Philanthropy Claims to Be a Dynamic Sector. Why Isn't It?

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While covering the world of philanthropic giving, it often strikes me just how wide the gulf can be between how the sector likes to describe itself — innovative, ambitious, idealistic — and the status-quo reality of most giving — staid, slow-moving and risk-averse.

Philanthropy likes to present itself as a dynamic sector, embracing concepts like “risk capital” and that old go-to, “innovation.” But when it comes down to it, even the biggest living donors, people we might expect to push the envelope, are still moving most of their philanthropic money to traditional destinations. And that’s when they aren’t simply stashing it away in donor-advised funds and well-tended foundation endowments to give away at some undefined point when philanthropy becomes more interesting than whatever else they’re working on.

That’s not to say backing traditional causes is an unworthy philanthropic practice, or that there aren’t places in the philanthrosphere where truly innovative work is taking place. On aggregate, though, the common image of philanthropy as a pastime of the rich in their sunset years is often pretty accurate. Despite claims to the contrary, many folks in philanthropy prefer going with the flow rather than shaking things up.

Our most recent survey of sector professionals bears that out. Only about half of respondents agreed with the statement that philanthropy works to accelerate positive change in society, with 40% ascribing to it “only limited or incremental impact” and 10% claiming it slows down or holds back change. That’s a pretty poor showing for a sector whose whole reason for existence is to make positive change — and from people working in that sector, no less.

Respondents in our survey had similarly dim views of leadership in philanthropy, with a full 75% agreeing that while there are some creative and bold leaders out there, it’s not the norm. When it comes to candid debate in the sector, more than twice the number of respondents said that “there’s a lot of groupthink and people are afraid to say what they really think” (about 30%) as the number that said “there’s a lot of candid and robust debate about important issues” (about 15%).

The respondents’ mixed feelings reflect one of the core paradoxes of modern philanthropy. This is a sector that ought to be dynamic, creative and bold, especially given how few constraints exist on what it can do — not to mention its massive and growing pile of ready capital. But in reality, philanthropy can’t seem to shake an enduring stodginess and risk-aversion, even as the supposed billionaire disruptors and tech wunderkinds get into the mix. Why is that?

Seven years ago, Sean Parker took on the question of philanthropic stodginess in a Wall Street Journal op-ed memorably titled “Philanthropy for Hackers.” At the time, the billionaire Napster co-founder and early Facebook president was fresh off launching the Parker Foundation with a $600 million gift, and presented himself and his fellow “hacker elite” as a shot in the arm for the ponderous world of traditional philanthropy.

“While philanthropists like to talk about impact, they seldom have the tools to measure it,” Parker wrote. “This has led to a world in which the primary currency of exchange is recognition and reputation, not effectiveness.” He then laid out some lessons for rising philanthropists to keep in mind, “lest we assimilate into the stodgy institutions of the past and lose our edge.”

To Parker’s credit, at least some of philanthropy’s decision-makers have embraced his advice. Giving early, deploying resources quickly, betting big, even getting political, have all gained traction within the philanthrosphere since he penned that op-ed, including in some parts of the foundation establishment he dismissed at the time as “largely antiquated.”

Also to Parker’s credit, his philanthropic focus on the “hackable problem” of cancer immunotherapy research — then underfunded — seems like a wise move as the pace of advancements in that promising field continues. The problem, though, is that even hacker philanthropist Sean Parker hasn’t quite been able to escape the gravitational pull of philanthropic stodginess. Sure, his big giving started off with a bang, complete with a star-studded L.A. launch for his cancer giving (read IP founder David Callahan’s reflections on that “phantasmagoric” evening).

But since then, the Parker Foundation has settled into a fairly standard (dare I say traditional?) eds and meds approach. Research on cancer and other diseases has been the focus, with some additional giving for global public health. It’s vital funding that has likely helped save and prolong lives. But it isn’t anything close to the kind of philanthropic boundary-stretching Parker evangelized in 2015.

The same goes for the Parker Foundation’s civic engagement work, the closest he appears to have come to “getting political” within the 501(c)(3) world. One main beneficiary there is the Economic Innovation Group, a “bipartisan public policy organization” that helped spearhead the Trump-era Opportunity Zones initiative. As we’ve discussed multiple times, the results of that market-oriented attempt at fostering local economic equity have been lackluster at best.

Not to beat up on Parker too much; he’s just one example I could cite here. The history of charitable giving suggests that it’s next to impossible for even the boldest of big givers to escape the event horizon of philanthropic tedium. One could point to Gates, Zuckerberg, or even make a pessimistic argument about MacKenzie Scott, whose approach to mega-giving, though definitely far more dynamic than most, still favors many traditional philanthropic destinations and may or may not actually deliver lasting social change.

So what gives? What’s the reason for philanthropy’s enduring lack of dynamism and tepid faith in itself?

There are likely a number of factors at play. Parker alluded to one in his 2015 piece: inadequate tools to measure impact. Rather than entering the muddy waters of long-term social change, many big givers and philanthropoids, trained and acculturated by a private sector where numbers reign, stick to areas where impact can be quantified and where they feel they can bring their personal expertise to bear. They tend to want to carbon copy their paths to business success onto their charitable operations. Parker said as much in his piece: “We hack systems that can be hacked and ignore the rest. I care deeply, for example, about the plight of refugees and the peril of global warming, but I don’t pretend to have some special insight into how to deal with them.”

The thing is, having special insight yourself and having the ability to find and fund others with special insight you lack are two separate things. Parker’s reflections left that second stone unturned. That’s the trouble with the metrics-first mentality: It leaves out the trust element. And while it’s possible to be too trusting, risk and trust go hand-in-hand in nonprofit funding.

As for other reasons, the philanthropic status quo no doubt gets a boost from the often insider-y nature of the pool of professionals who work in this space. From staffers at influential foundations to the expanding universe of philanthropic consultants, many sector decision-makers tend to hail from similar backgrounds and boast the same sorts of fancy degrees and credentials. There are exceptions, to be sure, but on aggregate, that’s not really a recipe for out-of-the-box thinking. Combine that with the inherent tendency of wealthy donors to favor a status quo that preserves their wealth and reputations, and it’s no wonder taking major risks is often out of bounds.

The most fundamental dynamic at play here may be the simple fact that change happens slowly, and social change in particular can be a tortuous process of two steps forward, one step back, over and over again. That doesn’t lend itself to a narrative of dynamism. A lot of ostensibly bold funding has little to show for itself at the end of the day, setting into motion work that advances in nonlinear ways, subject to chaotic and unpredictable forces. Early climate change philanthropy, for example, attempted to reduce the global crisis to a math and engineering problem (some of it still does), but funders quickly learned that it was also an enormously complex social, political and cultural problem.

In the wake of last week’s Supreme Court decision overturning Roe v. Wade, lots of philanthropic voices came forward stressing the importance of patient, long-term support in the continuing fight for reproductive justice. They’re right. For one, it’s an issue where fear of taking a bold stance has kept far too many timid funders away in the first place. But also, as the conservative donors who resourced the anti-abortion camp over many patient decades have proven once again, long-term funding can have an enormous impact. It doesn’t have to be flashy. In fact, it’s almost better if it isn’t. After all, the local organizing and policy work that built up conservative power and ideological orthodoxy, while whittling away abortion rights in dozens of states, happened mostly way in the background of the national political horserace.

So while there’s clearly room for improvement when it comes to philanthropy’s willingness to take risks and try new approaches, stodginess isn’t always a sin. That is, so long as it’s the right sort of stodginess, one born of a patient willingness to listen and trust, and a healthy appreciation that social change is actually harder and takes longer than making a bucketload of money. If it’s merely a case of giving the same old way because that’s how it’s done and we don’t want to think anymore, I’ll take splashy innovations any day.