The Problem with Philanthropy

leapI was lucky enough to attend the After the Leap conference last month. The two-day event was a culmination of more than two years of work on encouraging nonprofit performance management by a small coalition of people, led by Mario Morino. The movement began with the release of Leap of Reason, a book primarily authored by Morino, which made the compelling argument to nonprofits and funders alike to pay more attention to achieving tangible results. (Disclosure: I worked with Morino to help release the book and build momentum around its core messages.)

The event was attended by over 400 people from around the world—an impressive feat when you consider its eye-glazing-over topic of public sector performance management and evaluation. But I thought the most impressive part of the conference was the general feeling in the audience, and reflected in some of the speakers’ remarks, that funders are mostly to blame for a lack of effectiveness and performance management in the social sector. It is rare you find a group of people brave enough to blame a major source of their livelihoods for any type of problem. Many people lambasted funders for not supporting the infrastructure necessary to invest in the people and technology that create performance management systems.

Nancy Roob, President of the Edna McConnell Clark Foundation, said in her keynote address that the reason funders don’t support performance management is that they are focused on “piecemeal” activities and not on results. Her five suggestions to change this, summarized in Twitter form, were:

Roob-list

These suggestions by Roob will help push funders in the right direction on performance management, but ultimately fall short of solving the main problem with philanthropy: Ego. Until we remove ego from philanthropy, no other sector-wide reforms can happen. Until philanthropists and foundations understand that their own goals and agendas are secondary to the results of the sector as a whole, those results will continue to be piecemeal.

Here’s why: Philanthropy has no incentive to change the way it is working. Right now, there’s no punishment for not achieving results (save public disapproval) for any type of philanthropy. This means that foundations and philanthropists can go on creating their own initiatives and funding their own pet projects without recourse, even if those end up being complete failures.

The only way philanthropy is going to change is if their stakeholders stand up to them. Look at Roob’s list of five suggestions again—they are all self-imposed changes. There are no structural changes, such as tying tax-deductible status to demonstrated social impact, or increasing required endowment payout for foundations. If the government won’t change the rules around philanthropy, the only other constituency that can push philanthropy in this non-piecemeal direction is philanthropy’s beneficiaries—the nonprofits.

And it is a rare nonprofit that can stand up to its funders and turndown money, or negotiate on the terms. One nonprofit, Communities in Schools, was able to do it, according to another conference keynote given by its president, Dan Cardinali. But unfortunately, a lot of the advice given at the conference to nonprofits about securing funding based on results was to work only with those funders who understood the long-term time horizons that performance management implementation takes, and ignore the others. For most nonprofits, they do not have that privilege, and are forced to sacrifice on operations, or mission, or both, to bend to the wishes of funders.

Without a significant cultural shift in the social sector away from ego, it is unlikely we will achieve widespread nonprofit performance management or increased results. We need to move to a more collaborative environment, with results as the guidepost, not personal goals and ideas. What we need to do is “keep the arrogance out of social change,” as UnSectored blogger Laura Tomasko put it, and work together better.

So how do we create this culture change? The same way all cultural shifts have happened—from the anti-slavery movement to women’s rights to same-sex marriage—by speaking truth to power. This is hard to do, especially when the powerful are funding your paycheck. But a lot is happening within the social sector to stand up to those funders too focused on ego to put results first—evidenced by the large attendance at the After the Leap conference, which included many funders in addition to Roob. Changing culture will require coordination on both sides of the issue—funders and nonprofits—just as all social movements require input from actors with different motivations.

After the Leap was a great start to a small part of this culture change, and many attendees by end were asking when the next one would be. It’s gatherings like these that will continue to chip away at the institutional ego of philanthropy and encourage collaboration among all actors in the social sector.

Photo credit: danger0usdays