by Steven Lawry

One of the principal criticisms proponents of so-called new philanthropy direct toward old, or traditional large philanthropies is that old philanthropies, in assessing the merits of grant proposals, don’t require prospective grantees to provide sufficiently rigorous estimates of the likely impact of their proposed work. 

For instance, Paul Brest, Hal Harvey and Kelvin Low, in a recent article entitled “Calculated Impact” in Stanford Social Innovation Review, assert that, “Philanthropists grant billions of dollars a year without assessing whether their chosen strategies are likely to solve the problems that motivate their giving, and without attempting to assess the effectiveness of the organizations they fund.” 

Brest and his co-authors proffer a formula for estimating returns to philanthropic dollars invested (either through grants or loans) as measured in some social benefit.  For instance, they compare the number of person years of life protected per dollar by either investing in a factory that would produce insecticide-treated mosquito nets on a commercial basis or by producing and distributing mosquito nets as a traditional charitable activity.  Another example assesses the expected increases in income per dollar of grant funds invested accruing to poor people as a result of Hewlett Foundation funding for anti-corruption initiatives in Nigeria.  (I’ll return to these examples at the end of the post.)

I believe that philanthropy’s current focus on short-term, quantitatively measurable impact is distorting the practice of strategic grant-making and reducing the prospects for meaningful social change. 
 
Social change is complicated, and systemic social change is more likely to happen over the long-term and as a result of a variety of interventions, including securing changes in law that expand rights, changing public policies, and creating and strengthening vital institutions. The short-term impacts of these kinds of efforts are sometimes hard to measure but history and experience tell us that pursuit of ambitious goals is essential to meaningful change.

Susan Berresford, former president of the Ford Foundation, argues that new philanthropists, by insisting that grantees demonstrate short-term, measurable impact, run the danger of “miniaturizing the ambition” of foundations and grantees alike to work on deeply entrenched problems such as racism, poverty and inequality.  Berresford wonders if “decades of support by Ford and others for the world’s human rights movements, assistance to the U.S. civil rights movement or the anti-apartheid struggle would not have fit the short-term planning formula.” 

Seasoned grant-makers know that nonprofit leaders base their plans on evidence that they are likely to be impactful, and gather evidence along the way that things are working (or not), using a variety of methods and skills.  Tested leaders have learned from both success and setbacks.  Their knowledge, which is routinely informed by empirical evidence, has helped them shape sophisticated theories of change that guide their planning and decision-making.

Effective leaders possess qualities of judgment, intuition and political adroitness that are forged through many years of working close to the problems that bedevil their societies.  They know which levers need to be pushed and pulled in moving essential institutions toward more just and pro-poor policies.  These qualities of leadership are not given the kind of weight they merit, especially when donors are fixed upon knowing how things are going to end before they begin. 

To over-focus on measurable, short-term impact runs the danger of drawing foundation attention and resources away from ambitious and complicated problems, the kinds of problems that philanthropies are best suited to address.

Let’s return to Paul Brest’s and his co-authors’ “Calculated Impact.”  Take their mosquito net analysis, for example.  I would rather see foundations, as private donors better able to bear risk than public donors and traditional charities, investing in the development of the next generation of malaria prophylactics, whatever these may be.  This is the uncertain but pioneering ground.  Leave distribution and marketing of tested technologies to the public sector, private investors and charities. 

And to the extent that Nigerians will benefit in coming years from reduced official corruption, surely the groundwork laid by decades of anti-corruption work undertaken by Nigerian human rights and good governance groups would have been essential to whatever progress is ultimately achieved.  Many of these groups were funded over many years by foundations such as Ford and MacArthur with little expectation of social return in the near term.