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Principle 12: Philanthropy and NGOs

The practice of philanthropy wields influence far beyond the amount of money that foundations and individuals give away each year. Because a great number of the tasks most vital to building a better future demand investments whose return is measured in impact rather than dividends -- tasks that would not be done correctly (or sometimes at all) if they needed to return a profit -- smart philanthropy acts as a sort of yeast, catalyzing innovations that will pay off handsomely in future public benefits, from child welfare to ecosystem services.

But much of the philanthropic work done today is less smart than it ought to be, and a whole host of new ideas is bubbling up which offer the possibility of real transformation in the field.

One of the biggest changes is a dramatically increased demand for transparency in the ways foundations and donors track and reveal the impacts their giving has, why their gifts were made, and what they've learned from their failures. Shockingly enough, many philanthropists still treat their grantmaking and evaluation processes like business secrets, when they ought to be thinking about how to leverage the value of the new knowledge their money has purchased (in the form of programatic efforts from NGOs) by sharing it as widely as possible.

If the opacity of philanthropic practice is a problem, the ways many institutions invest their endowments is a flat scandal. Many foundations fund their charitable giving by investing in companies that are actively creating the kind of harm those foundations are trying to undo. In the wake of a series of scandalous revelations of amoral investment practices, there has been a wave of calls for not only greatly increased transparency on the part of foundations about their portfolios, but also more comprehensive tools for holistically evaluating the social and environmental impacts of the stocks they hold -- what we here term their philanthropic footprint. Foundations that get it are increasingly treating their portfolios as part of their toolkit for creating change.

Being clear about their philanthropic footprints also frees foundations and the NGOs they fund to think more clearly about partnerships with private sector companies, partnerships that when done right -- as some sayis increasingly the case in the global response to the water crisis -- offer tremendous opportunities to use the strengths of all three kinds of organizations to best advantage.

NGOs themselves are beginning to change as well. On the one hand, they are beginning to respond to the emergence of millions of networked small donors, becoming more nimble, more open and collaborative, and quicker to form mutually advantageous networks themselves. On the other hand, they are beginning to demand longer-term investments in the creation of considered strategies, intellectual groundwork and slowly-emerged innovations (especially in the sustainability arena). This combination of nimble openness and deep strategy is less a contradiction than it might seem though, as it becomes clearer that long-term vision coupled with operational spontaneity offers the best recipe for success in a world where online communications, technical innovation and rapid cultural and political change are sending tremors through the strategic landscape.

The big question is whether all this change is happening fast enough. With many of the problems we face being the kinds (from climate change to fighting global poverty) in which time is not on our side, we need rapid innovation and we need it immediately. The men and women who are working to change philanthropy are thus giving us all a gift, even if we never see a coin of the money they grant out.

Transforming Philanthropy -- The worldchanging philanthropist's job grows more difficult as our insight into the interwoven nature of the world's problems grows more clear. We know now that efforts to fix a single problem with a single, simple solution rarely succeed...We are just beginning to see truly effective philanthropy that thinks about its grantmaking in terms of systems, interconnections, leverage points and payoffs which are slow but powerful. We can hope that this big-picture, long-term giving proves to be a growing trend.

Bright Green Funding -- Why have environmental NGOs struggled to keep their support level growing in proportion to the problems they're trying to solve? One reason is that many large NGOs came late to the game of networked collaboration, and high-speed, distributed efforts to raise money and grow their pool. In communications, too, environmental non-profits have a history of running inefficient campaigns and actions, and of lacking the right language to compellingly describe their missions to funders. But all that has begun to change as NGOs embrace 21st century tools and technology to assist with funding for advocacy.

SF's Stewards of the Global Village: Foundation for Sustainable Development -- The San Francisco based non-profit Foundation for Sustainable Development (FSD) harnesses the enthusiasm of globally concerned young people in order to fulfill its mission: "to support the efforts of local development organizations working to improve the welfare of the people living in their communities." Since 1995 FSD has partnered with grassroots organizations in the developing world, providing them with human resources, financial resources, and technical assistance.

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