Here’s what that means and why it can be incredibly fulfilling for you as a donor.
One big reason funders seek out our advising services at Building Impact is to get help transitioning from checkbook philanthropy—intuitively giving to whatever comes their way—into strategic philanthropy.
Typically, their giving capacity has grown significantly in recent years, and they have hit a point where they want to make sure their giving is making an impact. In many cases they have worked for years amassing the resources they now plan to give away and naturally they feel a sense of obligation to make sure this money does the most good it can.
There is nothing wrong with this impulse. It comes from a good place, from a desire to give in a way that feels good and does good. But where people go wrong—and, arguably the entire field of philanthropy has gone wrong for a long time—is when they assume the only way to be a good steward of a great fortune is to do strategic philanthropy.
For all of the valid critiques of strategic philanthropy that have been shared in the last few years, especially in the wake of the pandemic, my issue with the data-driven, goal-focused paradigm is simple.
Strategic philanthropy is not feasible or fulfilling for the vast majority of donors.
Now, you might ask, why does it matter if a method of giving is fulfilling, as long as it’s effective?
As a donor, if you truly aspire to maximize the impact of your giving and its benefit for others, you must pay attention to conducting your giving in a way that you find personally gratifying as well—otherwise you run a grave risk of underperforming in your giving. You risk doing less of it in financial terms and giving it less of your time and attention.
Rigorous and nuanced impact measurement is the key to doing effective strategic philanthropy well—but not many are up to the challenge
The main reason why strategic philanthropy is not well suited for the majority of funders is that they aren’t able or willing to truly measure the impact of their giving in a meaningful and accurate way.
In strategic philanthropy, a funder begins by developing a theory of change about how the world works on the issue they care about (also called a logic model). Then they articulate a strategy for pursuing this theory of change, set specific goals with metrics, measure their progress toward those goals, and course correct based on the data.
Strategic philanthropists often set out to tackle the world’s most complex challenges—things like intergenerational poverty, chronic homelessness and disparities in educational attainment. In a complex challenge, the causal chain is non-linear. To achieve a desired outcome, you have to bring a flexible, constantly adapting solution, because the conditions surrounding the problem are constantly changing. And to measure the true impact of your solutions, you need to bring a similarly nuanced and adaptive approach to measurement.
However, most metrics that strategic philanthropists are using today to calculate impact oversimplify the problem they’re addressing by at least one level of complexity. And when they do this, they inadvertently incentivize their grantees to focus on activities that don’t always have a positive impact on the problem.
For example, let’s say a foundation wants to measure how well their grantees are intervening to stabilize people with both substance abuse and mental health issues in Boston. A complex problem, no doubt.
In an attempt to find a valid metric to evaluate that effort, the foundation might ask its grantees to report how many people they have in case management every month. That grantee will now feel pressure to make sure that number grows every month in order to continue receiving funding. And that’s where things start to break down.
To increase the number of people in case management, the grantee might start focusing on serving the most stable people in their area. Those are the people who can actually stay on their meds each month and show up to therapy. But the unstable ones, the ones with the most severe problems, who are having the most interactions with the police, are the ones who churn the most. From the standpoint of maximizing the metric the grantee’s funding hinges on, they’re the wrong people to focus on. But they’re the population that likely most needs the grantee’s services.
In their essay, “The Elusive Craft of Evaluating Advocacy,” political scientists Steven Teles and Mark Schmitt argue that the only way to effectively evaluate the impact of advocacy work is to approach it like an intelligence analyst:
Evaluators must acquire and accurately weigh and synthesize imperfect information, from biased sources with incomplete knowledge, under rapidly changing circumstances where causal links are almost impossible to establish.
The challenges that come with evaluating the impact of advocacy are common to almost all philanthropic interventions that aim to solve complex social challenges. The most effective evaluation often happens intuitively by the team that is on the ground doing the work. They are best positioned to feel their way towards the real story. But when they have to fit that story into the metrics demanded by the funder that keeps them afloat, they often tell whatever story they need to tell to keep the lights on.
If you’re not willing and able to take a rigorous AND nuanced approach to impact measurement (and very few people are), you will struggle to be an effective strategic philanthropist. And you’re probably not going to find a lot of meaning or fulfillment in your giving either, which may lead you to do less of it (not to mention torturing your grantees in the process).
Why we need more funders to embrace the role of accelerator
If you’re not going to be a strategic philanthropist, how can you give in a way that makes an impact and is highly fulfilling?
I believe there is a simple solution, one that’s available to all funders, regardless of how many zeroes they write on their checks. It’s possible to give in a way that is both highly impactful and highly fulfilling, without being the one to measure the impact.
All you have to do is let go of your attachment to your personal ideas about how social change gets made.
Here’s a hard truth: even if you have personally experienced the challenges you want to impact, and lived in the communities affected by them, your personal theory of change may still be off-base. This is because on the most complex social challenges, the answers are emergent—this kind of systems change doesn’t follow a linear path. Unless you are actively in the work day-to-day, it will be difficult to tune into the subtle signals and patterns upon which sound strategic adjustments depend.
But that’s perfectly OK, because there are thousands and thousands of committed social entrepreneurs in the U.S. alone who do have immediate and ongoing proximity to our most complex social challenges. This allows them to intuitively measure the impact of what they’re doing and course correct as they go. What these change agents on the front lines need is not more strategic philanthropists trying to stand in as social entrepreneurs themselves. They need accelerators: funders who are willing to back other people’s ideas.
Let’s be clear, if you are genuinely ready and willing to be entrepreneurial in your philanthropy, to generate your own ideas for making change and pursue them strategically over time, with both rigor and nuance, the world needs you to do that! But don’t have the illusion you can do strategic philanthropy effectively as a side gig, with just an hour or two a week. And don’t kid yourself that you can just hire people to do this kind of giving for you—unless you are truly willing to empower them as fully delegated decision makers on your behalf.
This is why the accelerator role is really worth considering for so many donors who are looking to gear up their giving. The accelerator role may not fit your initial story for yourself as a trail-blazing strategic philanthropist, but that doesn’t mean it can’t be incredibly fulfilling and impactful.
When you act as an accelerator, you’re trusting someone else to set the strategy and do the intelligence analysis to figure out what’s working and what’s not. You’re directly backing someone who has proximity and experience with the problem, who is constantly assessing the situation and course correcting automatically—at least, when their donors allow them to.
You can have a transformative impact on that person’s ability to keep doing what they’re doing by providing them unrestricted, sustaining funds, without requiring them to tie themselves up in a set of metrics and a storyline that bends reality to fit into your strategic plan.
Of course, to be an accelerator, you have to trust the social entrepreneurs you’re backing. I’ve written about the need for funders to be open to building trusted advising relationships with active leaders of social enterprises before, and it’s a crucial part of being an accelerator.
As a funder, your ability to make an impact is often directly related to your ability to let go of your fear that others will take advantage of you.
Social entrepreneurs have dedicated their lives to making the world better. They have repeatedly made choices that demonstrate their commitment to social impact over personal gain. The idea that you can’t trust them doesn’t add up. There are always a few bad apples in every walk of life, but the vast majority of social entrepreneurs aren’t going to defraud you. And so what if you do end up putting your trust in someone who abuses it? It’s rarely going to be an irrevocable loss. For a donor seeking to maximize impact with their hard-earned money, by far the greater risk is that you never fully lean into your giving because of your fear.
If we’re going to get billions of philanthropic dollars off the sidelines and into the hands of people who are making an impact on the issues that matter most to our shared future, we need more donors to get comfortable getting behind other people’s ideas. Strategic philanthropy does make sense for some, but we need many more donors to embrace the accelerator role.