Philanthropy’s Tectonic Shift Continues

In last month’s column I wrote there’s a “tectonic shift occurring that has the potential to fundamentally change the world of philanthropy.” I noted that many funders are beginning to see the limitations inherent in Strategic Philanthropy, the dominant concept in awarding grants the last few decades.

Strategic Philanthropy involves turning a successful pilot project into a model which is then “scaled up” or replicated in other places expecting the same result everywhere. Strategic Philanthropy believes that if subsequent projects are faithful to the model of the pilot project, success is generally assured.

As I explained last month, while Strategic Philanthropy has proven to work well for both simple and complicated problems, it fails when complex systems are involved. In their paper “Strategic Philanthropy for a Complex World” which appeared in the Stanford University Social Innovation Review, John Kania, Mark Kramer and Patty Russell write, “The core elements of Strategic Philanthropy are still useful: Having clear goals, thorough research, a hypothesis for how to approach the problem, and a way of learning from results all increase the odds of success. But the idea that a foundation can intervene in a complex system on the basis of a simplified logic model and reliably expect to achieve its intended outcome creates a false hope that misdirects strategy development and execution.”

Complex systems are by definition complex, but each is complex in its own unique way. Hence, a model built from an extremely successful pilot project will very often fail in another place because the players and relationships in the original community are different from those in the new community. Complex problems require foundations to move from a linear, predictive path to a more dynamic approach. It’s a concept called Emergent Strategy.

Think of it as the difference between being given a map and a compass. Strategic Philanthropy gives you a map with a pre-determined path highlighted for you. But the map is only useful if the terrain is the same, regardless of wherever you are. Emergent Strategy gives you a compass. It points you in a general direction, but recognizes that your community will encounter obstacles, detours and shortcuts that didn’t exist in the pilot community.

The authors write, “Each step taken is decided in the moment, on the basis of past experience and the unique combination of circumstances then present. Although the path is unknown, the goal remains clear.”

There are three guiding principles of Emergent Strategy. Let’s look at them in the context of a real project in our own community, namely, the Door County Scholarship Network (DoorCountyScholarship.org).

Co-Creating Strategy: Complex problems are complex because they are influenced by a wide range of actors, each with its own agenda and interests. The authors write, “No funder has the resources to compel all other participants to follow its preferred strategy. This is why strategy must be co-created and co-evolve among multiple organizations, rather than be shaped independently.”

The Door County Community Foundation was concerned that the cost of higher education was keeping too many local students from attending college. Rather than set forth a defined path based on a model and try to force the community to adopt it, the Community Foundation invited other important organizations to build a strategy together. Other foundations and scholarship providers were asked to participate. School guidance counselors and superintendents were engaged. The students themselves were given a seat at the table.

The eventual development of a one-stop shop for scholarships and a common scholarship application were never envisioned by the Community Foundation when the process began, yet by co-creating the strategy with many partners, Door County now has invaluable new tools to connect its young people to financial aid.

Working the Attractors: While complex systems are inherently unpredictable, you can sense when momentum is building. The authors write, “By paying close attention we can identify when energy within the system is moving in a specific direction toward what, in system dynamics, is called an attractor. In social systems attractors can be people, ideas, resources, or events that lead the system to move toward or away from the funder’s goal.”

With the Door County Scholarship Network, some scholarship providers were very excited, while others were skeptical. Some school personnel fully embraced the concept from the start, yet others could only see problems. Rather than force the issue, the Scholarship Network followed the enthusiasm of its participants. It did whatever it could do, whenever and wherever there was the interest in doing it.

The authors write, “One can sense everchanging sources of positive or negative energy in the political environment that create opportunities for timely leverage. This concept of sensing and leveraging opportunities, without any certainty about the outcome, is at the core of Emergent Strategy.”

Improving System Fitness: Strategy Philanthropy focuses on fidelity to a model solution. Emergent Strategy recognizes that within a complex problem, solutions will have to evolve and adapt over time to the unique environment in which they are implemented. Hence, the focus is not on the solution, but on strengthening the organizations and relationships that create and implement the solution. The authors write, “As circumstances change over time, the system must continually evolve. Its success depends not on any single configuration, but on its fitness to adapt to the changing circumstances and the end goal.”

The Raibrook Foundation invested in cutting-edge flexible web platform technology for the Door County Scholarship Network so it can easily adapt as more people move from desktop computers to pads and smartphones. The Community Foundation invested in itself and expanded its staff so that it could continue to develop the Network. Perhaps most importantly, trust continues to be built between all of the scholarship providers, school personnel and the community as a whole so that the Door County Scholarship Network will be able to grow and evolve as the world around it changes.

As the authors sum up, “If Strategic Philanthropy first borrowed from physics to establish clear cause and effect, [Emergent Strategy] must look to biology to understand interdependent systems and the process of evolution in which success depends on continuous adaptation. From the field of commerce we borrowed the management principles of business to incorporate more discipline into our work. Now we must look to behavioral economics, which exposes the less rational psychological factors that govern so much of human behavior.” This is the future of philanthropy when addressing society’s most complex problems.

This column by Bret Bicoy originally appeared in the Peninsula Pulse on March 5, 2015.

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