As governors across the country slash services, and Congress and the White House have agreed to cut nearly $40 billion from 2010 spending, there are, not unexpectedly, renewed calls for private philanthropy to help fill the gap.
Americans are generous. Large and small donors alike play a time-honored role in responding to emergencies with their time and money. And philanthropy’s resources are growing. Research indicates that the amount of funds flowing into foundations during the first half of the 21st century will be 10 times that of the entire 20th century. That’s 10 times the money in half the time.
Government, of course, must account to voters, much as business has to answer to shareholders. Philanthropy, however, lacks any such built-in external oversight. The upside of this insulation is a freedom to experiment, to take risks that neither the private nor the public sector can as easily attempt. And that includes the opportunity to make mistakes, learn from them and get better.
To solve longer-term social problems, philanthropy’s financial resources are still not enough to fill in for government. But because times are hard and the government’s resources are strained, philanthropies more than ever need to think about maximizing the impact of their giving.
What philanthropic individuals and organizations can do is lead the way by giving “smart”—modeling high-impact resource allocation to get the most “bang for the buck.”
Philanthropy works best when donors get clear about their vision of success—translating a broad idea of a win for society into some concrete, real-world goal, such as working to bring a polluted river back to life or getting inner-city youth into good jobs. Philanthropy should almost never be a solo act. Success involves identifying and investing in grantees that not only share the donor’s vision, but also have the capacity to transform that vision into results. Some good examples:
In San Francisco, a foundation called the Tipping Point Community, founded in 2005, is dedicated to “making poverty preventable.” Far from the region’s biggest player, Tipping Point has no endowment. Each year, it starts its fundraising from zero. Even so, during the past five years, Tipping Point has invested $25 million into 27 nonprofits—making more than 300 site visits to ensure those 27 organizations have strong leadership, clean financials and measurable results. The foundation sums up its philanthropic strategy in four words: invest, measure, improve, repeat.
On a national level, the Edna McConnell Clark Foundation demonstrates this same kind of clear-eyed thinking. Based in New York City, focused on youth, Clark has teamed up with other donors to pool resources and help some of the most promising programs in the nation grow in scale. In 2008, the foundation launched its pioneering Growth Capital Aggregation Pilot. For the pilot, Clark chose just three nonprofits:
• Nurse-Family Partnership, an evidence-based nurse home visitation program that serves low-income, first-time mothers and their children who face significant short- and long-term risks to their health, personal development, and economic well-being.
• Youth Villages, a nonprofit organization that provides a fully integrated continuum of services, including residential treatment, in-home services, foster care and adoption, mentoring and a transitional living program for young adults aging out of foster care.
• Citizen Schools, an after-school enrollment program in public school buildings that teaches educational skills and seeks to build relationships with people and the community. Citizen Schools works with middle-school students in low-income neighborhoods.
Aiming to create a $120 million pool, Clark supplied part of the funding and helped the grantees raise the rest. The foundation expects that this $120 million in private funds will help the organizations leverage at least an additional $700 million in public funds.
If there was ever a time to focus on giving smart, it is now. With growing evidence of the potential for effective collaboration, the boundaries between business, government, and nonprofits are blurring. Philanthropy is attracting increasing numbers of engaged donors, who are “giving while living,” funding new experiments and challenging old models.
Innovation in philanthropy is not new. The 20th century had more than its share of success stories. What is new is the scale and momentum of philanthropic innovation, propelled by the twin resources of money and talent. And what remains constant is that individual philanthropists, from Andrew Carnegie to Mark Zuckerberg, are deeply motivated to do what it takes to get results for our society.