Tuesday, October 31, 2006

Trick or Treat

Ramadan just passed, and we're coming up on Thanksgiving, Hanukkah, and Christmas, all holidays that provide occasions for platitudinous discussions of giving, but Halloween and its mass disbursement of sugary wealth doesn't provoke similar discussion. Given the overwhelming sense of gratitude that is supposed to buoy Thanksgiving and the religious underpinnings of the other holidays, it's easy to see why the sector gravitates toward them to wax poetic about what it is that we do here. Amidst all the hustle and bustle of contemporary life, amid the sad commercialism of the holiday season, we are called to pause and remember how fortunate many of us truly are, to think of others who may not be as fortunate, and to give to others without expecting in return.

But all that goes out the window at Halloween. And while we'd like to think that Ramadan, Thanksgiving, Hanukkah, and Christmas best exemplify what it is we do around here, Halloween, too, is a metaphor for the philanthropic sector.

Consider the plight of the trick-or-treater. What makes for a truly successful trick-or-treater? A male teen (stronger, possible access to personal transportation) without much of a costume (expensive and can impair movement) who targets several wealthy neighborhoods (more and better candy) is easily the better trick-or-treater than the six-year-old waddling around the block in a pumpkin costume with a pair of doting parents. Which nonprofit are you?

Consider the plight of the candy distributors. How do you juggle the expectations of the trick-or-treaters showing up now with those of future trick-or-treaters who might show up later that night? Give all the good candy out now or save it until later? Buy the same candy for the entirety of the night? How much do you want left over to enjoy for yourself? Do you give candy to the teens who aren't supposed to be trick-or-treating but are nonetheless out there? Do you decorate? How much? Do you build a haunted house on your porch or a graveyard on your front lawn or do you just carve a pumpkin? Will you dress up? As what? How much will you spend? Do you leave a bowl outside full of candy and, when it's gone, you're done for the night? Do you check out what the neighbors are doing? Do you compete? How well do you measure up? Do you just turn off the porch light and pretend no one's home? What kind of donor are you?

Now consider the relationship. The desired mark when trick-or-treaters ring the doorbell is someone who comes to the door, gives you great candy (no Tootsie rolls), and lets you go on your way. The undesirable mark is the elderly gentleman or lady who takes forever to get to the door, has a costume on and tries to scare you, and comments on your costume, before finally insisting on giving you candied apples, which your paranoid parents are just going to make you throw away. The desired trick-or-treater is a young person accompanied by a chaperone to prevent mischief that politely asks for candy out of the depths of a costume that demonstrates their enthusiasm for the holiday and accepts whatever they're given with sincere gratitude. The undesirables are the older kids who ring the doorbell several times, demand good candy, complain if given something other than what they want, and egg your house in retaliation. Naturally, expectations are all over the place. What kind of relationship do you have with your fellow donors or grantees?

There's your sector right there. We can decorate over it, dress it up in fancy costumes, and declare a holiday, but there it is, all too human. We stare out the window at the costumed freaks demanding our hard-earned wealth. We ring the doorbell and hope the guy behind it isn't the cheapskate the other guy was. We are eager costumed people running about, looking for bits of sugar to brighten our night. We are weary people doing what we can and looking for a little gratitude in a world of desperation and greed. Pause between Hershey bars tonight and give it a bit of thought.

We're going to spend $4.96 billion this year on Halloween. Will we be better people for it?

Foundations gave almost $32 billion in 2004. Will we be better people for it?

Trick or treat?

Give it some thought and have a safe and happy Halloween!

Another Level of Giving

Upon careful reading of Maimonides' "Eight Levels of Charity," Madmunk humbly proposes another level:
Perfect charity is done when, by your gifts, the recipient is not only no longer dependent on others but is a giver himself as well, for, if at day's end, he is still the recipient and you are still the giver, his hand is not truly strengthened and, indeed, nothing much has changed.

Thursday, October 26, 2006

The Real Difference Between Charity and Philanthropy

"The most powerful force in the universe is compound interest."
Albert Einstein

The adage "give a man a fish, you feed him for a day; teach a man to fish, you feed him for a lifetime" is, for many, at the heart of the difference between charity and philanthropy. Charity refers to the relief of suffering while philanthropy is the seeking out of the root causes of social problems and solving them. There is much truth to this. After all, that's the distinction Rockefeller and men like him drew when they insisted that they were doing something more, something greater, than their merely charitable peers.

Nonetheless, I believe that the true difference between the charity that is practiced by your average schmoe who tosses the Salvation Army a few coins at Christmas, and the philanthropy practiced by a man whose foundation is involved in a number of innovative initiatives aimed at effecting important social change is much simpler: compound interest.

While I marvel at American philanthropy's insistence on private solutions to public problems, its Tocquevillean associations, and its incredible can-do Yankee individualism and generosity, I am in still greater awe of its true genius: an entire system dedicated to harnessing the engine that is compound interest for the good of humanity.

When the charitable man makes a donation, he digs in his pockets for whatever he's got on him or he conscientiously strokes a check for a sizable sum and hands it off to a grateful beneficiary. Bada-bing-bada-boom. Charity.

When your philanthropist, on the other hand, makes a grant, that money's coming from a foundation, or a giving circle, or a donor-advised fund, where that money is invested for social benefit. You can make grants for the next five days, the next ten years, or forever. Bada-bing-bada-BOOM! Philanthropy!

While the charitable man's power is exerted and exhausted in the act of giving, the philanthropist's power is conserved even as it's exerted.

Give a man a fish, feed him for today. Teach a man to fish, feed him for a lifetime. Charity is for today; philanthropy is forever.

There's your difference between the philanthropic and the "merely" charitable: compound interest.

Tuesday, October 24, 2006

A Gentle Reminder of What It Is We Do in This Sector

I got a prospectus from a socially responsible investment group and this petite parable was printed on their materials:

Thousands of starfish washed ashore. A little girl began throwing them in the water so they wouldn't die.

"Don't bother, dear," her mother said, "it won't make a difference."

The girl stopped for a moment and looked at the starfish in her hand.

"It will make a difference to this one."

Sunday, October 22, 2006

From Strategic Giving to Democratic Giving

Peter Frumkin's great achievement in his new volume, Strategic Giving: The Art and Science of Philanthropy, is to declare what philanthropy is for a significant group of donors and philanthropic professionals: the development and carrying out of a coherent strategy for effecting social change.

I was impressed with Frumkin's main argument surrounding a "philanthropic prism," the five components of a philanthropic strategy: the value produced through giving, the vehicle of institution for giving, the time frame guiding giving, the identity and style of the giver, and the logic model supporting the giving. I could certainly imagine a donor sitting down and thinking through these issues and attempting to bring greater alignment and coherence to their philanthropic project.

I was also heartened to hear a voice in favor of constructive failure. For Frumkin, an ardent defender of the pluralism the sector represents, failure and mistakes come with the territory. We're dealing with complex social phenomena and attempting to effect social change. It's not a question of whether or not we're going to make some mistakes. That will happen. The question is: will we learn from these experiences? Are we up for the kind of scrutiny that pores over our failures as well as our successes? Do we report on our failures so that we and others might improve? For Frumkin, we can learn just as much from those challenges as we can from successful pilot projects, and I wholeheartedly agree.

Most of all, I am keenly interested by Frumkin's claim that the effectiveness and accountability questions obscure what's really at issue in these debates: legitimacy. In some sense, these questions of effectiveness and accountability define current debate, and credit Frumkin for seeing these arguments for what they truly are, questioning the right of private donors, philanthropic institutions, and professionals to act on behalf of the public. Our sector tends to focus on effectiveness and accountability as proxies for the real issue: what ultimately justifies philanthropic action? What legitimizes this sector?

According to Frumkin, "the best and only source of real and lasting legitimacy for philanthropy rests in the development of sound strategy." This argument intrigued me, so, at a recent panel discussion on Strategic Giving, I took the opportunity to ask Frumkin about it afterward. Frumkin contended that sound strategy is a necessary but not a sufficient condition of philanthropic legitimacy. Without a strategy, it's unlikely that we'll be effective. Without being able to point to results, we cannot be truly accountable. Without accountability, not mere transparency, we cannot claim legitimacy for our sector.

This is where I think Frumkin and many donors miss and will continue to miss an important opportunity. By whom exactly is Frumkin's prism to be used? Where does this discussion of values and vehicles take place? From the look of things, it's for donors - with the possible help of advisors, given Frumkin's skepticism of philanthropic professionals - with the goal of creating a coherent strategy. However, values are not developed in a vacuum, nor do we make grants and conduct the business of philanthropy in isolation. The development of a philanthropic strategy happens in a social context, not least because donors don't do it all themselves. Armchair philanthropy simply doesn't happen.

Frumkin doesn't claim that strategy is a sufficient condition for philanthropic legitimacy because it actually does very little in the way of convincing the public that donors have the right to act publicly on their behalf. Is the Gates Foundation's massive charitable wealth justified because Gates has a strategy? Are their grants more legitimate because they've got a logic model? Strategies and logic models certainly help - but only because they're often useful in getting people's consent to continue philanthropic work.

I assert that philanthropic action is legitimate if and only if all those involved consent to the action (and, I would argue, in some way participate in it and benefit from it). Truly legitimate philanthropy is democratic philanthropy. To adapt Frumkin: the best and only source of real and lasting legitimacy for philanthropy rests in the development of shared sound strategy.

This is where donors and philanthropic professionals alike miss an important opportunity to democratize the philanthropy prism. When a donor wants to accomplish something, their wealth can be used not only to achieve their philanthropic goals but to build a community, to build democracy. Donors should be encouraged to invite others into their philanthropic prism, to experience it and all the challenges and triumphs that come with it. Donors can afford to be strategic, can afford to think about appropriate logic models, time frames, and charitable vehicles. What of those who cannot afford "strategy" but nonetheless stand to lose or gain by the philanthropist's actions? What of them? By inviting them in, by working with them, side by side, for common benefit, donors can give others control of their own destiny, perhaps for the first time. Our goal is not necessarily coherent strategy(although that certainly helps), but cohesive communities.

To some extent, this already happens. As I noted, we are not armchair philanthropists. We discuss our views with others, learn, act, and grow among family, friends, colleagues, fellow trustees, fellow philanthropoids, and fellow citizens. We don't do this all by ourselves. I contend, though, that strategic giving ought to be a collective enterprise, deliberately developed of, by, and for the people. It can start with anyone, a new donor, a seasoned program officer, or your average citizen with a little money to give, but it continues with others.

Every grant is a new social contract, and I hope that given the choice between creating a strategy and creating a community, donors will opt for creating community by inviting them to participate in their strategic giving. That way, philanthropic legitimacy has a better chance of being assured because philanthropy will not mean one thing to a significant group of donors and philanthropic professionals. It will mean the development and carrying out of a shared strategy for improving our common life in one way or another. It will mean something to everyone.

Thursday, October 19, 2006

Wednesday, October 18, 2006

Is this thing on?

What do you say you and me try this one more time?

My name is Madmunk, and this is Philanthropica.