figure of a person deciding which way to go

by Rick Ybarra

Happy Holidays and Happy New Year!

One of my first reads back in the office was a thoughtful article written by Melissa A. Berman, chief executive officer of Rockefeller Philanthropy Advisors.

She articulates what many of us in health philanthropy reflect on: giving money through grantmaking is way tougher than it seems (a never-ending conversation with my colleagues at the Hogg Foundation). What makes it challenging are the tensions and trade-offs funders constantly struggle with to achieve thoughtful, effective giving and demonstrate impact.

Melissa and her colleagues at Rockefeller Philanthropy Advisors identified 10 tensions with which every strategic donor/funder grapples with. In this blog, I provide the viewpoint of a grantmaker’s perspective. These tensions are relevant to donors — and to grantmakers.

  • Efficiency vs. effectiveness. It is important for nonprofits to be good, efficient stewards of resources. But clearly efficiency is not enough: A nonprofit must also be effective in its work and demonstrate impact. Don’t just look just at measures of activity or outputs (ex: how many youths at risk are being seen in a given program) but look at and ask for outcomes (ex: how many kids stayed in school as a result of that program vs. the norm for that group; improvement of scores; how many graduated to the next grade).
  • Focus vs. flexibility. Funders can make huge impacts by focusing on a select few areas rather than spreading their funds minimally across many efforts, thus being more strategic in their grantmaking. “Going deep vs. wide.” Conversely, strategic grantmaking can limit funding options and result in missed opportunities. By focusing more on the outcomes and less on activities to support, funders can have a greater impact and contribute to causes that matters to funders. An obvious tension there.
  • Capacity vs. capability. Is it better to affect the largest number of people or to do the best possible job for a smaller, targeted group? Huge tension there! A great program may help a small number of individuals but may not have the capacity to go to scale in order to reach many more people. Sometimes the best solution is for a funder to grant an organization with strong capabilities and capacities to achieve impact at a larger scale. However, that solution isn’t always feasible, so the funder may have to choose between a small, highly effective program and one that has the capability to advance their work to scale.
  • Speed vs. thoroughness. Disasters often inspire a quick and large influx of grantmaking. Often funding is used to address immediate needs. However, this type of grantmaking can also reveal systemic issues that require more long-term, strategic thought and commitment that can lead to lasting change. Redesigning and strengthening organizational infrastructure and health-care systems are two good examples here.
  • Solutions vs. systems. We are generally idea people. We often come up with what seem like great ideas and solutions to address pressing issues. However, many issues that grantmakers are trying to impact are systems issues, and the lack of infrastructure, capacity or accountability can often limit the effects of the solution and prevent it from being a sustainable, self-sufficient, and thus truly long-term solution.
  • Unique vs. standard. Exciting and new vs. building on what works. A clear tension for many funders. Sometimes the biggest impact can come from simply improving a system that works and supporting its expansion, instead of reinventing the wheel.
  • Independent vs. collaborative. The author presented an excellent example using the company Apple to illustrate her point. Funders sometimes find they can be more successful following the Steve Jobs model (working independently) than by collaborating with other organizations. Apple found that working independently allowed the company to innovate, test their ideas and bring them to market more quickly than meeting with stakeholders, being inclusive, and engaging in dialogues to achieve consensus. However, collaboration is necessary for solving large-scale systemic and social problems. Not even the largest philanthropic organization (Gates Foundation) has enough funding, resources or capacity by itself to create a health care system to benefit all people and communities in the US and throughout the world. You may want to consider when it makes sense and how you’d like to collaborate with other funders.
  • Experiment vs. investment. Many funders view their grants as an investment with an expected ROI or social return. I believe that grantmakers should balance between ROI and being “risk takers.” Grantmakers should push for innovation and experimentation. The author uses the illustration of philanthropy as an experiment, with a thesis, methodology, protocol and results to assess. Many grantmakers are like scientists: we can accept and learn from failure if the experiment is well run. Think strong evaluation component!
  • Leader vs. organization. Strong, passionate, and charismatic organizational leaders are important. But not all strong, passionate and charismatic organizational leaders are good human assets managers. Strong leaders are important but funders should examine the organization’s strength and capacities — whether it’s full of talented, committed people with expertise and run well…or not.
  • Ethical altruism vs. donor-driven priorities. The author cites that philanthropy supports arts, education and health care more than other countries do. And while some grantmakers believe that certain forms of giving are better than others (donor intent areas; many small grants vs. a few large grants; one-year grants vs. multi-year grants), most of us believe that philanthropy is intended to “do good.” To make things better for people, families and communities.

The author concludes that these tensions makes strategic philanthropy both difficult and rewarding. I agree! To work through these tensions, funders should evaluate which tensions are most important to them and their role of the funder as a change agent in philanthropy. You’ll have a better sense of which trade-offs you are willing to accept.

A well done article by Melissa Brown. Well worth the read!