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Our Philanthropic Footprints

This article was written by Alex Steffen in January 2007. We're republishing it here as part of our month-long editorial retrospective.

Giving well -- giving money which provokes positive transformation over the long haul -- can be like juggling porcupines: things can easily end in tears, and everything keeps moving quickly. But the time has come to think about philanthropy in a new way: it's time for us to invent some new porcupine juggling moves.

I.

Worldchanging philanthropy, both organizational and personal, requires a fine sense of the challenges facing the planet. We must understand the causes of those problems and their proposed remedies. We need a sense of who's doing good work in the field and what their approaches are. We have to be aware of the law of unintended consequences and retain enough self-honesty to avoid the ethical pitfalls of power. This takes both a triage doctor's cold assessment of one's ability to impact a given situation and a good teacher's understanding that change is not always subject to calculation, and that when brilliance emerges it is not always subject to the normal rules. Seeing clearly, being honest and thinking ahead are not easy even when large amounts of money are not at stake.

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. For instance, it turns out that if we're serious about addressing humanitarian crisis, violence and environmental decline in conflict-torn regions, we'd better be prepared to address them all at once and holistically. 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.

But it turns out that there may be some bigger, more fundamental challenges to the practice of worldchanging philanthropy.

II.

If there is any new guiding principle for running a business that can change the world, it is this: most people still assume that doing good and doing well are at odds -- look for places where that idea is not merely wrong, it's so wrong that it presents a business opportunity.

This thinking is ripping through the corporate world. Okay, maybe not ripping, but at least rippling.

Many philanthropists, however, currently run their foundations and trusts on exactly the opposite principle. Consider the Gates Foundation, the world's largest philanthropic outfit (and one whose giving, while certainly imperfect, has earned my respect) and its counterproductive investment portfolio:

Ebocha, Nigeria - Justice Eta, 14 months old, held out his tiny thumb.
An ink spot certified that he had been immunized against polio and measles, thanks to a vaccination drive supported by the Bill & Melinda Gates Foundation.
But polio is not the only threat Justice faces. Almost since birth, he has had respiratory trouble. His neighbors call it "the cough." People blame fumes and soot spewing from flames that tower 300 feet into the air over a nearby oil plant. It is owned by the Italian petroleum giant Eni, whose investors include the Bill & Melinda Gates Foundation.
Justice squirmed in his mother's arms. His face was beaded with sweat caused either by illness or by heat from the flames that illuminate Ebocha day and night. Ebocha means "city of lights."
The makeshift clinic at a church where Justice Eta was vaccinated and the flares spewing over Ebocha represent a head-on conflict for the Gates Foundation. In a contradiction between its grants and its endowment holdings, a Times investigation has found, the foundation reaps vast financial gains every year from investments that contravene its good works.

The reporters went on to discover that the Gates Foundation has massive investments not only in climate enemies like ExxonMobil (in case you missed the connection, climate change threatens the poor in the Global South most of all and is likely to make many health crises worse) but dozens of other companies that have been cited for consumer fraud, corruption, worker abuses, and ties to gambling, alcohol, tobacco and child slavery. (If you're interested in the investigative methodology behind the LA Times' stinging series, they provide it here.) In other words, the Gates Foundation makes much of the billion-plus it distributes each year to make the world better by investing tens of billions in companies that are actively making the world worse.

This is the dirty secret of much philanthropy: often foundations and individual donors continue to directly invest in actions which undermine and contradict the change they are trying to bring into the world through their philanthropy. The relative silence about this point may stem from our inherited attitudes about "charity": that charitable action is always virtuous (when we in fact know that some actions, even untaken charitably, bring more misery than inaction would have), that it is an act in imitation of the holy (and thus small gifts, even if relatively meaningless and insignificant in relation to the wealth of the donor, should be praised) and that it cleanses (and therefore we mustn't criticize the behavior that lead to a charitable person being in a position to be charitable in the first place).

These three attitudes may offer a valid interpretation of the nature charity within the moral framework of certain religious traditions, but as guidance for effectively using money towards worldchanging ends, they are pretty worthless.

Instead, we might suggest three new rules for major philanthropy:

Practice holistic assessment.

Seek transformative impact.

Offer utter transparency

III.

Let's start with the last of these first: transparency.

Lots of people already espouse transparency in philanthropy. Funders increasingly demand for transparency from grant recipients, and, done sensibly, this is a good thing as it helps major donors to evaluate how best to spend their scarce dollars [though sometimes strictly measurable deliverables and business models don't make sense and may do harm].

Then too, the follow-on effects of Big Philanthropy's actions on distributed, citizen-based giving grow more important by the day. The transparency and accountability demanded by large donors also facilitate small donors' effectiveness.

And regular people increasingly fund worldchanging work, or at least aspire to: whether we're talking about distributed, collaborative microlending projects like Kiva or Trickle Up or micropatronage efforts like GiveIndia (the kind of efforts some anticipate growing massive as the phenomenon spreads), involvement brokers like Universal Giving and Nabuur, direct donation to small-scale worthwhile projects, even the new trend in giving away your bonus as a form of philanthropic tithing, we're seeing more and more examples of efforts to tap the passion of regular people to be involved in worldchanging giving, and transparency and accountability help that process, as people want to know that the dollars they give away are properly spent. The Big Guys demanding better practices makes the Little Guys more comfortable sending in a part of their paychecks.

But those of us managing fortunes on behalf of the public good can embrace a much more demanding form of transparency: open books and open impacts. Funders can reveal how they make their money, what is done to produce those profits, how much it costs them to earn that income, and what is spent on management. We can practice asset management that is not only open books (as usually mandated by law in the U.S.) but also aware of multiple bottom lines.

Such an effort might echo through the whole world of worldchanging funding, from cause marketing to small donor recruitment efforts, much to the improvement of all. People are smart: give them good tools and open information for deciding what's worth doing, and they'll support it.

IV.

The second new rule, seeking transformative impact, has as much to do with how we invest our money as what we invest it in.

We need in our philanthropy to publicly raise the stakes. We must seek, define, test and pursue courses of action which fundamentally transform the situations with which we're wrestling, not just merely ameliorate some of their worst consequences.

We must expect more than measurable temporary alleviation of suffering or partial mitigation of disaster: we must expect transformation, in all its slow and ungainly glory. We must aim to make big dents in problems (like ending poverty or redesigning our lives so they heal nature).

We must also support new innovative initiatives which offer at least the potential of changing the game by offering the ultimate proof of the possible: working models. In this context, pilot projects, trial efforts, beta tests and model communities prove themselves to be far more than the fringe efforts they're usually dismissed as: offering the "threat of a good example" is never a waste. Folks out there are trying to build prototypes of the change we wish to see in the world: they deserve our support.

Finally, we must walk our talk when it comes to the importance of new visions.

When I was consulting to NGOs, one of the constants I found most troublesome was my clients' near-complete lack of victory scenarios. Often, we were working without any idea of the future we hoped to build in the place of the coming bleak future of which we warned in our campaign literature.

But it's a stark reality of human existence that we can't build what we can't imagine. We are literally unable to take useful steps towards a distant goal (and most goals worth having are distant -- though Dick Raymond's line that "If it doesn't take fifty years, it's not worth doing" may be taking it a bit far) without being able to at least partially imagine that goal. Yet, time and again, we fund campaign after campaign, uncertain as to whether what we are doing is actually even leading anywhere.

Perhaps even more to the point, the absence of a vision of change fogs the debate: the status quo is present and real, even if somewhat awful, and few people will leave that safe shore and strike out for a distant shore where things might be better, unless they feel they can see that shore and how to swim there. Put another way, Bucky Fuller was quoted as saying "You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete." You can't get people to defect from their current way of doing things unless you offer them a new model.

And yet, all too often, strategic thinking and visionary planning remain unfunded because they lack the sort of immediate return that makes those of us in a position to give feel our gifts are doing something. So our philanthropy comes to mimic the proverbial fogged-in Norwegian sea captain who was utterly lost, but making great headway.

These transformative criteria -- long-term goals, good models, powerful visions -- could provide us with the sorts of instrumentation we need to make sure that our progress is progress towards a goal.

Here, too, wise moves on the part of large philanthropic players can magnify the impact of distributed, citizen philanthropy: by doing these things -- by defining areas in which real success is possible and setting a high bar for measuring that success, funding the sorts of R+D that smaller donors can't pay for (and the private sector mostly won't) and enabling smart, practical people to generate new operative strategic visions of a world that works -- worldchanging philanthropists of real means can create a NGO landscape which allows small donors to invest in funding new approaches that offer a better future, rather than merely offering temporary relief.

V.

Holistic assessment is in many ways the most difficult, and most needed, step.

It's difficult because in the real world, everything's all stuck together: systems function with great complexity, causes and effects are linked indirectly, chaotic and emergent behaviors are everywhere, human beings do bizarre things, and, as the Wombat reminds us, it's all interconnected. It's hard to track the true consequences of our actions.

But act we must. Things need doing. And we are luckily getting better and better at understanding systems, at modeling, at creating indicators, at anticipating second order effects, gaming change and creating generative feedback. These concepts (and others, like network effects and system dynamics) can start to sound like a New Age stew, but that linguistic awkwardness is merely the by-product of rapid growth in our ability to understand the world around us in ways which made no sense to us even twenty years ago. We shouldn't let the murkiness of the language muddy the clarity of the insights we're being offered today.

Today, we have an array of tools for judging the consequences -- intended or not -- of our organizational behaviors. There are guides to ethical corporate behaviors for everything from investing to outsourcing, choosing materials to relating interpersonally (a great many of these guides have been reviewed on these webpages). It may be difficult to know whether all the activities we undertake as organizations are ultimately beneficial, but we can very easily do the due diligence to make sure they are not immediately undermining our stated missions.

Indeed, I will go so far as to say that this is the new standard for doing philanthropic business: all of our actions, not just our giving, must visibly do no harm, and whenever possible, must reinforce the kind of change we're seeing in the world.

To do this, we'll need new research and higher standards. We'll need new socially-responsible investment tools that give the managers of even small philanthropic funds the ability to choose good investments effectively and easily.

Here, too, transparency can become a tool. If philanthropic organizations can have the courage to transparently account for their direct actions of all sorts, not just their giving, they can enlist the knowledge, insight and intelligence of large communities of concerned citizens. They can, as the buzzword has it, crowdsource. Indeed, a not-for-profit, independent community dedicated to evaluating and furthering knowledge of companies' business practices specifically in light of the investment of philanthropic and public trust funds would seem to me to be an idea worth exploring.

But we can go farther than merely making sure our profits don't indirectly stem from genocide or child slavery -- we can actively invest in the good.

Right now, we lack good mechanisms for finding and investing in socially-transformative enterprises on a large scale. This, indeed, is the root of Paul Hawken's contention that SRI is failing. Our choice not to invest in companies which are in the business of making change would seem to arise from two related ideas. The first is the idea that the business of philanthropy is giving away money to do good, and so whatever practices a philanthropic organization uses to get that money are at worst a necessary evil. The second is the idea that program officers are good at giving money, and fund managers are good at getting it, and things are smoothest when they stay the heck out of one another's way.

But it's not at all difficult for me to imagine an organization where all the organization's financial transactions were seen as part of its program, and where those managing the money were seen as a special type of program officer, just as responsible for furthering the mission as those giving the money away.

In a world full of such organizations, the hundreds of billions of dollars in the coffers of these organizations would become a gigantic lever for change, helping to create revenue for giving and propel innovative, worldchanging enterprises at the same time. (We perhaps have begun to see the emergence of such thinking in Google.org, though the jury's still out.)

But we need to go further, actively embracing in all our actions the kinds of openness, transparency, network-building and win-win actions that are driving the unfolding of the contemporary movement to change the world. As we invest in change, and give transformatively, and embrace transparency, philanthropic organizations ought also to support open source answers, facilitate the release of information in the public commons and offer incentives (instead of subtle barriers) to groups collaborating together.

Perhaps what's needed is a sort of philanthropic footprint report... a process any philanthropic group could undertake that would help it not only see the direct and indirect effects of its practices, but also to own up to them in public, spurring it on to better behavior where it has lagged, and encouraging imitation where it has excelled.

Indeed, in an era when knowing your backstory is fundamental to intelligent and ethical action, telling the story of our philanthropic footprints may become the new annual report, and the bottom line might just be truly transformative change.

Transforming Philanthropy is part of our month long retrospective leading up to our anniversary on October 1. For the next four weeks, we'll celebrate five years of solutions-based, forward-thinking and innovative journalism by publishing the best of the Worldchanging archives.

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