Modern proverbs for giving – from the Philanthropy Roundtable Annual Meeting

 

Paul Penley

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Paul Penley

Paul Penley

‘Even if grants don’t fully succeed, we only fail if we don’t learn.’ This adage from Jeff Raikes (Director of the Gates Foundation) is one of many exchanged at the 2011 Philanthropy Roundtable Annual Meeting. Since I had an opportunity to be both presenter and listener at the conference (held on 28-30 October), I thought I’d share the most salient giving proverbs.

Education reform. The dynamic originator of the Khan Academy, Sal Khan, made a powerful case for mastering each component of an academic subject before moving on to more complex components. ‘Who gets 75% of a home’s foundation completed and then decides to build a frame on it without finishing? So why do we let students move on to the next grade when they haven’t mastered all the components of a subject area?’ His proverbial question tears apart an academic system built on graduating students who only master parts of what they’ll need for next year – whether that’s 75% or even 95%. No surprise people fall behind. Thankfully the Khan Academy has a solution for ensuring full subject mastery before advancing. Watch out American education system! Sal Khan is coming, and he is about to undermine the ‘remedial class’ concept, the GPA standard, and the division of grade levels. OK, I might be overreacting out of excitement.

Nonprofit overhead. Bridgespan’s Tom Tierney undermined the popularized notion that low operational costs are preferable. He captured it in a couple everyday slices of sagacity. ‘No one ever chooses a hospital with the most inexpensive equipment and lowest paid doctors. No one ever picks an airline because it has the lowest maintenance costs.’ If the older adage ‘you get what you pay for’ still holds true, we shouldn’t shy away from a high-cost organization just because it has a high cost. It may have the best product or service.

Human welfare and economics. ‘Without economic welfare, there is no other welfare.’  Economist and Kauffman Foundation director Carl Schramm doesn’t want people to get confused. Nurturing entrepreneurs, growing businesses and creating economic opportunity are humanitarian and philanthropic endeavours.

Social entrepreneurship. To follow on from Carl Schramm’s proverb, Dr Paul Penley (that’s me!) questioned the moniker ‘social’ entrepreneur. ‘The new rage around social enterprise mistakenly implies that enterprise in and of itself does not benefit society. Anyone who praises social entrepreneurs to the neglect of entrepreneurs in general has not studied the intrinsic relationship between economics and human welfare.’ A ‘social’ entrepreneur who emphasizes social benefit over profitable business may actually lower the chances of making a sizable impact on a social problem.

Where to give. Peter Lynch takes the same approach to giving as he does to investing. ‘Invest in what you know.’ It means you should champion the causes and programs you understand. You’ll be a better decision-maker. You will also have the ability to compare the relative performance of players in that field.

Evidence-based decisions. Paul Brest wittingly wondered if US politicians are pragmatically concerned with what works, or just what works for them. ‘Is it evidence-based policy-making or policy-based evidence-making?’ Brilliant! In the new push to produce statistically verified outcomes, grantmakers had better be wary of creating enough data to prove anything they want.

Giving strategically. ‘You can’t give strategically if you don’t have a strategy.’ Of course, right? I presented a paradigm for local foundations to identify a community’s greatest needs that have working solutions but inadequate attention. It provides a quantitative and qualitative process for identifying local initiatives with multiple program success indicators and high community value. It is a clear path that can be replicated by foundations across the US who want to be proactive rather than reactive in the way they serve their communities. With limited resources available for ever-increasing problems to address, we better make sure our giving goes beyond good intentions and coincidental connections if we want to call it ‘strategic’.

I hope at least one of these modern giving proverbs captured your interest. The Philanthropy Roundtable has consistently been a superb platform for exchanging cutting edge ideas for major foundations in the US. This year was no exception. The exchange of ideas and networking with other funders makes a significant contribution to improving US grantmaking foundations.

If you disagree with one of the proverbs or have one of your own to add, let me know in the comments. I can’t imagine all the statements above sit comfortably with you. Some still have me thinking.

Paul Penley is director of research at the philanthropic advisory firm Excellence in Giving and creator of IntelligentPhilanthropy.com

Tagged in: education overheads Philanthropy Roundtable Proverbs Social entrepreneurship Strategic giving


Comments (4)

mahmoudi ghassene

mr paul im tunisian and i want to ask you if after our tunisian revolution we can make philanthropisme :)


mahmoudi ghassene

it is a good cataloge


Paul Penley

Miguel - I'm not sure if you saw my August 30 article about how not-for-profits are integrating profitable programs and services to increase their self-sustainability (http://philanthropynews.alliancemagazine.org/can-non-profits-be-profitable-the-movement-toward-self-sustainability/). The lines are blurring between nonprofit and for profit when it comes to how an organization funds its social or development work. I am glad to see the reconvergence of 2 sectors that used to both have a deep civic and social responsibility. I believe the funding model is less important than ensuring program effectiveness and the ability to sustain programs that are making a lasting difference. In some instances, a for profit model has a better shot at scaling sustainably but other models that say rely on gifts in kind, like pharmaceutical donations, can scale better as a tax deductible nonprofit model. The need for a nonprofit to fundraise and a for profit to turn a profit can both equally distract an organization from its mission. Both models require someone to be making a profit and then reinvesting it in social improvement efforts, one requires the business to do it and the other requires donors to do it. So I push both for profit 'social businesses' and nonprofits to provide a clear set of measurable outcomes that demonstrate sustainable improvements over time. Outcome measurement becomes the key to make sure that either funding model is fulfilling the mission and doing so in a manner that moves the needle on an issue for years to come.


Miguel García

I am the first one that believes that administration costs shouldn't be demonized but having said that I'd like to add that effectiveness and efficiency criteria should be part of the equation. Looking at just a percentage of the total cost is very shortsighted. When it comes to development projects implemented by for-profit or not-for-profit organizations, which criteria should be used? Do they provide same outcomes? Are there differences in effectiveness and efficiency between them? There is a tendency to believe that for-profit is evil and not-for-profit are the "good guys". What're your thoughts?


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