Why should Italian philanthropic foundations take the lead and start financing strategic goals and organizations rather than just projects?

Two intertwined vicious circles are resulting in Italy in an agonizing civil society sector, dotted with inadequate organizations and infrastructures. The bidding mechanism of projects responding to donor-driven calls for proposals has produced weak actors, caught in the starvation cycle and in competition with each other, causing civil society organizations to adapt and morph into mere project factories.

The myth that the third sector should cost very little and all funding must be allocated to projects necessarily reducing to the bone any overhead worsened the consequences. perpetuating the vicious cycle that non-profit organizations are expected to do more and more with less.

While in Northern Europe and North America the overhead myth has been reducing over the last decade – countered over the last decade not only by insiders and interested organizations, but also by universities and public and private donors, in Italy it has remained monolithic and undisputed, especially within the public opinion, stereotyped in the procedures and practices of practically all public and private donors. The ‘magic percentage formula’ of general costs as the only indicator of efficiency of non-profit organizations, is strangling Italian non-profit organizations.

In Italy the myth of the (almost) zero cost of third sector organizations has deep roots, which include: the culture of Catholic voluntary service; the subconscious of a country deeply rooted in a male-dominated system in which for hundreds of years social services were carried out free of charge by the church and, for the most part, by women, both religious and lay; the tokenist declarations needed to claim one’s contribution in the fight against a widespread subculture of mischief; the occasional risk that the more cunning ones will finance friends or friends-of-friends and, in general, the lack of social trust and the fear of taking responsibility towards change.

Today, even more than a decade ago when the University of Stanford first denounced the “Non-profit Starvation Cycle” in American NGOs, it is essential to be able to rely on healthy, sound and performing civil society organizations.

The civil society sector in Italy, in order to face the great social challenges in a courageous, innovative and effective way, desperately needs general operational support such as funding for the organization’s strategic objectives – for their mission, as Mariana Mazzucato put it – instead of only towards specific projects.

The misuse, over the last twenty years, of the logical framework and PCM- project cycle management – seen not as one of the tools in the toolbox, but as a comprehensive panacea – has proven its inability to capture the fluidity, complexity and duration of social change processes.

It has produced serious distortions so that today in Italy and NGO exists if it produces projects, and it produces projects to exist

The spiral of producing/reporting projects only to match the priorities of calls for proposals launched by public and private funders, together with the perpetuation of a chronic under-investing in the organizations, skills and staff has led Italian civil society to the failure to develop its full potential.

Faced with complex global crises – economic, environmental, political, social, cultural – Italian philanthropy should take on a new political and social role.

As opposed to emergency – driven public policies, foundations today — far from being mere “buffer funders”- are probably among the most capable actors of innovation and social change, more effective in putting the future back at the centre of political and social action.

The unique value of philanthropic foundations lies in the private wealth that they can make available for the common good and in the quality of their assets (not their quantity, given that even combined they could never replace public budgets).

We need Italian philanthropic foundations to have, at the same time, the humility and courage to take this step: the humility to recognize in non-profit organizations true strategic partners (and not mere recipients of funding) and the courage to completely overturn on the one hand the donor-beneficiary power dynamics typical of the current system focused on calls for funding and on the other the starting focus (from the control of inputs to outcomes), to foster the empowerment and an active, free and significant participation of civil society partners in social change processes.

If philanthropic foundations don’t lead the way, no one else will: not public donors and even less their “beneficiaries”.

The power dynamics between funders and grantees today, in Italy – where the legacy of “low pay, make do, and do without” is widespread culture – make it difficult if not impossible for non-profit organizations to take the initiative and escape the vicious cycle of the “project factory” plus no core funding.

Carola Carazzone is secretary general of Assifero – Italian Association of grant-making foundations and institutional philanthropy.

This is a summarised and translated version of an article that first appeared on Il Giornale delle Fondazioni on 22 March 2018. You can read the orginal article here. You can download an English translation of the full article here.