27April

How does philanthropy try to mitigate risk and should it? By Shelagh Gastrow

Whilst recognising the need for assurance that our funding is spent well and efficiently, we need to also explore what philanthropy is really about. Risk taking is fundamental and, in many ways, philanthropy is not for sissies. However, it is about effecting change, making a contribution and, most importantly, to provide meaning in our lives.

 

How does philanthropy try to mitigate risk and should it? By Shelagh Gastrow

The current trend in philanthropy is significantly influenced by business thinking that focuses on certainty and results. Moving away from the profit motive is proving difficult for many and they therefore look for “social profit” as an outcome of their philanthropic investments. The concept of philanthropy itself contradicts this trend. Philanthropy is defined as love of humankind, it is meant to be altruistic and about seeking fulfilment and meaning for the philanthropist as a person as well as for the people that benefit. Is there potential to align these two concepts? Can we really have results driven philanthropy?

Present movements in philanthropy, especially within institutionalised philanthropy such as established foundations, have swung towards the development of various mechanisms to ensure impact and mitigate risk. This article is not focussing on the risk involved in monetary terms, but more on risk relating to the type of cause or programme that is supported. Various tools are used to assist in sense-making of the context, the plans, the activities and the outcomes. Recipients of funding often have to use these tools so that the required reporting is aligned with the donor’s own reporting mechanisms. In addition, this enables philanthropic foundations to focus on results and push for evidence-driven decision making.


One of these tools is the logic framework which provides for a matrix of input, output, outcomes and potential impact. Basically, expectations of the logic framework are that the organisation can define measureable objectives, indicators to measure progress, goals to judge performance and a monitoring system to assess the results. Some people enjoy developing their logic frameworks as they provide planners with some degree of certainty, whilst others, who prefer not to work mechanically, may produce them if requested, but don’t believe they necessarily offer solutions to managing change which is often unpredictable and requires high levels of flexibility. (Note how quickly Rhodes disappeared from the UCT campus – the movement could have been predicted, but the speed of change was probably not in anyone’s framework, neither was the impact across the country and even into other parts of the continent).


Logic frameworks are very dry. Whilst process indicators do unpack what needs to be done to prepare for a project, they don’t provide for the real texture and complexity of the process. Working in the social sphere is usually experimental and involves negotiation, the building of relationships and navigation of the terrain in order to ensure people are on board. This involves frequent meetings, allaying fears, negotiating with stakeholders, site visits, draft documents and agreements, preparation of training materials, advertising and encouragement, phone calls and emails. This is really the bulk of the work, yet is not reflected in documentation related to measurable input, output and outcome. Sticking my neck out, I am concerned about how boring and often simplistic these materials are and who really can relate the logic framework with the reality on the ground which is richer and represents the passion and commitment of the people doing the work. I have a friend who once put a cake recipe into her logic framework document and nobody noticed.

Building on the logic framework is a second tool - “the theory of change” which provides a framework for an organisation to explore how it thinks or assesses change will happen. It is also an outcomes based tool which applies critical thinking to the conception, application and evaluation of an organisation’s work. Some organisations have found it to be an extremely useful approach as, besides mapping the logical development of a project, it assists in creating a thoughtful process of engagement and dialogue amongst all those involved. It provides for a review of values, ideals and principles and assists in making explicit the organisation’s theories on how change could take place. However, some organisations merely see this as part of conforming to donor requirements and many non-profits now have their theory of change ready, done and dusted to trot out as needed. Neither systems accommodate intuition, and many leaders are intuitive – they know almost instantly where to go when change takes place and are able to make quick decisions. However, they cannot spend the hours unpacking their thoughts into log frames or other written materials. We cannot dispense with intuition – it brings a combination of experience, awareness, wisdom and knowledge into a flash of understanding which no theoretical exercise can actually replace.

The above tools are an attempt by philanthropy to improve the capacity of their partner organisations to become more efficient and effective. However, by cutting out the “meat” of the daily work of the organisation and reducing the quest for meaning and purpose in this world, which is what actually drives people who choose to work in the non-profit sector, the current philanthropic focus on measurement could, if we are not careful, mean throwing the baby out with the bathwater. The problem with over-bureaucratisation of philanthropy is that the reports and forms become a drain on the resources of the recipient organisations who find them to be burdensome rather than useful tools for planning and learning.

How can we align the need for accountability and certainty relating to results of philanthropic investment and the passion and value that people in the field wish to experience? Some level of give-and-take is required in terms of expectations. Philanthropy also needs to consider the level of risk it is prepared to take, especially when it comes to supporting innovation and experimentation in the social sphere as well as those areas that pertain to social justice and human rights. There are ways to measure success in these areas, but they cannot be measured in the same easy way as the delivery of health care, for example. When we present a theory of change, the risk is that the theory might simply be wrong, or could be disrupted by political changes or new legislation. Understanding the cause and the passion of the people working for a particular cause, and not merely focussing on the deliverables will enable better communication and alignment between philanthropy and the civil society sector.

The other area of risk takes into account how long a particular philanthropic foundation remains committed to a specific project or cause. Currently we see a three or five year commitment as pushing the boundaries. Can institutionalised philanthropy adapt to slower time frames than is currently expected? The constant seeking of innovation is a sign of a fast-changing world, but some ground-breaking investments can take years to implement. Judith Rodin of the Rockefeller Foundation recounts its investment in 1928 into the construction of a 200 inch telescope by an astronomer called George Hale. The asking amount was $6 million, a fortune at that time, but it would enable humans to increase their knowledge of the universe. There was no guarantee that Hale’s design would function. The first attempt did not succeed and continuing problems hampered the project. When World War II broke out, the whole project froze. The Hale telescope only came on line in 1948, twenty years after the initial grant, but it provided a view of the universe and has forwarded scientific knowledge for humankind. Was it worth the wait? Would modern philanthropy be prepared to take this risk, including reviews of design, disruptive events such as a War, difficulties in delivery? Is our fast moving world forcing us all to seek immediate results?


Whilst recognising the need for assurance that our funding is spent well and efficiently, we need to also explore what philanthropy is really about. Risk taking is fundamental and, in many ways, philanthropy is not for sissies. However, it is about effecting change, making a contribution and, most importantly, to provide meaning in our lives.