What Can Philanthropy Learn from Moneyball?

Moneyball, a popular book and now movie, describes how the Oakland A’s used sabermetrics—the sophisticated statistical analysis of baseball player performance—to create a winning team cheaply. This approach came up during a recent webinar based on an article I wrote about balancing the technocratic and humanistic in philanthropy. Hewlett Foundation President Paul Brest noted how both baseball and philanthropy must combine objective and subjective analysis to succeed:

“If baseball scouts’ intuitions lead to outcomes, use them, and if statistics produce greater success, as Moneyball portrays, then use them, and if together they provide better results, mix them,” he astutely observed.

Of course, while a baseball game can involve complex strategies, it is a more contained system than the nonprofit arena. It is governed by rules, which often fall short when tackling such pervasive problems as poverty. As Bill Veek once said, “Baseball is almost the only orderly thing in a very disorderly world—if you get three strikes, even the best lawyer can’t get you off.” It is easier to quantify a pitcher’s accomplishments than the spirituality stimulated by a religious organization, or the joy and healing by an arts group.

Nevertheless, sabermetrics offers constructive, as well as cautionary, lessons for foundations.

Proponents have found hidden value by better forecasting player performance. Historically, scouts “knew” that the best first basemen were tall left-handers, yet through rigorous quantitative analysis, the A’s discovered that body type didn’t matter, so they acquired some fine—and affordable—ones who were stout and right-handed. Moreover, on-base percentage, a statistic that was ignored, proved to be more predictive than traditional indicators such as batting average or stolen bases. Many donors, likewise, have determined that for calculating nonprofit effectiveness, programmatic outcomes are superior to administrative cost ratios and program outputs. Through enhanced perfomance assessment, they have realized that some legacy nonprofits are over-valued, while other innovative and evidence-based programs are underrated. 

Still, most foundations, especially smaller ones, underutilize strategy and performance measurement, diminishing their potential. Relying on untested “conventional wisdom,” they risk underestimating certain organizations by neglecting significant metrics such as program-related results per cost and the extent of their shared leadership, network connectedness, and reflective learning. The Hill-Snowdon Foundation, once a “charity-check-writing-around-a-family-kitchen-table” operation, has increased impact by strategically focusing its few million dollars of annual funding and using more data to inform decisions.

Yet relying too much on metrics brings its own risks, as baseball amply illustrates. Franchises that have discounted team chemistry, clubhouse leadership, and player conditioning have paid a price. While Moneyball techniques helped the Boston Red Sox win championships in 2004 and 2007, they collapsed this season—and devastated my four-generation Red Sox fan family—as a result of disjointed teamwork, collective stress, and other unpredictable circumstances.

In philanthropy, an approach that is overly rational, or too oriented around “command and control,” numbers and accountability can similarly backfire when inclusivity, responsiveness, and improvisation are overlooked. While particular nonprofits can benefit from control group studies, for example, most gain more from an iterative R&D approach to evaluation entailing real-time learning about cause-and-effect patterns and rapid program adaptation.

Moneyball should not convince funders to go overboard and let algorithms, logic models, and cost-benefit and ROI analysis dominate. Like baseball managers, they must begin by selecting players with the greatest potential. The craft of grantmaking is crucial: Funders should authentically cultivate nonprofit partnerships, collaborate on agendas and strategies, and allow for experimentation. They need to share control and work organically within fluid boundaries.

Just as baseball is both an art and a science, so can philanthropy benefit by deliberately tapping the dynamic tension between the humanistic and technocratic. A case in point is the Novo Foundation, which makes approximately $55 million in grants annually to empower girls and women. Foundation President Jennifer Buffett says that her father-in-law, Warren Buffett, advised her and her husband to focus their funding, take risks, be patient, and assess their impact. “In a field that works to build and support human capacities and change entire systems, it is not a good idea to fall into the trap of relying exclusively on metrics or a technocratic approach,” she comments. “We work in a very thoughtful way to equalize power relationships, build expertise on the ground, and listen and nurture…balancing and considering the head and the heart. That doesn’t mean we are not interested in sound structures, evaluation, and solid results. But, again, to us, solutions should always have a human being, a human voice, at the center.”

Neither philanthropy nor baseball can afford to disregard the varied ways to create value. Moneyball advocates would be well-served to view empirical data as the beginning, not the end, and heed intangibles. And baseball traditionalists should appreciate sabermetrics’ insights more.

Correspondingly, some technocratic philanthropies might benefit by not being as directive and rigid with grantees, “owning” the strategy less, drawing on values and intuition more, and looking hard for any blind spots causing over-confidence. And certain humanistic grantmakers could profit by providing further direction to grantees and holding them more accountable for outcomes. Phil Buchanan, president of the Center for Effective Philanthropy, wisely discerns that funders “need both assessment and morality” and “are morally obliged to seek to know how we are doing and what we can improve.”

Fixed formulas for permanent solutions are unrealistic because the real world is not static. The way forward is intentionally intertwining the objective and subjective while diligently measuring shifting variables, creatively exploring how they influence outcomes and making meaning, and continually adapting strategies, tapping the wisdom of diverse stakeholders at every step. This emergent journey matters far more than the metrics. Whether you are striving to win the World Series or scale social innovation, you need to cultivate a symbiotic and vibrant interplay of logic and instinct, internal expertise and outside perspective. You need to follow the linear path along with the serendipitous one.

Read more stories by Paul Connolly.