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//Bang for the Buck: How Our Business Background Influences Our Philanthropy

Bang for the Buck: How Our Business Background Influences Our Philanthropy

 photo;  Mike Dexter/shutterstock

photo;  Mike Dexter/shutterstock

We are two philanthropists who share a commitment to building a more peaceful world. We do this by making grants to organizations that focus on peace, violence prevention, and social inclusion. Recent articles in Inside Philanthropy and The Nation have explored why more funders don’t support peace and security work. And, a 2017 Forbes list of  $25 million-plus gifts for social challenges did not have a single peace oriented gift. We are proud of our support for peace efforts but we realize that the peacebuilding field has a way to go before it can secure more significant amounts of funding. We believe that our experience as funders, specifically funders with a for-profit, private sector background, can be instructive.

The foundation that Tom created on September 11, 2010, the Global Peace Building Foundation (GPBF), seeks to build peace by supporting organizations and projects that restore, rebuild, and transform relationships that have been broken due to stereotyping, hatred, and fear that have accumulated over generations. “Micro-grants” are made to select organizations in the range of $500. Milt orients his giving to the Purdue Peace Project which reduces the likelihood of political violence and contributes to lasting peace in West Africa and Central America. He also funds research that stimulates the creation of new knowledge, information, and data that can help donors make decisions about what to fund.  Both of us prioritize actions and solutions driven by people within conflict affected communities. And we have both observed positive impact resulting from our philanthropy.

Tom’s philanthropic giving was motivated by the loss of both his niece and a close friend on September 11, 2001. For Milt, becoming a retiree created an opportunity to give back, specifically by reflecting on the ongoing war and conflict in the world and asking “What can I do to help reduce the terrible human and economic cost of armed conflict?”  Though we came to our current peacebuilding / violence prevention philanthropy for different reasons and give at different levels, we  draw on our private sector background to inform our giving.  Increasingly, we’ve realized that this particular framework often sets us apart from other donors in the peacebuilding field.  

When the GPBF considers where to make its “micro-grants” it closely sticks to the eligibility criteria it established early on: organizations focused on youth and children that employ an approach known as the contact theory. The contact theory believes that negative attitudes can be reduced by promoting contact and familiarity between conflicting groups. Once those criteria are met, the GPBF looks for organizations that have financial reporting systems in place and an ongoing plan for monitoring and evaluation the effectiveness of their programs. GPBF recognizes that quantitative data is often challenging for grantees to secure, so it looks for qualitative indicators that the attitudes and perceptions of the youth and children are changing in a positive way. When it comes to expectations around reporting, GPBF is flexible, but does expect the grantee reporting to get more sophisticated as their revenues grow and are able to invest more resources in reporting systems. 

Milt Lauenstein’s giving is at a larger scale (approximately $500,000 each year) and as an individual donor, he can act with a great deal of flexibility. However, like the GPBF, expected results are a key determining factor. Milt says: “I talk to potential grantees and partners. I look for determination to achieve results at minimum cost. I assess their interest in, and capacity to, measure results and costs.” His approach about what to fund is based on his best judgement about the cost-effectiveness of the potential grantee work and the value of results to society. Milt’s firm belief in the importance of cost-effectiveness as a metric has led him to dedicate an area of his giving to the development of more cost-effectiveness research. Milt is currently funding several research projects on peacebuilding cost-effectiveness. Similar to the GPBF, Milt invests a good deal of time in getting to know potential grantees and building relationships with them. And although Milt doesn’t have a lot of formal grant requirements, performance against budget is a key factor.

We know that businesses make spending decisions based on what gives the most bang for the buck. In the peacebuilding field, that gets much less attention; little has been done to determine where money and effort can do the most good. The unfortunate result is that donors and practitioners possess less than an ideal amount of evidence on which to base decisions about where to spend their effort. We’d like to see peacebuilding organizations focus on measurable results at a minimum cost, consider cost-effectiveness in their work, use data to make decisions, and adjust accordingly.  

Decades ago there was a mentality of “us versus them” when it came to the for profit and not-for-profit sectors. Mindsets and values were perceived to be drastically different in each group, there was skepticism, and little room for collaboration. Thankfully, that has changed. Public private partnerships are commonplace, corporate social responsibility is sophisticated and genuine, social impact investing is trending, and many more nonprofits are adopting a strategic and quantitative mindset to ensure the success of their mission. Let’s build on this to look for learning that can happen between the for-profit world and our particular, small slice of philanthropic giving: peacebuilding. We believe that this kind of openness and  learning will increase the chances that (1) corporate philanthropy (and others) will recognize the potentially positive role they can play in building peace and (2) they will step up to support peacebuilding efforts.

We also think it’s time that companies who have been supporting education, poverty alleviations, and sustainability programs through their philanthropy take on peacebuilding as a new cause. Investing in peacebuilding initiatives is certainly the right thing to do,  but making and preserving sustainable peace also provides opportunities for investment, for sales, and for developing sources of supply. 

Without peace, doing business is difficult, often impossible. And without sound financial management, focus on results, and cost-effectiveness, peacebuilding organizations will struggle to achieve their worthy goal. As we continue to support initiatives within the peacebuilding field we’ll encourage the field to adopt a more rigorous approach to cost, effectiveness, and return on investment. We think this is key to drawing in more funding for peace, which the field (and the world) desperately needs. 

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Tom Etzel, based in Pittsburgh, is a Certified Public Accountant and Investment Advisor with four decades of experience. September 11, 2001 was the major catalyst in Tom Etzel’s commitment to peacebuilding propelling him to pursue a Master of Arts in International Relations from the Fletcher School of Law and Diplomacy (Tufts University) and to establish GPBF in 2010.

Milt Lauestein is a chemical engineer by training and has an MBA from the University of Chicago. Retired for approximately 20 years, he has served as CEO, president, or chairman of several successful corporations, a director of over a dozen corporations, and a management consultant. He co-founded the Purdue Peace Project in 2011 at his alma-mater, Purdue University, based on test case on locally-led peacebuilding that he had funded earlier.

2018-07-10T10:45:41+00:00 July 10th, 2018|Categories: Nonprofit News|