The New Philanthropy

What I mean by “the New Philanthropy” is the cultural change afoot that is leading more and more of us to believe and act on the belief that we can make a big impact, in our lifetime, with or without large amounts of capital. The New Philanthropy has three classes of people.

Independently Wealthy

John Wood is a model example of someone who had accumulated massive resources and lived a full and busy life, but had some experiences that shifted his perspective to the point where he could no longer continue on his previous path. In the old days, independently wealthy philanthropists like Rockefeller saw their role as to “make as much money as possible, and then use it wisely to improve the lot of mankind.” John Wood and his ilk believe “what kind of man am I if I don’t go face this challenge directly”, and to their peers who say they are crazy or having a midlife crisis they respond “wouldn’t it be a crisis to not follow my heart… at age 35, I’m too young to not do that”.  Bill Gates (Woods’ old boss, the man who made him rich) might be seen as old guard, but unlike his industrialist counterparts he lives in a globally connected world of mass communication (that he largely helped create). And when you convince people like Warren Buffett to let you give away all their money too, then you fall into the category of Amplifier.

Amplifiers

The patron saint of Amplifiers is Oprah. She and her brethren like Bono, Brangelina, and Leonardo Di Caprio, leverage their personal capital but more importantly they leverage their even more valuable social networks. They focus massive amounts of media attention to mobilize the masses to action. They trade on their capital of celebrity and political power for what they perceive is the greater good. Rather than sit imperially at the top of their thrones and decide which courtesans receive cash, they choose their causes and when others who would take advantage of their sympathies come calling — and they inevitably do in droves — Amplifiers think about how these outside interests help or distract them from their own mission and act accordingly.

Average Citizens

The value of cash is dependent on how it is spent. The value of human capital (all the non-monetary activity that goes into a project) would be an order of magnitude greater than the cash involved, assuming one could accurately measure it. The potential amount of human capital that could be raised and spent on any given project is several orders of magnitude greater still. This potential human capital (PHC) is what the Average Citizens as a group bring to the table. An individual Average Citizen can make an immediate and enormous impact by (a) mobilizing their peers, (b) attracting Amplifiers to their cause, and (c) convincing the Independently Wealthy to adopt their cause. All three activities have the additional impact of catching discretionary capital from philanthropists* in their “dragnet”. Genevieve Piturro and Barbara Franklin are perfect examples of Average Citizens who are changing the world for the better right now.

So how do traditional charities fit into the New Philanthropy? It is a complex situation. On the one hand, we have all heard about how bad some charities squander their donations in administrative costs. Even grass-roots initiatives can be comically misguided, like the charitable parachutists who raise less money than than it costs to care for their parachuting injuries. Then there are charities that have been operating for over 20 years with very low overhead rates, like the Cancer Research & Prevention Foundation.** Celebrity charitable foundations can act as effective Amplifiers like or they can just make the celebrities look charitable without raising much money at all, as in the case with most celebrity golf tournaments. Ultimately though, we must consider the non-monetary benefits of any charitable endeavor, given the difference in scale between dollars and PHC.

Here are some questions you can ask yourself if you are considering giving money or your time to an existing charitable cause (whether it’s a formal legal charitable organization or a grass-roots initiative):

  • Do I believe in the stated Mission and its importance or relevance?
  • What kind of PHC exists for this effort?
  • How are they currently leveraging their cash to convert PHC to human capital?
  • What opportunities exist for me to help contribute meaningfully in ways other than my cash?
  • What are the opportunities for attracting Amplifiers to the cause?
  • In the case of formal organizations, what do the various watchdogs say about them?

More generally, we should all be thinking about ways we can become Amplifiers for the New Philanthropy. It starts by sharing your thoughts below.


* non-activist givers as well as corporations
** conflict disclaimer: I serve on the CRPF Board of Directors. My choice to join them was in part because of their low overhead rate.

  • Nice blog!

  • Oprah has also been a big amplifier for frauds. She needs a professional skeptic on her staff.

  • Can you be more specific?

  • Jai

    Before we start charting a course for “New Philanthropy” we need to take a moment and consider what’s wrong with Old Guard Philanthropy. Today, New Philanthropy has mostly been defined by a younger and more savvy class of donors, often entrepreneurs who bring a strong foundation of ambition, a need to be more closely engaged and a desire to realize more tangible results through their giving. For sure, the common practice of doling grants has been challenged by these new players, but unfortunately the discussion has led most of us only to consider the shortcomings of practitioners and not enough attention has been paid to analyzing the tools and resources necessary to convert common practices to meet the needs of new philanthropists.

    For those less familiar with traditional grant making, the scene looks vaguely familiar to a casino floor. Program Officers crowd around a table, placing their bets on research and new “initiatives.” Each has a system, but from afar it looks a lot like a roulette table. So many small bets on black or red, and the occasional inside bet on a single number that attracts attention and builds some outside interest. When you tally the results, there are too few instances of real outcomes (e.g., successes in cancer treatment are poultry compared to the level of philanthropic investment over the past 60 years), and we assume that the house has an advantage.

    However, it’s not so simple. Those making the “bets” in philanthropy have tremendous influence over the rules of the game, and their experience – albeit often intuitive – is not to be underestimated. We need to roll up our shirtsleeves and find the most effective ways to build and proliferate effective tools that help these experienced players perform better.

    Here are some basic ideas for discussion:

    1. We need a dominant design for benchmarking results in and across the many philanthropic verticals in which grants are made. In softer sciences, these tools are debated and discussed ad nausea, but there is not enough effort to build consensus around metrics and to use them to compare results. Too much effort is spent debating the shortcomings of even the most well articulated tools. If we can put a stake in the ground and claim a standard – even one that is not yet perfect – we can do a much better job of building best practices and generating momentum around innovative solutions.

    2. We need to find those models that speak to the need for more “leverage” (as called for by New Philanthropists) and put them in the hands of common practitioners. For example, the use of PRIZES to harness the power of competition is getting a lot of attention (as it should), but Old Guard grant makers are reluctant to experiment with the model, instead choosing to back “lifetime achievement awards” or “idea competitions” (versus contests guaranteeing proof of concept). These and other models, such as Advanced Market Commitments (AMCs), need greater traction.

    3. We need better marketing. Philanthropy will not be fixed overnight; so, if we have to deal with anecdotal success stories, let’s at least make them compelling and broadcast them to the general public. If we can get the basic set of ideas that are available TODAY on the table, then we can begin to chart our progress (both practically and ideologically).

    4. We need more experimentation. If there were some incentive for grant makers to fail more frequently, to bet on ideas with great potential for success and relatively lower probability of returns, then we could cast a wider net and invite more mavericks to join. In sectors, like the Internet, where failure is considered a learning experience (and highly valued) there is a great deal of innovation. Similarly, philanthropists should be prepared to make long bets and to justify those decisions in pursuit of innovation.

    By no means is this an exhaustive list (I hope that you will add to it), but – again – I think that the discussion needs to move towards a better analysis of what issues need to be resolved and what tools need to be put in place to make progress.

  • Jai,

    You bring up some very important points, and I mostly agree with you.

    1. The benchmarking issue in my mind is the central one when it comes to prizes. Not all problems are really appropriate for prizes, but it’s my belief that some (such as cancer) can be brought into the prize-amenable realm if (and only if) the benchmarking issue can be addressed. As I see it there are three parts to this: (1) Problem/goal definition: what is cancer, and how do you define a “cure”? (2) Measurement: how close are we to the goal, and has the goal been achieved? (3) Credit: who gets what share of the prize?

    Without getting too philosophical or too deep into the science of cancer, I feel that a priori consensus on any of the three parts (but especially the first) is not only impossible, but also speaks to why there has been no real progress on a cure. Namely, the nature of the disease (possibly diseases) is so complex that to attempt to define it and to put a stake in the ground is doomed to presupposing the approach that will cure it. And since the whole point of a prize is to incentivize radical new approaches, this would defeat the purpose. Measurement has a derivative conundrum in that without clear definition, what are you measuring?

    However, just as these types of issues did not stop the Supreme Court from ruling on pornography, I truly believe that if we let go of the notion of an a priori definition and measurement strategy, we can proceed with a prize annuity fund approach as outlined here,

    http://rafefurst.wordpress.com/2008/03/11/x-prize-annuity-funds/

    leaving the matter to the philanthropists themselves to “know it when they see it”. I realize that there are countless objections that might be raised, but ultimately the only things that matter are (a) whether the philanthropist believes his goal has been achieved and (b) the prize award process is legal and fair (i.e. nobody has been mislead into doing work under false pretenses). To those who still have objection, I say, great, the more approaches the better. If someone wants to come up with an a priori benchmarking methodology for cancer (say), and can build a large prize around it, how can this possibly be a bad thing? Especially if there’s a “wisdom of the crowds” approach (like the one I propose) in addition.

    2. I’m not familiar with AMCs, can you elaborate? Also, what are some other new models?

    3. Amen. The X Prize Foundation has done an incredible job on this front. I see that you are a part of that organization. Do you guys have plans to extend your mission beyond the current model? In my way of thinking, if the X Prize Foundation were to adopt the annuities fund idea, I would be very happy.

    4. am torn about this last statement because on the one hand I agree with the notion that knowing what issues need solving (such as conflicts of interest) and what tools are being brought to bear on those issues (such as an incentive-aligning prize) is important. On the other hand, rarely is it the case that we add value by doing more than commonsense analysis — analysis that all stakeholders can follow easily. The beauty of the original X Prize was its simplicity and attractiveness for those who would try to claim it. If the rules were complex and if there were lots of caveats to eligibility and the award process, nobody would have worked on the problem. Ideally what we need are ways to obviate deep analysis and remove barriers to implementing new philanthropic approaches, and let the market do its magic.

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