By Henry Berman, ASF
I hear lots of talk about measuring philanthropic impact, and it often focuses on the metrics of a funded program or organization: How many children were served? By what percentage did (fill in the blank) change? But how many of us truly use this information to help our grantees or increase the effectiveness of our grants?
Instead, consider a different way to think about good philanthropy, or to assess what I call Total Philanthropic Impact: the combination of dollars granted, non-dollar assets leveraged, and investment assets put to work in service of your mission.
Based on ASF’s 2011 Foundation Operations and Management Report, set to be updated with 2013 data this fall, we estimated that ASF members granted $4.85 billion in 2010. If they were a single foundation, it would have been the largest in the country. But, whereas money can certainly address needs, it can’t, at least by itself, fix the underlying problems that cause the needs. Doing so requires giving more than money; it requires going beyond the check.
Donors who choose to practice small-staff philanthropy, which includes ASF members, are by design closer to the issues, grantees, and communities their giving impacts. They are decision makers grounded in their geographies or areas of interest, responsive to community needs, and often seen as the philanthropic equivalent to small businesses, serving as the backbone of healthy, engaged, and compassionate communities. They are well positioned and highly motivated to tap their own knowledge, networks, experience, and reputation to leverage their grantmaking for maximum impact—all non-dollar assets that can increase the impact of their grantmaking exponentially.
To be true philanthropists, I believe we have an additional obligation to make certain our dollars are invested for maximum effectiveness. I’m referring to investing with your mission in mind and all the forms it might take: mission related investing (MRI), program related investing (PRI), socially related investing (SRI), or the more common umbrella term nowadays: impact investing. Read more about impact investments
I realize that many philanthropists, myself included, need the financial returns they believe they can find in non-mission related investments. But times are changing, opportunities are growing, and impact investments are increasingly targeting market-rate returns. Might your investment portfolio slowly move toward impact investing? After all, if you fund education, why wouldn’t you want to place some money in municipal bonds to fund the construction of new schools?
Dollars + Non-dollar Assets + Impact Investments = Total Philanthropic Impact
Certainly some foundations and individuals with large sums of money do make an impact with their funds alone. But there are a lot more funders with smaller grantmaking pools that also leverage their expertise, connections, passion, and knowledge to make their money go further. And many of them also invest in ways that support their missions.
To truly asses your total philanthropic impact, and not just the impact of your grants, you must consider all three: dollars granted, leverage, and how you manage your investment portfolio. At any time, one may contribute more toward impact than the others, for they are, in fact, dynamic. But, in the end, I submit the greatest total philanthropic impact happens when you pay attention to all three and keep them in balance.
Where do you stand?
- Twenty Ways to Make a Difference: Stories From Small Foundations
- ASF’s Getting to Impact initiative
- ASF’s resources on foundation investing
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. Follow Henry on Twitter @Berman_Henry.