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Smart Giving: the Quest to Do It Better

This Is the Primary Challenge Involving Modern Philanthropy

I keep a sign on my desk that says:

“Giving away money is easy. Deciding to whom to give it, how much, when, and how, is not.”

While the attribution of this is unclear, it is certainly a revelation to those who are much more familiar with the difficulties of raising money for their favorite causes, or who envy those with much more to give away. Those same people, however, are often the first to join the rising chorus of complaints about too many dinner-hour telephone solicitations, direct-mail appeals, and, finally, just too darn many nonprofits.

Indeed, the flood of compelling appeals is unsettling even for the most affluent.

Whether by necessity or the kind of restless desire for improvement that is part of the American psyche, one of the unique features of modern philanthropy has become a quest to do it better — to get, in that quintessential American parlance, a bigger bang for the buck. And this observation applies across the board — from the smallest school child who is learning to give away $1 of the proceeds from the lemonade stand, to the multi-billionaires of our modern economy.

Much of the impetus for this has come from the ‘new’ wealth of the past 25 years, built on the success of new ways of creating that wealth, primarily in the financial-services and technology industries — new ways represented not just by new goods and services, but new ways of doing business, such as flatter organizations, more rigorous accountability, and a host of other nostrums that have spawned an entire genre of management publications. If they worked to create the wealth to give away, why wouldn’t they work to deploy that wealth as it was given away?

“Venture philanthropy,” complete with the kind of roll-up-the-sleeves, serve-on-the board, help-the-CEO involvement of the venture capital world, became the cause du jour.

Because the results were mixed, however, cooler heads began to prevail, and, in yet one more example of the extraordinary way in which a vigorous, free, educated, and pluralistic society can continuously tackle its important features, American philanthropy has begun to explore, and become much more self-conscious about, how it goes about its business. In countless periodicals, listserves, governmental, and other public forums, the exchanges are lively and the debates are raging, with champions for all kinds of perspectives always ready to jump in.

At the center, however, remains the premise that some giving is better than others, that choices must be made, and with that necessity comes a responsibility for making the better choice. If you give to one cause, you can’t give to another, and you’d better make sure you make the right choice. The very notion that there are ‘better’ choices, however, is coming under scrutiny as some theorists point out that the giving decision, unlike the venture-investing decision, involves some value judgments that are intensely personal and might be difficult to justify logically. Those who support the handicapped over the hungry might be hard-pressed to justify that decision logically. What that uncertainty does to accountability is conceptually unclear.

It is clear, however, that there are plenty of ways to differentiate that don’t depend on personal preference, and they usually start with data.

In the information age, and with computing power everywhere at hand, we know a lot more than ever before. We can know, for example, that, as recently revealed, child poverty is much more acute in Springfield and Holyoke than elsewhere, or that open space is disappearing in Massachusetts at the rate of 40 acres per day. On a micro level, we can, at least in theory, learn that, of $100 given to one organization, only $50 ends up in the hands of service recipients, whereas the comparable amount at another is $90; or that $100 feeds 50 people at one organization, and 75 at another.

The proliferation of ‘benchmarking’ for communities, and the financial analysis of organizational effectiveness, is unmistakeable. The mass dissemination of this kind of information over the Internet appears to hold both extraordinary promise and danger, empowering millions with information previously only available to a few, but risking its misuse as well.

‘Lies, damned lies, and statistics’ are just as prevalent on the Internet as on the printed page. In particular, skepticism about the use of “one-size-fits-all” measurement templates for organizations continues to grow apace.

It is also becoming clear that measurable accountability for the results of philanthropy is a different animal than its counterpart in the for-profit sector. For one, the results may not be known for years, as, for example, with intervention in early-childhood education. And sometimes, the results are just impossible to know. How would you measure the impact of a campaign to restore Symphony Hall, or the establishment of a community garden in Holyoke, or an energy conservation education program in a school district?

One important element of the philanthropy scene today is scale. Change for the better is thought to be more likely with $25 million than with $25. Whether many $25 donors pool their money in a capital campaign for their local church, or the 10 largest foundations in a community pool their funds to end homelessness, collaboration is generally thought to be a good thing. Those of us who have tried to get a family to make a collective charitable gift, however, know just how difficult that can be. Collaboration always exacts a price, which may be too high for some participants.

And the diversity of American philanthropy is also one of its defining features. The best evidence is that 80% of all American families make at least one charitable gift over a five-year period to one of the more than 1 million organizations determined to be tax-exempt by the Internal Revenue Service. The size of that vast sea of transactions keeps America from putting all (or too many) of its eggs into one silly basket.

The surprising resilience of such a vast market survives most of the passing trends of the day. Even the instant-gratification nature of modern society does not seem to dent the desire for long-term results that is an important component of American philanthropy. Larger charities (particularly the educational institutions) seem to have little difficulty continuing to mount their campaigns for endowments or large capital projects.

If size is a defining feature of the recipients of such gifts, perhaps that is just a reflection of the trust that must be reposed in an organization by a donor who makes a gift that will be used long after the donor can take any pleasure in or possibly influence that use. The desire to leave a lasting legacy, to help succeeding generations with an act of faith of the kind that previous generations have left to ours, seems just as strong as ever.

If our government is currently under a cloud worldwide, the American traditions of philanthropy are still the envy of the rest of the world. That its practitioners are seeking to make it even better is surely remarkable. But that’s the American way.

Kent Faerber is the executive director of the Community Foundation of Western Mass.; (413) 732-2858;www.communityfoundation.org.

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