PETER FRUMKIN Seeking Effectiveness Through Strategy Problem: Lack - - PowerPoint PPT Presentation

PETER FRUMKIN

Is my Funding Working ? Understanding Strategy and Impact

Seeking Effectiveness Through Strategy

Problem: Lack of fresh thinking about the nature of philanthropy strategy Impact and effectiveness are the product of sound strategy and execution We know what strategy looks like in the business world… … But what is strategy in philanthropy?

Philanthropy’s First Big Idea

‘Scientific philanthropy,’ better than charity Addressed root causes of social problems, not just symptoms Create durable “ladders of

• pportunity”

… but few new ideas about effective giving over time

Five elements of strategy

In building a giving strategy… Need for alignment coherence and fit among choices

• 1. Purpose
• 2. Theory of Change
• 3. Style
• 4. Vehicle
• 5. Time

• 1. Purpose:

Public/Private Tension

Tax deduction for charitable gifts: The subsidy vs. sovereignty debate

Values of the donor vs. Needs of the public

Private Values and Public Purposes

Some donors focus on enacting values Some donors focus on creating public benefits Effective philanthropy

• ften involves both

powerful private values and important public needs

Amy Biehl Foundation

Bringing the two sides together

Finding intersection and point of overlap Values expression and instrumental impact possible at once

• 2. Thinking about Change:

Two Common Theories

Direct service with change driven my transformations of one person at a time. Advocacy of new public policy, with change driven by shifts in government regulation or spending.

Philanthropy is

more complex than this dichotomy

Five Levels of Change in Philanthropy

Risk increases as

philanthropic ambition increases Tensions with government rises as philanthropy reaches further

1.Individuals 2.Organizations

• 3. Networks
• 4. Ideas
• 5. Policy

More choices today than ever before… …which complicates strategic giving

• 3. Vehicles

Many options:

Private foundations, community foundations, charitable gift funds, federated funds, giving circles, or no vehicle at all… Choice has implications for exposure

• f philanthropy to government and

public

Dean Mathey and Grafton, VT

Operating foundation sometimes best…

Mathey’s philanthropy dedicated to both conservation and development Creates perpetual

• perating

foundation for town

Mary Maurer in Kansas City

Community foundation sometimes best…

Mary Maurer fond memories of father Donor advised fund at local community foundation meets her needs for convenience and support

• 4. Style: Profile + Engagement

Profile levels Everyone knows about Ted Turner’s big gift to the U.N. …but few know that Charles Feeney gave away a $4 billion fortune Profile levels connected to donor personality

• 4. Style: Engagement

Trends and Challenges

Rise of high engagement philanthropy Need for values congruence

• r conflict will arise

Level of Trust Between Donor and Recipient

Contractual Relationship

Low High

Delegating Relationship Auditing Relationship Collaborative Relationship

Involvement of Donor with Recipient Low High

• 5. Time Horizon

Attraction to perpetual foundations Convergence in payout practices

Now vs. Later 5% payout rate was set as a floor but has become a ceiling Regulation of this dimension of strategy has been counterproductive

Payout and Total Return across Foundations

Average over 1972 to 1996 0% 5% 10% 15% 20% 25% 169 Foundations (in alphabetical order) payout and return rates

Payout rate Total Return

Time and Social Problems

Pay out rate should reflect the contour of the problem the donor has selected Convergence around 5 percent payout is evidence of a lack of strategizing around time dimension

Time Relative severity

• f social

problem

Polio Global Environment Rural Poverty Natural Disasters

Toward Strategy

Broader Context Philanthropy is a growth industry Public attention & understanding is increasing Some donors start with value, some with style, some with vehicle… What matters is making wise, internally consistent choices, no matter entry point The Philanthropic Prism is a diagnostic tool and strategy coach

The Philanthropic Prism

The search for strategy brings the donor into contact with the public sphere and the state

Value produced through giving Theory of change supporting giving Profile and engagement

• f giver

Time frame guiding giving Vehicle or institution through which giving takes place Alignment Fit Coherence

Why strategy matters

Two Cases in Point

• Irene Diamond and AIDS

research

• Edith Everett’s battle with

the New York City Zoo

Strategic alignment is a key driver of success and failure

Consider two experiences with giving…

• ne leading to a fundamental

breakthrough changing the lives of millions…

• ne leading to public humiliation and a

returned grant

What happens without strategic alignment?

“The Plaque's the Thing, but How Tall Are the Letters?” “Tisch to Match, and Raise, Revoked Gift to Children's Zoo” What does poor strategy look like? Edith Everett and gross misalignment: Attempts to engage staid NYC Zoological Society Demands high profile and recognition No clear model for value creation

What is good strategic alignment?

Irene Diamond and “strategic fit”

• Chooses to focus on

public health (purpose)

• Sets up a foundation with

clear focus (vehicle)

• Change sought through

basic research (change)

• Spends out over 10 years

when problem demands it most (time)

• Delegates to talented

scientist (style)

Giving and Learning

Few donors have Irene Diamond’s success… Still, funders can improve and build their skills over time

Progress toward achieving philanthropic

• bjectives

Philanthropic Approach 1 “Ready, Aim, Fire” Philanthropic Approach 3 “Think, Act, Adjust” Philanthropic Approach 2 “Try, Try, Try Again” Progress toward defining a philanthropic strategy

START GOAL

Philanthropic Strategy and Philanthropic Objectives

Strategic Giving: The Challenge of Impact

Private wealth and values meet imperfectly public needs and priorities Need for focus across all 5 dimensions Strive for balance and alignment !

Discussion

The End