Transparency Talk

Category: "Books" (2 posts)

Book Review: 'Giving Done Right: Effective Philanthropy and Making Every Dollar Count'
April 18, 2019

Daniel X Matz is manager and content developer for Candid's GlassPockets.org portal. This review first appeared in Philanthropy News Digest's PhilanTopic blog.

Daniel X MatzBack in 2016, Bill Gates, in the context of his partnership with the Heifer Foundation to donate 100,000 chickens to people around the world living on $2 a day, blogged about how raising egg-laying fowl can be a smart, cost-effective antidote to extreme poverty. As Phil Buchanan tells it in Giving Done Right: Effective Philanthropy and Making Every Dollar Count, the idea, however well-intentioned, attracted scorn from some quarters, including Bolivia, where the offer was declined — after it was pointed out that the country already produces some 197 million chickens a year. The episode is a pointed reminder that being an effective philanthropist isn't as easy as it might seem.

"If you want to effect lasting change — to move the needle — then you need to dig in and think long-term."

And Buchanan ought to know; as the founding CEO of the Cambridge-based Center for Effective Philanthropy for the past seventeen years, he has worked closely with more than three hundred foundations and scores of individual givers, exploring the landscape of American giving, distilling lessons learned (both successes and failures), and highlighting what works and what doesn't. (Spoiler alert: there's no single answer as to how to give "right," but few are better positioned than Buchanan to frame the question.) In this slim volume, he lays out a framework that can help anyone engaged in philanthropy to be more thoughtful, open-minded, and willing to learn, adapt, and keep trying.

As Buchanan sees it, anyone can be an effective philanthropist, and there is no one best practice to that end, other than to be as engaged as one can be. While much of the advice he shares is better suited for the well-heeled donor or the program officer at an established foundation (those with the time and resources to think through larger issues, consider options, and evaluate methods for learning from their giving), the panhandler's dictum applies: you don't need to be a Rockefeller to help a fella, and you don't need to be a tech billionaire to carve out a smart, sustainable path for your own giving. Certainly, to give is better than not to give, and if all you have the time to do is to write a check, do that. But if you want to effect lasting change — to move the needle, as it were — then you need to dig in and think long-term.

Phil BuchananPhil Buchanan

According to Buchanan, digging in means setting goals, weighing strategies for achieving those goals, evaluating the effectiveness of your giving, and, armed with that information, going back for more. Buchanan's work with CEP has given him special insight into how philanthropists approach their giving, and he's nut-shelled a range of smart propositions designed to help individuals and institutions think more clearly about how and where they give. Take his four types of givers:

  • The charitable banker broadly gives because of precedent or simply because they're asked to, but not really having a goal or focus that informs that giving.
  • The perpetual adjuster always changes who and what they fund but never having a sense of whether that giving is doing any good.
  • The partial strategist connects some of the dots in terms of goals, strategy, and effectiveness, but still keeps much of his/her giving unaligned with those goals (think of the family foundation that strategically works to reduce hunger in its community but allocates half its grants to the unrelated interests of board members).
  • The total strategist is all in on finding approaches that work and is rigorously willing to test strategies toward achieving clear goals.

While most givers start out as charitable bankers, Buchanan wants them to become as strategic as they can be, spending their time, talent, and treasure "maximizing [their] chances of making a difference."

Being strategic isn't quite the same as being on target, however, and the balance of Giving Done Right is a broad-brush effort to tease out the key ingredients of effective philanthropy. For instance:

  • Stop thinking you know everything. "The most effective givers open themselves to the possibility that others are in a better position to identify solutions." Not only do givers need to up their game with respect to understanding the problem they hope to solve, they also need to deepen their understanding of the communities and nonprofits actually doing the work.
  • Stop re-inventing the wheel. "The best givers share what they're learning openly with other funders and those they fund." Chances are you're not the first to want to solve an intractable problem; effective philanthropy means building on what others have learned, supporting their efforts when they work, and collaborating to find new paths when they don't.
  • Take the time to find the right fit. Not every family needs its own foundation; for some a checkbook at the kitchen table will do just fine, for others it's a giving circle, a community foundation, a donor-advised fund, an LLC, or a programmatically focused, professionally staffed foundation. And while Buchanan sees the opacity of DAFs and LLCs as a thorn in the side of the sector's embrace of openness (and conversely views independent foundations as the dark horse in leveraging transparency across the sector) here, the key is understanding which vehicle works best with your goals, and then getting to work.

Ultimately, transparency is at the heart of Giving Done Right, where "clarity, openness, and honesty about goals and strategies, as well as the nitty-gritty of what the giver is learning about what works and what doesn't" are tools that givers of all sizes need at the ready. Effective givers willingly use openness to strengthen relationships between funders, communities, and collaborators, help mitigate redundancy, build consensus, and solve problems.

Giving Done RightBuchanan also has a few dragons to slay, and Giving Done Right starts and ends with an exhortation for givers of all sizes to ignore the misguided lessons embraced by a new generation of wealthy donors. First and foremost is the assumption that nonprofits would be more effective if they were run like for-profit businesses. No one likes bloat or ineffectiveness, but as Buchanan notes, most nonprofits are bare-bones operations that rather miraculously squeeze water from the proverbial stone day in and day out. What's more, most for-profit businesses aren't as efficient as they'd have us believe, relying on a solitary metric — quarterly profit — to measure their success. In addition, Buchanan scolds those who see nonprofits' reliance on philanthropy as "dependency." Without philanthropic support, he writes, tongue firmly in cheek, how would a children's charity keep the lights on, by putting the kids to work? And in any case, he reminds us, the nonprofit sector overall generates nearly $1.7 trillion in annual revenue ($1 in every $10 of U.S. GDP), with 70 percent of that derived from fees and services.

Similarly, Buchanan has no patience for foundations that demand that their nonprofit grantees spend time and money evaluating the impact of their services while being unwilling to fund such work, or for fixating on "overhead" as a measure of nonprofit effectiveness while too often ignoring the full-spectrum cost involved in delivering nonprofit services. And while he's willing to concede that what a successful business tycoon knows about getting rich might (might) provide some insight into how to be an effective philanthropist, it's more likely than not to cloud one's judgment. After all, if the world's problems could be solved by a vigorous application of business acumen, why haven't they?

In Buchanan's view, givers are much more likely to be effective by taking the time to learn what they don't know and proceeding from there. Not everyone embraces that idea. As David Callahan's The Givers showed, the growth of big philanthropy in an era where government is less willing and less capable of affecting social change has become a hotly contested issue. In January, Buchanan, along with Rob Reich (co-director of Stanford's Center on Philanthropy and Civil Society), Ben Soskis (Center on Nonprofits and Philanthropy at the Urban Institute), and Anand Giridharadas (Winners Take All: The Elite Charade of Changing the World) engaged in a debate on Twitter during which they laid out their views with respect to the role of philanthropy in present-day America, its influence (both positive and negative) on our politics, and the tendency of Big Anything to generate a handful of winners and lots of losers. That debate is echoed in Giving Done Right, with Buchanan staking out a middle ground where philanthropy is celebrated as a reflection of American idealism and pluralism, where giving is good and smarter giving is better, and where the willingness of philanthropists and nonprofits (the unsung heroes of our more perfect union) to work together to solve seemingly intractable problems is to be commended.

-- Daniel X Matz

More of Daniel's book reviews touching on philanthropy, the arts, and the social sector, can be found on Philanthropy News Digest's Off the Shelf.

The Givers: Wealth, Power, and Philanthropy in a New Gilded Age
May 10, 2017

(Daniel Matz is manager and content developer for Foundation Center’s Glasspockets.org portal. This review was first published in Philanthropy News Digest.)

Daniel X MatzThe mega-wealthy have long been celebrated in American culture. Even in the first Gilded Age, when the likes of Carnegie, Mellon, Rockefeller, and Sage were scorned as robber barons, their wealth — and power — were much admired. In their time, these titans of America's burgeoning industrial might determined the economic destiny of millions and set the course of the nation. And their philanthropy — more than a century on — continues to echo with all the force that money can buy.

Today, as we celebrate the dynamos of a new gilded age — their fortunes, in many cases, made younger, growing faster, moving at the speed of light — we're witnessing a second philanthropic boom. And that seemingly inexhaustible river of "private wealth for public good" brings with it the ideas and voices of those who, having made vast fortunes, are now determined to put that money to use. How society responds to and channels that torrent of money while making sure the ideas it funds best serve the interests of the American people is of broad concern.

“Giving by the mega-wealthy is going to be bigger, more sophisticated, and more focused on influencing public policy debates.”

In The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, David Callahan gives us a grand tour of the philanthropic landscape in the opening decades of the twenty-first century while opening a window on how today's economic winners — having proved themselves in business — are eyeing philanthropy as the ultimate opportunity to convert wealth into power. But where a Matthew Josephson might have distrusted such a development, in Callahan's telling, these masters of the universe are thoughtful, broad-minded, and, yes, even likable. He's not interested in taking them down, criticizing their often rapacious business practices, or pointing out the role played by fiscal and tax policy in cementing their status as the .01 percent. Instead, his is a book about the giving away, not the getting, of great wealth.

Founding editor of the Inside Philanthropy website, a founder of public policy think tank Demos, and a former fellow at the Century Foundation, Callahan has a reputation as a keen observer of philanthropy and civil society and it serves him well here. Not only does he know his subject, he's also interviewed many of the people in his book — Priscilla Chan, Eli Broad, Melinda Gates, and John Arnold, to name a few — and is able to support his own judgments with their words. And what both he and they see is a future in which giving by the mega-wealthy is going to be bigger, more sophisticated, and more focused on influencing public policy debates.

David CallahanDavid Callahan

Of course, many of today's mega-wealthy, people like Warren Buffett and Michael Bloomberg, have indicated they have little interest in leaving much of their wealth behind. (In a recent 60 Minutes interview, Bloomberg joked with correspondent Steve Croft about "a guy on his death bed in a hospital with the rails around and his family looking down like vultures. And he looks up and says, 'I know I can't take it with me, but I can take the access code'.") Indeed, in the next decade alone, some $740 billion is likely to be distributed in the form of private philanthropy. And if the Giving Pledge — the Buffett and Gates effort to encourage the uber-rich to commit the majority of their wealth to philanthropic causes — is any gauge, we could see another trillion dollars in private wealth making its way to nonprofit organizations and causes over the lifetimes of the 158 current "pledgers" who have signed on. (Learn more about that campaign and its signatories at the Foundation Center's Eye on the Giving Pledge feature.) How all that money will be used over the coming decades is what former Secretary of Defense Donald Rumsfeld might call a known unknown, but it undoubtedly will have important and lasting effects, and that — as well as who will decide what its impact might be — is at the center of Callahan's inquiry.

In the book, Callahan examines the collision of two fundamental American values — freedom and equality — and how the wealthiest Americans have been able to leverage their money (for better or worse) to gain advantage in the marketplace of ideas. Sure, money in politics is as American as apple pie: for proof, look no further than the Supreme Court's ruling in Citizens United, the flood of cash swirling around political campaigns, and K Street lobbyists and super PACs. But much less is heard about the ways in which the mega-wealthy are using their philanthropy to influence public policy and (intentionally or not) drown out the voices of average Americans. We're not talking about eight-figure gifts for museums and the like; we're talking about philanthropy that shapes national agendas and priorities and promotes policies that affect Americans where they live — from promoting school vouchers, to hobbling the Johnson Amendment, to pushing for repeal of the Affordable Care Act.

It's one thing, for instance, for the average American to make a $100 donation to a cause she believes in, and it's certainly noteworthy when a wealthy donor trumps that with a gift a hundred thousand times larger; it's something else entirely when a donor puts up the money for a think tank to develop a public policy recommendation, hire researchers to provide intellectual cover for the policy, and disseminate the results through a report and a media campaign. The Brookings Institute has been around since the 1910s, the American Enterprise Institute since the 1930s, the Heritage Foundation since the 1970s. All are tax exempt, and all have been the beneficiaries of substantial philanthropic largesse over the years. What's different in 2017 is the full-throttled way in which such bounty has become another weapon in the ideological clash that defines our time: Left vs. Right, liberal vs. conservative, cosmopolitan vs. populist. What we are seeing, Callahan notes, is the mega-wealthy using their philanthropic dollars to define the terms of the debate and dominate the public square in areas and on issues that a generation ago were the purview of academics, technocrats, and policy makers.

The Givers - Book JacketSome might argue that this isn't necessarily a bad thing, and Callahan is quick to note that the mega-wealthy have no agreed-to set of interests and, as a group, are as ideologically and politically pluralistic as the country itself. If at times they can seem like gods throwing thunderbolts at one another, the diversity of ideas and approaches they represent seems to balance out: for every wealthy advocate of school vouchers and charter schools, there's an equally wealthy and committed advocate eager to double down on public education.

In a perfect world where government is more or less trusted to do the right thing, that might be okay, argues Callahan. But in an era of widening inequality and growing political polarization (exacerbated by our addiction to social media), government and traditional institutions are losing their ability to absorb those thunderbolts and forge compromises that satisfy the majority of Americans. It's not that the public square is empty; it's that the platforms from which the plural voices of American democracy typically are heard have been roped off and posted with "Do Not Enter" signs. For Callahan, it's no coincidence that the outsized influence on public policy of the mega-wealthy comes just at the moment when both institutional and government effectiveness appear to be in terminal decline.

With a nod to French economist Thomas Piketty, Callahan sees this decline as a by-product of mounting economic anxiety, driving broad disaffection with both major political parties and a loss of faith in the ability of government to materially affect the lives of those who have lost their livelihoods to globalization, automation, and de-industrialization. Into that vacuum has stepped the wealthy, with states and local governments increasingly looking to foundations and nonprofits to join forces in public/private partnership, and fund everything from education initiatives to homeless services to public parks. Every time a philanthropist gives $100 million to bankroll a new reform effort in a struggling school district, or convinces a city to spend a portion of its parks budget on a whimsical project, or provides millions for a campaign to convince the public to support/oppose an international climate agreement, writes Callahan, we are seeing a new kind of philanthropy in action. And there's no reason to believe the trend won't continue, or that it won't happen in ways largely beyond the ability of the public to control.

As much as The Givers pulls back the curtain on this reality, it's also a call to change how philanthropy in America is regulated. Readers of Callahan's posts on Inside Philanthropy will not be surprised by his prescriptions — chief among them a call for greater transparency and accountability in the sector (principles Foundation Center has long championed through our Glasspockets initiative). Here, though, Callahan has something more specific in mind: changing the rules to require wealthy individual donors, donor-advised funds, private foundations, and nonprofits to disclose more information about their giving, more quickly. He also calls for the creation of an independent Federal Reserve-style commission to oversee the nonprofit and philanthropic sectors; the establishment of formal metrics to assess charities' effectiveness; and for the IRS to be given more resources — and greater latitude — to audit more than the tiny fraction of nonprofits and foundations it currently reviews. Callahan also favors limiting the tax-deductibility of contributions to nonprofits that are not working to alleviate poverty or address other urgent social problems, and he wants to see foundation boards be more independent and representative of the communities they are charged with serving.

For Callahan, these are small changes — a somewhat Pollyannaish take that seems to ignore our current political climate and the treasured prerogatives of many large, important foundations and nonprofits. Yes, philanthropy needs more transparency and accountability, it probably needs new rules, and the public needs more and better information about how foundations and individual donors are spending their tax-advantaged resources.

But we also need to find the will, and a way, to restore the public square to something like its imagined heyday so that the voices of the rich and powerful are not the only ones heard in statehouses and the halls of Congress. As Callahan puts it, Alexis de Tocqueville didn't esteem America for its robust nonprofit sector; he admired it for its egalitarian ideals. Nurturing and sustaining those ideas over the coming decades should be something we can all agree on.

-- Daniel Matz

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