By Henry Berman, ASF
Most of us in the philanthropic world are often asked by financial advisors about our tolerance for risk. But lately I’ve been thinking about risk in terms of organizations I choose to partner with and fund as a philanthropist. Will I accept the fact that my investment in a nonprofit may fail to produce the desired results? Or not produce as quickly as I would like? And what do I have, aside from financial capital, that could leverage my investment and potentially minimize risk?
In a conversation I had with Paul Shoemaker, Executive Connector of Social Venture Partners Seattle and founder of Social Venture Partners International (SVPI) we explored this topic. In Paul’s words:
Obviously, in the private sector we’re used to failure and we say that’s part of the process, and we make bets, and occasionally there’s a failure. In this business [philanthropy], if you have a failure, it may affect real lives. So it’s got a different connotation to it. What I think is true is that we need to be willing to sometimes invest in things that we know work, and to scale them, but we also need to be willing to invest in some innovations. And some organizations may do one or the other, or maybe some of both.
So to me, I guess the definition of tolerance for failure would be: Are [you], as a philanthropic organization, willing to invest in innovation, either within an existing organization or a new organization? And are [you] willing to stick with that investment while it makes mistakes, and it trips on itself, and maybe even ultimately fails, but what comes out of that is something better or some knowledge that moves the field or moves the practice forward?
Listen to the complete interview in our free podcast, Strength in Numbers: Leveraging Human Capital to Amplify Impact. And let me know what you think.
Henry Berman became ASF’s CEO in 2011, previously serving as acting CEO, board member, and committee member. Through his experience as a foundation co-trustee and ASF member since 2003, he brings a firsthand understanding of the needs of ASF members to his role. Berman’s early career included positions as an independent communications consultant and director, writer, and producer of film, video, and multimedia programs for education, motivation, and fundraising.