How to be a better philanthropist

How can philanthropists give their money in ways that are more effective and better support their grantees? There is increasing discussion around this question as a new generation of philanthropists challenges how giving has traditionally been done. Devex convened a panel of experts to give their views. They raised issues about power, collaboration, long-term giving, and the dangers of unwanted “capacity building.” Power and co-creation One of the main topics of conversation was power imbalances in traditional models of philanthropy, and the need to shift more decision-making power to grantees. “Just by virtue of actually writing the check, a philanthropist feels that … they are in a position to tell those who are working on the ground … how the projects should be done,” said Naina Subberwal Batra, CEO of the Asian Venture Philanthropy Network. “There is a need to co-curate how solutions are arrived at,” she said. “It’s also really important that we look at models that work in the global south and we’re not just looking at a one-way transfer of knowledge from the global north to the global south,” she added. There is a strong tradition of philanthropy in the global south, but it often works in different ways. For example, it tends to be less institutionalized than philanthropy in the global north, and there is often more collaboration with governments to fill in gaps in social services, she said. This power dynamic is changing to some extent with younger donors. But although “trust-based philanthropy” is appealing to many of them in theory, they also want to “get their hands dirty,” said Michael Moody, Frey Foundation chair for family philanthropy at Grand Valley State University. That means being closely involved in programming and decision making, often bringing expertise from the world of business that they believe to be applicable to philanthropy. Navigating this complex power dynamic “is going to be a key issue for anybody working on social change, anybody working in the NGO sector [or] development, as these next generation donors become as powerful and influential as we know they will be,” he said. Nonfinancial support This led to a debate over the contentious question of nonfinancial support for grantees. “Capacity building from our perspective is guilty till proven innocent,” said Andy Bryant, executive director of the Segal Family Foundation. “Even with the best of intentions, when it’s top-down and imposed by funders, it’s usually a bad idea. Anything that draws the time and attention of a doer away from their really busy focus on delivering awesome programming to their beneficiaries and their communities, is a net negative.” When grantees specifically request nonfinancial support, Segal will support them and might give them extra funds to engage a service provider in the area, he said. But generally, it’s best for funders “to get out of the way.” Batra agreed, saying that small organizations value mentorship or technical support from funders in specific areas where they feel they need it, but that it can be a double-edged sword if it’s imposed in areas where it’s not wanted. Long-term funding Another issue raised was the need for long-term funding. Western philanthropy has often seen donors hand out cash and then disappear — the so-called spray, pray, and walk away model of grantmaking — Moody said. Despite many people perceiving the millennial generation as having a short attention span, his research shows that younger donors are more interested in taking a long-term approach and developing long-term relationships with organizations, he said. “Change doesn’t happen overnight on many of these issues so a long-term commitment to these causes, consistent support to organizations, also needs to be at the forefront,” said Elizabeth Dale, associate professor of nonprofit leadership at Seattle University. “We can’t have donors moving on to every shiny new project or else we might not actually see the change at the heart of these issues.” Batra added that this ties into the localization question because small organizations are usually better positioned to accept small, regular donations, instead of large lump sums. Dale did note, however, that large one-off injections of capital at certain tipping points for a cause can also be effective — the key is for funders to have a conversation with the grantee about what kind of support is right for them. Pooled and unrestricted funding Grantees often say that an unrestricted dollar is two or three times more valuable to them than a restricted one, said Bryant, whose organization specializes in unrestricted grants: “As a funder, I kind of want to be valuable, and if I can be twice as valuable by stripping off a project-based restriction, I feel pretty good about that.” He added that “we live in a series of crises” — from pandemics to the impacts of climate, to conflict, the context is always changing. So “if you don’t provide as much flexibility to your partners, you’re hamstringing them from the get-go.” Batra said her organization had overseen the development of a pooled philanthropic fund during the pandemic, which offered completely unrestricted grants. The pooling of funds had enabled that sort of innovation, she said. “What I discovered then is that when you have people that come together in a group with other philanthropists, they tend to be more innovative, they tend to be more entrepreneurial, they tend to be braver, and they tend to take risks and do things that they don’t otherwise do in their daily lives when they’re running their own foundation. We’ve at this point got eight funds that we’ve done,” she said.