A Relational Approach to Philanthropy
Recently, I read with interest Paul Shoemaker’s Blog post on the Stanford Social Innovation Review website Reconstructing Philanthropy from the Outside In. In this article, he boldly asserted that it was time for grantmakers to abandon the practice of restricting grant dollars. Quoting Shoemaker, he says, “let’s call restricted dollars—funds that are subject to limits based on purpose, time, or specified means for achieving an end—what they really are: quite damaging dollars (QDDs).” Underneath the blog post, in the comments section, are a chorus of “amen” and “amen!” Somewhere in those comments are a couple from me saying, “wait, it is more complicated –or at least more nuanced than that.” Having mulled it over for a while, I thought that I needed to be a little clearer. So in this blog post, I want to lay out a premise for relational philanthropy and what it means for a nonprofit grant seeking strategy (1).
The concept of relational philanthropy can be understood by placing two driving grantmaker motivations on a 2 x 2 matrix. One axis is the grantmaker “power differential” and the other axis, is the expected “return on investment” orientation of the grantmaker. By combining these two variables, it helps us create a common language we can use in discussing the idea of relational philanthropy. Let’s consider the quadrants briefly.
Heartfelt Philanthropy: When a philanthropist gives a grant with low expectations of return and little engagement, it more often than not, a gift that comes from an empathetic center. At the most basic level, it is the equivalent of the passerby who tosses pocket change in the Salvation Army’s red bucket during the holidays. Scaling the concept, many smaller family foundations or donor-advised funds organize their giving around causes. “We support animal welfare, the arts, and children’s health” might be the mission statement of such philanthropists. A program officer at one such family foundation once put it in these terms, “we simply determine how much money we have and try to divide it equitably among the nonprofit organizations working in our core focus areas.”
Transactional Philanthropy: The opposite end of the spectrum is philanthropy with a large power differential and high interest in outcomes. Philanthropists in this category are those engaged in the business of paying for performance. At one time, performance might have been and simply scaling a successful intervention. A grant to a youth mentoring program to provide services to more young people at $1,400 per youth/adult match is an example of transactional philanthropy. It is the “production approach” to philanthropy. We will pay you x dollars for every youth served successfully. In today’s landscape, where the outcomes stakes might be higher, the pay structure may be shifting from paying per mentoring match to paying for mentoring matches lasting six months or longer and where 70% of the participating youth stay in school. In either case, the nonprofit organization is simply a service provider to the grantmaker. It is simply a transactional relationship.
Paternalistic Philanthropy: This is the quadrant where the grantmaker retains a high degree of control and finds it acceptable to invest large amounts of capital and tolerate mediocre returns on investments. In essence, it differs from throwing change in the red bucket because the grantmaker requires the bell ringer to submit quarterly reports and line-by-line budget justifications and also requires the bell ringer to ask permission to move money out of supplies and into the phone expense line item. Lip service may be given to the concept of evaluation, but it is more “wagging the finger” you should evaluate rather than funding the agency to evaluate.
The second manifestation of paternalistic philanthropy is when a foundation (either in a vacuum or with a small group of advisers), decides to solve a problem on its own. If you are fortunate enough to be the researcher handed a $10 million commitment to build the “next big thing,” it might be the equivalent of winning the professional development Powerball jackpot, but unfortunately, the philanthropic landscape is littered with large-scale foundation intervention failures. Or even worse, we have dozens of examples of foundation driven interventions that are successful yet when the foundation moves on; the successful program is relegated to what one author astutely calls an “orphan intervention.” In between the full-support stage and the orphan stage are those programs that linger as “foster kid interventions.” These are intervention funded by one foundation for a while and then are passed from one foundation “relative” to another, until the exhausted system can no longer support the legacy infrastructure (2).
Fortunately, I believe that the days of paternalistic philanthropy are waning. The radical thinking of venture philanthropy, a nascent concept emerging from the dot-com bubble, has begun to shift philanthropic thinking towards performance driven by true collaboration. In recent years, the trend of “doing philanthropy” differently has only accelerated with the explosion of alternative capital aggregation and distribution models, which challenges the paternalistic foundation framework. This opens the final quadrant of the matrix.
Relational Philanthropy: This final quadrant of the philanthropy matrix is where, I believe, philanthropy is headed. Relational Philanthropy is about partnership and performance. Relational Philanthropy is centered around trust, co-creation, and mutual respect. Relational Philanthropy is less about power and credit and is myopic on defining and achieving success. Driven by thought and practice leaders like Mario Morino (see Leap of Reason) and Paul Shoemaker (further reading here), many foundations are engaged in fundamentally rethinking of strategy that aligns with relational philanthropy. Here in our region, one only needs to consider recent transformations of United Way, Northwest Health Foundation, and at the Meyer Memorial Trust to see how this viral wave of relational strategy (baked into the DNA of Social Venture Partners Portland) has expanded to other local grant makers.
So what are the implications of this framework of philanthropy for your nonprofit? Are you equipped to enter into relational philanthropy? Does your nonprofit grant-seeking strategy reflect a relational focus? To help you start thinking, I’d like to offer a few principles for developing a relational philanthropy lens:
1. Learn Relational Thinking: I believe that all nonprofit leaders need to make time develop an understanding of how philanthropy is changing. This includes print and eNews subscriptions to Nonprofit Quarterly, Stanford Social Innovation Review, Chronicle of Philanthropy, Foundation Review, and routine reading of resources from the Center for Effective Philanthropy (including their Blog), and Learn Philanthropy. Tracking examples of relational philanthropy and listening to thought leaders will better position your nonprofit to understand how philanthropic relationships develop and work.
2. Think Relationships not Grant Writing: Many nonprofits make the mistake of segmenting grant writing and major donations into two different silos. Grant writing is a task, driven by RFP deadlines and a calendar schedule, while major gift development is a relational process that occurs over time. This old model might work for a nonprofit agency that has a significant number of reliable “transactional grants,” but as philanthropy migrates towards relationships, the nonprofit organizational (or conceptual) walls separating grant writing and donor relationships need to come down. Smart nonprofits treat all grant makers as investors and major donors to be engaged in defining and addressing the nonprofit’s mission-related strategy.
3. Invest in Relational Communications: Many nonprofits are also too content submitting a quarterly and maybe an annual report to grant funders. That approach is no longer adequate, and I believe that relational philanthropy demands more than periodic reports. Philanthropists focused in the relational box want engagement. I have worked with several nonprofits who have developed successful “investor’s briefings” –convening grantmakers and major donors at the release of a strategic plan or another point of significant organizational change. I have encouraged others to host annual or bi-annual advisory events or quarterly conference calls, open to all donors, as a way to solicit input from (and build relationships with) funders. The point is not to create work but to engage the thinking of those who support you in advancing strategy.
4. Engage in Relational Advocacy: The fundamental flaw with the traditional model of philanthropy controlled giving (either paternalistic or transactional) is that it is based on top down thinking. Nonprofit organizations need to advocate for the true community needs and use their influence to tip the thinking upside-down. Philanthropists need to learn how to follow, and it is up to nonprofits to lead the way. Today, in the name of collective impact, every grantmaker and foundation seem to narrow their strategies which can create winners and losers. This means that nonprofits must enter into authentic and deliberate dialogue with those who hold access to capital. It will increasingly be important to create tables for conversations to ensure that nonprofit voices have equity in the decision-making process. It is only in the context of such “give and take” can we develop the relationships that allow the joint opportunity to develop and create a shared community change agenda.
Relational philanthropy is gaining momentum and, while it may not be the norm (yet), we need to start adopting a philosophy that is aligned with erasing the power differential between philanthropy and nonprofit organizations. It starts with learning and thinking and leads to investing and engaging. Leading edge nonprofits are are already applying principles of relational philanthropy.
Photo Credit: Pexels
(2) Disclaimer, several years ago, I worked for one of these languishing interventions that was in the death spiral and continues towards obsolescence.