Philanthropy Forum Lecture Discusses Strategy in Tough Economic Times

04/15/2010

Story courtesy of Christine Waller
Many philanthropic organizations have seen a decrease in funding availability since the onset of the global financial crisis. In light of this uncertainty, Paul Brest, president of the William and Flora Hewlett Foundation, argues that it is more important than ever to focus on a few key elements of philanthropic strategy.

“For a goal or any strategy to be effective it must be based on a sound theory for change,” Brest said. “Philanthropy doesn’t start on a blank slate. Sure, it’s innovative, but much research has already been done in the field. To make a great strategy, you must learn from the field.”

The list of philanthropic goals is wide and varied. They can range from reducing methamphetamine abuse in one community to mitigating climate change across the globe. The number of possible problems for philanthropists to identify is immense.

Brest made the point that one of the defining factors to distinguish between these different types of goals is the level of risk involved, and the scale of the effect that the philanthropic outcome will have.

Of course, it is not enough to identify a problem and propose a goal to solve it. “You actually have to trace the results to see where your strategy leads you. If you think math or physics is difficult, social change is even more so,” Brest said.

Social change is an incremental process that can take time. The Hewlett Foundation, for example, recently appointed Hal Harvey to lead the Foundation’s Climate Works – a Foundation initiative that was started to help spearhead the global fight against climate change. Brest admits that there have been modest gains in trying to reduce CO2 emissions, but that the verdict has yet to be decided about humanity’s ability to manage this important issue.

Brest argued that the fear of failure should not dictate philanthropic activity and that instead of considering projects in terms of the expected return, philanthropists should exercise an “expected return attitude.”

“We take this approach to a lot of decisions in our everyday lives. When we buy insurance, or choose to buy an extended warranty, for example,” Brest said. The same, he argued, should be true for our decisions to participate with projects in the world of philanthropy, almost an intuitive, common sense approach.

“Understanding risk in philanthropy is very important,” Brest said. “If we understand risk, and take an expected returns attitude approach, our risky ventures will be justified by the possibility of high payoffs. And this attitude encourages realism and candor about failure. Different funders have different risk tolerances – and this attitude will help funders to understand their own tolerance for risk.”

The lecture, sponsored by the Philanthropy Forum and the Johnson Institute for Responsible Leadership, contained insights for philanthropists within the current economic climate. GSPIA students and faculty, as well as community leaders and local philanthropists, attended. Many took home a copy of Paul Brest and Hal Harvey’s latest book, “Money Well Spent.”