Overcoming inconsistent decision-making in philanthropy

 

Katelyn Cioffi

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It can sometimes be taken for granted that all outwardly altruistic activities are good by default. How­ever, motivation alone does not guarantee success: philanthropic programmes can not only be ineffective in achieving their aims but can actually cause harm.

In order for the UK philanthropy model to become more effective, there needs to be a conscious movement away from the traditional principles of giving towards what we call ‘high-impact altruism’. What differentiates a high-impact altruist from a conventional philanthropist is the way in which the donor adapts ways of working to achieve sustainable results in the most efficient and effective way possible.

A key obstacle to overcome in this move towards high-impact altruism is resolving the conflicts in philanthropists’ decision-making processes. A pitfall for many modern philanthropists is that they behave in a philanthropic context in a way that is at odds with how they would behave in a professional context. The absence of the intense scrutiny and competi­tive pressures that drive businesses to improve efficiency means that erroneous decisions can be made, which compromises the impact of philanthropic giving. There are two principal areas in which greater rigour could improve philanthropic decision-making:  deciding which cause to support, and deciding how best to tackle the problem.

Deciding which cause to support
More often than not, assumptions are made about which causes to support without the analysis that would be a prerequisite in other professional contexts.  Above all, it is assumed that social causes inherently have a net positive social impact, and that one’s job as a philanthropist is done when funds have been provided to the chosen cause. However, it is impossible to be a high-impact altruist without a clear sense of purpose driving all one’s decisions.

Though it can be difficult to choose which cause to support, resources are in practice always limited, and spreading activities too thinly can dilute the impact that one is able to achieve. Philanthropy is best seen as a ‘social’ investment and, as with any investment, it is important to understand how much it will cost – not just financially, but also what the altruist expects in return.

As a result, altruists should adopt a structured approach to determine their philanthropic purpose, contemplating three core components: motivation, commitment and ambition. In other words: what is my motivation for giving? How much am I willing to commit (time, money, resources)? And what is my overall ambition? By undergoing this more rigorous thought process, decisions will be much more targeted towards the specific impact that the altruist wants to achieve.

Deciding how best to tackle the problem
Another inconsistency exists between the objective and the subjective. On the one hand, the investment arms of many foundations are run like hedge funds – rational, but making no allowances for the way social causes operate. On the other hand, philanthropic giving is often entirely based on personal reasons. This clash often reduces the understanding of the issues at play and of how social causes operate.

Many altruists are not experts in the fields they hope to influence, and it is unrealistic to expect that they should all become experts. However, being complete­ly dependent on others to design the best solutions can be both risky and ineffective. To inform their philanthropic decisions, altruists need a robust understanding of the problem they aim to combat and its causes, and the ecosystem in which their chosen social venture operates.

This again requires a structured thought process. Altruists should ask themselves a series of questions, such as: what problem am I trying to solve? What information is already available? What are the root causes of this problem? What are some of the barriers to a solution? High-impact altruists seek to understand the most relevant parts of the ecosystem in which they work, enabling them to make decisions that target resources and efforts to where they will achieve the greatest good.

Katelyn Cioffi is a principal at Aleron.


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