Gearing Up Your Giving: Strategic Philanthropy--And Six Alternatives
Feb 21, 2022
When you think about gearing up your giving, whose ideas are you planning to back? Yours or someone else’s?
Strategic philanthropy is what you do when you have your own theory of change, your own ideas about how best implement that theory, and you invest your resources accordingly.
In the most extreme version of this approach your grantees function like contractors hired to carry out elements of your strategy to your precise specifications.
Strategic philanthropy positions the donor in the role of social entrepreneur--this can be a good fit for some donors with a deep understanding of the challenges they are seeking to address, but it's far from the only way that donors can position themselves for impact and fulfillment in the social change ecosystem.
Strategic philanthropy is often held up as the gold standard in the field, but it is not actually feasible or fulfilling for many donors.
- Rigorous and nuanced impact measurement is key to doing strategic philanthropy well—not many donors are willing and able to do this
- Strategic philanthropy gets even more demanding when tackling complex social challenges
- Strategic philanthropy can easily go astray if you have the time and proximity to deeply understand the causal mechanisms at play on the issues that matter most to your giving
Here's the good news. Strategic philanthropy is NOT the only way to maximize your impact on the issues that matter most. And it sure isn’t the only way path to find personal fulfillment and joy in your giving. This post explores six alternative approaches locate your primary play as a donor in the accelerator and advisor roles.
Here’s an outline of six options to consider as you gear up your giving
- Seed and Speed This is angel investing and human capital building for individual, early stage social entrepreneurs. The “seed” part of the equation is that you provide early stage resources for social entrepreneurs who are just getting started. Being one of the first donors to back a new leader and a new idea means that you will always know your resources made a genuine difference. Sure, there is risk here in that many of these new ventures may not succeed immediately, or ever. But that comes with the territory, and you can take measures to increase the “hit rate” of your early stage investments through up front diligence if you choose. You might not need to do as much of this formal diligence as you think if you are backing leaders with proximity and passion around an issue that matters to both of you. The “speed” part comes with supporting human capital development in various forms for these leaders, backing them as full human beings, through supporting their participation in incubator and accelerator programs, support for them to receive coaching and mentorship etc. There are all kinds of challenges that early stage entrepreneurs must confront and overcome. Helping them grow personally and professionally is not only a great way to boost their success, it can also feel deeply fulfilling for you as a donor, particularly when you have the opportunity to hear from your grantees about what profound difference this kind of support makes. And almost nobody in the donor community supports this stuff, so you’ll have no doubt about the attribution of impact for whatever resources you commit to speeding the personal and professional growth of your grantees.
- Equip for the Trip This is what you might call expeditionary giving. You are providing significant backing to a social entrepreneur to go on a voyage of discovery, exploring new territory. This is a great approach when the challenge you are interested in is complex and nobody—even those with expertise, passion and proximity—can map out the path to success in advance. The way forward has to be discovered as it emerges. You might say that this is a form of strategic philanthropy, but the point here is that you are not positioning yourself as the entrepreneur who is developing the strategic plan and simply hiring someone else to carry it out. Instead, you are backing a promising social entrepreneur to go on their own voyage of discovery in partnership with you (equip for the trip). Your responsibility is to equip the expedition as best you can initially, and then to be a partner as the journey unfolds (entrust, discuss, adjust). Yes, this means you are putting your faith in someone else’s vision and strategic instincts. But you can also use this approach to lean into the advisor role in your giving. You can be a true sounding board and strategic partner, helping map out course corrections and providing flexibility in resources to pursue these emergent paths as the front line entrepreneur encounters challenges along the journey. A great example of this is how the Emil Schwarzhaupt Foundation provided ongoing, flexible general operating support and a strategic sounding board for the emergent strategy of movement building organizations and leaders such as the Highlander Folk School during the civil rights movement.
- Wings With No Strings The idea here is to put wind beneath the wings of well positioned change agents in the form of completely unrestricted general operating support, letting them soar higher, entirely on their own terms. This is what MacKenzie Scott has been making headlines for, kicking off her philanthropic efforts by giving away $5.7B in a single year to U.S. based organizations with strong track records of past success and/or significant potential across several areas of interest to her (social services, racial equity, economic development, environmental protection). Her team of advisors lightly vets these organizations through desk research and one or two phone calls and then she simply backs up the truck and dumps out a bunch of cash in the form of a one-time grant of general operating support, very often the largest single gift these organizations have received, with no application process, no strings attached and no subsequent reporting requirements. In its most expansive form, this approach would be like the MacArthur prize on steroids--giving unrestricted support to change agents with proximity and passion for addressing the challenges that matter most to our shared future and letting them have at it in whatever way they see fit (more on this idea coming up in Chapter Five). How does this differ from “strategic philanthropy?” For one thing, the “Wings with No Strings” approach doesn’t involve ongoing evaluation and oversight of grantees and their operations. This is not to say that the funder can’t engage strategically at a macro level to assess how the effort is going over time, what kinds of impact these one time infusions of support are having on recipients and make course corrections to the overall approach over time. MacKenzie Scott is showing that you can move extremely large amounts of money without creating a large standing philanthropic infrastructure. You can do this by working with a consulting team and streamlining your vetting process and attaching no ongoing reporting requirements for grantees. You simply identify the organizations you want to support and write very large checks, no strings attached. No intricate strategy needed beyond identifying the general areas and types of leaders you want to get behind.
- Maintain and Sustain The idea here is to provide ongoing support for established entrepreneurs who are creating consistent value within an established footprint. These leaders and their organizations might have been expeditionary at one point, but now they are all about maintaining a steady state of service within existing boundaries. You can have tremendous satisfaction and impact as a donor by backing these folks and accelerating their work. It doesn’t need to be new and it doesn’t need to be growing to be worth supporting on an ongoing basis. Too many donors have dismissed this kind of giving as lacking excitement, but it can actually be incredibly meaningful and impactful to have a long term supportive partnership with an organization that is living out its mission of service day to day within a defined boundary. Take for example the Harlem Children’s Zone, which has focused on breaking the cycle of intergenerational poverty within a defined 97-block neighborhood of NYC for decades—many of its donors, including Board Chair Stanley Druckenmiller, have been steadfast supporters of this journey going back 15 years or more.
- Outsource Without Remorse This is about placing your philanthropic resources in the hands of a professional team with proximity and passion to the challenges your care about and letting them allocate your resources for maximum impact. This team of pros can use the principles of strategic philanthropy so you don’t have to, developing a theory of change, an evaluation function and making ongoing adjustments to grant-making strategy in light of evidence of impact over time. But they could also operate using these other approaches we’re discussing right now, such as Seed and Speed, Equip for the Trip etc.. The key to this being the right approach for you as a donor is whether you can wrap your head around finding true fulfillment for yourself with this level of distance from the grant making process. Will it feel psychologically satisfying to you get periodic progress updates from your philanthropic investment team without being involved in the day to day decision making and operations? For some donors the answer is an emphatic yes! No remorse here—no fear of missing out.
- One and Done The idea here is to make one big gift, to transfer your philanthropic resources in one fell swoop. There are all kinds of options for doing this. It could be that there is a particular institution whose work you find so inspiring that you simply want to entrust your entire philanthropic capacity to them. Another alternative is an extreme variant of Outsource without Remorse—you transfer your entire philanthropic resource to an intermediary who then makes grants according to its own logic, with no ongoing involvement or influence on your part. Warren Buffet has done a version of this by announcing his intention to vest his entire philanthropic capacity with the Bill and Melinda Gates Foundation. This approach might be appealing if you don’t have the need or capacity to be involved in your giving in an ongoing way and you have a clear interest in a particular cause, institution or organization that is doing work on issues you care about. Some might criticize this approach as risky and unstrategic—you are placing your entire philanthropic legacy in the hands of others and hoping for the best. But placing your trust in those who are closer to the action to make more effective decisions can be a deeply disciplined and strategic choice. And there’s no question that the opposite is far worse. Holding onto your philanthropic resources without actually giving them away is the most senseless and unstrategic path of all.