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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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