A Tectonic Shift in the World of Philanthropy

Although few outside the philanthropic world realize it, we are in the midst of a monumental philosophical debate on how to use charitable dollars so they have the greatest impact on society. The outcome of this discussion will have enormous implications for the manner in which charitable dollars will be granted out to nonprofit organizations for the next generation.

For nearly two decades, the prevailing model for foundations and great philanthropists has been the concept of Strategic Philanthropy. This calls for foundations to identify and fund nonprofit organizations that follow a proven model with evidence-based strategies to achieve clearly defined outcomes. Progress toward these outcomes are measured against a benchmark throughout implementation and thereby provide a reliable gauge of the charity’s effectiveness and impact.

This idea really found an audience during the economic and philanthropic boom of the late 1990s. As wealthy families were realizing record capital gains in the heyday of the tech stock boom, foundations and major donors were encouraged to think of their charitable contributions as another kind of “investment.” Only with these charitable investments, the expected return was not income for the donor, but rather some measurable positive impact on the community.

In the years since, Strategic Philanthropy has been both refined and expanded. Many foundations now expect a potential grantee to document the Logic Model that guides its programming. A Logic Model is a clearly articulated path that begins with specific inputs then moves sequentially through a series of predefined activities. Ultimately, this is expected to result in predictable outputs.

In essence, Strategic Philanthropy calls upon foundations and major donors to give money only to charities that implement a proven model with the expectation that the outcomes will be similarly positive every time the model is used. It’s a very attractive approach to philanthropy because it gives us a sense of confidence that our money is being used wisely.

However, the last two decades of real world experience with Strategic Philanthropy has demonstrated that it has an insurmountable and inherent flaw.

In what may prove to be the seminal thinking on the subject, last year John Kania, Mark Kramer and Patty Russell argued in the Stanford University Social Innovation Review that Strategic Philanthropy fails when it comes to addressing large community issues that exist in complex systems.

In their paper “Strategic Philanthropy for a Complex World,” they write, “The more foundations embrace strategic philanthropy, the clearer its limitations become. As practiced today, strategic philanthropy assumes that outcomes arise from a linear chain of causation that can be predicted, attributed and repeated, even though we know that social change is often unpredictable, multifaceted, and idiosyncratic.”

They note that “the forced simplicity of Logic Models often misleads funders to overlook the complex dynamics and interpersonal relationships among numerous nonprofit, for-profit, and government actors that determine real world events.”

At some levels, Strategic Philanthropy has proven to be a very effective tool. As a field, there is wide agreement that Strategic Philanthropy works well with simple problems. Building a hospital in Door County is not easy, but it follows a simple and predictable path. One can reasonably predict the cost, timeline and outcomes by using well-tested models consistent with the concepts of Strategic Philanthropy.

Even complicated problems, like developing vaccines, are well served by Strategic Philanthropy. A vaccine might have to go through many generations as we learn from our failures and building on previous successes before a final formula is discovered. But once it is realized, the vaccine can be replicated with predictable results.

However, Strategic Philanthropy is woefully inadequate when addressing society’s most intractable problems. These challenges aren’t simple, nor are they merely complicated. They are complex. They are dynamic and dependent on the interplay between many variables that are decidedly non-linear in nature. Our biggest societal problems don’t fit into a Logic Model that can be neatly applied to similar situations everywhere you go.

For instance, consider the complex challenge of improving the health of the residents of Door County. The authors write, “The health of a population is influenced by the availability and quality of health care, but also by economic conditions, social norms, daily diet, inherited traits, familial relationships, weather patterns, and psychological well-being. The interplay of these factors creates a kaleidoscope of causes and effects that can shift the momentum of a system in one direction or another in unpredictable ways.”

Strategic Philanthropy tries to categorize and measure all inputs with the belief that if you implement the model’s predefined series of activities, you can achieve predictable results. But finding that kind of consistency just isn’t possible in a complex world. The authors point out that “each intervention is unique, successful programs cannot reliably be repeated with the same results, and learning from past efforts does not necessarily contribute to better future results.”

“Strategic Philanthropy works well for simple and complicated problems, toward which the vast majority of philanthropic funding is directed,” write the authors. A program designed to shelter and protect abused women is relatively clear, well documented and thus easy to justify funding. It’s important that we support shelter programs, but reality is that they only address the consequences of the problem. At the root of the challenges faced by the abused woman is the fundamental problem of violence itself. Eradicating domestic violence is an exponentially more difficult task because it exists in a complex and dynamic system.

The authors write, “To solve today’s complex social problems, foundations need to shift from the prevailing model of Strategic Philanthropy that attempts to predict outcomes to an emergent model that better fits the realities of creating social change in a complex world.”

There’s a tectonic shift occurring that has the potential to fundamentally change the world of philanthropy. I’ll talk about it in next month’s column.

This column by Bret Bicoy originally appeared in the Peninsula Pulse on February 4, 2015.

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