The baby boomer generation continues to grow older and has already begun to pass the philanthropic choice to later generations. Estimates show that boomers will leave behind about 1 trillion dollars each year to family members and charities. This incredible amount of money funneling into charities, combined with the recent increase in large foundations funded by the tech boom, has resulted in what some are calling the “Century of Philanthropy.” While the increase in donations certainly has the potential to create a golden age for giving, some people believe that donors need to become more strategic in their approach to grantmaking.
John D. Rockefeller and the Roots of Strategic Philanthropy
About 100 years ago, John D. Rockefeller spearheaded the growth of big philanthropy with a number of hypotheses that drove his particular approach to giving. Rockefeller believed in addressing the root of a problem rather than its symptoms and in tackling key big issues, such as education, health, and hunger. In addition, he strived to take an objective approach to addressing these issues and put his trust in experts working in the field. With his giving, he focused on long-term change driven by continuous updating of strategies based on witnessed results.
Over the course of his life, Rockefeller made an enormous impact with his philanthropy. His giving is directly or indirectly linked to extraordinary growth in agricultural productivity, the establishment of the research university, and great strides in public health. While not all of his work resulted in success, his unique take on how to effect change delivered some incredible returns that have fundamentally changed life in the United States and in other parts of the world. All of this success points to the value in strategic philanthropy.
The Concepts That Define What It Means to Give Strategically
What, exactly, does it mean to give strategically? In the most basic sense, it means that donors pay attention to what has worked before, including the Rockefeller hypotheses. While new ideas will drive real change, implementation of these ideas needs to be grounded in the lived experiences and achieved outcomes of donors. Strategic philanthropy also implies an understanding of the systems donors wish to change. Giving strategies should account for the forces at play in a given issue, as well as the motivations of key players in the debate. Understanding the overall situation helps avoid wasting time and money on pointless pursuits.
Strategic philanthropy requires in investment of time and energy. Donors need to have experiences in the field and speak to decision-makers as they formulate their strategies. Doing this will help create realistic and important goals. Giving should have measurable ends and outcomes to facilitate the evaluation process. Furthermore, strategic philanthropy involves an honest assessment of past failures and successes, which can help donors figure out what has worked in the past and, more importantly, why it worked.
Once a strategy has been defined, donors need to get feedback on it from as many people as possible. While industry experts will have some great insight, grantees, other stakeholders, and beneficiaries will also have a lot to say about how to address an issue most effectively. Many donors do not take adequate time to understand the unique perspective of all the parties mentioned above. However, doing so will help make strategies as effective as possible. When grantmakers fail to reach out to one of these parties, they can miss out on a critical point in the development of a strategy, whether it pertains to what a beneficiary actually wants or what kind of solutions are practically feasible.
The Relationship between Funders and Grantees in Strategic Philanthropy
Giving strategically helps avoid aimless flailing among nonprofits. Without strategy, organizations may make a temporary impact, but it will be difficult for them to effect lasting change. With strategy, organizations understand exactly what they need to do to move toward larger goals. Donors who embrace strategic philanthropy need to respect the expertise and autonomy of grantee organizations while also holding them responsible for the decisions that they make. When grantmakers think strategically about their own goals, they increase the expectation that grantees make their own strategies transparent. Organizations that receive funding should be able to explain exactly what they intend to do and why they believe that their actions will have the intended effect.
This transparency welcomes criticism and sparks conversations that can result in better programs. In this way, strategic philanthropy actually strengthens the partnerships forged between funders and their grantees. Effective strategic philanthropy depends on debate and exchange of information. Some industry experts have raised concerns that strategic philanthropy shifts too much power to donors by creating a situation in which grantmakers will only fund the people willing to follow their own ideas. Funders who take this approach are missing out on the very nature of strategic philanthropy, which demands ongoing conversation and shared responsibility in strategy formation.