Philanthropy – Get over Yourselves and Spend That Money!

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December 26, 2012; Source: Reuters

Writing for Reuters, Felix Salmon has an enjoyable column on the things that mega-philanthropists do wrong with their philanthropy:

  1. Meddling with the internal operations of the recipients of their giving: Salmon correctly points out that donors’ “experience in the for-profit world is not nearly as valuable” as they might think;
  2. Setting up their own foundations: Salmon calls foundations “the classic waste of money and resources…expensive things to run, both in terms of overhead costs and in terms of opportunity costs;”
  3. Making donations “to Harvard, or any other large endowment”: Salmon suggests that the marginal utility of donations to big endowments “is probably smaller…than anywhere else” and describes such gifts as “just another way of not actually spending your money;”
  4. “(F)und(ing) architecture: Salmon says “mission-building is more important than edifice-building;”
  5. “(E)ncourag(ing) mission creep”, that is, attaching strings to a donation that “essentially force a non-profit to do something it never particularly wanted to do in the first place;”
  6. Assuming that the donor’s presence on the board is inherently valuable: Salmon sees that the money is what’s valuable, and to a nonprofit, the value of the donor’s “presence on the board is the implicit or explicit financial commitment that comes with it;”
  7. Teasing nonprofits, forcing them to “put a lot of effort into buttering up donors and potential donors” rather than simply deciding to give or not give without the rigmarole;
  8. “(C)onfus(ing) philanthropy with social climbing”, that is, “buying the admiration of…friends and peers by ostentatiously giving money to their favorite causes;”
  9. Thinking that “going to charity balls constitutes charitable activity:” Salmon writes that if a donor doesn’t need the black tie rubber chicken self-congratulation kind of stuff, “just take the money you would otherwise spend on a table, and donate it to the organization directly. That way the charity gets all of the donation, and you get four hours of your life back;”
  10. “(P)ut(ting) your name on a building, or anything else, for that matter:” Salmon’s only comment is “why?”;
  11. “(T)ransactioniz(ing)” philanthropic giving: Salmon criticizes the “tit-for-tat” dynamic of charitable giving in contrast to the Jewish tradition of “tzedakah [which] calls out anonymous gifts for especial praise.”

The obvious theme in Salmon’s essay is humility. He is actually focused on individual mega-donors with outsized egos and expectations, spending a piece of the essay on the University of Virginia’s effort to get $15 million from hedge fund billionaire Paul Tudor Jones, trying to get him off his idea for endowing a center for yoga toward a somewhat broader concept of a “contemplative sciences center” approved by Jones’s personal yoga consultant. For those nonprofits smaller than UVA that are unlikely to be wining and dining hedge fund guys, the outsized egos most likely to be encountered are in the executive suites of private foundations. A dose of humility might be very useful there as well.—Rick Cohen

  • outthereaswell

    Clearly, humility is an all-too-rare element in philanthropy today.

    Unfortunately, its appearance in non-profits is also in proportional lockstep with philanthropy.

    We have evolved to what I call the Sycophant Syndrome:

    “Saying You Can Offer Philanthropic Help Always Requires No Thought.”

    Saying you will help and then not helping is worse than not helping. The dopamine that used to flow in anyone’s head once they helped others now flows when they “save the day” by telling non-profits they will help and then never following through. Yet, at the end of their cliché day, they fund what they want and not what should be funded. It is their money but the world they extend it to has the right to demand better and more efficient decisions on their part, but we never do.

    I know countless non-profits who have had philanthropists step up and claim they will solve a critical problem of their organization’s, only to wax cold -once the heat of the moment fades. Every non-profit, regardless of size and age knows this growing problem. The amount of effort on the part of the non-profit to then pursue a fading interest is staggering, demoralizing and damaging. These are the real and hidden shames of wasted resources.

    We have evolved to trigger the “helping dopamine” in the offer and not with the actual helping action. This is also true for volunteers. It is unclear how this happened so pervasively, but its trend started in earnest in the last two decades and is pervasive in the generations who have something financial to offer. Youth is more resistant to this trend because they do not yet have the financial clout to make grand gestures of help.

    This syndrome comes resplendent with no action on the part of the philanthropist and huge expenditures of resource and hope on the part of the non-profit. A baseless, self-aggrandizing offer that feeds the needs of the philanthropist and not those of the charity, is destructive and diminishing for all but the philanthropist. It is a shameful and unspoken reality in today’s philanthropic circles.

    This syndrome forces the non-profit to court the philanthropist and hope that they can keep their interest. The tragedy is that as the charity works to court the source, and in some cases even morph to what they feel is fundable instead of laudable, the philanthropist is past their interest level and will never fund them at a useful or sustainable level because as they say, “the thrill is gone”. The non-profit simply does not know this and continuously feels that the lack of response on the part of the philanthropist must be the non-profit’s fault because of the earlier direct grand statements of support they received.

    This syndrome has bred a clear and ever now present laziness on the part of philanthropists, who do not seek out practical innovation but rather who fund the same causes, approaches and redundancies over and again. The non-profits who have the resources to claw their way through the noise get the attention and the bones. During harder economic times, the larger non-profits actually do better because they can afford to stay in the lead foundation focus. In fact, it is presently predicted that in 2013, when small and medium non-profits will have a worse funding time than even in 2012, the larger mega charities will experience a bumper year of actual increases in funding. To date, not a single philanthropic source has publically raised this concern to lead in exception to these predictions.

    Philanthropists and their Foundations have been trending for twenty years to “focus their resources” on specific subject categories because, as they have always claimed, the crush of charitable requests has forced them to focus their resources. In reality, their leadership has simply never funded honest and serious research to find the harder to find practical innovation that can better and more efficiently find solutions to today’s local and world problems. It is simply easier to fund the larger and more establish, and better lobbying charities.

    Serious R.O.I. in funding ceased to be a concern decades ago, even though it is still claimed to be paramount. Ease of funding is the dirty little secret out there, and few philanthropic initiatives in the modern era could defend themselves against this if challenged. There are no challenges because they have the funding, and their leadership may care better but have evolved to not know better. These are harsh but justified words to describe what the growing record shows in real practice.

    Check your average foundation or business/individual philanthropic action budgets and you will find virtually no budgets for specifically researching laudable innovation to solve problems. Their budgets are to evaluate the charities who can rise above the din of all the outreached hands and who also fit the narrow focus of their program. They wait for non-profits to find them and persist through a gauntlet of larger funded promotional programs to make themselves competitive. Some foundations are so lazy that they have reduced themselves to funding those charities who can muster the most votes on cyber campaigns. Merit has been removed from the equation and budget and manipulation are the new kings.

    This “voting for philanthropic dollars” is becoming the new, unfortunate cyber vogue. It is denied, but the metrics are there for anyone to examine on the growing number of public displays of this mean and wholly misguided practice. Business philanthropy started this with contests for awards that simply force non-profits to mine their contacts and resources and offer them up to the business for their own shameless marketing downlines. Sign up for any of them out there (we are not name bashing here but they are simple to find), and you will instantly see the problem and usury nature.

    This is an evolutionary travesty. The small, still underfunded non-profit has no chance in today’s philanthropic environment, where “big” means successful and defines a legacy. The trend is for funders to look for “investments for the long-term” which is clearly stated as funding those charities who are already well established working on solutions to problems that are NOT solvable in a minimum of a twenty-year period. This direction and rationale for funding seems counter intuitive; however, it is very goal-based. That goal is the philanthropists’ and not the non-profits’.

    Charities who work on problems not perceived as lasting are no longer seen as serious “investments” and receive no serious funding attention. The exceptions to this of course are natural disasters, which do diminish in relatively short cycles and toward which some well healed charities do some great work. Again, programs that will never have an ultimate solution, yet can promise the hope of one, become the unspoken but favorite child, “investment”.

    This point-of-funder-view is not publically stated; however, it is pervasive in review boards. The irony is that this attitude toward smaller, less funded charities that address real mitigate-able problems basically says that if a solution significantly diminishes the need in the near-term (2-5 years), then the investment is a poor one because the long term legacy of support is more important than the solution. This has been stated over and again by board members in various foundations in private conversations, but is very unlikely to be paraded in public because it is based solely on investment and legacy discrimination criteria. Public merit has little to do with the process anymore. Nevertheless, the habitually funded causes clearly illustrate the point.

    Humility is indeed needed, and there are also many incredible and innovative philanthropic intents and actions out there who have humility and who attempt to encourage practical innovation and sustainable impact. However, the evolution is toward incredibly lazy funding entities with little knowledge and expertise and no budgets to find and fund new solutions, while of course perceiving themselves to be practicing the opposite.

    The vast mix of elements that combine to marginalize innovation and the small, meritorious non-profits is complex but coming “out of the pipe” is a modern real trend to fund only those non-profits with the resources to manipulate the funding sources.

    Curiously enough, greater “humility” on the part of all those with the purse strings could reverse these trends but most assuredly it will not happen without humility.

    Who in the philanthropic community has the stomach and leadership moxie to buck the rest? Time and perhaps some louder non-profit voices will tell.

    Thank you for poking the beast.

  • Michael Edwards

    Dear Outhereaswell, bravo! If you’re willing to out yourself, at least to me, pse contact me at I’d love to talk more and maybe get your thoughts to an even wider audience. Thanks, Michael Edwards