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Social Innovation Fund: Next Steps

September 8, 2010 – 8:34 am

This is my latest column in the Chronicle of Philanthropy. The Chronicle ran a longer version of this column with more details just after the story broke in late August. I’m running the column here for the benefit of the many people who sanely took a vacation in late August.

Next Steps: Let’s Learn From Innovation Fund’s Applicants
September 6, 2010 | Chronicle of Philanthropy

A critically important philanthropic experiment nearly got derailed last month by rounds of second-guessing and speculation.

The Social Innovation Fund, a federal effort to spread good nonprofit efforts nationwide, got into hot water in part by bowing to requests from potential grantees to keep their applications confidential when publishing them would in fact lead to more social impact.

In an age when Web tools make it easy to provide reams of information quickly and effortlessly, many people expected the Social Innovation Fund to push the envelope of transparency. The Social Innovation Fund’s policy not to release grantee applications or the ratings and reviews of the experts who judged the proposals generated significant criticism.

The issue mushroomed from a somewhat academic debate into national news when a prominent nonprofit expert, who served as a reviewer, wondered in The Washington Post why an organization his review committee rated poorly had ended up a winner. What’s more, he said, the group with bad reviews had lobbied the government to create the Social Innovation Fund, adding yet more fuel to the demands to release the applications and evaluations from reviewers.

To its credit, the Social Innovation Fund moved fast to recover from its missteps—working feverishly over one weekend to get everything online as a controversy erupted on a quiet Thursday in August—and has now made public all the application materials of the organizations that won grants as well as the ratings and comments of reviewers. It also clearly described the fund’s process for selecting grantees in a way that explained how the group that got a poor review in one round did very well with other experts and ended up a finalist.

At the heart of the Social Innovation Fund is an exploration of an underappreciated approach to philanthropy.

Rather than simply paying nonprofits to carry out their programs, as the government and most large foundations typically do, the fund focuses on expanding high-performing nonprofit organizations. This type of growth capital is largely absent from the philanthropic marketplace, a primary reason why proven approaches are so rarely able to reach their potential.

Some nonprofit commentators have criticized the Social Innovation Fund’s budget as too meager, but it is important to note that the fund’s budget—a combination of government and private dollars totaling $123-million—makes it a significant grant-making entity. Many foundations give more than that in a year, but most foundations earmark only a minority of their grants to spread good ideas and build the capacity of nonprofits.

If the Social Innovation Fund is in fact a revolutionary experiment in providing growth capital, why has there been so much consternation about the fund’s transparency of its grant making?

One of the primary goals of the Social Innovation Fund is to identify more effective approaches to solving critical social problems and broadly share this knowledge. When the fund didn’t want to release the proposals, it raised questions about its commitment to spreading the smartest approaches across the country.

A secondary reason the fund should have published all the applications right from the start was to discourage second-guessing and speculation as to which organizations applied, which ones did not receive a grant, and why.

Now that the fund has made additional information available, nobody has uncovered any conflicts of interest or undue pressure. All the evidence suggests that the process was fair.

The fund needs to show it learned from its mistakes. It erred when it first promised grant seekers that it would not make public their applications. It should announce immediately that next year’s process will include an explicit notice to grant seekers that all applications will be made public.

As we put to rest the second-guessing and speculation about the process, let us not forget the fund’s goal of sharing knowledge about effective approaches to solving social problems.

To jump-start the sharing of ideas, The Chronicle and I have started a public repository for all applications.

We urge applicants that did not win grants to submit their proposals. Social Venture Partners, one of the organizations that did not receive a grant, has already done so. It can be viewed here.

The repository is not meant in the least to shine negative light on any of the applicants. Fully 70 percent of the applications were rated “strong,” the second-highest rating, or better by at least one of the two committees that did the first round of reviews.

Many of the proposals, winning or losing, reflect years of experience deploying growth capital in support of high-performing nonprofits and will help to advance the field of knowledge.

The Social Innovation Fund almost lost crucial momentum over the debate about its openness. Now it is up to the unsuccessful applicants to keep things moving in the right direction. By voluntarily posting their applications, they will help to cement the Social Innovation Fund’s commitment to transparency and help it reach its goal of broadly sharing knowledge about what works.

Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors, in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.

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Individual Donors Practicing Unconstrained Philanthropy

August 30, 2010 – 8:25 am

This is part three of a six part series exploring the sessions in the Tactical Philanthropy track at the Social Capital Markets conference.

Session Description: Individual Donors Practicing Unconstrained Philanthropy
Many of the most well known, active participants in the social capital markets are institutions. But individual donors have fewer institutional constraints and can bear more social risk. These types of donors can make decisions faster, are able to act on less popular/overlooked areas that nevertheless promise big impact, and find it easier to forge collaborations. Join three individual donors who are doing cutting edge work in the social capital markets without the help of a large staff.

  • Katherina Rosqueta, The Center for High Impact Philanthropy
  • Dave Peery, The Peery Foundation
  • Jerry Hirsch, The Lodestar Foundation
  • Liz Alderman, The Peter C. Alderman Foundation

One of the reasons that I so enjoy working with individual and family philanthropists is that they tend to ignore the many self-imposed constraints that many large, staffed foundations seem to face. Unconstrained by the caution “culture” of much of institutional philanthropy, these donors are able to simply choose to operate on the leading edge.

This session will have a storytelling format. Katherina Rosequeta of The Center for High Impact Philanthropy, will play interviewer to three outstanding individuals who have chosen to doing things different.

Dave Peery, who manages his family’s philanthropy will talk about how his two person shop has ended up being featured in the Monitor Institute’s report on cutting edge practices for their efforts to do live strategic planning on Twitter, co-fund alongside groups like the Skoll Foundation and use video to help their grantees.

Jerry Hirsch, will discuss why he created the Collaboration Prize and became the biggest game in town for nonprofits seeking to merge or collaborate with others. While many funders wish that nonprofits would collaborate, Jerry actually focuses on funding effective and efficient use of resources without regard to issue area.

Liz Alderman will talk about how she and her husband Steve became “accidental philanthropists” when the death of their son Peter on 9/11 thrust them into a passionate effort to help people around the world recover from the mental health effects of being exposed to extreme violence.

You can get a sneak preview of Liz’s story in this video produce about her and Steve when they won the Purpose Prize.

Click here to see the video if you are viewing this post in an email.

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Next Steps for Social Innovation Fund: A Call to Action

August 23, 2010 – 8:29 am

CNCS This is my most recent column in the Chronicle of Philanthropy. You can find a full archive of my columns here.

Lessons in Social Innovation: a Call to Action
August 23, 2010 | Chronicle of Philanthropy

Over the past few days, debate among nonprofit experts about transparency at the Social Innovation Fund has mushroomed into speculative second guessing that risks undermining this critically important philanthropic experiment.

The fund, while making some early strategic mistakes in the degree to which it made public information about applicants, has moved quickly to rectify the situation and deserves full credit for delivering on its promise to supply growth capital to high-performing nonprofits.

At the heart of the Social Innovation Fund is an exploration of an underappreciated approach to philanthropy.

Rather than simply paying nonprofits to carry out their programs, as the government and most large foundations typically do, the fund focuses on expanding high-performing nonprofit organizations. This type of growth capital is largely absent from the philanthropic marketplace, a primary reason why proven approaches are so rarely able to reach their potential.

Some nonprofit commentators have criticized the Social Innovation Fund’s budget as too meager, but it is important to note that the fund’s budget—a combination of government and private dollars totaling $123-million—makes it a significant grant-making entity. Many foundations give more than that in a year, but most foundations earmark only a minority of their grants to spread good ideas and build the capacity of nonprofits.

If the Social Innovation Fund is in fact a revolutionary experiment in providing growth capital, why has there been so much consternation about the fund’s transparency of its grant making?

I am a big believer in the idea that the fund should push the envelope on transparency in an effort to help the nonprofit world  learn as much as possible from this audacious experiment.

While I have been a vocal supporter of the fund, I have advocated for it to make public all of the applications. My reasoning for this was not so much about ensuring that the fund played by the appropriate rules as it was about my belief that these applications represent a treasure trove of detailed information about the practices of grant makers providing growth capital. However, the fund decided early not to release the applicants’ proposals.

Marta Urquilla, a senior adviser to the fund, told me that the decision came out of public comments received from nonprofits.

According to Ms. Urquilla, numerous potential applicants told the fund that a policy of publication of applications would reduce the likelihood that they would indeed apply. Therefore, in an effort to maximize the number of applications and ensure the highest possible talent pool from which to select grantees, the fund made a strategic decision to promise applicants that their applications would not be made public.

That was a mistake.

One of the primary goals of the Social Innovation Fund is to identify more effective approaches to solving critical social problems and broadly share this knowledge. The best way to accomplish this is to make public all of the applications detailing the existing approaches to solving critical social problems deployed by the applicants.

A secondary reason for publishing all applications is to preemptively discourage second guessing and speculation as to which organizations applied, which  ones did not receive a grant, and why. Unfortunately, it is this second category that risks curtailing the Social Innovation Fund experiment before it can even get started.

On Thursday, Paul Light, a prominent nonprofit scholar and an application reviewer for the Social Innovation Fund, wrote in a Washington Post column that his panel had issued the lowest possible rating to one of the Fund’s 11 winning grantees.

Mr. Light wrote, "I have no idea how this applicant reached the winner’s circle. … I can only surmise that this applicant was invited to revise and resubmit. … Given the applicant’s impressive lobbying effort on behalf of SIF, its success raises inevitable questions about fairness, conflicts of interest, and undue pressure."

While Mr. Light’s concerns are valid, and I share his interest in the fund publishing more information about the applicants, it appears his speculation of conflicts of interest and undue pressure is without merit.

According to the Social Innovation Fund, each application was reviewed by two groups of reviewers. Out of the 54 applications reviewed by two committees, only 12 received identical scores from each committee.

In nine instances the scoring differed significantly and in three of those cases one panel assigned the highest rating while the other assigned the lowest rating.

Mr. Light’s post hit a nerve because it was widely assumed that his reference to an "impressive lobbying effort" referred to New Profit, a grantee at which Paul Carttar, director of the Social Innovation Fund, once worked.

While Mr. Light never named New Profit, an analysis of the distribution of ratings published by the fund after he published his column shows that New Profit was the only grantee to receive the lowest possible rating from one of the panels.

This does not, however, mean that conflicts of interest marred the process.

Paul Carttar has had a varied career at some of the country’s most prestigious nonprofit organizations. When he was named director of the fund, he was issued a detailed four-page letter explaining the process for selecting grantees and identifying situations in which he would be required to recuse himself.

Most important, as director of the fund, Paul Carttar was not in charge of selecting grantees.

Paul Light was not the only person asking questions. The Nonprofit Quarterly, The New York Times and others—including me—all published articles and blog posts questioning the fund’s rationale for not making more information about the applicants public.

By Sunday night the fund had published explanatory matrixes laying out reviewer ratings from each phase of the process, finalist applications, and the comments of application reviewers.

The fund has now made public as much information as might possibly be asked about the winning applications.

While it is impossible to prove a negative and state definitively that no conflicts of interest or undue pressure marred the process, there is no evidence to suggest that the process was anything but fair.

As we put to rest the second guessing and speculation about the process, let us not forget that the primary reason for the fund to make public information about all applications is because doing so can best help the fund achieve its goal of broadly sharing knowledge about effective approaches to solving social problems.

However, the fund did make oral statements of assurances to the applicants that their applications would not be made public. Therefore, the fund should announce immediately that next year’s process will include an explicit notice to applicants that all applications considered for grants will be made public.

The Chronicle and I have started a public repository for all applications to get the conversation out in the open. We urged  all applicants to submit their proposals. Social Venture Partners, one of the organizations that did not win a grant, has already agreed to publish its application, and we will make it available soon.

The repository is not meant in the least to shine negative light on any of the applicants. Fully 70 percent  of the applications were rated "strong," the second highest rating, or better by at least one committee that did the first round of reviews.

Many of the proposals, winning or losing, reflect years of experience deploying growth capital in support of high-performing nonprofits and will help to advance the field of knowledge.

We are at a critical juncture.

The Social Innovation Fund is an extremely ambitious attempt to help create a philanthropic capital market for supplying growth capital to high performing nonprofits.

The effort was almost derailed over the past few days, but quick action by the Social Innovation Fund has got things back on the right track.

Now it is up to the unsuccessful applicants to keep things moving in the right direction. They were promised that their applications would not be made public. But voluntarily doing so now, with the encouragement of the Fund, will cement the Social Innovation Fund’s commitment to transparency and help it reach its goal of broadly sharing knowledge about what works.

To submit a Social Innovation Fund application to the repository, please e-mail it to editor@philanthropy.com. If you’d like to discuss your submission, please e-mail me at sean@tacticalphilanthropy.com.

Sean Stannard-Stockton is chief executive of Tactical Philanthropy Advisors, in Burlingame, Calif., and author of the Tactical Philanthropy blog. He is a regular columnist for The Chronicle of Philanthropy.

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Social Capital Markets Conference: Tactical Philanthropy Track

August 5, 2010 – 8:36 am

SoCap10 First of all, I want to extend a big thank you to everyone who helped me design the Tactical Philanthropy track at the Social Capital Markets conference. From the idea crowdsourcing we did earlier this year to the many conversations I had with members of the Tactical Philanthropy community, the final track design is very much a product of your input.

Below you will find full information about the sessions in the Tactical Philanthropy track, as well as links to more information about the full Social Capital Markets (SoCap) conference (October 4-6, San Francisco).

I’m happy to announce that exclusive to Tactical Philanthropy readers, the SoCap conference organizers are extending a special 30% discount on registration. If you’d like the discount code, please email me. This discount will expire on August 19, so you’ll need to hurry. In addition, all nonprofit employees are eligible for a 40% registration discount. You can apply for this discount here.

Social Capital Markets Conference: Tactical Philanthropy Track

Register Here

The full spectrum of the social capital market includes philanthropic capital. Join the Tactical Philanthropy track and explore the role of philanthropic capital in both for-profit and nonprofit social enterprises and markets. The sessions will help donors and investors bridge the illusionary gap between acts of philanthropy and market rate social impact investments.

Click here to see the full SOCAP10 schedule, including the Tactical Philanthropy Track!

Decriminalizing Fundraising
Fundraising is generally seen as "asking donors for a favor." But what if fundraising is in fact no different from raising investment capital or selling a well-vetted product? This session will feature two 20 minute talks by George Overholser and Dan Pallotta, two of the most visionary and radical philanthropic leaders.

  • George Overholser, Nonprofit Finance Fund Capital Partners
  • Dan Pallotta, Springboard

Scaling Social Impact
In business, scaling requires companies to increase their organizational capacity and output in order to generate greater profits. Nonprofit organizations can scale social impact by not only increasing their own capacity, but also by encouraging other nonprofits to adopt their models. How should social enterprises weigh the tradeoffs between scaling their organization or scaling impact through sharing their process with others? Come hear the stories of three organizations that have successfully scaled using entirely different approaches.

  • Steve Goldberg, Author of Billions of Drops in Millions of Buckets: Why Philanthropy Doesn’t Advance Social Progress
  • Lance Fors, New Teacher Center
  • Shawn Bohen, Year Up
  • Jennifer Davis, National Center on Time & Learning

Individual Donors Practicing Unconstrained Philanthropy
Many of the most well known, active participants in the social capital markets are institutions. But individual donors have fewer institutional constraints and can bear more social risk. These types of donors can make decisions faster, are able to act on less popular/overlooked areas that nevertheless promise big impact, and find it easier to forge collaborations. Join three individual donors who are doing cutting edge work in the social capital markets without the help of a large staff.

  • Katherina Rosqueta, The Center for High Impact Philanthropy
  • Dave Peery, The Peery Foundation
  • Jerry Hirsch, The Lodestar Foundation
  • Additional donor to be announced

The Lessons of Behavioral Finance: Understanding & Overcoming Barriers to Impact Investing
Impact Investing challenges the conventional separation of asset growth from charitable distribution and raises interesting questions about strategic philanthropy, fiduciary responsibility and investment products. While the concept has been well received in theory, most funders and donors have not significantly engaged in this approach. This dynamic panel will explore behavioral, structural, and theoretical obstacles to Impact Investing – and help participants understand how to overcome these obstacles.

  • Rae Richman, Rockefeller Philanthropy Advisors
  • Randy Allison Hustvedt, Federal Street Advisors
  • Hope Neighbor, Hope Consulting

When to Invest & When to Give
For all the talk of producing a blend of social and financial value through giving and investing, little is known about when a social investor can maximize his or her blended returns through a donation and when an investment is a better option. This session will use Evergreen Lodge, a social purpose destination resort in Yosemite, as a case study for when to give and when to invest from both the enterprise and investor/philanthropist perspective. Join Evergreen Lodge owner Lee Zimmerman and his venture capitalist/philanthropist financial backer Stuart Davidson as they discuss the role of philanthropic and social investment capital in the growth of Evergreen Lodge.

  • Melinda Tuan, Melinda Tuan Consulting
  • Stuart Davidson, Woodcock Foundation
  • Lee Zimmerman, Evergreen Lodge

Nonprofit Analysis: Beyond Metrics
Over the last few years, mainstream nonprofit analysts and rating groups have moved beyond simplistic metrics like the "overhead expense ratio." Join three of these groups, Root Cause, GiveWell and Charity Navigator as they present their analysis of a single, high profile nonprofit. You’ll hear three robust approaches to analyzing nonprofits as a way to determine the degree to which a social investment in the organization may lead to impact.

  • Ken Berger, Charity Navigator
  • Andrew Wolk, Root Cause
  • Elie Hassenfeld, GiveWell
  • Nonprofit representative to be announced

Keynote Speakers for the Full SoCap Conference

  • Jacqueline Novogratz, Acumen Fund
  • Matt Flannery, Kiva
  • Jay Coen Gilbert, B Lab
  • Woody Tasch, Slow Money
  • Julie Sunderland, Bill & Melinda Gates Foundation
  • William Foote, Root Capital
  • Ron Cordes, The Cordes Foundation

I hope to see you there!

Register here.

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Philanthropy Daily Digest

July 23, 2010 – 6:01 pm
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Audacious Ideas: Jim Canales

July 19, 2010 – 6:03 am

This guest post from Jim Canales, CEO of the James Irvine Foundation, is part of the ongoing Audacious Ideas series.

By Jim Canales

5204 Bill and Melinda Gates along with Warren Buffett recently announced their commitment to devote the majority of their wealth to philanthropy. Perhaps more notably, they are encouraging other billionaires to pledge a similar commitment, and a new website, www.givingpledge.org, has been launched to encourage their peers to follow suit and to document these pledges.

This is certainly audacious. And it got me thinking about what similar “pledges” those of us privileged enough to work within organized philanthropy should be thinking about. Obviously, each of our foundations effectively makes a pledge by deciding where to focus our grants, whether on issues of education, health, economic development, the environment or the arts.

But, I’d suggest there are other commitments we should consider related to how we as foundations engage in our work in addition to what we do with our resources. The big-dollar pledges that foundations can make are certainly compelling, but the ways in which we engage with our grantees deserve as much attention as what we fund. Our ability to create positive social impact through our grantmaking is directly related to our capacity to be effective and thoughtful partners with the organizations we are privileged to support.

Much has been written about the tenuous nature of a grantor-grantee relationship and how it is influenced by the inherent power differential and complexity. Let’s lean into that complexity and commit to specific actions that can deepen these relationships, and enhance trust in ways that will further our collective social impact.

So, with a focus on how we might improve and enhance that working relationship, my audacious idea is to suggest—even implore—foundations to make commitments that address the following:

–Transparency: What specific action or actions will your foundation take to increase its openness and render its processes and approaches less opaque and more transparent?

–Accountability: To what specific measures should your grantee partners hold the foundation accountable, and what will be the foundation’s mechanism for reporting publicly on your progress?

–Authenticity: What specific steps will your foundation take to enhance its relations with grantees and grantseekers and create greater authenticity in them, rooted in respect for our partners? What mechanisms will you put in place to ensure that you are listening and learning from your grantees as much as you expect them to listen and learn from your foundation?

If the largest 250 foundations in this country agreed to even one tangible, specific and measureable improvement in one of these areas each year, the quality of our relationships with our partners could be improved significantly, and the power differential that often impedes an effective working relationship could be reduced greatly.

At the Irvine Foundation, we have tried hard to uphold our commitments to transparency, accountability and authenticity, but we are under no illusion that our work is done. We are committed to finding additional authentic mechanisms to listen and learn from our grantees. Our next opportunity will be later this year, when we receive the results of our Grantee Perception Report. As we have done in the past, and as others now do routinely, we will post the results of that report on our website, along with a letter describing what we have learned from our grantees and how that will influence our practices going forward.

Some might rightly question how audacious it really is to commit to principles that ought to be at the heart of exercising effective philanthropy. I agree. But, as a field, we have much more progress to make in this regard, and I know that improving the nature and authenticity of our relationships with grantees can be one of the most effective ways we can enhance our capacity to create positive social impact. With that authenticity, grantees are more likely to be honest about the challenges and risks in their work, and grantees and grantmakers are more likely to forge effective strategies to overcome those challenges. Without such authentic relationships, we are far less likely to have the kind of impact that our missions articulate and our communities deserve.

Has the time come for a more visible and cohesive movement in organized philanthropy to express our collective commitment to principles of transparency, accountability and authenticity? If not now, when?

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Philanthropy’s Biggest Opportunity Part III

May 27, 2010 – 9:09 am

Deyan Vitanov, CEO of Philanthropedia is guest blogging on Tactical Philanthropy this week. He welcomes your feedback in the comments section. Tactical Philanthropy Advisors is currently collaborating with Philanthropedia to help them develop their Expertise on Demand platform.

Read Part I.
Read Part II.
Read Part IV.

By Deyan Vitanov

deyan2In part I and II of this blog post, I explained what an impact-based social capital market is and why it is the biggest opportunity in philanthropy, and elaborated on how we could jumpstart its creation by using a “catalyst” that has certain specific characteristics. In the last two parts, I want to focus on the remaining elements that need to come together to create an impact-based social capital market and answer some common questions and concerns.

An impact-based social capital market will require at least two more important elements:

Minimum scale: It is important to recognize that the catalyst I described in the previous part needs to compile information on nonprofit impact on a sufficient minimum scale in order to attract enough donations that can jumpstart the creation of an impact-based social capital market. What is this minimum scale? Although different organizations might have different answers, for us at Philanthropedia this means covering the most prominent 8-9 national social causes and 4-5 local causes. (Note: we will have this minimum scale by the end of the summer and our research results continue to rise in quality thanks to the hundreds of experts participating.)

Demand: Without a critical mass of donations, the market will obviously not work. As we think about inspiring donors to give based on impact, we need to consider the following:

· Building a donor audience is difficult and costly. That is why partnerships are a key tool in the battle for a better philanthropy because they can expose information to millions of donors quickly and effectively. Fortunately, GuideStar has taken the lead with their TakeAction initiative that we proudly support. In addition, Charity Navigator has announced plans to follow a similar path and I am excited to see how they progress. We should also not forget local initiatives such as GiveMN, which have done an amazing job of mobilizing donors and have tremendous potential if they decide to focus on impact.

· We are currently experiencing a tectonic shift in technology with the advent of social networking and social media. This creates a unique opportunity to leverage the power of personal connections to inspire people to give based on impact.

· Finally, we need to acknowledge that there is a lot more research necessary in order to find effective ways to motivate donors. I am not sure whether the right approach is to utilize Twitter or Facebook, Philanthropedia’s concept of mutual funds, or the many other ideas that I have seen, but I do know that we need to put a lot of effort into finding out if we are to create an impact-based social capital market.

I hope the post above combined with parts I and II gave you an idea of the different elements that need to come together to create an impact-based social capital market. I will use tomorrow’s post to answer some common questions and concerns, describe how you could join the effort of creating this market, and conclude.

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Shock & Awe Philanthropy

April 21, 2010 – 8:56 am

Last year, Mark Kramer of FSG Social Impact Advisors defined the term “catalytic philanthropy” in a Stanford Social Innovation Review article. Mark wrote:

“For most donors, philanthropy is about deciding which nonprofits to support and how much money to give them. These donors effectively delegate to nonprofits all responsibility for devising and implementing solutions to social problems. Despite the sincere dedication and best efforts of those who work in the nonprofit sector, there is little reason to assume that they have the ability to solve society’s large-scale problems.”

Mark then went on to describe four practices of what he termed “catalytic philanthropy”:

  • Take Responsibility for Achieving Results
  • Mobilize a Campaign for Change
  • Use All Available Tools
  • Create Actionable Knowledge

In other words, Mark argued that donors or funders should take responsibility for being agents of change themselves rather than focusing on supporting nonprofits who are agents of change.

To a large extent, Catalytic Philanthropy is in direct opposition with Tactical Philanthropy. Catalytic Philanthropy is in many ways a special category of Strategic Philanthropy. In a Chronicle of Philanthropy column in which I described Tactical Philanthropy I wrote:

“While strategic philanthropists seek to solve social problems, tactical philanthropists are social investors.

Investors, in both the for-profit and the nonprofit contexts, provide capital to organizations that solve problems. Good investors take great interest in the solutions deployed by the organizations they finance, but they themselves are not problem solvers.”

Yet I have great interest in Mark’s concept and think that Catalytic Philanthropy is an important approach for large donors and funders to consider. In some ways, Catalytic Philanthropy is an attempt to leverage the “soft power” potential of philanthropy, a concept I wrote about yesterday.

The core case study that Mark uses is Tom Siebel’s work on the Montana Meth project. When I wrote last year about Investing in Nonprofits, I used Siebel’s project as a counter example of effective ways that donors could approach philanthropy.

But while I agree that Catalytic Philanthropy, in which funders are positioned as the core agent of change, can be an effective approach, I disagree with Mark’s premise that most philanthropy does not already attempt to act this way.

Mark writes:

“For most donors, philanthropy is about deciding which nonprofits to support and how much money to give them.”

But this is clearly not how most large foundations work. Most foundations talk about their own programs and view grantees simply as the way in which they express the foundation designed program. Only a small handful of large foundations truly see their role as an investor in nonprofits and talk not about the foundation designed program but about their portfolio of grantees as their agent of change.

Even individual donors, who might say that “philanthropy is about deciding which nonprofits to support and how much money to give them,” in practice generally don’t invest in nonprofits, but instead restrict their donations to certain programs and in effect attempt to use the nonprofit to execute the ideas that the donor themselves believe will do the most good.

When I first read Mark’s article, I was reminded of the Powell Doctrine. When Colin Powell was chairman of the joint chiefs of staff for the US military during the first Gulf War, he advanced the idea that war should be avoided at all costs. But when it became necessary, overwhelming force needed to be deployed.

To me, this is how I view Catalytic Philanthropy. Donors should avoid the temptation to design social impact programs themselves in the majority of situations. But when a donor decides that they have the answer to a problem, they must bring overwhelming force to the situation.

Mark himself told me that when he was writing his article, he considered using the term “shock and awe” to describe Catalytic Philanthropy.

When Tom Siebel decided no nonprofits were effectively combating the meth problem in Montana, he didn’t just launch a media campaign to educate non-users about the devastation caused by the drug. He saturated the media market with extremely hard hitting ads designed by advertising firms who usually work with Nike and other major corporate advertisers. And he supplemented the ad campaign with support for a variety of other elements of the system.

Siebel didn’t just design a strategy. He brought overwhelming force and execute a “shock and awe” campaign that resulted in a massive decline in methamphetamine related social problems.

So here’s the lesson. If you are a donor or a foundation, your best bet in my opinion is to focus your energy on building portfolios of outstanding nonprofit organizations. Invest in these organizations, help them grow and provide them the resources they need to achieve impact.

But remember that there are a lot more tools available in philanthropy. These tools can be powerful. But it is not enough to simply sit in an office and design a strategy that you think might work. Don’t forget that nonprofits on the ground have been hard at work on the very problems you think you can solve. But you have a unique role as a funder. There may be opportunities for you to become an agent of change yourself.

But if you take this route, bring your A-Game. Bring overwhelming force. Be prepared to execute a campaign of shock and awe that has a shot of truly acting as a catalyst that sets in motion a new chain of events.

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The Cost of Information Sharing in Philanthropy

March 2, 2010 – 9:54 am

My last post on the way that information has different characteristics in the social sphere compared to the for-profit sphere, generated a string of reader comments. The comments covered a lot of ground and I encourage you to check them out here. But one recurring theme pointed to the costs of sharing information being something that was difficult for nonprofit entities to cover.

Gabi Fitz of IssueLab:

When we forget the original intention behind knowledge production in the social sector (namely that it will contribute to social good and social change) we also forget to dedicate the necessary resources to sharing this knowledge more broadly…

Just like any other social need that is not satisfied by the market (or is maybe even the result of a market failure), the work of making meaning from information, providing effective filters, and brokering knowledge in the social sector is a social service that needs charitable support.

Dan Elitzer of Full Contact Philanthropy:

I agree that unlike in the for-profit sector, information sharing in the nonprofit sector does not have a negative impact on the information-creator’s ability to achieve their goals. However, there is still an opportunity cost for organizations to package their knowledge and transmit it in a form that will reach and be actionable for other actors. Foundations may have the resources to engage in information sharing if they think it will advance their mission, but for most nonprofits, investing the time and financial resources to share their data or knowledge requires making cutbacks in other areas.

If a nonprofit staff member is directed to evaluate a program and capture information on how it can be effectively replicated, the time spent on that task is time not spent on providing direct client services or fund-raising or training new staff, etc. If that staff member then has to find a way to distribute that information so that others in a position to act on it will find it, that’s more time not spent on other mission critical work. Yes, the time spent on capturing and disseminating information may ultimately do more to advance the organization’s mission than whatever other activity was superseded, but unless the organization is confident it can make that case to its supporters, that’s a hard call to make.

These are important points. I think the way to address these concerns is though the Googlization of Philanthropy and the way that technology is unbundling the process of creating information from its distribution. In a Chronicle of Philanthropy column last April I wrote:

The Googlization of philanthropy is about organizing knowledge to allow for smarter giving by more people. Most important, the Googlization of philanthropy means that organizing the information will not be done by the information creators, but by third parties and — excitingly — the people who want to consume that information.

The point here is that we are witnessing the rise of information processing organizations like Google, Yelp and Twitter (when it is used to create information filters) which do not themselves create information, but which pay for the infrastructure of information distribution. Something similar could clearly occur in the nonprofit sector (with current examples like IdeaEncore, PubHub and IssueLab).

The rise of these intermediaries both bring light to the information that is already available and creates incentives for more information sharing. The Foundation Center’s Glass Pockets project is a good example. The site, which shows how transparent and accountable large grantmakers are, both allow users direct click through access to an enormous amount of information about foundations and importantly it helps set expectations around information sharing. Certainly foundations which are currently not sharing information which Glass Pockets deems necessary will at least need to give some thought to changing their policy.

The takeaway from all of this is that it is critical that the social sector, both nonprofits and grantmakers, embrace a cultural ethic of information sharing. That as a sector, we realize that we don’t need to “own” our social impact. If we have valuable information that can help inform the activities of others, it is our duty and our biggest impact opportunity to share this information widely. Even the Bill & Melinda Gates Foundation, the largest grantmaker in the world, makes up only 1% of the amount given to charity each year. So to the extent that they are able to share what they know to help inform the other 99% of giving, they have an opportunity for the impact from what they know to dwarf the impact from the money they give.

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Qualitative Evaluation Conference Call

February 18, 2010 – 10:01 am

For all the focus on quantitative metrics, many donors forget that the act of investing, whether it be social or for-profit investing, is largely driven by qualitative information.

Join me on Monday, February 22  at 10am pacific on a Philanthropy Action hosted conference call with Timothy Ogden of Philanthropy Action and David Roberts of New Dominion Philanthropy Metrics. I’ll be making opening comments and then turning the call over to David who is an expert in measuring qualitative information. He’s currently one of the lead researchers on the National Institute of Health project to replace the current patient reported “pain scale” with a more effective qualitative measurement system.

To register for this free call and receive call in info send an email to info@ndpmetrics.com.

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