Thinking about Philanthropy

As I write my next-to-last blog entry as President of the Dodge Foundation, I am drawn back to the title of my first – not just because I am thinking about this field as I prepare to leave it, but also because there was an important gathering about the future of philanthropy in New York earlier this month that has grabbed my attention.

It was a panel discussion titled “Disrupting Philanthropy: Changing the Rules,” hosted by the Council of the Americas and the Stanford Alumni Association. You can already tell from the title that there is some deliberate ambiguity going on. Are outside forces disrupting the complacent self-satisfaction of organized philanthropy? Or is organized philanthropy disrupting itself and the world (in a good way) through changing its own rules and practices?

I couldn’t go to the event, but happily the Stanford alumni group distributed some vivid notes written by Emily Robbins, which I will excerpt and comment upon here.

Ms. Robbins begins as follows:

Nothing, not even rain and rush-hour crowds, could dampen the enthusiasm of the capacity crowd that turned out Thursday evening for the “Disrupting Philanthropy” panel discussion … It hardly seemed possible that a year had passed since I’d been in the same room to hear Hewlett Foundation president Paul Brest, Rockefeller Philanthropy Advisors CEO Melissa Berman, and Stanford professors Debra Myerson and Rob Reich discuss the potential and pitfalls of strategic philanthropy. That night, with the U.S. economy in freefall, it was impossible to ignore the tension and anxiety in the room.

This year’s event, in contrast, was marked by a palpable sense of excitement and possibilities, on both sides of the funder/grantee divide. Indeed, at times it felt as if we had all arrived at a transformative movement together.

This mirrors a feeling I have sensed recently in meetings at Dodge and elsewhere. And it reminds me of a theory of change I subscribe to which posits that unless there is significant dissatisfaction with the status quo, it is very hard for things to change in any significant way. Perhaps that time has come. On so many levels and with so many issues—from global climate to state budgets to local news—there is a sense that the way we have been doing things is unsustainable. That DOES fuel the momentum for change, even for transformation. But what is the role of philanthropy?

At this panel, the Council on Foundations President Steve Gunderson asked, “Is the main role of philanthropy to provide funds? What if, instead, we provided leadership for social change? What if we acted more as partners and provocateurs?”

This sounds good if you are working for a foundation, or sitting at its Board table – maybe a little scary if you are asking, “Who elected those guys?” Yet it is undeniably true that the flexibility foundations have to act as what Paul Ylvisaker famously called “society’s passing gear” is under-utilized.

Ms. Robbins’ notes from Professor Robert Reich’s remarks suggest the extent of the change we may have to bring about:

Reich likened the changes roiling society to nothing less than a rewriting of the social contract, with the traditional roles of the public, private, and nonprofit sectors suddenly open to reinterpretation. He noted that philanthropy is changing much more quickly than the public-sector regulations to which it is subject and argued that as business discipline and techniques increasingly are applied to social benefit work, nonprofit practitioners need to make sure the sector doesn’t sacrifice its soul in the pursuit of greater impact and efficiency. He also urged those in attendance to remember that the vibrancy of the sector is dependent on its freedom to innovate and that foundations and nonprofits should not be afraid to embrace the “permission” they are given to do that as a result of rapid and disruptive changes in society.

Wow. There is a lot to think about here. He is saying both that the nonprofit sector needs to work in different ways with business and government and that its “soul” may be at risk in doing so. He hints at the great measurement debate – the potential (and I believe unnecessary) tension between quantitative and qualitative assessment, between short-term outcomes and long term impact, between solving problems in existing systems and creating new ones. And he lands on the question of “permission.” It is a crucial one, I think. Maybe that permission has already been given, as he suggests, but I believe our efforts would be well-spent in surfacing that assumption – or perhaps better yet, reinforcing it through the very act of collaboration with other sectors around shared values and visions.

Meanwhile, as we strategize based on the public, private and nonprofit sectors as they are now, the playing field is changing under our feet. The “Disrupting Philanthropy” meeting notes summarize the presentation of panelist Lucy Bernholz, the founder of consulting firm Blueprint Research & Design and a force behind the influential Philanthropy 2173 blog:

(She) was fired up by the idea that the traditional role of 501(c)(3) nonprofits was being challenged by the emergence of entities with a “triple bottom line” — e.g., low-profit limited liability companies, otherwise known as L3Cs, and so-called beneficial corporations, aka “B corps,” which recently were recognized as legal entities by the state of Maryland. She noted that Americans need to develop a better understanding of the laws, here and abroad, that shape and determine global philanthropic giving. And she suggested that while nonprofits’ use of social media is advancing by leaps and bounds, as evidenced most recently by the success of various mobile text campaigns for Haiti earthquake relief, we are still in the early stages of understanding the multiple possibilities for these tools in terms of how they can help us better organize and finance our social change efforts.

Two big, new ideas – the emergence of L3C’s and of social media. Think about what might be possible if the economic power and visibility of businesses were brought to bear on social missions at a large scale. And social media has already changed our daily lives – someone may even tweet this blog and set up a conversation for me I never could have found on my own. As Bernholz notes, we are just beginning to understand the possibilities. Both ideas beg for gatherings of foundations asking what these developments mean for our work, as opposed to each of us trying to make sense of them on our own.

The last panelist at this event was Diane Aviv, the President and CEO of Independent Sector. I again turn to Emily Robbins’ notes:

She asked those in attendance to imagine what the good foundations could do if they looked beyond the 5 percent they are legally mandated to pay out and found ways to harness the other 95 percent in the service of social change. And she noted that the new paradigm of interconnected global markets — for capital, labor, information — means that, now more than ever, the philanthropic sector needs leaders who favor change over the status quo and are committed to innovation and taking risks.

I can say as the outgoing President of one foundation and an ongoing Board member of another (Surdna), that her first point, the potential of Mission-Related Investing, has moved from a back-burner issue to the front in both organizations. And of course such discussions are inextricably linked to Aviv’s second point about tolerance for risk — risk within a complex and dynamic system and by organizations often perceived by the greater society as being risk averse.

It is no wonder, though, that we are drawn to doing things the way we have always done them, in foundations and elsewhere. At least we can wrap our minds around what is going on, and what we expect will happen.

This is one of the points I most appreciate in Chip and Dan Heath’s book Switch: How to Change Things When Change is Hard – that we get overwhelmed by choices, by complexity, and by ambiguity, the very world the “Disrupting Philanthropy” panel described as the one in which foundations now operate. The result is paralysis, which is not what we need.

Emily Robbins—whom I thank, whoever and wherever she is—ends her notes with a final quote from Diane Aviv: “A good chess player thinks a couple of moves ahead. The great ones think ten, twenty moves ahead.”

Let’s not fault the chess analogy because there are multiple players in the game of social change and many of them are not aware they are in the game, not to mention the fact that we may want more than a single winner in this game. Let’s just embrace the metaphor for its evocation of planning backwards strategically in the midst of complexity.

I see every decision about every Dodge grant, and every attempt at collaboration, in this light. They are part of something twenty moves ahead – a creative and sustainable New Jersey—as well as important to the current day.

And if the playing board and the rules of the game are changing, as the “Disrupting Philanthropy” panel suggests, that is probably a good thing, for this is a game with the highest of stakes, which requires our most creative and open-minded efforts. It has been a great privilege to be part of this world for a time.