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February 14, 2010

In my recent article in Stanford Social Innovation Review, I coined the term “catalytic philanthropy” to describe the four key practices that FSG Social Impact Advisors consistently found among donors who achieved substantial impact on significant social problems. The article has attracted considerable interest around the world, but it has also been challenged as merely the latest fad, just another fancy name in the long line that began with strategic philanthropy and has taken us through venture philanthropy, high engagement philanthropy, adaptive leadership, social entrepreneurship, and the like. Each new idea has been hailed as the answer, finally, to how philanthropy ought to be done—only to wear thin over the years following as its limitations become apparent.
Is philanthropy merely moving in circles, substituting new vocabulary for the same old ideas, forever destined to rediscover what previous generations have already learned? Or worse, is it fragmenting into different schools of thought, each rushing off in a different direction and dissipating our potential for coordinated change?
I believe that we are not merely running in circles, but progressing toward a much more effective philanthropic sector. To be sure, there is no one answer as to how philanthropy should be done. It is much too complex a phenomenon for that. Venture philanthropy is best suited to some issues, adaptive leadership or catalytic philanthropy to others. The search for powerful new approaches doesn’t need to supplant the approaches we are already using.
But consider for a moment, why progress in the field of philanthropy is so hard to see.
The overwhelming majority of philanthropy comes from individual donors. Only 5% of the 70,000 or more private foundations in the U.S. have any paid staff at all, and most of those are staffs of one, consumed with the mechanics of processing grant requests, keeping records, and getting funds out the door. My guess is that there are perhaps 1,000 foundations with full-time professional staff who have the time and expertise to research or innovate in their grantmaking initiatives. Perhaps there are another few thousand high-net-worth donors who have the time and passion to devote themselves to their giving beyond serving on a few local nonprofit boards. But in a country where more than 250 million people give to charity, that’s a small number indeed.
And let’s look at where they give. Nearly half goes to sustain religious organizations, and most of the rest goes to large nonprofit institutions that rely on annual donations to support their ongoing operations. As Claire Gaudiani described, these institutions enrich our society in countless ways. They educate us, cure us, and entertain us. Yet they do not often create large-scale change in social or environmental conditions.
Finally, consider the complex motivations behind philanthropy. Donors give because of personal relationships, social, educational, or business advantages, the desire to leave a legacy, or just a compelling story from an inspirational leader that tugs at their heart strings. Besides, it makes us feel good. A recent New York Times article by Nicholas Kristof cited a scientific study indicating that giving to charity stimulates the same centers in the brain as eating or sex. (I leave it to the reader to take that thought as far as he or she wishes to go.)
My point is that most donors, most dollars, and most motivations for charitable contributions have nothing to do with any knowledgeable attempt to impact a specific social issue. So when we talk about changing the field of philanthropy by identifying more effective methodologies to achieve impact, just how much of the field do we really expect to change?
I don’t raise this question to minimize the importance of the progress we are making. Those few with the desire and professionalism to achieve impact have more than enough money to reshape our world for the better. But when, in the coming months, 650 of us gather at the Grantmakers for Effective Organizations (GEO) conference or two thousand come to the annual Council on Foundations conference, let’s acknowledge that we represent much of the philanthropic field that is actually open to change.
And in this small but powerful segment of philanthropy, the change over the past decade has been remarkable. Ten years ago, I attended a session on evaluation at GEO that never got beyond an opinionated debate about whether we should measure anything at all. At the last GEO conference, I heard a sophisticated discussion of impact measures that had me taking notes as fast as I could. Ten years ago there was little serious scholarship on philanthropy. Today I find it hard to keep up with the high-quality articles, books, case studies, and white papers that constantly appear. And the spread of mission investing in just the past five years is just one example of the growing range of tools that foundations are beginning to employ.
We may coin different phrases and affiliate with different organizations, but we are building a body of knowledge that is surprisingly consistent and increasingly nuanced.
Those of us researching and publishing in the field may pursue different topics, but there is very little that I would disagree with among the many reports published by my colleagues at GEO, CEP, BridgespanMonitor InstituteMcKinseyArabellaHarvardStanford, and Duke. (And I hope there is little in FSG’s work with which they would disagree.) Among the hundreds of clients of our various firms, I see progress and change in how they go about their work and, very often, in the impact they achieve.
began these blog posts with a reference to Thomas Kuhn’s work on paradigm shifts in the history of science. Kuhn came to understand that these shifts in thinking are so profound that they often occur across generations. The new paradigm takes hold partly because many scientists see the wisdom of a new approach, but even more because the scientists operating under the old paradigm retire and are replaced by those who came of age under the new one.
These are still early days in the maturation of philanthropic theory and practice. Much of the traditional thinking that hems us in must yet change if we are to realize our potential for impact in the world today. Progress takes far longer than we would like in the issues we tackle, such as poverty, disease, or global warming, and the same is true in reforming philanthropy. But progress in philanthropy is already underway.
Monday’s post: The Structure of Philanthropic Revolutions
Wednesday’s post: Elements of a New Paradigm: The Importance of Scale
Thursday’s post: Elements of a New Paradigm: Evaluation
Friday’s post: Elements of a New Paradigm: Beyond Theories of Change