Lucy, these are all great ideas. What do you think it takes for this shift to begin in earnest?
Is it a tipping point phenomenon in which the current exploration in these areas will build on each other and final tip over to mainstream acceptance? If so, are we heading towards the tipping point in a meaningful way right now?
Or does the framework in which we operate need to be changed before this shift can happen? Are there barriers in place that prevent the viral aspect of a tipping point mechanism from ever taking place?
1 - we need to be more imaginative about what is possible. Foundations suffer from an enormous amount of institutional isomorphism
2 - the system needs incentives for change - there are no penalties for status quo. The system needs to provide incentives for foundations to actually accomplish something, other than meet the payout rate
3 - those creative leaders in the field - and there are many - should be helped in sharing their ideas. Many of them are focused on changing their own organization, not on changing the system. That boost may need to come from outside.
4 - Actually, limiting ourselves to thinking about foundations (as I, admittedly, did) doesn’t help. Philanthropy is now really a hybrid, diverse business of advisers, individuals, foundations, corporations, DAFs, political concerns, double bottom line businesses, social stock exchanges, investment options, and so on - and we need tools and advice that help people - who are the center of all of the above - to think about their entire portfolio of financial actions.
1. Crowds make better decisions than individuals.
Really, let’s see: Socrates and Jesus were both killed at the behest of the crowd. Thousands lost their fortunes in 1929. Bernard Baruch, an individual, sold out in time. So, perhaps not always are the crowds wiser. As for diverse crowds being the best of the best, you give no evidentiary support of that statement
2. Outsourcing.
Foundations outsource investments because a) foundations tend to be run by persons interested and educated in social policy. Except for very large foundations, in-house investment managers would be expensive and lonely. b) Investment objectives are clear (make money) and easy to measure even on a quarter by quarter basis. Social objectives are often unclear, nearly always hard to measure and impossible to measure on a quarterly or even yearly basis.
3. Bubble.
You make a declarative statement, we are experiencing a bubble in prizes… To support your declarative statement you offer the internet equivalent of a footnote, a jump to a source that presumably supports your position. The jump takes one to… you, making the same statement in some other venue. Perhaps we are experiencing another type of bubble.
4. Information.
I followed the link to Clinton Foundation under your rubric of “organize markets for social good.” The link took me to an opportunity to buy his book, and little else. As for the Public Patent Foundation, intellectual property rights stimulate the creation of… intellectual property. If you desire to limit patents and copyright, I suggest you might end up limiting innovation, and you should be very careful what you wish for.
5. Investing.
Investing in new ideas is difficult. One example cited is that of Kleiner Perkins, one of the most successful venture capitalists in the nation. A year ago, it established a fund to invest millions to prevent deaths from among other things, Bird Flu. It worked. Few have died from Bird Flu. The point is, that is hard to guess what is needed even by the best of the best. Perhaps most foundations should stick to more conventional investing.
6. What if success really mattered.
Success by whose measure? One foundation might view the establishment of a school voucher and/or charter school program as a great success. The foundation down the street might do its best to get rid of such a program. Who would decide? The government? Which government: national, state, or local? Maybe the local university. Which university? Stanford? Pepperdine? Grove City College? I suggest that each would have a different answer.
Much of the value of foundations comes from their independence and their ability to try ideas that are against the Zeitgeist.
In response to part of this discussion, especially about your first observation about crowd decision-making, you might want to research the process of informational cascades. Essentially, even presented with independent information, an individual will make a wrong decision, depending of the decisions of those in front of him. It’s the difference between a secret vote and knowing how others have voted before you; your decision will more likely be influenced by others’ decisions, regardless of the evidence you have.
This doesn’t negate your proposition about crowds, but there may be considerations you hadn’t thought about.
2. Not clear which part of this statement refutes my proposal that outsourcing programmatic investing strategy would be a more efficient use of resources than the current, redundant, structure
3. Bubble in philanthropic prizes - problem here is I am the one raising attention to the issue, citing myself is best source here, sorry. If you want corroborating evidence, please see http://www.youtube.com/watch?v=YOjAdjWgtgY or http://philanthropy.com/giveandtake/article/307/prizes-versus-grants. Beyond that, you’ll have to do your own research
4. I am not shilling Clinton’s book - he has two whole chapters on this point. Talk to him about making it available for free to readers who won’t buy the book, take it out of library.
5. There is actually inconclusive research on the actual relationship between patent structures and innovation - though it is a connection that people like to assume is there and fully documented without actually looking at any research. Public Patent foundation is not overthrowing patent process. Look into it. Pandemic Fund at KPCB is one of the examples in the paragraph- but your point seems to suggest that their investment is why millions have not died. This is an odd point, IMHO.
6. Success need not be measured by the ultimate goal - the richness of philanthropy is its diversity. But articulating a goal, pursuiing it, and adjusting as needed would be a long way from where we are. See the new Center for Effective Philanthropy report, Beyond Rhetoric. Just because its hard and subjective, are you suggesting that success doesn’t matter, and shouldn’t?
The point of the post is to push people to imagine new ways of acting philanthropically so as to seek to improve the individual acts, institutions, and the whole sector. I guess it didn’t work for you.
Thank you for this very insightful article Lucy. It is refreshing to have a person so in tune to the philanthropy world speak of innovation. I am looking to re-enter the field and am struck by the status quo thinking. Apparently as indicated above, thinking new thoughts is threatening to some.
I would greatly appreciate learning about who some of the innovators are in the field and if there are sites you like and organizations which are pushing the envelope.
COMMENTS
BY Sean Stannard-Stockton
ON November 15, 2007 04:01 PM
Lucy, these are all great ideas. What do you think it takes for this shift to begin in earnest?
Is it a tipping point phenomenon in which the current exploration in these areas will build on each other and final tip over to mainstream acceptance? If so, are we heading towards the tipping point in a meaningful way right now?
Or does the framework in which we operate need to be changed before this shift can happen? Are there barriers in place that prevent the viral aspect of a tipping point mechanism from ever taking place?
BY Lucy Bernholz
ON November 15, 2007 05:44 PM
Sean
A couple of things come to mind (at least)
1 - we need to be more imaginative about what is possible. Foundations suffer from an enormous amount of institutional isomorphism
2 - the system needs incentives for change - there are no penalties for status quo. The system needs to provide incentives for foundations to actually accomplish something, other than meet the payout rate
3 - those creative leaders in the field - and there are many - should be helped in sharing their ideas. Many of them are focused on changing their own organization, not on changing the system. That boost may need to come from outside.
4 - Actually, limiting ourselves to thinking about foundations (as I, admittedly, did) doesn’t help. Philanthropy is now really a hybrid, diverse business of advisers, individuals, foundations, corporations, DAFs, political concerns, double bottom line businesses, social stock exchanges, investment options, and so on - and we need tools and advice that help people - who are the center of all of the above - to think about their entire portfolio of financial actions.
Can you think of others?
BY Joseph Ignat
ON November 15, 2007 07:56 PM
1. Crowds make better decisions than individuals.
Really, let’s see: Socrates and Jesus were both killed at the behest of the crowd. Thousands lost their fortunes in 1929. Bernard Baruch, an individual, sold out in time. So, perhaps not always are the crowds wiser. As for diverse crowds being the best of the best, you give no evidentiary support of that statement
2. Outsourcing.
Foundations outsource investments because a) foundations tend to be run by persons interested and educated in social policy. Except for very large foundations, in-house investment managers would be expensive and lonely. b) Investment objectives are clear (make money) and easy to measure even on a quarter by quarter basis. Social objectives are often unclear, nearly always hard to measure and impossible to measure on a quarterly or even yearly basis.
3. Bubble.
You make a declarative statement, we are experiencing a bubble in prizes… To support your declarative statement you offer the internet equivalent of a footnote, a jump to a source that presumably supports your position. The jump takes one to… you, making the same statement in some other venue. Perhaps we are experiencing another type of bubble.
4. Information.
I followed the link to Clinton Foundation under your rubric of “organize markets for social good.” The link took me to an opportunity to buy his book, and little else. As for the Public Patent Foundation, intellectual property rights stimulate the creation of… intellectual property. If you desire to limit patents and copyright, I suggest you might end up limiting innovation, and you should be very careful what you wish for.
5. Investing.
Investing in new ideas is difficult. One example cited is that of Kleiner Perkins, one of the most successful venture capitalists in the nation. A year ago, it established a fund to invest millions to prevent deaths from among other things, Bird Flu. It worked. Few have died from Bird Flu. The point is, that is hard to guess what is needed even by the best of the best. Perhaps most foundations should stick to more conventional investing.
6. What if success really mattered.
Success by whose measure? One foundation might view the establishment of a school voucher and/or charter school program as a great success. The foundation down the street might do its best to get rid of such a program. Who would decide? The government? Which government: national, state, or local? Maybe the local university. Which university? Stanford? Pepperdine? Grove City College? I suggest that each would have a different answer.
Much of the value of foundations comes from their independence and their ability to try ideas that are against the Zeitgeist.
BY Rick Rose
ON November 16, 2007 09:14 AM
In response to part of this discussion, especially about your first observation about crowd decision-making, you might want to research the process of informational cascades. Essentially, even presented with independent information, an individual will make a wrong decision, depending of the decisions of those in front of him. It’s the difference between a secret vote and knowing how others have voted before you; your decision will more likely be influenced by others’ decisions, regardless of the evidence you have.
This doesn’t negate your proposition about crowds, but there may be considerations you hadn’t thought about.
You might find this paper useful: http://welch.econ.brown.edu/academics/journalcopy/1992-jpe.pdf.
BY Lucy Bernholz
ON November 16, 2007 07:19 PM
Sources and footnotes in response to the comment questioning them:
1. James Surowiecki’s book on the Wisdom of Crowds presents the thesis I am supporting here. He duly notes when crowds are limited and when they are better. http://www.randomhouse.com/features/wisdomofcrowds/. His book, and other research, such as this, discuss the value of diversity - http://www.rashmisinha.com/archives/06_04/diversity-decision-making.html
2. Not clear which part of this statement refutes my proposal that outsourcing programmatic investing strategy would be a more efficient use of resources than the current, redundant, structure
3. Bubble in philanthropic prizes - problem here is I am the one raising attention to the issue, citing myself is best source here, sorry. If you want corroborating evidence, please see http://www.youtube.com/watch?v=YOjAdjWgtgY or http://philanthropy.com/giveandtake/article/307/prizes-versus-grants. Beyond that, you’ll have to do your own research
4. I am not shilling Clinton’s book - he has two whole chapters on this point. Talk to him about making it available for free to readers who won’t buy the book, take it out of library.
5. There is actually inconclusive research on the actual relationship between patent structures and innovation - though it is a connection that people like to assume is there and fully documented without actually looking at any research. Public Patent foundation is not overthrowing patent process. Look into it. Pandemic Fund at KPCB is one of the examples in the paragraph- but your point seems to suggest that their investment is why millions have not died. This is an odd point, IMHO.
6. Success need not be measured by the ultimate goal - the richness of philanthropy is its diversity. But articulating a goal, pursuiing it, and adjusting as needed would be a long way from where we are. See the new Center for Effective Philanthropy report, Beyond Rhetoric. Just because its hard and subjective, are you suggesting that success doesn’t matter, and shouldn’t?
The point of the post is to push people to imagine new ways of acting philanthropically so as to seek to improve the individual acts, institutions, and the whole sector. I guess it didn’t work for you.
BY Marianne Quarre Dean
ON November 17, 2007 05:05 AM
Thank you for this very insightful article Lucy. It is refreshing to have a person so in tune to the philanthropy world speak of innovation. I am looking to re-enter the field and am struck by the status quo thinking. Apparently as indicated above, thinking new thoughts is threatening to some.
I would greatly appreciate learning about who some of the innovators are in the field and if there are sites you like and organizations which are pushing the envelope.