably should – include enough risk to make staff and board leaders feel a little personally uncomfortable.

That’s how we’ll know we’re truly helping to lead our communities toward solutions, rather than resting comfortably in a risk-free status quo.

Allen Smart is a philanthropic advisor who specializes in health and rural giving. He previously served as vice president of programs at Kate B. Reynolds Charitable Trust. Follow @allensmart6 and @NCRP on Twitter.

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