|Lucy Bernholz, 10/1/08|
|Edward Skloot 11/16/08|
|The Economist 11/27/08|
|Peter Kareiva, science chronicles 12/2008|
|Susan Berresford, Stanford Social Innovation Review, Spring 2009|
Lucy Bernholz, Wednesday, October 01, 2008
I received my review copy of Money Well Spent, the new book on strategic philanthropy by Paul Brest and Hal Harvey, back in August. I sat right down and read the book, but waited to post this review to align with the timing of the book’s public availability. Given that there’s been a “slight” change in our financial structures since August, I’m glad I held back. Harvey and Brest can’t rewrite the book before it hits the shelves to account for the changing economic fortunes across the U.S. or the new landscape of investment banking, Wall Street, and mortgage lenders (to say nothing of taxpayers and mortgage owners). Nor can (this edition of) the book ponder the implications of these crisis-driven shifts in the financial industry or regulatory systems on the philanthropic industry.
But I can. So let me use the occasion of this book review to remind us of how interconnected the business of giving is with the fortunes of finance and the vagaries of regulation. I have always contended that philanthropy is a regulated industry. Three forces define the outlines of philanthropy as we know it – markets are the first and regulatory structures around personal taxes and institutional tax exemptions make up the second. The third, a concern for others, is the only one of these forces that flows from within humanity and stands outside of human institutions and systems.
Lets get on with it. The book marks a significant moment in the marketization of philanthropy. It is, in its own words:
"...intended to do for philanthropists what the best books on business strategy do for business entrepreneurs and executives: provide readers with the concepts necessary to design a strategy to achieve their goals - in this case their charitable goals." (preface, page xi, review copy)
Why does this matter? Because such a 'manual' couldn't have been published 10, maybe even 5 years ago. Why? For at least three reasons: First, there was not enough material, hadn't been enough discussion, not enough real development of strategic technique and thinking. Even though foundation philanthropy - which the two authors know best of philanthropy's many forms - has been around for almost 100 years, there was not, until recently, the commitment to an industry, a demand for strategy, lasting challenges to the status quo, or a significant quantity of players, thinkers, institutions, vehicles and experiments about philanthropic practice to actually inform a book such as this.
Second, and perhaps more important, there was no visible demand. The market of individuals who might become philanthropic, and of philanthropists who might become strategic, and of advisers who'd like to sell to this market, and of financial companies who wish to manage assets for these individuals - these were all too fragmented, too under-the-radar, and too quiet. Only in the boom of the last six or seven years have critical numbers of each of these developed to the point where there was an identifiable, reachable target market.
Finally, the book is published by Bloomberg, which is an example of the changes that have occurred in the philanthropy marketplace and of those to come. That a financial press is bringing out this first guide for the mass market is telling - their readers care about this stuff, they see philanthropy as a core business skill, and the business press intends to serve them.
That said, what about the book's contents? The authors divide the work into three sections - Framework, Tools, and Organizing Your Resources. The first two are relevant to all their intended audiences - the last one is best for individual donors and their financial or legal advisers. Professional foundation staff (a small group, about 18,000 or so nationally, including both of the authors) may be less interested in the third section.
The logic of the sections is important - Brest and Harvey go to great lengths to present strategy absent ideology or issue. Their frame for thinking, their recommendations on strategy development, programmatic approach, asset allocation, evaluation, structure, and so on are determinedly issue-agnostic. It doesn't matter, assert the authors, if you are interested in the arts or health care, whether you are pro-life or pro-choice, whether you want your philanthropy to support micro-finance in Zimbabwe or Zen studies in Michigan - the guidance they offer is relevant.
And much of it is. Of particular use is the frame that the author's provide to help a donor locate their goals. They present a frame for thinking about the scale of philanthropic goals that I believe is truly important. This scale offer three dimensions to consider:
* Does the problem diminish the quality of life or does it threaten life itself?
* How long will the harm persist?
* What is the scope of the problem? (pp. 22-28, review copy)
These are three, judgement-free, axes that will help a donor articulate his/her goals and escape "zero-sum"comparisons of "infants or immigrants, arts or AIDS." This is valuable, it effectively "de-escalates" judgement value on values that often paralyze people.
Working from this three-dimensional analysis, Brest and Harvey take readers through carefully chosen, well-documented stories that illustrate real-life choices to define a problem, establish a funding strategy, and evaluate the support that is provided. They provide accessible, and relevant, discussions of technicalities such as expenditure responsibility grants, prizes and awards, and payout rates that will help donors make better decisions about their philanthropy. Simply put, the advice in this book will help people give smarter.
As useful as the advice is, I still found myself pondering two ironies as I finished my read. The first irony is that the same place the book succeeds is where I also think it falls short. No doubt about it, Brest and Harvey have synthesized and presented key elements of rational, strategic giving. Their chapters on goal articulation, strategy and evaluation logically lead them to their final section on organizing resources - the book takes to heart the idea that form should follow function. What it leaves out is the heart. Philanthropy is an industry, enterprises within it do compete as businesses, and it is becoming ever more rational, measurable and visible because of this. These are good things.
Philanthropy is also a labor of love. It is perhaps the only business where passion and volunteerism play major roles. No matter how strategic a donor or foundation becomes, they may still be pursue what some will consider to be foolish, frivolous, or redundant goals. No matter how strategic or effective (or neither) a foundation may be, at any point in time for any number of reasons (some rational, others perhaps not) the donor may pull the plug, redirect the resources, or simply decide to no longer participate. There is little to put an endowed foundation out of business, nothing to tell a donor "don't do that, it is actually harmful," or little that can keep someone from packing up her philanthropic playthings and going home. The most strategic foundation, the most carefully evaluated program strategy, and the most well-weighted goals will still be pre-defined by the donor's interests - be they environmental, health related, artistic, justice oriented, equality-seeking, or none of the above. So while the focus on strategy and measurement are in sync with two of the defining forces of philanthropy (markets and regulation), they are out of sync with the third, the heart and human nature.
The second irony of the book has to do with the timing of its release. Just as this book could not have been published 10 or 5 years ago, it is somewhat fitting that it is being released in the midst of a crisis-induced restructuring of American financial markets and the public systems that oversee them. The book was written during a boom that seemed to have no end, it is informed by a mindset that philanthropy as an industry will continue to grow in size and sophistication and it is intended to inform that growth strategically. Only hindsight will tell us if this transformative moment for markets and regulations is also a transformative moment for the business of giving.
One can easily see a need to be more strategic with declining philanthropic resources, just as Harvey and Brest lay out the need to be more strategic during boom times. Whether or not that will happen, however, is anyone’s guess. If it does, it will more than likely depend on that amorphous, irrational, non-strategic third defining force, the heart of philanthropy, as the roles and shapes of markets and regulation are reconstituted.
The publication timing for Money Well Spent will either prove to be deeply ironic or deeply prescient. In either case, since any valid philanthropic strategy must account for the context of relationships between independent actions, public systems, and private markets, Brest and Harvey’s message remains important, we just can’t predict how well it will be heard.
Full disclosure: I had several opportunities to discuss the developing book with the authors and provided feedback on a penultimate version of the manuscript. I have to say, for all my love of blogs and RSS feeds, and reading the news on my iPhone it is still exciting to see a book become a book (as in the real artifact, bound paper with a nice cover, table of contents, index, the whole shebang). Even as it is, of course, also a website. (www.smartphilanthropy.org)
Some of you have written in and asked me about the review I posted on Money Well Spent, the new guide to smart giving from Paul Brest and Hal Harvey. In particular, the questions deal with my suppositions about the role of strategic philanthropy in tough (may this not prove to be an understatement) economic times. Let me clarify as best I can:
- Being strategic with one's philanthropy is a good thing. Research, goals, objectives, partnerships, measures, feedback loops - all important, all possible.
- Philanthropy is by its nature, a matter of head and heart, so strategy will only go so far - the best strategy may not, necessarily, change one's areas of interest or regions of focus, for example (those are so often set by interest, passion, familiarity, connections, etc.)
- When resources are limited, it is important to be strategic.
- When resources are abundant, it is important to be strategic.
- The current crisis in credit markets and its rippling effects to financial markets and the broader economy do not lessen the need to be strategic. However, they may dampen interest/ability in being philanthropic.
- My point about the timing of the book's release had to do with whether interest in philanthropy would be diminished, not whether or not the book's messages would be less important.
Hope that helps.
And, yes, I appreciate the "irony" that I can amend my post because of this medium (blogging), an ability that published books don't have - the point I made at the start of my review.
I just finished reading Money Well Spent. (Disclosure: I was sent an advance copy.) The book gives a clear and public picture of how the authors conduct their grantmaking, something I believe is relatively rare in the sector; I’d like to see more people in this area laying out their approach and their positions on key debates (summarized below), as Brest and Harvey have.
Concise and example-backed arguments are given for many principles that we agree are important, including:
- The importance of forming a clear theory of change (i.e., laying out where a given program fits in the causal chain necessary to achieve desired outcomes, and what evidence there is that each link in the chain works as hypothesized).
- The case for providing general operating support (Brest and Harvey concede that there are times for restricted funding, but on balance feel that more gifts ought to be unrestricted).
- The importance (and meaning) of rigorous evaluation, citing two of our favorite organizations - the Poverty Action Lab andKIPP - as examples.
- Why “charity” can be as good a use of funds as “philanthropy” (something we discussed here and here).
- The case for quantifying “cost-effectiveness” of different approaches (although we disagree with the authors’ emphasis on “social return on investment” as measured in dollars, for many of the same reasons that we take issue with the Disability Adjusted Life-Year metric).
- Most importantly, a plea to “consider how failure can contribute to the knowledge base,” and publicly publish impact studies even of failed projects. (Good examples of such studies are scattered throughout the book.)
The authors also discuss many topics of more interest to larger funders; their emphasis is very much on creating and driving initiatives, rather than finding already-strong programs that just need more funds.
Overall, I recommend this book to grantmakers interested in an overview of good general practices in grantmaking. There are many interesting examples throughout the book, but its focus is general (grantmaking strategy in the abstract) rather than on specific issues (i.e., what the most promising programs are). We’d like to see more public discussion of the latter, even more than the former, but welcome both.
In our personal lives, we regularly make year-end gifts to organizations for which we have warm feelings. These gifts make us feel good, and doubtless they help good organizations. But this isn’t the way to change the world, and it certainly is not a responsible way to give away someone else’s money.
Why give away your own money in a way that would be “irresponsible” with someone else’s?
Why be smart, disciplined and strategic when giving large grants, and then drop all of these principles for your individual gifts?
Especially when individual gifts collectively dwarf foundations’ grants?
November 16, 2008
Edward Skloot. Duke University, Durham, NC
I ran a big foundation for 18 years. I ran a nonprofit for 8 years. I wish I had this book by Brest and Harvey when I got started...or anytime. It is the best guide to DOING philanthropy I've ever read.
The primary reason for its usefulness is that it's subject-neutral. You can run a big foundation focusing on brain research or a small nonprofit delivering meals-on-wheels -- or a for-profit business for that matter. Why? Because the authors are looking at an encompassing approach where the focus is on knowing what you are assuming, what you are doing, and how you are doing it. You can keep your passion. You can keep your theories of the universe. What you can't do -- and this book tells you why -- is be ignorant of strategies that will drive you toward clarity, intelligent choices and a greater likelihood that those choices will pan out. And the strategy includes building-in feedback loops, so you can change course in mid-stream. (Full disclosure: I read and commented on an early draft of this book.)
The book is divided into three parts; the first is a framework for doing strategic philanthropy, the second contains tools of the trade, the third talks about how to structure the organization and employ your dollars (or euros or any other currency for that matter). For my money, the first part is the best. For example, early in the book they introduce three central questions that are the basis of the philanthropic choices you make. First, "Does the problem diminish quality of life, or does it threaten life itself? Second, "How long will the harm persist?" Finally, "What is the scale of the problem?" Then they arrange the three questions in the form of a three dimensional cube that illustrates the implications of your philanthropy depending on where on the axis you choose to put your money down.
But keep on reading. You'll see the value and pitfalls in defining your goals, mission and, perhaps most important, "theory of change." This latter term is in vogue now, but all it is is a theory of causality -- if you do (a) then (b) will happen. If you believe that giving everyone in your city $1,000.00 will cure poverty you've probably got a flawed theory of change. If you think one great novel will lead to more great novels, that's probably flawed, too. Tie your theory of change into a strategic plan (or, in common parlance, your "logic model"), determine the risks involved in choosing one strategy or another and you're on your way. And, at the end, you'll have a framework to know (via "metrics" which you develop) whether you're efforts are successful and to what degree.
Toward the end of the book the ride gets a little wonky and the lift goes out a bit as it becomes more detailed and focused on strategic philanthropy. No matter. What you -- a rich individual, a program officer of a foundation, a CEO of an organization looking for a grant, a philanthropy advisor, a board member -- get is a road map which directs you how to use your money wisely and well. Finally, you don't have to be a genius to "get" it. Just smart enough to put down a small amount of money (low risk) for a big, practical approach to doing philanthropy well (high return).
[from the Amazon.com website]
Nov 27th 2008
From The Economist print edition
DIRE predictions that the financial crisis will result in a calamitous decline in philanthropy are probably exaggerated. In America, still the most generous of nations despite the financial-markets crisis, total giving has risen every year since before the Great Depression, except in 1987 when the stock market crashed. But even if the pessimists are right, it only reinforces the need for every philanthropic dollar to achieve the greatest possible impact.
How to do this is the theme of “Money Well Spent”. Written by Paul Brest, of the William and Flora Hewlett Foundation, and his former colleague, Hal Harvey, now of the ClimateWorks Foundation, the book dispenses practical advice to aspiring philanthropists and provides examples of the ways they can influence the world—from education to climate change to the arts.
The authors do not avoid controversy. Those who think philanthropy should stay out of politics will not like the chapter on “influencing individuals, policy-makers and businesses”. The growing “mission-related investment” movement, which urges foundations to invest in ways that support the thrust of their giving, will not like their conclusion that “although screening out investments in companies whose practices you abhor may serve institutional values, the practice is largely ineffective in achieving social impact.”
Messrs Brest and Harvey seem most excited about philanthropy when it plays the role of “risk capital” for solving society’s problems. With risk comes the hope of disproportionate impact, but also some probability of failure. They argue that philanthropy needs to celebrate its failures as much as its successes, so society can learn from them and thus ensure the money was not wasted.
At the Hewlett Foundation, Mr Brest has even introduced an annual competition among his staff to find “the worst grant from which you learned the most”. He says this is now fiercely contested.
Reviewed by Peter Kareiva. the science chronicles. December 2008: volume 6 issue #11
We conservationists spend an awful lot of our time trying to be smarter and more effective. We need money to do our work, and constantly have to deal with foundations that frustrate us because we often think they seem to be hopelessly misguided. It is reassuring to know that foundations worry about this as well—and this book discusses pathways to increased effectiveness that foundations should follow if they want their money to make a difference. There is nothing that surprising or profound in the book—but it is very well written and is backed up with concrete case studies that turn what could be banal platitudes into unforgettable lessons.
I think the most striking point for any NGO, and certainly for The Nature Conservancy, is this book’s recommendation that foundations take smart risks and embrace and talk about failure more openly. If foundations could be more open about their failures, then maybe we could as well—and the whole enterprise of conservation would be better off. Big difficult challenges will produce failures more often than success. I used to tell my PhD students that on average I expected only one out of three research projects to pan out. I personally think at least half of TNC’s projects are not delivering the biodiversity they promise, or are investments that reap subpar returns. If we admitted how hard conservation was and then followed this book’s advice about celebrating failures from which something is learned, then we could do a much better job. That is not happening now. NGO’s pretend everything succeeds, and foundations pretend all their money is well spent. Requests for funding demand measurable objectives and adaptive management –but there really is no incentive or forum for critical evaluation of outcomes.
The book misses one big frailty of foundations—staff naïveté and smugness. Having the smartest kids in town on your staff does not mean they will figure out how to spend money well. All else being equal, I will place my bets on the wily veterans who consistently turn in good performances, even if they did not write up a great list of measurable objectives—the Clint Eastwood’s of conservation. The best predictor of whether a project will turn out well is not the proposal—but the previous performance of the project director and her or his organization. In basic research, federal funding is often “accomplishment based’. If conservation outcomes were truly evaluated, then accomplishment based awards could be given in conservation and progress would be greatly accelerated. It is important that accomplishment based does not necessarily mean the biggest NGO’s or the most senior practitioners—in conservation, as it is in basic research—accomplishment means results that unequivocally make a difference, regardless of whether the research is done at Harvard University or a small liberal arts college.
Over the last few decades, American foundations have proliferated at a striking rate, and among their creators are a good many super-wealthy donors. The media have dedicated more and more space to these philanthropists, and experts have poured out advice about the value of “strategic” giving. These advisors believe that too few donors, new and old, carefully analyze the best use of their funds, and that as a result, they accomplish less than they might through a more strategic approach to giving. Indeed, donors can now find not only books on this subject, but also multiple courses, conferences, consultants, and online guides.
Paul Brest and Hal Harvey are two seasoned and wise leaders in the field of philanthropic effectiveness—Brest is president of the William and Flora Hewlett Foundation and Harvey is a former director of its Environment Program. Their new book, Money Well Spent, is an outstanding example of the strategic giving genre. They walk the reader through the importance of donors having clear problem-solving goals, sound strategy, and clarity about risk tolerance. They urge donors to aim high: “Developing alternative solutions requires creativity or innovation akin to that of a scientist or engineer— creativity that is goal-oriented, that aims to come up with pragmatic solutions to a problem.” They advise about careful selection of grantees and accountability arrangements, distillation and communication of lessons learned, and the right types of grants and institutional arrangements. And they infuse their instructive text with non-polemic presentations of critical decisions such as choosing whether to spend out a foundation’s assets or manage them in perpetuity, as well as warnings about false dichotomies such as charity vs. change.
They also do more than offer advice on skillful grantmaking. They foster an appreciation of the many ways to engage in philanthropy, something too few authors in this space do well. Chapter 2, “Choices in Philanthropic Goals, Strategies, and Styles,” for instance, serves as a primer on the roles donors can play, ways to consider the donor’s resources in relation to needs, and the effort required to achieve change. And the book’s afterword wisely reminds donors of their responsibilities to the larger field of philanthropy and its infrastructure organizations. Brest and Harvey list organizations such as the Association of Small Foundations, the Council on Foundations, and Independent Sector, all of which can help donors live up to the important maxim “do no harm,” and even go well beyond it. New entrants to the field will surely find this section valuable, as few know about the local, regional, and national groups that assist and track philanthropy.
My guess is that this book so nicely fills its niche that it will push the next generation of authors to explore new territory—to be less donor-centric and discuss grantmaking from the perspective of grantor, grantee, and beneficiary. I will welcome that, because too many of the recent aids to donors, including this one, impart little understanding of what it is like to be on the other side of the table. Ignoring the experience of others can undercut donors’ effectiveness. Brest and Harvey do touch on donor-grantee matters in several places, including in Chapter 5’s “Grantor- Grantee Relationship” section. They list common donor mistakes: unresponsiveness, time-wasting reviews and proposal revision processes, outsized expectations, and clumsy program exits. But the book gives only limited space to the donor-recipient-beneficiary relationships and the serious problems that can emerge from inattention to them.
As Brest and Harvey certainly understand, success in the search for philanthropic solutions does not lie entirely in the logic and accountability model, or in the now-popular wholesale importation of business practices into grantmaking. If a donor wants to ensure that libraries carry particular books or that all of a neighborhood’s elderly residents get flu shots before the holidays, tight logic models and timebound grantee accountability agreements make sense and can greatly help. But if donors are funding people trying to change deep-seated attitudes or individual and institutional behavior, then they need to engage in a dynamic, long-term, and open-ended consultative process with them. Such processes have been a key to success in donors’ and grantees’ struggle against apartheid and other forms of discrimination, and in building entirely new kinds of organizations empowering the poor here and around the globe. But few strategic philanthropy guides help donors learn how to be part of such relationships in a genuine partnership.
If the next generation of strategic philanthropy books does indeed focus on grantmaking from more than the grantor angle, I hope authors give attention to the following thorny issues: Does increased media scrutiny of our field lead some donors (boards especially) to feel more impatient for results and credit for those results, leading the organization to increase control over the use of its money and appear to discourage the grantee’s creativity? In other words, has the role of the quiet, patient, and responsive donor become less appealing? (I worry that this is too often the case.) What are the proper protections against donorled strategic planning that imposes wearying and unnecessary demands on applicants and grantees? (Few grantors seem to have created a feedback loop to hear from applicants who think a “reasonableness” line has been crossed.) Which business practices transfer well into effective philanthropy and which do not? (Relentless bottom-line pressure for immediate results and branding requirements work in some types of philanthropy but can undercut the effectiveness of others.)
A few leaders have already started a conversation of this sort. Sheela Patel, founder of Shack Dwellers International and the Society for the Promotion of Area Resource Centres (SPARC), an organization of Mumbai pavement dwellers, noted recently at Harvard University’s Hauser Center for Nonprofit Organizations: “Today, unfortunately, the conditions that allowed SPARC and its partners to succeed are changing. … In the last 10 years, the whole financial architecture of philanthropy has changed. Something has infected most of the foundations and large NGOs that support us. Suddenly the virus of the ‘log frame’ [logic model] has stricken us. So now we have to pretend that in a period of two years, we can implement perfect strategies and produce complete solutions. … Foundations today are increasingly treating organizations like ours as contractors in the delivery of their own visions. … They make us contractors, not innovators.”
Patel’s observations deserve donors’ attention, especially because so few grantees can risk biting the hands that fund them. This brilliant community and organizational leader believes that strategic philanthropy can be unduly intrusive and go too far, miniaturizing ambition and stifling creativity. I agree, and see too many examples of this. Brest and Harvey’s advice to donors could have explored this set of issues further. But I believe that their excellent text has laid a sound foundation for the next generation to do so.
Susan Berresford served as president and CEO of the Ford Foundation from 1996 to 2008. She is currently a philanthropy consultant for the New York Community Trust.
Spring 2009 • STANFORD SOCIAL INNOVATION REVIEW