Philanthropy is a growth business. But will the influx of new philanthropic capital yield dramatically more social impact?
The answer can be “yes” if donors are disciplined enough to overcome some basic philanthropic realities: Unlike the business world, no external forces demand that philanthropists focus on results. Accountability must be self-imposed, yet results can be defiantly difficult to measure. And while hard data is scant, feel-good feedback is all too abundant.
These realities foster grant-making practices that diminish grantees’ ability to achieve results. Too often, philanthropists:
- Act like principals rather than recognize that they are intermediaries whose impact depends on the impact of the organizations they fund
- Underestimate the resources needed for programs to succeed
- Under-invest, seriously and pervasively, in building grantees’ capacity
- Impose demands that drive up grantees’ real “cost of capital”
Philanthropists committed to increasing the impact of their grants place their grantees’ needs and strategies ahead of their own. They invest in due-diligence and supplement their own opinions with the best facts available. They bring rigor—and common sense—to the hard work of assessing impact. They are likely to make fewer, bigger grants, over longer periods of time.
Also, you might be interested in this short clip on Bob Buford’s take on “High-Yield Kingdom Investing”