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Here We Go Again (and Again and Again): Let’s Stop Looking for the One ‘New Approach’ to Philanthropy

Date: June 14, 2024

Phil Buchanan

President, CEP

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If one thing is clear to me about philanthropy, it’s that there is no single right model or approach that makes sense in every context. We at the Center for Effective Philanthropy (CEP) have developed a working definition of philanthropic effectiveness that lays out some essential elements of what we believe necessary for success. But there needs to be room for a lot of flexibility because, even though there are some tenets of effectiveness that I’d argue apply in pretty much any circumstance, there are a range of ways to be effective in light of a donor or foundation’s specific goal or goals.

Effective philanthropy is nuanced. A focus on policy change might make sense in pursuit of one goal, but not so much another, for example. Or, take another example: While it’s usually the case that, to be effective, foundations and donors would be well served to take a bottom-up, empowering approach, supporting strategies and approaches that are devised by those in affected communities, in particular circumstances, somewhat more top-down and donor-driven strategies can sometimes be effective. Similarly, in many cases, people know exactly what they need, which is why direct giving to people in poverty can be so effective; but sometimes, expertise is crucial. You really don’t want my input on how to devise a vaccine, even if I will benefit from it, and you certainly don’t want to give me a grant to just come up with my own vaccine. That won’t end well, I promise you.

You get the point. There are no silver bullets when it comes to the practice of philanthropy. It’s complicated and goal- and context-dependent. It requires humility.

That’s why I find simplistic takes on philanthropy that suggest that there is one, new, superior way so unhelpful. Examples from the past 25 years include foundation-driven strategies rooted in “unique positioning” and “the four forms of value creation”;  “catalytic philanthropy” that rejects the “traditional philanthropy” that has “fallen far short of solving America’s most pressing problems” in favor of funders using more non-monetary resources to achieve change; “collective impact,” which argues that “large-scale social change requires broad cross-sector coordination;” and, now, in a just-released Stanford Social Innovation Review (SSIR) cover story, there is “empowerment philanthropy,” which claims to be “a new approach to fostering political and economic self-determination by supporting people in finding their own solutions and ensuring an effective multiracial democracy.”

The tenets of these approaches are often in direct tension with each other. Yet all four were authored or co-authored by the very same person, Mark R. Kramer, and published, in the case of the latter three, in SSIR.

Look, people evolve and change their views, to be sure. That’s a good thing, of course. But that fact should lead to some humility about the way we express our latest take — and candor about our past perspectives (and errors).

If you’re new to philanthropy, you may not know Kramer’s name. But if you’ve been around a while, you will recognize him as the founder (and current board chair) of the consulting firm FSG. His latest article, co-authored with Steve Phillips, is the SSIR summer issue cover story and is titled, “Where Strategic Philanthropy Went Wrong.”

It would take far too long to go through each of Kramer’s pieces over the past quarter century or to revisit his tendency, which I discussed at length in this 2013 post, of seeking to popularize the ideas of others while claiming them as his own. But let’s just say I was at least pleased to read the first endnote in his latest piece which says, simply, “These ideas have been well articulated by others.”

Indeed, they have.

Yet that doesn’t stop the authors from declaring theirs to be a “new approach,” which it decidedly isn’t. In fact, while I agree with some of it, there is nothing novel in this piece and, worse, there is the same troubling over-simplification that has plagued Kramer’s past efforts to lead the way for donors and foundations.

First, the article makes the broad and sweeping claim that “when it comes to solving our society’s most urgent challenges” philanthropy “has been astonishingly ineffective.” Only government, they argue, can do what really needs to be done.

Yet, few thoughtful philanthropic practitioners or donors believe philanthropy alone could solve our most vexing societal problems. Moreover, it’s an oversight not to explore more fully (beyond a passing reference to philanthropy’s role supporting “academic, cultural, and medical institutions” and a single sentence allowing that “philanthropy has funded numerous impactful programs that have aided many millions of people” with a link to another source) the many successes to which philanthropy has contributed. I am talking about, among other examples: vaccines that have saved millions of lives worldwide; progress in criminal justice reform; marriage equality; the incredible philanthropy-backed responses of local nonprofits in the wake of the COVID-19 pandemic; land conserved and protected from development; gains with respect to clean air and water; incredible philanthropy-backed advances in medicine that have extended lives; and the list goes on. Perhaps the question should be, what can be learned from these and many other successes?

Second, there is nothing new in the recognition that government is needed to address our most vexing societal problems, such as poverty. While glossing over his own role in promoting a top-down, donor driven, foundation-focused approach to philanthropic strategy that took hold in the 2000-2015 era, Kramer and his co-author confess to this realization: “philanthropy’s efforts on many issues seemed to be overwhelmed by the scale and immediate effects of government laws, policies, and court decisions.”

Most folks I know working in philanthropy would agree, of course, and would wonder why this is a revelation to anyone. The article juxtaposes philanthropic giving levels with the U.S. poverty rate as evidence of philanthropy’s failure. But the notion that only government can really alleviate poverty at scale, or end it altogether, is not news: it’s something most thoughtful donors know.

“Without changing government policy, even the most well-funded and effective charities cannot come anywhere close to meeting needs on a national scale,” the article states.

Agree! Indeed, many foundations are focused on just this kind of policy change, as part of their — you guessed it — strategies.

Third, the article presents as a revelation the idea that philanthropy requires unique skills, not just business and investing frameworks foisted over to a new context. Given my past vigorous disagreements with Kramer about this very topic, dating back to his stint as founding board chair of CEP (he left in 2004, three and a half years after my hiring as founding executive director), I thought I must be dreaming as I read this passage, with which I also fervently agree:

Many philanthropists have implicitly accepted the idea that their financial success in business reflects superior wisdom that is transferable to leading social change. But where is the evidence that skills in business and social progress are interchangeable? Expertise does not often transfer across different domains.

A number of us have been making this same argument for more than two decades, consistently and forcefully (I wrote a book about it), arguing against those who suggested, as Kramer and his co-author  and former Harvard Business School professor Michael Porter did in widely discussed and influential  Harvard Business Review article in 1999, that foundations should operate “like investment advisers in the business world,” adopting a focus on “unique” strategy that in fact made little sense outside the competitive context of business.

Again, it’s fine to change your mind, but at least acknowledge the shift forthrightly.

Fourth, a number of the examples in the article are, in fact, exemplars of good strategy — the very concept the article positions as problematic — and seem to indicate, confusingly, that philanthropy is indeed supporting what the authors claim it isn’t. In its promotion of “empowerment philanthropy,” the piece relies heavily on the example of direct cash transfers to poor people employed by organizations like GiveDirectly and UpTogether. These are great organizations doing life-changing work to get money to people who need it, with evidence to demonstrate their impact. (Disclosure: Jesús Gerena, CEO of UpTogether, sits on CEP’s board; and, for more on GiveDirectly, listen to this interview my colleague Grace Nicolette and I did with co-founder Paul Niehaus in 2021.)

Lost somehow in the piece is the fact that the model of direct cash transfers has received significant support from foundations and major donors. Why? Because it’s part of their strategies!

The David and Lucile Packard Foundation’s Ruth Levine puts it this way in an excellent response to the article:

In empowerment philanthropy, social ills are addressed by distributing resources directly to people via cash transfers; and improving the responsiveness of government, including through voter engagement (which, if the people with money are going to get a tax break, has to be nonpartisan). That sounds like a strategy to me. It also sounds like some — not all — of what I’ve had the chance to recommend as grants so that people have a wider set of life chances and more influence over their futures when they are part of communities that have little economic or political power. Many grantmakers who practice strategic philanthropy promote the use of cash transfers, directly or through research projects, while at the same time supporting collective solution-finding. And in the U.S., many encourage voting through education, often in concert with other work to strengthen public policy and help make government dollars serve the right communities.

The fifth, and perhaps biggest, problem is the degree to which the entire article argues against a straw man, as Levine again so helpfully describes:

According to Kramer and Phillips, strategic philanthropy originated in the low-oxygen environment inhabited by Andrew Carnegie in the latter part of the 1800s, and was based on the following assumptions: “that the beneficiaries of philanthropic support are incapable of solving their own problems, that wealthy donors have the wisdom and incentive to solve society’s many challenges, and that the social sector is an effective alternative to government in building an equitable and sustainable society.” Hmmm. That may have been Andrew Carnegie’s modus operandi but I know no self-identified strategic philanthropists today who would fit that bill.

Me neither.

At CEP, we defined foundation strategy in a 2007 research effort as an approach to decision-making that involves “a hypothesized causal connection between use of foundation resources and goal achievement.” It’s that simple.

Strategy is essential to effectiveness and impact, in my view. The problem isn’t the concept of strategy, as I have argued elsewhere, it’s badly designed strategies developed in isolation that don’t work. Often the culprit is a “biznification” of strategy — promoted in the 1999 HBR article I mentioned earlier — that focuses on uniqueness (which makes sense in a competitive market context) rather than shared strategy (which makes sense in the collaborative philanthropic and nonprofit sectors).

I’d agree with the article that empowering those closest to issues and problems to chart solutions can be an effective approach to making progress toward certain goals, and probably isn’t common enough. I’d also agree with the authors’ points about the pervasiveness of systemic racism and the flaws in our electoral system. But these observations shouldn’t be positioned in opposition to strategy; recognition of these realities can be, in fact, essential elements of a good strategy. Nor, again, are these new ideas, and this is important because, in fact, there are many existing efforts, supported by philanthropy, that other donors and foundations can learn from and support.

The article declares that, “the current model of philanthropy is not only misleading but dangerous.” But there is no one model, of course. And there is real danger in pretending there is, or that there should be.

Phil Buchanan is president of CEP, author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count,” and co-host of the Giving Done Right podcast.

Editor’s Note: CEP publishes a range of perspectives. The views expressed here are those of the authors, not necessarily those of CEP.

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