Philanthropy & Funding

Five Lessons for New Philanthropists

Before tackling complex social problems, new philanthropists should consider what current philanthropists have learned about how to “hack.”

Recently, Napster co-founder Sean Parker announced the funding of the Parker Foundation and posited some advice for the coming wave of Silicon Valley “hacker philanthropists.” Parker’s fundamental critique is that traditional philanthropists are neither as transparent nor accountable as they should be, and lack the tools needed to measure impact and solve problems. This isn’t a radical proposition. Telling foundations that they need to do a better job maximizing and measuring impact is like telling a company they need to do a better job maximizing revenues. 

The question isn’t whether we should do this. It’s how. 

Parker’s critique of traditional philanthropy as a “strange and alien world made up of largely antiquated institutions” has a ring of truth; the philanthropy sector can be opaque and slow moving. Yet foundations and individual philanthropists have been trying to maximize impact for generations, and more so now than ever before. Ignoring these decades of experience and existing networks of experts doesn’t make you innovative—it simply means that you have a strong chance of reinventing the wheel. 

To that end, we suggest that new philanthropists consider the following:

  1. Scan the ecosystem first. Your ideas may seem disruptive, but there is a chance someone smart is already doing it. Before you embark on creating the next big thing, check to see if there are organizations, academics, or funders working in the same direction. Warren Buffet saw this in philanthropy and gave his money to Bill Gates. Matt Damon saw this in water and gave his money to Water.org. You wouldn’t get far trying to disrupt the ride-sharing market if you had never heard of Uber. The social sector is no different. 

  2. Make the time. Systemic change takes time for the doers and the donors. Changing the status quo on a given issue at scale requires a lot of work and substantial amounts of coordination. It’s easy to talk about “hackable” problems, but it’s much harder to find discrete issues where you can have an immediate impact, especially if you’re focused on broader social change; providing malaria nets, for example, is not the same as providing quality healthcare to a mostly rural population. So you need to understand why the status quo is the way it is. You need to understand who is working on that problem, and the extent to which they have—or haven’t—succeeded. If you want to give smart, you have to make the time to dig in or get someone else to. 

  3. Get comfortable with ambiguity. For complex social issues, it’s difficult—if not impossible—to determine cause and effect. No single intervention will create better education outcomes or more-effective health care systems, much less resolve conflict in Syria. There are just too many players and factors involved. Impact is indeed difficult to measure, but attribution is even more difficult in so-called “wicked problems.” Before you start giving, decide whether you are comfortable working on an issue where, at best, you might be able to measure total impact but not your specific role in contributing to that impact. 

  4. Give unrestricted funding. One of the most profound lessons funders and service providers have learned is the essential role that unrestricted funding (often called general operating support) plays in helping organizations scale. When you tell a nonprofit they can only do certain things with the money in a certain timeframe, it fundamentally limits their flexibility and hence their ability to adapt, change, and grow. Can you imagine a venture capitalist giving money to Facebook, and then saying it could only use the funding for engineering, not for product development, servers, business development, or marketing? Exactly. 

  5. Use data as a tool, not a solution. The social sector is doing some exciting work on gathering and analyzing data related to social issues. In particular, we are doing a better job of capturing broader swathes of data, and using this to inform and test our interventions. But we need to remember that this data is almost always incomplete and may only tell part of the story. For instance, a child may fall behind in school because she doesn’t have enough to eat or because of a family history of abuse. Judging her performance solely as a function of the school environment is insufficient. We must know the limits of data and the value of testing ideas, measuring, sharing results, and trying again. 

New philanthropists can do a tremendous amount of good. The fastest way to squander this opportunity is to ignore important lessons from our past. 

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COMMENTS

  • Mary S.'s avatar

    BY Mary S.

    ON July 16, 2015 11:23 AM

    Amen. The idea that no one else has noticed the problem and started to try and fix it is, frankly, insulting. And by starting a new foundation, you duplicate the resources used for mundane necessities like support functions, accounting, etc. wasting some of the funds that could be used for problem-solving.

  • BY Gayle Gifford

    ON July 16, 2015 01:02 PM

    Double Amen! 
    And, to quote a slide I saw:
    “Not everything that counts can be counted. Not everything that can be counted, counts.”
    Perhaps Mr. Parker can tackle some of the more difficult challenges organizations have in measuring what matters. . 
    http://www.ceffect.com/2013/11/11/nonprofit-evalution-counting-what-matters/

  • BY Andrew Zolli

    ON July 16, 2015 07:44 PM

    Triple Amen, and great piece, Kimberly and Michael. This particular generation of “hacker philanthropists” is big on the things that make Silicon Valley work - namely:

    1. Bragadoccio. In practical terms, that mean trashing everything that has come before as antiquated and useless;

    2. An over-reliance on the kinds of thinking that made them their money. Most problems that philanthropy contends with are not amenable to simple hacks, market forces, or to “disruption” more generally speaking. Great solutions may not always scale - or may not be addressable with a Moon Shot—something that is anathema to Valley-thinking.

    New technologies, new innovations, and the people who make them have a *huge* role to play in tackling the challenges of this century - but they have to approach it with humility and patience, and it’s those things—not money, that often seem to be in short supply.

  • Juliet Valdinger's avatar

    BY Juliet Valdinger

    ON July 18, 2015 01:28 PM

    As many Amens as I can count. And even more.

    But following Gayle’s comments… counting (and knowing what you are counting) is not always as important in some places as it is in others… 

    I do welcome Sean getting involved in the philanthropy sector. Although coming into it with such full force might have been unnecessary and it would do him good to step back, pause and discuss things with others before he starts doing things in what he thinks is the right way…. at least it has brought a philanthropic debate and discourse forward. And I hope inspire other next-gens to join him.

    Let’s hope the ones in the UK are listening to this discussion as much as they are in the US.

  • Alice O' Flynn's avatar

    BY Alice O' Flynn

    ON July 20, 2015 01:50 PM

    Kimberley & Michael this is an excellent piece….thank you….and to the other guys who have commented….

    the point about making time….digging in is music to my ears!...understanding what is going on and taking the time to listen and learn as you jump in…also shows respect for what people have been doing….being comfortable with ambiguity…and not become inpatient and blaming….innovation can be a small tweek which opens up patways and other options…

    and how many times have i heard use data as a tool not a solution but time got in the way

  • BY Michael Steiner

    ON July 20, 2015 03:42 PM

    I am reminded of an instance I was part of some years back. I brought to one of the more well established #socialgood organizations a young & exceptionally talented (30 yo) VC fund owner. He was profoundly touched by the work of the org does globally.

    YET the investor had ideas on how he and his fund could make a difference to further help children in need. Behind his “disruptive” way of looking at #socialgood he was willing to put some 750k to make a difference where food, medications, education etc were key problems among children.

    The answer from the lead professional representing the organization was “we would love to have his money but “what does he know about the work we do to advise us on how to do it”.

    I sincerely believe that #socialgood will change tremendously when we let entrepreneurs do what they did in technology. Make the world so much better - their innovative way.

  • Rodney C. Robinson's avatar

    BY Rodney C. Robinson

    ON July 25, 2015 06:17 AM

    Great insights and wisdom!  Thank you so much for sharing them! I have experienced some of these mistakes firsthand- establishing an endowment to have an impact in an area that means a lot to my family, but it hasn’t a whole lot to show, because I may have been too restrictive in my specific purpose. I will have to revisit that with my relationship manager.

    I’ve also, because of where I work, get to see a lot of other mishaps where the match ups are a mismatch for various reasons and no impact is had and the money sits and or goes back with no impact.  There are, however some great projects out there with a proven track record of positive outcomes that need help transitioning to a sustainable phase. This would be a great place to direct new philanthropists. 

    There should be more discussions around how do we help great proven projects become sustainable in a way that is smart and simple.

    Thanks again!!!

  • Juliet Valdinger's avatar

    BY Juliet Valdinger

    ON July 26, 2015 09:40 AM

    I would love to understand how many times this article is being registered, and acted on, by individuals in the UK… 

    ...my prejudiced view is that it is connecting more with an American audience…. 

    ....I hope my views are way off the mark….

    Best wishes to all…. wherever you are!

  • New philanthropists might want to also consider tackling some of the simple, less headline-grabbing issues. A piece I wrote here, on SSIR, proposing a Donors Charter was particularly well received/debated. I would hope something like this might also contribute to the discussion.

    http://ssir.org/articles/entry/a_new_donor_code_of_conduct

    Ken

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