Do philanthropy bloggers care about donors?

June 10, 2010June 9, 2010 ~ Sasha ~ 5 Comments

Sean Stannard-Stockton and Nathaniel Whittemore point us to a recently-released UK report that shows that only 40% donors are interested in creating a new national charity rating scheme and 68% said such a rating scheme would not change their giving decisions.

Reflecting on these facts, Sean writes a post titled Do Donors Care Whether Nonprofits are Any Good?

And Nathanial’s title is Do Donors Care About Impact? Not Really

Nathanial’s conclusion from the aforementioned statistics: “Uh oh. That’s some pretty damning evidence that donors don’t care.”

The other way to look at these numbers is to conclude that donors don’t believe that a rating scheme is going to work; that they don’t believe that such an approach is going to effectively inform them about how to make charitable decisions. (I happen to agree that it won’t, though that’s a post for another day.) If that’s what’s really going on, then the right headline – much less catchy, and much less likely to be retweeted – would be: “Do donors believe that rating agencies are any good at their jobs? No.”

There’s a lot of good stuff in both Sean’s and Nathanial’s posts, especially Sean’s point that we need to put as much effort into spreading ideas as we put into assessing impact. But I also think we have to be careful. I don’t think we advance the field of philanthropy and champion the cause of effective philanthropy by making and tearing down caricatures of philanthropists, and I think the blog post titles do just this.

It’s fun to be provocative to grab attention, but not when it cuts directly against what I know Sean and Nathanial and all of us hope to be part of – an ever-improving, ever-more-dynamic field of philanthropy that brings about large-scale, positive social change.

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A leading voice takes the next step

September 3, 2009September 2, 2009 ~ Sasha ~ Leave a comment

Congratulations to Sean Stannard-Stockton on the launch of Tactical Philanthropy Advisors. Sean has been writing on the Tactical Philanthropy blog since 2006, and has become one of the leading voices “Chronicling the Second Great Wave of Philanthropy.” If you want to know what’s going on in U.S. philanthropy, with a nod to what is newer and is most cutting edge (and an acknowledgment of what’s mainstream), you go to Sean.

This week, Sean has launched Tactical Philanthropy Advisors, to provide philanthropic advisory services to clients with $1 -$50M or more of philanthropic assets. And yes, Sean will still be writing his blog.

Why does this all matter? Sean reminds us that “Individual donors give $250 billion a year to charity, making up 82% of all charitable giving.” It’s a lot of money, and where it goes makes a real difference.

Sean is also launching the Tactical Philanthropy Knowledge Network, “a network of professional grantmakers who are committed to the idea that knowledge sharing leads to greater social impact.” Jed Emerson will be the Chair of the Network, and IDEO will be involved in designing the Network and facilitating Network gatherings.

Congratulations, Sean. We’re all cheering you on.

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Should foundation program officers be more like venture capitalists? (Part 2 of 2)

February 9, 2009 ~ Sasha ~ 6 Comments

(This post first appeared on the Tactical Philanthropy blog, as part of a conversation Sean Stannard-Stockton kicked off on creating a ‘capital market’ for philanthropy. It is the continuation of my earlier post on whether foundation program officers should be more like venture capitalists.)

One of the big problems we need to solve as a sector is how to find ways to scale highly effective nonprofit organizations. Kudos to Sean for raising this question and also for highlighting the power dynamic that can often exist between funders and grant recipients. (I particularly like George’s reference to the need to be a “chameleon”, which captures the issue very nicely).

At Acumen Fund, about two years ago we realized that we were in a position for a major scale-up of our work, and we also recognized that the best way to do it would be to raise a large pool of unrestricted philanthropic capital that would take us to the next level. We set out to raise $100M over two years in unrestricted capital in May of 2007, and by the end of 2008 we raised $85 million against this goal.

One of my reflections having led up this effort is that individual philanthropists are typically much more prepared than institutions (foundations and corporations) to make large, long term, multi-year, unrestricted gifts. (That said, there are some institutions that are exceptions to this rule, and I do believe that when programmatic goals of a nonprofit align closely with those of a foundation, large gifts with some restrictions can provided needed growth capital that allows for the kind of organizational investment that growing nonprofits need to make.)

Where things get really tricky is when a nonprofit that might be ready for tens of millions of dollars of growth capital (the $10-$30M that George Overholser suggests is a good reference point) finds itself mostly able to raise programmatic grants (often narrowly restricted) in $50,000-$100,000 increments from foundations. Programmatic grants like this can create the two-headed hydra of not having sufficient funding for “overhead” (a.k.a. non-program staff), combined with the communications, relationship and reporting challenge that can come with having 100 individual $50,000-$100,000 grants (an absurd number, but this would get you to $5-$10 million) – the “chameleon” problem.

The irony is that in other lines of work – venture capital; executive search; etc. – being able to find and invest in a world-class team of people is seen as THE differentiator between good and great firms. Yet all too often, foundations seem unwilling to invest in people and organizations, instead seeing nonprofits as a means to a programmatic end.

The problem with a world in which the most proactive, risk-taking philanthropists are individuals (rather than foundations) is that it has the potential to limit severely the types of new nonprofits that will be successful at growing to scale – namely, the winners will be those organizations that are run by individuals who are capable of building strong and deep relationships with ultra high net-worth individuals. Nonprofit CEOs who can do this bring together a unique combination of skills, but if this is only real way for anyone looking to grow a new nonprofit, then we as a society have a problem. (though large scale retail fundraising using Web 2.0 tools is a potentially interesting solution).

The potential I see is to have foundations bring together both know-how about what it takes to solve major social problems AND a risk appetite to put capital behind organizations (and not just programs) that have a real chance at building those solutions.

For now, at least, it seems like we’re coming up short on the appetite for risk and for openness to the idea that investing in great teams and building great institutions will be what brings forth the next wave of groundbreaking nonprofits.