PETER FRUMKIN Seeking Effectiveness Through Strategy Problem: Lack - PowerPoint PPT Presentation

Is my Funding Working ? Understanding Strategy and Impact PETER FRUMKIN

Seeking Effectiveness Through Strategy Problem: Lack of fresh Impact and effectiveness are the product of thinking about the sound strategy and execution nature of philanthropy strategy We know what strategy looks like in the business world… … But what is strategy in philanthropy?

Philanthropy’s ‘Scientific philanthropy,’ First Big Idea better than charity Addressed root causes of social problems, not just symptoms Create durable “ladders of opportunity” … but few new ideas about effective giving over time

Five elements of strategy In building a giving strategy… 1. Purpose 2. Theory of Change Need for alignment coherence and fit 3. Style among choices 4. Vehicle 5. Time

1. Purpose: Public/Private Tension Tax deduction for charitable gifts: The subsidy vs. Values of the donor sovereignty debate vs. Needs of the public

Private Values and Public Purposes Some donors focus on enacting values Some donors focus on creating public benefits Effective philanthropy often involves both powerful private values and important public needs

Bringing the two Amy Biehl Foundation sides together Finding intersection and point of overlap Values expression and instrumental impact possible at once

2. Thinking about Change: Two Common Theories Direct service with change driven Philanthropy is my transformations of one more complex than person at a time. this dichotomy Advocacy of new public policy, with change driven by shifts in government regulation or spending.

Five Levels of Change Risk increases as in Philanthropy philanthropic ambition increases 1.Individuals Tensions with government rises as 2.Organizations philanthropy reaches further 3. Networks 4. Ideas 5. Policy

3. Vehicles More choices today than ever before… Many options: …which complicates strategic giving Private foundations, community foundations, charitable gift funds, federated funds, giving circles, or no vehicle at all… Choice has implications for exposure of philanthropy to government and public

Operating Dean Mathey and foundation Grafton, VT sometimes best… Mathey’s philanthropy dedicated to both conservation and development Creates perpetual operating foundation for town

Mary Maurer in Kansas City Community foundation sometimes best… Mary Maurer fond memories of father Donor advised fund at local community foundation meets her needs for convenience and support

4. Style: Profile + Engagement Profile levels Everyone knows about Ted Turner’s big gift to Profile levels the U.N. connected to donor …but few know that personality Charles Feeney gave away a $4 billion fortune

Trends and Challenges 4. Style: Engagement Rise of high engagement philanthropy Level of Trust Between Donor and Recipient Need for values congruence Low High or conflict will arise Low Contractual Delegating Relationship Relationship Involvement of Donor with Recipient Auditing Collaborative Relationship Relationship High

Now vs. Later 5. Time Horizon 5% payout rate was set as a floor but has become a ceiling Attraction to perpetual foundations Regulation of this Convergence in payout practices dimension of strategy has been counterproductive Payout and Total Return across Foundations Payout rate Average over 1972 to 1996 Total Return 25% 20% payout and return rates 15% 10% 5% 0% 169 Foundations (in alphabetical order)

Time and Social Problems Pay out rate should reflect the contour of the problem the donor has selected Global Relative Environment Convergence around 5 severity percent payout is of social Natural problem evidence of a lack of Disasters strategizing around Rural time dimension Poverty Polio Time

Toward Strategy Broader Context Some donors start with value, some with Philanthropy is a style, some with vehicle… growth industry What matters is making wise, internally Public attention & consistent choices, no matter entry understanding is point increasing The Philanthropic Prism is a diagnostic tool and strategy coach

The Philanthropic Prism The search for strategy Value produced brings the donor into through giving contact with the public sphere and the state Vehicle or Theory of institution change through which supporting giving takes Alignment giving place Fit Coherence Time frame guiding Profile and giving engagement of giver

Why strategy matters Two Cases in Point Strategic alignment is a key driver of • Irene Diamond and AIDS success and failure research Consider two experiences with giving… • Edith Everett’s battle with the New York City Zoo one leading to a fundamental breakthrough changing the lives of millions… one leading to public humiliation and a returned grant

What does poor strategy What happens without strategic look like? alignment? Edith Everett and gross misalignment: Attempts to engage staid NYC Zoological Society Demands high profile and recognition No clear model for value creation “The Plaque's the Thing, but How Tall Are the Letters?” “Tisch to Match, and Raise, Revoked Gift to Children's Zoo”

Irene Diamond and “strategic fit” What is good strategic alignment? • Chooses to focus on public health (purpose) • Sets up a foundation with clear focus (vehicle) • Change sought through basic research (change) • Spends out over 10 years when problem demands it most (time) • Delegates to talented scientist (style)

Giving and Learning Few donors have Irene Diamond’s success… Still, funders can improve and build their skills over time

Philanthropic Strategy and Philanthropic Objectives Progress toward defining a philanthropic strategy START Philanthropic Approach 1 Progress “Ready, Aim, Fire” toward achieving philanthropic objectives Philanthropic Approach 3 “Think, Act, Adjust” Philanthropic Approach 2 “Try, Try, Try GOAL Again”

Strategic Giving: The Challenge of Impact Private wealth and values meet imperfectly public needs and priorities Need for focus across all 5 dimensions Strive for balance and alignment !

Discussion

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