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Strategic Philanthropy?

Date: October 5, 2021

Stuart Buck

Former Vice President, Arnold Ventures

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MacKenzie Scott has made headlines for her fairly cryptic announcements that she has made several hundred grants collectively worth a few billion dollars. Her decisions seem out of the blue, even to grantees themselves, who find that without any application, they have suddenly been given a large grant — often the largest grant in their organization’s history.

Given the scale of her giving, one wouldn’t be surprised if Scott employed a foundation with a staff the size of the Gates Foundation, well over 1,000 people. Yet Scott has made all these grants with outside consultants and apparently no permanent foundation staff of her own.

To make matters even more interesting, Scott makes these grants with no strings attached, writing that “teams with experience on the front lines of challenges will know best how to put the money to good use.”

Scott’s way of making philanthropic decisions has caused some raised eyebrows. But Ruth Levine of IDinsight (and formerly with the Hewlett Foundation) now argues that far from showing the uselessness of “strategies, proposals, and reports,” Scott has shown that foundations should “engage in intensive due diligence,” and that her “selection of grantees would not have been possible without the knowledge developed and shared by other funders with specialized expertise.”

After all, Scott may not have an official foundation staff, but her December 2020 blog post noted that she had external advisors that talked to “hundreds of field experts, funders, and non-profit leaders,” including “hundreds of emails and phone interviews, and thousands of pages of data analysis.” This process started with 6,490 organizations as potential grantees, did deeper research on 822, and then weeded it down to 384 grantees based on potential impact, management teams, and the like.

To Levine, this process shows that far from being useless, the traditional philanthropic practices of “due diligence, monitoring, and evaluation can play a major role,” and that foundations should share that information with a “a broad range of funders, rather than only with themselves.”

I couldn’t agree more as to the value of due diligence and sharing information. Indeed, I have thought for years that foundations should mutually share their insights on potential grantees and philanthropic causes.

Even so, I wonder if Levine overstates the case. Yes, MacKenzie Scott believes in due diligence into grantees’ capabilities and their likelihood of producing impact. But what about the original question — does philanthropy need to have so many “strategies, proposals, and reports,” none of which Scott seems to be using?

Corporate-style strategies are probably useful when the objective is narrow, clearly measurable, and achievable in a finite period of time — such as when philanthropists funded the campaign to legalize gay marriage.

But when philanthropy is trying to address society’s wicked problems — poverty, health, social justice, etc. — it’s hard to point to any evidence that strategic philanthropy is any better than MacKenzie Scott’s approach.

More specifically:

Is there any evidence that philanthropy is better able to address a wicked problem by spending months or years agonizing over a lengthy “strategy” document?

Not that I know of.

Sure, it can be useful to formulate a strategy just to get a sense of what you think about an issue, but the details are not that relevant to how the world will actually unfold.

Is there any evidence that philanthropy is more successful at addressing wicked problems by requiring detailed proposals and regular reports on every specific activity, budgetary expenditure, and milestone, with lengthy conversations about the tiniest departure from the original plan?

I’m not aware of any such evidence in philanthropy, or anywhere else for that matter (e.g., business or science). Wherever you look, the most impactful ideas don’t tend to happen because of prefabricated three- or five-year plans that are then micromanaged by outsiders.

Such proposals and reports take an enormous amount of time on the part of grantees and foundation staff alike, and the end result is probably worse than with MacKenzie Scott’s approach; grantees are trapped in endless bureaucracy, rather than being free to adapt to current circumstances that they likely understand far better than foundation boards or staff.

So why is strategic philanthropy so consumed with bureaucracy? My theory: it creates a greater sense of control on the part of foundation staff and boards. But even that sense of control is mostly illusory.

When it comes to wicked societal problems, it isn’t possible to predict (let alone control) how the next five years will go. Otherwise, communist control of the economy would have been a raging success. The best you can do is try to nudge things in the right direction.

And, perhaps unexpectedly, control is nearly as illusory when it comes to grantees themselves. Funders have the purse strings, yes, but grantees don’t wear body cameras 24/7. For the most part, the only way that foundations know how grantees spend time and money is . . . asking for their say-so. A few grantees, in an honest moment in a hotel bar, will admit that their budget reports are mostly a frantic end-of-the-year attempt to reconstruct their activities so that each funder hears what they want to hear.

As MacKenzie Scott has shown, the world is full of great people trying to do great things in their own sphere. If philanthropy wants to address wicked problems, maybe the best approach to find those people — with as much or as little due diligence as it takes — and then empower them to address society’s problems on their own terms. That might help create a better world in ways that boardroom strategy meetings wouldn’t have predicted.

Stuart Buck is a former vice president at Arnold Ventures. Follow Stuart on Twitter at @stuartbuck1.

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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