U.S. Philanthropy’s Shrinking Ambition, Part V: The Paradoxes of Philanthropic Effectiveness
Posted on 26 May 2009
By Steven Lawry
In Part IV of this series I argued that large, conventional foundations, staffed by highly-qualified and increasingly specialized professional staff, are over-specifying the solutions to poverty in-house and, in the process, are increasing the possibility that potentially breakthrough ideas coming from outside of foundations get over-looked and go unfunded.
New philanthropies, founded by living donors, are bringing another kind of hands-on practice to the field, based on principles of social entrepreneurship. They are also bringing with them a critique of the nonprofit sector, including of traditional philanthropies, that questions whether nonprofit leaders are sufficiently bold or innovative to bring about real social impact.
In some cases, this skepticism is warranted and can be healthy. But it is more often than not accompanied by a kind of hubris that says success in business is a predictor of success in bringing about social change. So while entrepreneurs have brought to the field needed attention to impact assessment, the horizon for measuring impact is too near and the impact questions asked too shallow. As a result, work essential to bringing about meaningful change, such as building movements and knowledge, networking and advocacy, is less likely to get supported by the entrepreneur funder.
Funders who approach social problems as entrepreneurs often don’t understand the complexities of the lives that poor people lead, nor have they developed the knowledge of social and cultural resources present in poor communities necessary to placing good bets. They tend to fund small organizations headed by smart people who come from social backgrounds and experiences similar to their own and, who like their entrepreneur funders, don’t have a lot of direct experience of poor communities (or political and social standing within them).
Some entrepreneurs have extended their critique of the failures of the nonprofit sector to the work of the large traditional foundations. Sadly, some foundations have not mounted vigorous and nuanced defenses of their achievements as funders of patient, long-term approaches to complex problems, but actually embraced their critics’ analysis of their presumed failures.
I worked for the Ford Foundation from 1992 to 2006. I was lucky to be present at the meeting of Ford’s trustees in 1996 in Cape Town where the presidency of the Foundation was passed to Susan Berresford from Franklin Thomas. Mr. Thomas had led the Foundation since 1979. During his tenure, he changed fundamentally how this leading U.S. philanthropy saw its role in relation to the leaders and organizations it funded.
At the Cape Town board meeting, a trustee M.S. Swaminathan read out a tribute to Mr. Thomas on behalf of the entire board. One sentence especially stuck with me: “Franklin Thomas transformed the Ford Foundation from a technical assistance organization to a humanistic organization.”
We can each attach various meanings to the word “humanistic,” but in the context of Franklin Thomas’s leadership of Ford, it came to mean something very particular to me. It means that the important social problems, the ones worth attacking, are complicated and often deeply entrenched, our knowledge of them is imperfect and progress in addressing them will be hard, slow and fitful. So the long view and patience are essential.
Persistent poverty is, to a significant degree, the result of political and economic arrangements that deny poor people access to resources, knowledge and opportunities. So while technical interventions can have a role, access to rights and good governance matter tremendously. And finally, the really powerful ideas are most likely to come from outside the foundation, from people living and working closest to the problems.
This last insight speaks most directly to the notion of a humanistic philanthropy. But it is also the one that gives foundations working internationally today the most difficulty. A large portion of funding meant to support anti-poverty work in the Global South goes to large intermediary organizations and universities in the Global North. These organizations often do fine work, and given their proximity to contemporary intellectual currents in universities and reporting expectations of donors are better able to generate credible measures of short-term impact than their counterparts in developing countries. But local organizations and their leaders possess qualities of insight, persistence and legitimacy that will yield potentially greater impact, over the long term.
2 responses to U.S. Philanthropy’s Shrinking Ambition, Part V: The Paradoxes of Philanthropic Effectiveness
Leave a Response
Subscribe
Stephen,
I think you mischaracterize social entrepreneurship in this article. You conflate it with business entrepreneurship, and I don’t really blame you because you are using the dominant American understanding of social entrepreneurship, which involves business metrics and focuses on revenue almost to the exclusion of everything else. But from my perspective through the global organization that pioneered social entrepreneurship and now works in over 60 countries across the world, I can assure you this is a very limited definition of social entrepreneurship. What distinguishes social entrepreneurs from traditional NGO leaders is not the focus on business (i.e. income) but the focus on systemic impact. In my own experience with NGOs, this is the arena they are weakest in. And this is the unique contribution of the social entrepreneur, and why in the end the whole NGO sector will be forced to become more innovative and entrepreneurial. The time horizon of the social entrepreneur is not shorter than that of the NGO leader – it is in fact longer and involves the transformation of society’s approach to the problem the entrepreneur is trying to solve. And it is in fact, very very locally rooted.
Cheers,
Roshan
My thanks to Roshan for his compelling perspective on social entrepreneurship. The notion of social entrepreneurs being concerned with fundamental, systemic change stands in considerable opposition, as he notes, to the dominant focus among donors who by simply focusing on business metrics and measures of short-term, measurable impact consider themselves social entrepreneurs. Roshan’s notion of entrepreneurship comports more closely with what I’ll call the classical definition. In the classical sense, a business entrepreneur is someone who figures out how to make or create a product, provide a service or solve a complicated technical problem that is so ground-breaking that it generates considerable demand among consumers. Because the entrepreneur has a breakthrough insight into product design or service provision before others, he or she realizes tremendous initial profits. Competitors, however, want a piece of these profits, and scramble to catch up, by inventing and marketing their version of the innovative product or service. This process of catching up, as others bring their business practices into alignment with the breakthrough discoveries of the entrepreneur can lead, if you will, to systemic change. Entire sectors of an economy come to be organized and managed in different ways. In recent decades, entrepreneurs creating new IT products have been major drivers of systemic changes in how workplaces are organized and products are designed and manufactured. Entirely new forms of media have been invented. I think it is useful to think about social entrepreneurship along similar lines. If social entrepreneurs where thinking about how their investments in social innovations might lead to systemic changes in the rights of poor people to secure housing, to good educations for their children, to affordable health care, and to decent incomes, their resources would be deployed on behalf of causes that are less about the short-term impacts of their individual expenditures, and more about helping foster innovative social, political, economic arrangements and reforms that change fundamentally the prospects for the poor.