Getting Smart About Giving

Nonprofit advisers encourage foundations to think strategically about their philanthropy.

06/07/11
Staff Writer
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 On June 13, Joel Fleishman, a professor of law and public policy at Duke University and former president of the Atlantic Philanthropic Service Company, and Thomas Tierney, co-founder of The Bridgespan Group, a nonprofit adviser to the nonprofit sector, will speak at the 92nd Street Y about their new book: “Give Smart: Philanthropy That Gets Results” (Public Affairs: 2011). The Jewish Week spoke with Fleishman while he was in Israel working on a third report for the Avi Chai Foundation detailing the progress of its spend-down. In a phone interview, Fleishman spoke about the six questions individual donors and foundations need to ask themselves in order to give “smart,” why “overhead” is not a dirty word, and the role Andrew Carnegie and Maimonides played in shaping his theory of change when it comes to encouraging foundations to give strategically.

Jewish Week: “Give Smart” (www.givesmart.org) aims to help foundations and individual donors maximize the impact of their philanthropic dollars. Do you see a difference between the way Jewish and non-Jewish foundations are operating?

Joel Fleishman: I don’t see any differences at all on these issues. There are many foundations that don’t think systematically about what they are trying to accomplish in both the Jewish and non-Jewish world. The percentage of foundations that practice careful, strategic grant making is about 5 percent. These include the Hewlett Foundation, the Packard Foundation, the Robert Wood Johnson Foundation and the Lumina Foundation for Education. There are others. They’re the ones that are at the cutting edge of trying to do philanthropy in a smart way. The Avi Chai Foundation is one of the foundations in the Jewish world that is, in fact, trying to do things that way. The Schusterman Foundation does a pretty good job of it, too.

In recent years, there seems to be a greater emphasis not only on giving more, but also on giving smarter. Why do you think that is?

That’s really one of the major movements in philanthropy at this point. Many high-tech billionaires took from the world of venture capital the idea that when a venture capitalist makes an investment in an organization, he or she typically gets on the board of the organization and works with management to hire or fire the CEO, for example. The same thing has happened in the world of philanthropy. Donors, particularly those from Silicon Valley, are keen when giving away money to be engaged and figure out how to achieve greater impact. They put in place the metrics to determine whether or not they are making a difference. There’s nothing new about venture philanthropy. It really started with Andrew Carnegie and his “Gospel of Wealth”; that is exactly what he preached. It goes back as far as Maimonides and his ladder of giving, in which the highest form of giving is loaning money to help someone start a business. That’s about as engaged as anyone can be with someone who needs help. It creates accountability.

The Chronicle of Philanthropy called your book “an absolute must-read for people involved in giving away large sums.” What about those with smaller amounts to give to charity? How can they still give smart?

Of the approximately $307 billion given to nonprofits of all kinds in 2008, the bulk came from individual donors and a lot of that is in the form of small gifts. Often, donors are not looking for impact, but rather to support a cause. Peter Frumkin [a professor of public affairs at the University of Texas at Austin] has written an interesting book in which he differentiated between expressive giving, in which the donor identifies with a cause, and instrumental giving, which is aimed at getting results. It takes a certain amount of money to accomplish something. Still, it doesn’t have to take $1 million to make a significant difference. My favorite story is the story of the Dorr Foundation, which invested about $100,000 over the course of 10 to15 years to persuade Connecticut highways to paint white lines on the sides of the highways [which decreased the number of accidents]. In the world of philanthropy, that’s not a lot of money. Still, there needs to be a reasonable relationship between what you are trying to do and the amount of money needed.

You recommend that “smart givers” ask themselves the following six questions: “What are my values and beliefs? What is ‘success’ and how can it be achieved? What am I accountable for? What will it take to get the job done? How do I work with grantees? Am I getting better?” How did you come up with these six questions? What does this process look like?

The jargon in the field of philanthropy is that you’ve got to have a “logic model.” If you think about what a logic model is, the first thing you have to do is to articulate the goal — identifying your values and beliefs. The second thing is to ask yourself, “How do I define success?” These are the specific outputs and outcomes. The next step is doing due diligence. “What needs to be done to reach the goal? What are the obstacles?” In this step, you identify all of the resources the foundation needs [the inputs], including energy and time, as well as financial resources. The fifth question is a very important question: “How do I work with grantees?” Most philanthropists and donors regard grantees as instruments for getting done something they want to get done. That’s the wrong approach. There needs to be fidelity on the grantee side and respect and full support of the donor to get things done. The most important question of all is ‘Am I getting better and how do I know whether I’m getting better?’ The questions really parallel a formal logic model; we just put it into layman’s terms.

You talk a lot about asking the right questions. How important is it to come up with the right answers?

As Einstein said, ‘It’s the questions that are important, not the answers.’ Or as Eisenhower said, ‘It’s not the plan that’s important; it’s the planning.’ We want to encourage foundations to think in an analytical way about what the process of philanthropy is. Giving away money carries with it psychic satisfaction — you feel better having given it. It’s all too easy to be satisfied with that. That’s one of the reasons we use the question format. We want to trigger people to think more critically about what they are doing. Different stakeholders will have different answers to these questions. Putting it down on paper and answering the questions for yourself is critical.

In the book, you are critical of the “nonprofit starvation cycle,” the unwillingness of many funders to provide general operating support that grantees need to improve their internal systems and management. What would it take to stop this cycle?

One of the purposes of this book is to try to get donors to think more seriously about the problem. It doesn’t make any sense to starve a nonprofit. If you do an activity with a nonprofit, the direct costs [provided for by the grant] only pay for a fraction of what [the program] costs. Who’s paying for the lights, rent and the fundraising function of the organization? You’re in effect pushing off a sizable share of the costs of running a program to other people and that’s not fair. That penalizes the nonprofit in a very serious way.

When it comes to overhead, the general consensus has been that “less is always best.” Is that philosophy hurting nonprofits?

It hurts nonprofits. Even good nonprofits are not as good as they could be if they were adequately supported. Would you want to fly on an airplane claiming the lowest overhead, the lowest repair and maintenance rates? It’s ridiculous. One of the best models is The Edna McConnell Clark Foundation. It’s turned the paradigm of foundation grant making on its head. The foundation does a survey of the field of organizations working in youth development. It then solicits nominations across the field and invites 10 organizations to apply for a planning grant. A lot of the best-run foundations are beginning to adopt that model. The goal is to achieve agreed upon measures and satisfying benchmarks in a strategic and focused way. It’s still a small movement but it’s growing.

E-mail: Tamar@jewishweek.org

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03/30/2012 - 04:35

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