It's a Myth that Funders from the Business World Are Obsessed with Metrics

The growing focus on metrics and evaluation in philanthropy over the past decade is often seen as yet one more example of how business practices and market ideology are infiltrating every last corner of American society.

In fact, though, the average philanthropist with a business background doesn't care a whit about this stuff. Or at least that's my impression now that Inside Philanthropy has profiled hundreds of funders from finance, tech, and other business sectors.

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A great many of these funders, we've found, actually practice a very traditional form of philanthropy: They identify organizations they think are doing good work, engage in due diligence, and then write large general support checks—often year after year.

For every Bill Gates or John Arnold or Michael Dell who invests in serious evaluation of grantmaking, there are dozens of billionaires who never go down that path. More often, they go with their gut.

Most corporate foundations aren't rigorous either, judging by our extensive coverage of this world. They don't tend to fund pilot projects, assess the results, and then decide what to scale up. Rather, they often invest big in established leaders in a given issue area and, again, routinely renew grants to groups they see as effective.

If you want to find fancy-schmancy grantmaking, don't look at the foundation of a titan of industry or a hedge fund star. Look at a legacy foundation staffed by former academics and policy wonks. It's the Ph.D. program officers—most of whom have never stepped foot in the private sector—who are most rigorous in their grantmaking, not the former CEOs and entrepreneurs giving away their fortunes.

Of course, there is a logic to this if you look back in history. The era of rigorous grantmaking started back in the 1960s as part of a broader push toward evidence-based policymaking. Social scientists have always wanted to see hard numbers, and they've long been major players in philanthropy. One difference now is there are more professionalized foundations and more Ph.D.s running around in the philanthrosphere.

Meanwhile, there's also a logic to the hands-off strategy of business types. As I wrote a few weeks ago:

most big living donors come from the business world, and many have run sizeable organizations. The conventional wisdom in this sector is that the way to achieve the best results is to get behind winners—i.e., the people you're hiring or companies you're acquiring or investing in—and then give them the support they need to succeed. If things don't head in the right direction, you cut your losses. What you don't do is micromanage at every step of the way.

So it makes sense that when the titans of industry turn to philanthropy, many operate the same way and are ideal funders. Note the irony here: The transplants from the private sector are often easier for nonprofit executives to deal with than their own brethren on the funding side of the fence.

The supreme irony here is that living donors from business are more likely to trust nonprofit leaders to spend their hard earned money wisely than foundation program officers who are giving away somebody else's money.