While our second edition of Money Well Spent contains many updates and improvements, it doubles down on the first edition’s unabashed commitment to strategic philanthropy. This approach gained considerable praise, but it also received criticism suggesting that we favored the head over the heart and did not pay adequate respect to grantees and beneficiaries.
Our own view of the supposed head-heart dichotomy is reflected in a guide published by the Hewlett Foundation near the end of Paul’s tenure as president in 2012: "Outcome Focused Grantmaking: A Hard-Headed Approach to Soft-Hearted Goals." The basic point is that the choice of goals is a matter for the heart, but the design of strategies to achieve those goals is for the head.
To begin with the heart: The social, environmental, and other values that motivate philanthropists are extremely varied, and lead to the pursuit of a virtually infinite number of heartfelt goals.
Some philanthropists hold religious, moral, or political views that militate toward particular goals. This is true for philanthropists on both sides of the abortion issue, as well as for “effective altruists,” who believe that their philanthropy should be devoted to the most disadvantaged people of the world and averting global catastrophes.
Strategic philanthropy has nothing to say about the choice of goals. Rather, it only comes into play after that choice has been made. For better or worse, the framework is value-neutral—as useful for National Right to Life as for NARAL Pro-Choice America; as useful for the Brady Campaign to Prevent Gun Violence as for the National Rifle Association.
But once the heart has made its choice, philanthropists must use their heads to achieve their hearts’ desires. Whether they develop their own strategies or scrutinize those presented by a grantee organization, a successful strategy must have five elements:
Clearly defined goals,
Evidence-informed plans for achieving them,
Capacity to implement the strategy,
Provisions for monitoring progress in order to make appropriate course corrections, and
Provisions for evaluating ultimate success.
Not surprisingly, nonprofit organizations, no less than retail sellers, use clever marketing techniques—the teary-eyed child, the polar bear on an isolated ice floe—to short-circuit donors’ rational processes. The donor who succumbs to these images but actually cares about results will be left with a broken heart.
Nonetheless, William Schambra, former director of the Bradley Center for Philanthropy and Civic Renewal at the Hudson Institute, has been a persistent critic of strategic philanthropy, arguing that the focus on outcomes is anathema to communities and civil society:
[W]e need a vital local civil society, right in front of our faces, to draw us out of that individualistic isolation, to engage us in the affairs of our own immediate communities, wherein we learn through direct, daily interaction with others to become responsible, self-governing citizens. Our vast, bewildering, and ever-growing profusion of nonprofits—in all their naïve, amateurish, bumbling, redundant glory—may appall those who want to see social services delivered in a neat, orderly, rationalized and centralized way. But Tocqueville would have said that this is a small price to pay for the education in democratic self-government provided by our thick, organic, local network of civic associations.
While Schambra views these matters from the right, Bill Somerville, former head of the Peninsula Community Foundation, echoes his sentiments from a progressive point of view, arguing that philanthropists should not question the intuitions of the staff of community organizations.
Empowering a community is a laudable philanthropic objective—but it is as difficult to achieve as any other. If your goal is to create a thick, organic network of civic associations, then you are still faced with the question of how to accomplish this. Would you just write checks to every group, spreading your money like margarine across the town? Or choose the biggest? Smallest? Those with religious affiliations, those without, or a mixture? Single-time capacity building grants, or multi-year commitments? Matching requirements?
The point is that even if your goal is to have community groups enrich the world by their own lights, you as a funder have really important choices to make. We are not suggesting that you should supplant grantees’ judgments with your own, but rather that you cannot avoid making your own choices and judgments. So do it rationally, and then test the results.
One important development in the decade since Money Well Spent’s first edition has been the emergence of “beneficiary voice” as a critical way to ensure that philanthropic strategies are truly responsive to the needs of their intended beneficiaries.
At the same time, the techniques of “human centered design” have responded to the basic insight that, whether you are designing consumer products or social interventions, you must immerse yourself in the lives of your customers or beneficiaries to understand their motivations, needs, and behaviors.
As we emphasize throughout Money Well Spent, and as we’ve recently reiterated, effective strategic philanthropy accords great respect to the expertise and autonomy of grantee organizations as well as their shared beneficiaries.
But our own experience is that all organizations improve their strategies when they are required to make them transparent, explain why they think they will work, and subject them to the scrutiny of critical friends. With this in mind, a philanthropist can work to strengthen civil society. But this requires a thought-out grantmaking strategy rather than the scattershot funding of “amateurish and bumbling” organizations.
A different complaint about strategic philanthropy is that it entails using quantitative metrics, which press for risk-averse short-term outcomes rather than the risk taking essential to ambitious philanthropy aimed at social change. In 2004, Dennis Collins, former president of the James Irvine Foundation, wrote:
“Hyperrationalism” and “managerialism” are taking over the nonprofit sector, including philanthropy. These new “isms” appear to be crowding out a more values-driven, mission-centered approach to philanthropy and replacing it with technically-based, efficiency-driven, outcome-centered processes. In short, supplanting art with a pseudo-science that imagines metrics and matrices are reality rather than a set of useful but limited tools…
One of the most pernicious consequences of this rush to proficiency is the impulse to avoid, if not eliminate, funding to address big, complicated, messy, seemingly insoluble problems, problems rife with uncertainty, risk, and inefficiency, and projects whose potential for failure is high. Indeed, a troubling feature of the “new” philanthropy is an enthusiasm to fund projects and activities that are easily quantifiable and highly visible, which may result in short-term “wins,” but do little to change the underlying causes of the problems at issue.… The reluctance or inability of foundations to “swing for the fences” is discouraging.
We entirely agree that social change efforts are not amenable to the sorts of calculations appropriate for service delivery organizations. But a decade and a half later, Collins’ fears have not been realized. On the contrary, the years since his critique have seen unprecedented philanthropic resources devoted to long-shot, systems-changing strategies including efforts to reduce global warming, establish marriage equality, reform public education, reform the U.S. political system and the administration of criminal justice, and reduce poverty.
Many of these efforts have been funded by the most strategically-oriented foundations in existence today, including the Laura and John Arnold Foundation, the Open Philanthropy Project, and the William and Flora Hewlett Foundation. Readers who are similarly inclined will find a plethora of examples in Money Well Spent, which devotes considerable space to thinking through grantmaking in realms where the systems are large and complex, the time horizons are long, and the consequences of failure are profound.
Strategic philanthropy is premised on the belief that expert intuitions informed by evidence will lead to better outcomes than intuitions alone. It is an unfortunate fact that many intuitively obvious strategies fail, not for the good reason of having made long-shot bets, but for want of thoughtful planning, followed by monitoring progress. Strategic philanthropy is essentially a bet on the value of rational decision making. At a time when Enlightenment values are under siege in many other domains, this is an important moment for philanthropists to double down.
Paul Brest is Former Dean and Professor Emeritus at Stanford Law School, a Lecturer at the Stanford Graduate School of Business, Co-Director of the Stanford Center on Philanthropy and Civil Society, and Co-Director of the Stanford Law and Policy Lab. He was president of the William and Flora Hewlett Foundation from 2000-2012.
Hal Harvey is the CEO of Energy Innovation, a San Francisco-based energy and environmental policy firm. Previously, he was founder and CEO of ClimateWorks Foundation, a network of foundations that promote polices to reduce the threat of climate change; Environment Program Director at the William and Flora Hewlett Foundation; and founder and president of the Energy Foundation, a philanthropy supporting policy solutions that advance renewable energy and energy efficiency.