Better Ways To Give It Away: Philanthropy 2.0

Our distrust is very expensive.—Ralph Waldo Emerson

As the Susan G. Komen for the Cure Foundation recently discovered, mixing mission and politics can cost an organization both credibility and dollars. Susan G. Komen, dedicated to the least controversial cause imaginable, eradicating breast cancer, lost the support of many core donors over its (since reversed) decision to end its relationship with Planned Parenthood, a national organization that provides women’s health care, family planning, and, incidentally, abortion services.

Ironically, given the scope of Komen’s mission and the size of the foundation, the Planned Parenthood grants somehow became the tail that wagged the dog. Last year, for example, Komen gave Planned Parenthood $700,000 to finance 19 separate breast-related programs. That donation, while generous, represented a tiny portion of its $93 million in grants. Yet these grants, however small, however mission-appropriate, were nonetheless sufficient to plunge the entire organization into crisis.

Komen’s decision was widely interpreted to be politically motivated, and this perception is at the crux of the organization’s debacle. Komen’s existing supporters expected the organization to be politically neutral. Public charitable organizations are supposed to be broadly embraced, broadly understood, broadly valued, and broadly and publicly supported. Many of Komen’s core donors therefore felt betrayed by what they perceived as a breach of trust, a misappropriation of charitable funds to accomplish a political agenda seemingly unrelated to the organization’s stated public mission: eradicating breast cancer.

The Komen crisis begs the questions that all of us struggle with when we give to a nonprofit organization: How do I make certain that my philanthropic dollars align with my own philanthropic goals and my core beliefs? How do I prevent my donations from being diverted to spending and programs that don’t accomplish the intended purpose of my gift? Can I trust a public nonprofit to act transparently and consistently in support of its stated mission?

Increasingly, affluent donors are answering these questions by taking control of their own philanthropy. Instead of writing a $100,000 check to an organization like Susan G. Komen or the Red Cross or any other large public charity, they are funding causes directly through their own private foundations and donor-advised funds. With their own foundations, they can give that amount incrementally rather than in a lump sum, targeting effective and deserving grantees and monitoring their performance and continuing alignment with stated goals and objectives over time. Perhaps that’s why private foundations have seen such explosive growth in recent years. According to The Foundation Center’s Statistical Information Center, there are currently more than 76,000 private foundations in the United States—almost 33,000 more than there were just 15 years ago. 

The growing prevalence of private foundations reflects the life experiences and styles of many of today’s most prominent philanthropists. Entrepreneurs like Bill Gates, Ted Turner, and Warren Buffett didn’t follow conventional paths to success. Gates, after all, famously dropped out of Harvard. Is it any wonder that he, like many self-made business leaders, might harbor a healthy skepticism of big institutions? Is it any surprise that when it comes to their philanthropy, Gates and other entrepreneurs might want to harness their own business acumen, resources, and experience to accomplish a philanthropic goal instead of merely writing a check to a charity and trust that it will accomplish that work effectively and efficiently?

If there is a silver lining to the Komen controversy, it’s that it has motivated donors to take a harder look at how their dollars are spent by their charitable donees and how those organizations are led and governed. The impassioned reader comments and discussions that accompany each new Komen-related headline point to a new reality for nonprofits: Whether donors are writing small checks or making significant grants, I believe that they will demand increasing transparency and accountability from the recipients of their funds. On the public charity side of the table, organizations will need to remember and re-embrace the basic fact that when positioning themselves as public charities to gain broad public support and funding there is a trade-off around being able to assert and promote narrower, less publicly attractive agendas and objectives. That type of focus is better accomplished in the private foundation format. These are not negative developments.

As Americans, we are a famously generous people. We’re also famously self-reliant and innovative. Ideally, philanthropy should unite the best of our impulses with the best of our abilities, marrying purpose to efficacy. As the days of blind faith in large institutions—even the best-intentioned ones—come to a close, I foresee not a diminishment of charitable activity but the golden age of the philanthropic entrepreneur. Philanthropy won’t be hurt by this recent crisis but it might be revolutionized.

Related: How Howard Buffett Will Use His Grandfather's Recipe For Riches To Disrupt Philanthropy

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[Image: Flickr user Gabriela Camerotti]

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5 Comments

  • Paul Penley

    When more organizations are being exposed for poor operations and compromised missions, donors should be getting more serious about doing their homework before giving.  Making sure you fund high performers rather than good marketers is essential if you passionately care about the rising number of people in need.  That is why Excellence in Giving created a charity evaluation platform called http://www.IntelligentPhilanth....  Intelligent Philanthropy gives you access to the 150 most critical data points about organizational performance and impact in a user-friendly 2-page format that you can analyze in 5 minutes.  There is no better way to analyze the quality of nonprofit infrastructure and impact.  Check out a sample charity's Analytical Overview at http://www.IntelligentPhilanth...

  • theyoungbigmouth

    We also need to rethink "giving away" -  "giving local" is better. The same logic that applies to local food applies to charity too. Local donations don't have to incur transport costs, it will never be a logistical nightmare and you are more responsible for what you are giving. 

    During most natural disasters clothes and water become the most donated and least used items. We pass on our donations to some organization and feel happy about our karma. We don't care if our contributions are useful and we don't know what really would have helped. 

    With local donations and charity, a lot of these issues are resolved. You identify the needy, you decide what to give and what will be useful. You can follow up and see whether it is being used or not. I understand there will be Haiti and a Japan but they don't happen every day. 

  • Alex M

    I thought this article was going to be talking about better ways to give, but instead it was just describing the increase in accountability for NGOs and an increase in private foundations. Private foundations are not a "better way to give for the average American. Wealthy Americans might be starting private foundations, but the average person is not.

    However, social business IS a "better way to give". Social business has created a completely new way of giving to a non profit, by increasing overall donations and visibility for an NGO through a for profit enterprise.

    This article should have been about companies such as Warby Parker or One Hundred Apparel, organizations that are completely overhauling the way we give to charities.

  • Joan Of Argghh!

    Now, just a minute. I'll overlook the idiomatic sin of misusing, "begging the question," but to continue to misrepresent the facts of the Komen foundation's innocuous decision to discontinue grants to PP (it was not culturally or politically motivated) and conflate it into an entire article about local accountability is to undermine the good you seek to accomplish in this post.

    I've been advocating local, accountable giving for years and I don't need to vilify my political polar opposites to make the point. Shame on you for accepting a premise, repeating a false impression, and continuing the acrimony against facts that are inconvenient or non-sensational. Cheap shot and poor sport.

    It's like Fast Company has no standards for fact-finding whatsoever.

    Meanwhile, I was neutral about The Komen Foundation before, but am now decidedly declining any support for such feckless integrity as they have demonstrated. But such is the fear now imparted to anyone who strays from the Hive Narrative that TKF folded like a cheap prom dress.

  • Bette Boomer

    The boomer generation is still driving innovation and clearly there is a new frontier in philanthropy, e.g boomers like Gates, Branson, etc. We agree that this can be a golden age for philanthropic entrepreneurs & leaders  whose objectives are survival of the planet.The revolution continues.