DoGoodBetter Blog

 

Can Business Beat Philanthropy at Changing the World?

Leslie Crutchfield, August 15, 2011

The most thought-provoking philanthropy piece I’ve read this summer is the Economist feature, “The Centenarians Square Up”. The article asks which 100-year-old institution has had more positive impact on society—IBM, a $200 billion for-profit company, or the Carnegie Corporation, a $2.5 billion nonprofit foundation? It puts a creative twist on Built to Last / Good to Great author Jim Collins’ research in which he compared companies founded in the same era to deduce why some were wildly successful and others were average.

It ties into a question that we’ve lately been asking readers of Do More Than Give to consider: Given that modern philanthropy is celebrating its centennial anniversary—Carnegie Corporation was created in June 1911 as the first major U.S. general purpose foundation, ushering in the modern practice of “scientific” philanthropy—how much have donors accomplished in these past 100 years? What will it take for philanthropy to reach its full potential in the next century of giving? (see “A 'Platinum Age’ for Philanthropy Requires Donors to Change Their Ways” in The Chronicle of Philanthropy).

The Economist piece got me thinking more deeply about the evolving relationship between business and philanthropy. It used to be simple: In the not-too-distant past, if you wanted to make money, you invested in business. If you wanted to make a difference, you gave to charity. But as we explore in Do More Than Give in Practice #2: Blend Profit with Purpose, if ever the world were so neatly divided, it ain’t so today. Forward-thinking businesses now create “shared value” —a concept that Michael Porter and Mark Kramer introduced to explain how companies can become more competitive and profitable when they incorporate societal benefit into pursuit bottom line pursuits (it’s different than CSR).

Of course, most companies haven’t yet mastered the art of creating shared value, and not every executive may be up to the challenge. But there is a middle ground. Companies don’t need to retreat to the traditional mode of bifurcating business from philanthropic pursuits. Even if its main contribution to society comes through a corporate foundation, a company can enhance giving by leveraging all of its assets—including its know-how and networks— rather than only dispensing grants to worthy charities.

A good example is PNC Financial Services Group (PNC). The fifth largest U.S. bank, PNC launched Grow Up Great—a ten-year, $100 million program to improve early childhood education. But instead of simply making grants to Head Start centers and deploying corporate volunteers as tutors or mentors, PNC took a radically different approach. It also leveraged its corporate lobbying power on behalf of vulnerable youth, training each of its regional presidents on how to advocate for better early childhood education policy reform at the state and local level. The early results have been impressive: Through the advocacy of regional presidents in Pennsylvania and the personal drive of CEO Jim Rohr, PNC contributed to the passage of a $75 million line item to the Pennsylvania budget to improve school readiness programs for an additional 12,000 children.

The point is, when companies use their core business capabilities and leverage non-financial assets to tackle social problems—like their lobbying prowess and access to policymakers—they can often achieve more. Corporations like PNC embrace a wider arsenal of tools to advance social progress. And while they may not yet be fully creating shared value, they’ve moved beyond the antiquated notion of traditional checkbook philanthropy.

A hundred years ago, Carnegie introduced new philanthropic tools by pooling his millions into a general purpose foundation and giving it away “scientifically” to solve problems. The received wisdom of his day was to separate one’s philanthropy from one’s business, and the notion of corporate responsibility had not yet evolved (Carnegie’s deadly breaking of the Homestead Strike was a case in point). It may have made sense to bifurcate your business from your philanthropy at the dawn of Industrial Era, but in today’s Digital Age leading donors look for what business and philanthropy can accomplish together.

 

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The Price of Change

Leslie Crutchfield, May 19, 2011

The cost of catalytic philanthropy was top of mind for donors attending a recent Philanthropy New York seminar on Do More Than Give. They’d heard leaders speak about two very different kinds of foundations: The Tow Foundation— a private, family-run philanthropy, and Thomson Reuters Foundation—a global corporate foundation. As the leaders described their efforts to generate change, audience members commented that it sounded expensive. “How much grantmaking actually gets done?”

In the case of The Tow Foundation, the hard costs of catalyzing change appeared relatively low compared to some significant soft costs.

This family foundation based in New Canaan, Connecticut, has contributed to statewide juvenile justice system reform affecting tens of thousands of young residents. Executive Director Emily Tow Jackson explained that her family’s Foundation started out the way most family funders do–they gave limited grants to local nonprofits providing services directly to kids in the community. Tow Jackson soon realized that, while the Foundation was helping a few hundred kids through these local gifts, tens of thousands more young people could benefit if the entire state system could be reformed. So Tow Foundation co-founded and gave start-up funds to a local Alliance of nonprofits and juvenile justice advocates that collectively pushed for policy change; Tow also funded litigation and other advocacy activities (see www.towfoundation.org for more information.)

The impact: Tow Foundation has contributed to dramatic decreases in Connecticut’s rates of juvenile incarceration, enhancements to how youth are treated, educated and counseled while detained, and changes to legislation that move sixteen- and seventeen-year-olds out of adult jails and into the juvenile justice system.

The cost? Hard expenses, such as grants given annually, amount to approximately $1 million. The soft costs are harder to put a value on. Over a ten-year period, Emily Tow Jackson and the Foundation’s one program officer, Diane Sierpina, worked nearly full-time on juvenile justice advocacy. Their work included some grant diligence and organization evaluation, but the bulk of time was spent participating in the change process—commissioning research on the extent of the problem, inviting experts to speak to the Foundation board and testify before state Judicial leaders, calling in chits with policy elites and the media leveraging family and professional connections, helping to convince state leaders that they needed to create a new strategic plan, and so forth.

It’s difficult to put a price tag on Tow Jackson’s time. Even if you calculated her annual salary over a 10-year period, how would you value the policy and media connections, the accumulated field knowledge, the local and national networks that the Foundation staff and board of trustees mobilized?

Net-Net, our research suggests that The Tow Foundation’s advocacy proved to be a relatively low-cost, highly-leveraged strategy for accelerating change in the Connecticut state Juvenile Justice System.

The Thomson Reuters Foundation angle is different. When Monique Villa agreed to take the helm of this newly formed foundation—created in 2008 when Thomson acquired Reuters—Villa ramped down grantmaking activities and dedicated Foundation staff time almost exclusively to catalyzing change. Staff focused on leveraging the deep legal, financial and journalism expertise among the company’s 55,000 worldwide employees and its broader global networks of clients and partners.

Take Thomson Reuters Foundation’s work last year in Haiti. Within hours of the earthquake, Villa dispatched a team of the Foundation’s staff journalists to Port-au-Prince to set up a first-of-its-kind Emergency Information Service (EIS) for the affected population, disseminating verified, actionable information by SMS messaging in Creole. While tens of thousands of Haitians desperately searched for medical care in the aftermath of the earthquake, one hospital only a mile away was fully equipped with medical staff and equipment—but virtually empty of patients. EIS helped direct injured people to the hospital. It also provided critical information on how to contact search-and-rescue teams, where to receive food and water, and how to register missing loved ones.

Further, once the immediate earthquake crisis subsided, Thomson Reuters Foundation provided lawyers and legal resources for free through two programs, Trustlaw and Trustlaw Connect. In Haiti, the local population struggled with a tragic increase in rape and other violence against women. So the Foundation reached out to its global TrustLaw network of lawyers to provide pro bono research on how other countries improved legislation on similar issues, and help Haitians establish stronger rule of law on these matters. (The Foundation provides these and other services in Haiti and other communities worldwide, see www.trust.org)

The Thomson Reuters Foundation annual budget is approximately $5 million (U.S.) It still makes select grants to NGOs providing humanitarian assistance to communities worldwide, but the majority of the funds are now deployed through staff providing critical services such as EIS and connecting NGOs and social entrepreneurs worldwide with pro bono legal help and advice through Trustlaw, among others.

How do you put a price on those contributions? Is it more valuable to society for a corporate foundation to contribute another few million in grants, or instead use those resources to leverage a company like Thomson Reuters’ worldwide expertise, global reach and programmatic contributions in ways that no other funder—private, corporate or community—could?

Would some corporate foundations be better off sticking with a more traditional mode of giving, and put the bulk of their money and time into making grants?

And what about family foundations, or community foundations for that matter? Would they be better off focusing exclusively on making grants to nonprofits and getting out of the way, as some philanthropy experts advise?

The answers to these questions aren’t obvious, and I don’t profess to know all of the solutions. I welcome your thoughts and hope you will suggest ideas of your own that can advance the debate.

 

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New Name for the Same Old Thing?

Leslie Crutchfield 5/10/2011

“Catalytic philanthropy sounds good” said a guest attending the Do More than Give event at The Newseum in Washington, D.C.,“but isn’t this just a new word for the same old thing?”

The questioner said by way of example that labels for youth have morphed from at-risk, to disadvantaged, to most recently under-served. “But aren’t we just talking about the same thing? What’s really changed in philanthropy?”

Fair question.

Jean Case gave a provocative response. As co-founder and CEO of the Case Foundation, she pointed to America’s Giving Challenge, an online social media campaign that raised last year more than $2 million for nonprofits from about 100,000 donations in just 30 days. “That’s change,” said Jean, whose Foundation is a pioneer in leveraging social media networks and other online platforms to advance causes.

Jean Case was a featured panelist at the Newseum event along with Matthew Bishop, who writes for The Economist and is co-author of Philanthrocapitalism, Paula Ellis of Knight Foundation, and Mario Morino of Venture Philanthropy Partners. The Case Foundation was featured for it its catalytic campaigns such as the Make It Your Own Awards, which incite local community members “from all walks of life” to convene and discuss what matters most to them, then decide what kind of community they want, and finally, take action together. The first Awards had thousands of applicants and more than 15,000 voters. It’s an excellent example of Practice #4: Empower the People in Do More Than Give. Catalytic donors don’t just treat individuals as “recipients of charity” or part of a “problem to be solved.” Instead, they engage individual community members in devising their own solution to a problem—and then support them in tackling it.

Donors catalyze change offline too. They forge networks on the ground, like Knight Foundation, which has built a national network of community and place-based Foundations and galvanized them to tackle the news and information crises in their hometowns. Locally-relevant information and news “is as vital to a well-functioning of a community as clean water or good schools,” said Knight’s Paula Ellis. But instead of making top-down grants to local nonprofits from its headquarters – Knight is $2 billion+ national foundation based in Miami, Florida—Ellis and her team instead forged networks of foundation peers and provided them with tools and resources to tackle the problem in a decentralized way. It’s an excellent example of Practice #3: Forge Nonprofit Peer Networks.

“Managing to outcomes” is another gem of philanthropy jargon—one that’s bound to stay in vogue for a while with the publication of Mario Morino’s much-anticipated book, Leap of Reason: Managing to Outcomes in an era of scarcity (releases May 19; to download a free copy visit the book site. Morino laments the fuzzy phraseology—“frankly, I wish I had a better term,” he says—but it’s a huge problem. “The vast majority of nonprofits have no reliable way to know whether they’re on track to deliver what they promise to those they serve. They rely on little more than anecdotes and intuition.”

By extension, this presents a huge problem for donors, who want to know if their grants “worked.” But we advise donors to move away from evaluating their grantees in order to claim attribution for their gifts.  Instead donors should strive to understand how they have contributed to advancing the outcomes they seek. (We write more about this in Practice #6: Learn to Create Change). Matthew Bishop notes that Venture Philanthropy Partners is one of the few self-styled funds that actually delivers on the promise of “venture” philanthropy. Bishop studied VPP and other entrepreneurial business leaders who apply their corporate know-how and management discipline to address social problems in his seminal book Philanthropcapitalism.

Is all of this just new jargon for the same old concepts? My response is, I’m not sure it matters. People have been trying to create positive change in the world for as long as history has been recorded. My beef is that philanthropy, as commonly practiced today, is not focused on solving problems and catalyzing change. Most donors still define their role primarily as giving away money. So while catalytic philanthropy is not new, it is rare. And that’s what we hope to change. We want catalytic philanthropy to become the new normal in this 21st century Golden Age of Giving.

 

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Announcing the DoGoodBetter Blog

Leslie Crutchfield 3/21/2011

Welcome to the blog for our new book, Do More Than Give: The Six Practices of Donors Who Change the World (www.domorethangivebook.com). We've created this space to invite conversations and debate about the practice of catalytic philanthropy, a unique twist on the traditional approach to charitable giving that we explore in the book.

We wrote Do More Than Give because we believe that philanthropy, as commonly practiced, has become antiquated. It's no antidote to the complex, interconnected problems that face our world. And while more than $300 billion is donated alone in the U.S. each year, experts agree that most philanthropy falls far short of its potential to create significant change. The exceptions are those donors who take a catalytic approach and strive to solve problems. They employ high-impact practices like funding and engaging in advocacy (rather than only supporting direct service providers). They embrace mission investing (rather than separating their financial and philanthropic interests). Perhaps most importantly, catalytic donors pursue collective impact strategies, collaborating with foundation and nonprofit peers to achieve field-wide wins (rather than only funding individual nonprofits or competing to establish their own legacies). They recognize that change requires influencing entire fields and systems - which are affected by multiple nonprofits, donors, policymakers and business leaders - to adopt better approaches (see John and Mark's recent article in Stanford Social Innovation Review, Collective Impact). Catalytic donors see the forest for the trees.

Writing Do More Than Give has changed the way I think about and advise donors how to practice philanthropy. After studying the catalytic foundations, corporations, and individual donors featured in the book, I have come to believe that every funder has the potential to contribute to systemic change. This wasn't always the case.

Back in 2007, when my previous book, Forces for Good, was first released, I held a different view. My coauthor Heather McLeod Grant and I had written about the "six practices of high-impact nonprofits," and explored how great nonprofits create wide-scale systemic change by leveraging forces that extend far beyond the four walls of their own organizations (see www.forcesforgood.net). So when donors would ask me how they could apply the concepts in Forces for Good to their giving, at first I advised them to use the six practices as a screen to select the best nonprofits for funding. If donors spent more time finding and funding high-impact nonprofits like those in Forces for Good, I reasoned, more philanthropy would flow to top-performing organizations, and we would move closer to solving problems like underperforming public schools or climate change.

But then I realized that donors can do more than fund nonprofits to do things like combine policy advocacy with direct service. Donors themselves can actively advocate and push for policy change - and they are often in a better position to do so, given their connections and clout with policy elites. These are important assets that nonprofits often lack. But I didn't know of many examples of donors who actually did much more than make grants. So John, Mark and I set out to find out examples of philanthropists who go beyond basic checkwriting to proactively catalyze change.

The results of our research are encapsulated in Do More Than Give. The book officially publishes on March 28, 2011, and we are excited to hear what you think. My coauthors and I will be starting a book tour this spring, and we look forward to sharing these ideas at various conferences and events in the U.S. and overseas. I'll return to this blog to explore questions raised and ideas sparked from these encounters. So please join me back here to share your feedback and exchange your own stories about what it takes to catalyze change in this 21st century of giving.

 

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Author Leslie Crutchfield
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