I am glad that Lisa Jordan has raised the issue of risk and how to measure failure. However, though I could wish our sector had only one parameter, namely profits, for measuring failure and success, I have my reservations about the comparison with venture capital. Our field is more complicated and multidimensional.
What is lacking in Lisa’s article is the issue of values (though they are embedded in mission, which she does raise), which underlines the difference between our sector and venture capital. Philanthropic organizations do, and should, look at failures and successes, including risk-taking, in light of the values behind their work. Without these values, the concepts have little meaning. For example, risk-taking in programmes providing services would be different from those looking at global development (the subject matter of this issue of Alliance).
When I was director general of the Welfare Association (WA), I tried to incorporate risk analysis in management plans and move away from just looking at financial risks (I believe most organizations, if they consider risk at all, do this). The task was by no means easy, due primarily to the complexity of trying to measure the risks related to the effectiveness of WA’s programme. However, I persisted and the WA board approved my risk measurement plans whereby close to 80 per cent of organizational risk was allocated to programme aspects (efficiency and effectiveness) and just 20 per cent to overall financial management.
Again, thanks to Lisa for triggering a discussion of how good we are at looking at the way we do business and the results of our work.
Chairman of the Board, SAANED for Philanthropy Advisory Services – Arab Region