Donors: Is How We Think About Impact Holding Us Back from Achieving It?

Donors have often told me that their north star is impact.

But my experience, during nearly three decades on the “doer” side and now more than four years as a donor representative, has indicated otherwise.

Often, what donors actually want is impact delivered on a quarterly basis, preferably to coincide with their reporting deadlines; impact that is easily quantifiable; impact that is directly attributed to their funding; and impact that can be packaged as simple before and after vignettes demonstrating quick and direct transformation of individuals’ lives.

Achieving such impact requires a predilection for direct service-delivery interventions such as feeding the homeless, supporting educational scholarships, or building a health clinic — worthwhile efforts that ameliorate symptoms of failing systems.

While the desires of donors to quantify their ROI and their interest in seeing progress relatively quickly and directly attributable are understandable, they can undermine our collective interest in more durable, strategic, and long-term work to fix failing systems.

I saw the impact of this first-hand as a co-founder and long-time CEO of a pioneering organization strengthening land rights for women and men around the world. The organization, Landesa, seeks to make land property rights systems more just, inclusive, and efficient and thus strengthen, enforce, and protect the land rights of poor women and men. By helping government leaders change laws and policies, strengthening the capacity of government and civil society stakeholders, and helping to accelerate shifts in mindsets and social norms, we recognized that we could help millions of women and men who had unclear rights to inherit, control, and manage the land they relied on. In places like sub-Saharan Africa, where only 10 percent of rural land is formally documented, we knew that clarifying land rights through laws and policies could spark catalytic transformations in households, communities, and nations.

Partnering with governments to achieve impact at scale in this way has tremendous advantages. But it is long-term work with no guarantee of success, and has causal connections that can better be described in terms of “contribution” rather than “attribution.” For these reasons, most retail philanthropists and funders were not interested in supporting these efforts at equitable systems change.

For example, when, after years of consultation and collaboration, Kenya changed its constitution to strengthen women’s inheritance, or Indian states launched programs and policies to help landless families gain legal rights to a patch of land to farm and feed themselves, millions benefited. But how many beneficiaries did each donor’s dollar buy? And how much of this change was the result of Landesa’s support versus the result of our civil society and government partners? Landesa couldn’t say with certainty. And when donors asked how long it would take to achieve similar results in other geographies, Landesa had no crystal ball and could not guarantee impact.

We could point to many past successes where we had played key roles in wider efforts that resulted in millions of women and men obtaining secure, legal rights to land. But we could not guarantee success with every effort. Nor could we accurately predict a timeline for success or show the direct attribution that most donors desired, if not required. Changes in systems that result in large-scale impact do not work that way. But donors shouldn’t avoid such strategies. In fact, they would do well to seek them out.

Now that I’m on the donor side, I’m eager to partner with other donors to shine a spotlight on the potential for systems change work and the business case for investing in these long-term, durable, and transformational efforts to address the root causes of big problems.

Donors who are interested in exploring a systems change strategy can find inspiring first-hand accounts of taking a systems change approach and other resources in the latest issue of Social Investor magazine. The articles in this year’s magazine illustrate at least four key changes donors need to make to adopt a strategic, systems change approach:

First, given the scale of ambitions, systems change approaches require much more engagement with governments and with businesses. For more insights on this, read the Q & A with Simon Harford, CEO of the Global Energy Alliance for People and the Planet, on the organization’s work to scale private, public, and philanthropic capital over the next decade to expand energy access, reduce greenhouse gas emissions, and power economic growth in communities across Africa, Asia, Latin America, and the Caribbean. By harnessing the power of government and the speed of business we can do more good at scale.

Second, systems change approaches require persistence and patience. A study examining 15 successful systemic change breakthroughs around the world found that these efforts took at least 20 years, yet the average foundation grant is only 18 months long. Short-term funding is not system-change friendly. This interview with Giving Pledger Dr. Melanie Lundquist, whose work with the Partnership for Los Angeles Schools launched in 2007, is a persuasive example of what it takes to shift a system.

Third, systems change is risky and doesn’t happen in a straight line. It requires continual adjustment and engagement. It requires iteration, a willingness to learning along the way, and occasional course-correction, as needed — all of which is best grounded in a trust-based relationship between a funder and those they fund. Shaady Salehi describes the importance of a trusting and transparent relationship between donor and doer in this article.

Finally, donors would benefit from transforming their mental models about who, what, where, and how to fund. As Collective Change Lab’s John Kania and Cynthia Rayner outline, this means moving mindsets from individual to collective, from programs to systems, from proficiency to proximity, and from technical to relational work.

Donors interested in adopting an equitable systems change approach should also explore the resources available through donor collaborations like Co-Impact, or other initiatives such as Shifting Systems Initiative, Catalyst 2030, School of Systems Change, The Illuminate Funder Node, or Social Impact Exchange.

Most philanthropy alleviates symptoms of failing systems. That is necessary. But more philanthropy should be directed at the root causes — at trying to make the system work more equitably and efficiently so that fewer damaging symptoms occur. Supporting systems change is possible and worth the effort. The results are often long-term, never guaranteed, and likely can never be directly attributed to a single donor (or doer). Yet, when systems can be equitably changed, the positive social reverberations can reach an enormous scale and endure.

Instead of merely counting meals served in soup kitchens, scholarships provided, or rural clinics constructed to assess impact, I hope donors will more enthusiastically add systems change approaches to their portfolios. Such approaches require donors to adopt a different sort of calculus; one that is trickier to master but will bring us much closer to our goals. One legal or policy change, one government program improved, or one shift in community behavior can have a compounding effect and add up to multitudes — an order of magnitude closer to the scale we need to achieve our goals.

Tim Hanstad is CEO of the Chandler Foundation, a Skoll Social Enterpreneur Awardee, and a Schwab Foundation Social Enterpreneur Fellow. Find him on Twitter at @TimHanstad and on LinkedIn.