Philanthropy has been a defining, if under-appreciated, strength in the U.S. However, in recent decades, too many givers have sought to approach complex social problems as investors would approach a market opportunity, looking for the breakthrough innovation that will, say, “disrupt” poverty as rapidly as Uber disrupted the taxi industry.
Almost inevitably, they fail.
This “biznification” of philanthropy has led to countless missteps. Effective philanthropy, it turns out, is a unique discipline, requiring a deep humility borne of a recognition that what makes for success in business doesn’t necessarily make for success in giving. Giving Done Right: Effective Philanthropy and Making Every Dollar Count seeks to offer donors the frameworks needed for their uniquely important and challenging task.
Perhaps nowhere is this need for greater understanding more important than in the area of strategy. This excerpt opens with an example of an embarrassing misstep by the biggest giver of all, Bill Gates, and examines the backlash to a conception of strategy in philanthropy that has been too top-down and too focused on “uniqueness.” I discuss the call I received from a search committee chair whose foundation was seeking to turn the page on an era marked by a CEO who saw himself as the LeBron James of philanthropy, “taking his talents” from business to the nonprofit world. And the dinner I had with a community foundation president who wished his board would understand what he had come to appreciate – that giving done right is anything but easy.
I am hopeful that individual and institutional givers alike are learning the lessons from stories like this, and that a new conception of strategy – that emphasizes both the need for it to be iterative and owned by nonprofits and givers equally – is beginning to take hold. — Phil Buchanan
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In 2016, Bill Gates decided to donate 100,000 hens in developing countries, in partnership with the nonprofit Heifer International, to combat extreme poverty. He had written a blog post about the wisdom of raising chickens as a way out of poverty. “It’s pretty clear to me that just about anyone who’s living in extreme poverty is better off if they have chickens. In fact, if I were in their shoes, that’s what I would do—I would raise chickens,” he wrote.
While the wisdom of this effort may have been clear to Gates, it wasn’t necessarily clear to everyone else. In fact, the Bolivian government rejected the help, calling it “offensive.”
“Cluck You: Bolivia Rejects Bill Gates’ Donation of Hens,” blared a headline in the UK newspaper the Guardian. “He does not know Bolivia’s reality to think we are living 500 years ago, in the middle of the jungle not knowing how to produce,” said César Cocarico, the country’s minister of land and rural development. “Respectfully, he should stop talking about Bolivia, and once he knows more, apologize to us.”
Gates’ mistake is emblematic of a common one among both individual givers and institutional ones, and it’s led to a kind of backlash against so-called “strategic philanthropy.” Givers sometimes feel like they know what’s best for those they intend to help. It’s perfectly clear to them: They’ve got just the thing to address the problem.
Sometimes they’re right; sometimes they’re wrong. Let’s assume that, in Bill Gates’s case, raising chickens is indeed the best thing someone living in extreme poverty can do. The problem is this: It doesn’t really matter whether Gates is right if the people he intends to help—or those who stand between the donation and the people—don’t think so. Or if they’re insulted by the suggestion.
In this case, the Bolivian government spoke up and rejected the help. But, often, nonprofits and other key actors bite their tongues, for fear of alienating those with the purse strings. The result can be a kind of charade, in which the giver never hears what people really think about the strategy du jour, and in which nonprofits play along, or pretend to, to secure funding.
Some people, inside and outside the Bill & Melinda Gates Foundation, have suggested to me that this is what happened with the foundation’s work in education. They point to the foundation’s effort to break large high schools into smaller schools, for example, although others within the foundation say that work was more effective than many believe. When the foundation moved away from small schools, it focused on revamping and toughening teacher evaluation efforts only to see that initiative, like its predecessor, fall short of expectations. Similarly, efforts to push a common core curriculum have met resistance from those who felt it was being imposed from the top down.
To its credit, the foundation and Bill Gates himself have been open about the missteps, but only after a lot of upheaval—for schools, staff, families, and teachers. It’s likely that this disruption could have been avoided with more listening, more research, and perhaps a more limited effort to test the hypotheses before betting big.
“We haven’t seen the large impact we had hoped for [in education],” Bill Gates conceded in his and Melinda Gates’s 2018 annual letter. Perhaps the right lessons weren’t fully internalized—by the donors or the foundation’s staff—from earlier failures. In that same letter, Melinda Gates seems tacitly to acknowledge as much, saying that now, “Everything we do in education begins as an idea that educators bring to us. They’re the ones who live and breathe this work.” Time will tell whether this more ground-up approach to strategy really takes hold at the Gates Foundation, which of course has also done much good and important work.
But, given stories like this—and they’re legion among nonprofit leaders— perhaps the backlash is not surprising. More and more, people are questioning whether givers should be so focused on strategy.
I got a call from a board member of a significant foundation, which was undertaking a search for a new president. She was on the search committee and wanted my thoughts on the search. I asked her to fill me in on the context. “Well, I’ll tell you this,” she said, a tone of exasperation in her voice. “We’re done with ‘strategic philanthropy!’ We have had enough of that approach.”
She told me that, after a president who had been a big advocate of strategy, the foundation was ready to move in a different direction. “He just didn’t know what he didn’t know. And so we didn’t have the impact we wanted,” the board member said of the CEO. “It’s time for us to listen. And to really respect the nonprofits we support with our funding, who are the ones on the ground doing the work, after all.”
I realized that her issue was not with the concept of strategy—of pursuing the set of activities that would be most likely to help the foundation achieve its goals. It was with what the term “strategic philanthropy” had come to mean, which was something very different. Strategic philanthropy implied to her a way of working that lacks heart and is isolated and top-down, focused on the “uniqueness” of individual actors as though they were competitors in an industry.
Thoughtful givers recognize that strategy in philanthropy is different from strategy in business, but the CEO who was being replaced simply didn’t get that. He saw himself as a business-savvy savior who was turning the foundation around by employing strategic philanthropy, which to him seemed also to mean his way or the highway. His attitude, and I’ve spoken to people who come from the business world who see themselves in this light, seemed to be that we should all be grateful that he was willing to take his talents to the nonprofit sector, fancying himself the LeBron James of philanthropy.
This belief that business experience offers exactly the right tools to be a great giver is quite common. One community foundation president, whose board includes significant individual givers who made their money in business, confided in me one evening at a conference dinner, whispering so his board chair across the table wouldn’t hear: “Every single one of my board members thinks they can do my job better than I can. Look, I came out of business, too, but what I know now that they don’t is how hard it is to do this work well. They don’t get it.”
Over time, those who promote a conception of strategy that’s pulled straight out of the business world will find it just doesn’t work. But let’s not throw out the baby with the bathwater. To me, the issue isn’t strategy, per se, which is essential to having impact in philanthropy. The problem is bad strategy or, often, well-designed strategy implemented badly.
So, what happened when it came to strategy in philanthropy? What went wrong?
As has often been the case in the nonprofit sector, it’s the business school professors and philanthropy consultants invoking business metaphors who led philanthropy astray. It all started with a 1999 Harvard Business Review by one of the most prominent business school professors in the word and his co-author. The article unrelentingly emphasized the need for “uniqueness” and “distinct positioning.” The problem is that the authors failed to acknowledge— or perhaps didn’t understand—crucial differences between business and philanthropy, arguing instead that the underlying logic of strategy in philanthropy is the same as in business.
But strategy isn’t a business concept; it has meaning in any number of domains from sports to chess to war (the word itself derives from “army” in Greek). Crucially, strategy in philanthropy, unlike in business, isn’t about uniqueness or distinct positioning. It’s about a shared approach across institutions and people that recognizes and appreciates the challenge of understanding cause and effect when working on the toughest challenges. In business, your strategy should be yours alone, given the competitive dynamics. In philanthropy, if your strategy is yours alone, it will almost surely fail. The HBR article was influential because it offered simplicity, boiling down “strategy” to a simplistic checklist. But, as Warren Buffet famously said in another context, “beware geeks bearing formulas.”
In too many conceptions of so-called strategic philanthropy, the giver is the locus of strategy—and of control, as philanthropy evaluation consultants Patricia Patrizi and Elizabeth Heid Thompson described in 2011. “Not only are plans often separated from implementation, they’re often developed in isolation from those doing the work—the grantees supported to execute the strategy. It is difficult to think of a setting where this would be good practice.”
I’ve seen it up close. Years ago, I shared results of a grantee survey we had conducted, through the Center for Effective Philanthropy’s Grantee Perception Report (GPR) process, with the staff of a foundation as well as with the living donor who established it. I let them know that grantees didn’t feel the foundation was approachable when problems arose. I also told them that grantees said the foundation put much more pressure on them to modify their priorities to get funding than was typical. In both cases, our comparative data showed the individual giver and his foundation to be at the extreme, and not in a good way.
But, to my surprise, they were pleased with this result, seeing it as a vindication that what they were doing was working. “The nonprofits we are supporting don’t yet understand what we know about what needs to happen,” one staff member said. “And we’re pushing them to follow our strategies and to ramp up their performance. So, we see a strained relationship as a sign that we’re doing something right.” This is a common view: People describe poor relationships to my CEP colleagues and me as the inevitable collateral damage of a focus on impact.
Unfortunately, though, this kind of heavy-handed approach almost invariably fails. “Grantees need to be treated as the central partners that they ultimately are in the strategy process. They are not only the main executors of strategy but have the on-the-ground knowledge and experience essential to sort the wheat from chaff in strategic thinking,” wrote Patrizi and Thompson.
Far too many people in the philanthropy world have adopted a mindset in recent years that’s a little too “command and control.” This mindset also affects those who didn’t come from business. Take Paul Brest, former president of the William and Flora Hewlett Foundation (and former dean of Stanford Law School), someone I admire as thoughtful and committed to effectiveness. Brest, who has been among the most ardent proponents of strategic philanthropy, often points to the analogy of a pilot charting a flight path when discussing the concept. He argues that donors and nonprofits need a “causal model”—a strategy—just as much as a pilot needs a flight plan.
But this analogy has never quite worked for me. First, it makes the work all sound too simple. Feedback to a pilot flying a plane is clear and essentially real-time, such as, “you’re on course” or “you’re off course.” Not so in philanthropy.
Second—although, in fairness to Brest, he makes clear strategy is needed for both philanthropists and nonprofits—it often feels to many grantees as though foundations and donors see themselves as the pilots and nonprofits and the people affected as passengers who don’t have any relevant input into the best route to take to get to the destination. Indeed, sometimes the feeling of being a grantee or intended beneficiary can be as frustrating as being a passenger on a long-delayed flight, with little or only incomplete or inaccurate information available and a sense of utter powerlessness.
Nonprofit grantees and intended beneficiaries aren’t just along for the ride that the givers chart. They’re crucial navigators.
Increasingly, even those who have advocated for a more donor-centric version of strategy are recognizing that it’s tougher than it looks. Brest wrote in 2012, “We have also learned through painful experiences about the challenges of implementing even well-thought-out strategies.” Another of the chief proponents of strategic philanthropy, Hal Harvey, coauthor with Brest of the 2008 book Money Well Spent: A Strategic Plan for Smart Philanthropy, went further, penning a regretful op-ed in The Chronicle of Philanthropy in the spring of 2016.
Harvey, who served as a program director at the William and Flora Hewlett Foundation and as a leader of both the Energy Foundation and the ClimateWorks Foundation, wrote about his evolving views of strategy: “I sometimes feel I owe the world an apology. The book’s ideas and arguments are important and legitimate, but I did not properly anticipate the potential side effects of this concept, and some of them are nasty indeed.” He went on to describe the “delusions of omniscience” among givers who “begin to see themselves as the origin of intelligence as well as the arbiters of money.” Harvey said an effective giver—his op-ed spoke to foundation staff, but the lessons apply more broadly—should act “as a humble synthesizer rather than an omniscient leader.” He said givers need to “listen, gather, synthesize, test. Do these for real, not as a fake front. Build the strategy around what you learn.”
Harvey wasn’t saying strategy isn’t important, although some misread his piece that way. Rather, he was suggesting that there needs to be a humbler approach. Indeed, a second edition of Brest and Harvey’s book, released in 2018, reflects an admirable evolution in their thinking. I respect Harvey’s candor in admitting that he did get some things wrong. I wish more would follow his lead.
I am hopeful that this evolution in thinking with respect to strategy is part of a broader shift in views among donors, who are increasingly recognizing the degree to which giving is a uniquely challenging discipline, requiring its own resources and skills. The techniques required for effective giving generally aren’t taught in MBA programs, nor are business frameworks readily imported across sectors.
The most effective givers recognize that. They see nonprofits as crucial partners and allies, to be treated with great respect, and see strategy as a shared endeavor. They recognize there are few quick fixes, or easy answers.
They embrace the inevitably messy, and iterative, nature of giving done right.