Comments on: Is Risk Right for Small-Staff Philanthropy?

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[…] Is Risk Right for Small-Staff Philanthropy? […]

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To Our Contributors, Thank You | PhilanthroFiles — Wed, 27 Nov 2013 15:05:06 +0000

[…] Our good friend Elaine Gast Fawcett at Four Winds Writing Inc. wrote on convening, funder collaboratives, and risk. […]

By: Floyd Keene

Floyd Keene — Sat, 20 Apr 2013 13:56:06 +0000

Best intelligent, back and forth discussion I have seen on Philanthrofiles. Keep it up.

By: Nonprofitcommenter

Nonprofitcommenter — Fri, 19 Apr 2013 19:11:37 +0000

True, and there will always be a tension between the freedom given to the tax-exempt sector and the desire on the part of interested parties to see those tax-advantaged assets used in their preferred manner. That freedom has done much good, but also comes with responsibility.

But, to say that their are different meanings of risk is to come close to saying that all definitions of risk are equally valid. And to help grantmakers become more effective and increase impact inherently involves making a judgement regarding certain practices. If it doesn’t, or it avoids making anyone uncomfortable, it just becomes an exercise in supporting the status quo (which, in some cases, may be perfectly fine- but that should be a conscious choice).

The broader point is that there needs to be a mix of holding up truly effective philanthropy and pointing out less effective philanthropy.

But I would pose a question regarding your hypothetical. If a foundation’s own stated goal is to preserve wetlands, and if a $100K direct grant preserves 100 acres of wetlands, while a $100K grant to an environmental group preserves 1,000 acres, isn’t the latter grant, by the foundation’s own definition, of greater effectiveness and impact? And wouldn’t pointing this out be the role of an organization that wants to help increase effectiveness and impact? Yes, then the foundation can and should have the freedom to ignore that advice- but they shouldn’t be able to pretend, and act, as if they are pursuing their goal in the most effective fashion.

I think, and hope, that we’re in a time of incredible research and data inquiry in the nonprofit sector. That work is beginning to reveal what methods and practices are, in fact, the most effective and create the most impact (see CEP, GEO). As that becomes clearer I think it is incumbent upon those of us who care about the philanthropic sector to hold up those best practices, and note where we- and others- fall short.

By: Henry

Henry — Fri, 19 Apr 2013 18:11:42 +0000

Thank you for reading and commenting. Risk can certainly be a messy business and as often happens the word itself can mean different things to different people and foundations. For some, spending down or sun setting could be a bold and risky strategy, while others may be torn over striking a balance between funding current needs or preserving their assets for the unknown future. Looking over our nearly 2500 member foundations there is a wide range of answers to these and other questions and I have no doubt each one feels they are acting prudently. One of the true beauties of our system is that each funder: you, the Case Foundation and every single one of our members, can set their own strategies and make their own decisions (within the legal requirements) as to how they fund and what they fund. Our goal at ASF is to help them do so effectively and with maximum impact. For some that involves direct grants e.g., preserving specific wetlands while others choose to promote change through advocacy e.g., supporting environmental groups.

By: Nonprofitcommenter

Nonprofitcommenter — Thu, 18 Apr 2013 16:16:15 +0000

True risk would be something along the lines of a foundation repeatedly approaching 10% or higher payouts to solve a problem today, rather than adhering to the bare legal minimum and embracing the perpetuity mindset. That’s risk. Giving out a grant that is 10% less likely to succeed but has a 50% larger upside is not risky. That’s prudent investment.
And risk would be the Case Foundation actually giving out substantial grants, rather than telling everyone how they should be fearless. By and large organizations are afraid of running out of money, not failure. Addressing the money side of the equation will get us much further as a sector than scolding nonprofits for being afraid or for having insufficiently collaborative instincts. If you look at the Case Foundation 990, they explain their rationale for not giving out substantial grants. And under the law, that’s their right. But it isn’t a risky strategy, that’s for sure.