Giving Done Right

Introduction

IT’S NOT YOUR BUSINESS

WHY GIVING IS A CHALLENGE LIKE NO OTHER

“I JUST WANT to know we made a difference,” one multibillionaire philanthropist, in her sixties, told me.

Even those whose full-time job is giving get anxious about it. “I worry about whether we’re doing all we can, as well as we can. I worry that we’re not. I worry we don’t even really know. I worry all the time,” a foundation CEO shared.

Every week, I have conversations like these with people. They’re allocating resources—a lot of resources—to address pressing social problems. It’s a huge privilege, and indeed most people who meet them and learn what they do are rather jealous. But it’s also an awesome responsibility, so they worry. Those who work at institutions where giving is their job and individual givers alike see the impact of their philanthropy as among their most important legacies (second only—and not always second—to their kids and grandkids), and they don’t want to squander it.

This worry about maximizing the good of giving has been the recurring conversation for more than seventeen years of my professional life, as the founding chief executive of the Center for Effective Philanthropy (CEP). Research we’ve conducted on foundation CEOs reveals not only a widespread sense that philanthropy must do better, but also uncertainty about how. In analyzing results from a survey and in-depth interviews with these leaders, we found that the overwhelming majority believe foundations can make a significant difference in society, but few believe they’re realizing their full potential.¹

This uncertainty and concern aren’t all that different from the anxiety of my friends and family members—people of more regular means—who wonder whether their own charitable contributions are making a difference. You’ve probably wondered the same thing as you’ve written a check, made a contribution online, or directed a gift from a donor-advised fund you hold at your local community foundation. After all, it’s not nearly as easy to gauge the impact your giving has as it is to check the performance of your 401(k). That’s because, while investments can be easily measured by their returns, the impact of giving is much more challenging to assess.

So Many Questions

This book is for givers at all levels who struggle with how to make the most difference. It’s for the megadonors and the everyday givers—the overwhelming majority of American households that contribute to charitable organizations. They do so because their hearts compel them to; they want to make a difference when it comes to issues and causes they care deeply about. But, in their head, they ask:

Am I on the right track to make the impact I seek?

What do I need to understand about the nonprofit sector and philanthropy to give well?

Should I give when asked by someone knocking on my door, or by the cashier at the store, or in response to a natural disaster?

Am I focused on the right goals? Did I choose the right giving strategies to achieve them?

Is my money really going where I intend?

How will I gauge progress?

What resources can help me do my giving well?

It’s overwhelming; I get it. And if there’s anything I’ve learned during my time working on these issues and helping givers face these questions, it’s that answers are elusive. But my hope is that, in the pages that follow, I’ll help you understand the unique challenge of giving as well as the essential ingredients for effectiveness, so you can know that you’ve maximized your chances of contributing to real, lasting impact.

I also hope to help persuade you of philanthropy’s great contributions—historical, present day, and potential future—to making the United States and this planet a better place. To be an effective giver, you need to learn from what’s worked, or you’ll be doomed to make the same, predictable mistakes many new givers make.

In the United States, giving has done more good than even many givers realize, and though many challenges remain, it has contributed to much of what makes this a great country. It has also contributed to global progress in improving the human condition; this is by any number of measures the best time in human history to be alive. That point feels especially important to underscore now, amid an increasing torrent of external criticism of philanthropy.

Giving and Nonprofits Aren’t Like Business

Criticism of philanthropy, which has been on the upswing in recent years, comes especially from those who promote the idea that business or market-based approaches offer the answer to the giving challenge. I can’t tell you how many times I’ve heard someone say that philanthropy isn’t effective and that nonprofits and donors need to act more like businesses—although it isn’t clear what that statement even means. This thinking has been going on for a while. I heard it nearly two decades ago while getting my MBA at Harvard, and it’s only grown more intense since then.

Indeed, it seems that much, if not most, of what business school faculty, management consultants, Silicon Valley tech titans (or titan wannabes), and others have written about philanthropy in the past few decades takes the view that charitable giving and the nonprofit sector more broadly are broken and in need of an injection of “business thinking.” People invoke that term as a synonym for “well-managed” or “effective.” I worked as a strategy consultant in the business world, and I can tell you this: It’s not. Moreover, this claim does a disservice to the incredible array of highly effective nonprofits and nonprofit leaders in the United States.

“We must reject the idea—well intentioned but dead wrong—that the primary path to greatness in the social sectors is to become ‘more like a business,’” argues Jim Collins, one of the few prominent business thinkers who seems to understand philanthropy and nonprofits. “Most businesses—like most of anything else in life—fall somewhere between mediocre and good.… So then, why would we want to import the practices of mediocrity into the social sectors?”²

I agree with Collins, and I’m concerned that the constant critiques of nonprofits as “lesser than” are beginning to alter the public’s and lawmakers’ views, contributing to damaging policy changes such as the effective curtailment of the charitable deduction in the tax reform bill that took effect in 2018. (It’s likely to significantly reduce the number of filers itemizing and therefore benefitting from the deduction.) I’m also concerned that the counsel to operate like a business is confusing and runs counter to achieving impact. Most nonprofits and nonprofit leaders I know are rigorous, data-driven, and fully aware of how different their work is than that of business—requiring different approaches to goal selection, strategy development, implementation, and performance assessment.

The most effective givers understand this difference, too. These philanthropists know that, while their business acumen (or that of their forebears) may have created their wealth, giving effectively requires a different set of skills. It necessitates a different level of collaboration and relationship-building, deep humility, and a recognition of how difficult it is to chart cause and effect. In each of these ways, and many others, it’s different than what it takes to be effective in business. It is its own unique challenge, requiring its own unique discipline. That’s what technology entrepreneur and investor Mario Morino found out after the business he helped build was acquired in 1995. Morino, a self-made multimillionaire who grew up in a working-class family in Cleveland, is now in his seventies, with two decades of giving behind him and many lessons learned.

“I probably did as much background research as anyone, and I’d argue I didn’t do enough,” he told me. “I was really arrogant.” Morino said he was too quick to assume that what worked in his business experience would translate to his giving. Over the years, he has become one of the most thoughtful givers I know, and his influence has been significant. But, as he’d be the first to tell you, it hasn’t been easy.

Givers are often seeking to address the most entrenched problems—the very ones that have defied market or government solutions. That intractability means success won’t come quickly. While many givers are anxious about whether they’re achieving results, as Morino and those who seek out CEP for counsel often are, others have the opposite problem. They think they’ve accomplished a great deal when they haven’t. “Everyone’s puking on the sidewalk while this guy is taking a bow,” Morino explained in his characteristically blunt way.³

Morino would agree that we need to be on the lookout for innovative and creative approaches that will work better than the old ones. But he’d also say that he’s learned that there are few easy answers and no quick fixes.

Giving Has Been a Powerful Force for Good

We tend to focus on the challenges and problems we see. After all, there are many today, including disturbing threats to our democratic institutions, growing inequality, and a rising tide of racism. But it’s also important to remember the progress we’ve made. As New York Times columnist Nicholas Kristof put it, 2017 was “probably the very best year in the long history of humanity.” On metrics from the number of people in poverty, to illiteracy, to childhood mortality, to disfigurement from disease, to blindness, there has been enormous progress.⁴ Givers have contributed to this progress and much else: supporting the research that led to commercial aviation and the Internet, combatting environmental degradation and cleaning up rivers and lakes, ensuring that poor children have somewhere safe to go after school or helping them progress academically, curing disease, and caring for the sick and dying.

Giving has made a huge difference in all of our lives. Look at the work of foundations and nonprofits to combat tuberculosis in the United States one hundred years ago.⁵ Or the work of the Robert Wood Johnson Foundation and many others to reduce the rates of smoking in the United States between 1990 and 2010.⁶ Or, more recently, the work of the Civil Marriage Collaborative, a consortium of givers that pooled their resources and strategically aligned their grantmaking over eleven years and to the tune of $153 million. They achieved results beyond what anyone would have predicted when the US Supreme Court ruled that the right to marry is constitutionally guaranteed to same-sex couples in 2015.⁷

Despite the real challenges around us—such as poverty, the threat of terrorism, or the treatment of military veterans—we cannot deny the progress that has been made on many fronts.

Giving—your giving—can make a difference.

I’ll aim to equip you with the facts and insights that will allow you to do just that. This book will describe and refute the most common and damaging myths. It will help you learn from what has worked and build on that success. It will help you understand that you’re not alone in the realization that it’s hard to do good well—much harder, in fact, than building wealth, as Andrew Carnegie famously observed.⁸

Effective Giving Essentials

In the pages that follow, I’ll lay out what we know about what it takes to be an effective giver. In Chapter 1, I’ll offer a high-altitude look at the US nonprofit sector in all its vastness and diversity, arguing that it plays a distinctive and important role in our society—one that touches all our lives for the better. Then, in Chapter 2, I’ll discuss the giving landscape and the myriad ways to give in pursuit of impact.

In Chapters 3 through 6, I’ll turn to the particulars of what it takes to be effective, which I believe are universally applicable to individual and institutional givers who are dedicated to doing their giving well. It’s about thoughtful goal selection, the identification of smart strategies, great relationships with those you support, and assessment of progress. In Chapter 7, I’ll discuss additional tools that you might employ to pursue your goals. Finally, in the Conclusion, I’ll bring you back to why it all matters.

In addressing each of these areas, I’ll draw on the extensive research CEP has conducted since I was hired as its first staff member in 2001. I’ll also draw on what my colleagues and I have seen up close from our work with hundreds of foundation clients, including most of the world’s largest foundations, as well as the individual donors and families affiliated with those institutions. Whenever possible, I’ll tell you the stories—of givers, nonprofits, and those who benefit from their work—that bring effective philanthropy to life. I’ll sort through the hype about “new” approaches, weeding out the fads from the promising innovations and refuting the most destructive myths. I use examples from both individual givers and institutional ones because I think, regardless of whether you’re giving your own money or you work at a foundation as a program officer, the principles of effective giving apply. I think givers can learn from a broad range of examples. There are lessons for all of us in the giving of John D. Rockefeller and Bill Gates, just as there are lessons for tech titans in the giving of those with more-limited resources.

In the final pages of the book, I’ll introduce you to two people whose lives have been transformed by giving and who have been inspired by the experience to give back themselves. That’s the nature of giving done right: It sparks a virtuous cycle. Like the famous concept of the butterfly effect, which argues that a single butterfly can change weather patterns, effective giving ripples inward and outward, with far-reaching positive consequences for givers and recipients. So, too, can ineffective giving reap far-reaching negative effects, resulting in tornadoes that inflict damage that was never intended.

Developing the Skills for Impact

There are some crucial insights and lessons to be learned by those who want to make a positive difference with their giving: the everyday check writers; the holders of donor-advised funds; the individual donors and families establishing or considering establishing foundations; those who advise donors establishing foundations; family offices of the wealthy and those who staff them; and the staff and boards of foundations and other grantmaking institutions. Whatever your motivation for giving—whether it comes from your religious beliefs, your concern about injustices, values passed along by your parents or family, or your personal experience with a problem or a disease—I hope this book helps you do your giving more effectively. I hope this book is also of interest to those curious about the role of giving in American society, including the growing number of students and academics studying the nonprofit sector and all those who raise money from, and interact with, individual and institutional givers.

I have drawn on a variety of sources to inform the perspectives I share in the pages that follow: CEP’s extensive research, almost all of which has been led by my colleague Ellie Buteau, PhD, CEP’s vice president for research; our experience working with hundreds of foundation and major donor clients, which my colleague Kevin Bolduc, CEP’s vice president for assessment and advisory services, has overseen; insights of members of CEP’s extraordinary board of directors as well as our more than forty staff members in our Cambridge, Massachusetts, and San Francisco offices; writing and analysis of others whose work I respect; and personal observation based on my interactions with thousands of givers as well as many nonprofit leaders.

I should note that many of the givers I discuss, especially the institutional ones, are clients of CEP, and many also provide some grant support to the organization. Some of the stories I tell focus on people with whom I’ve worked closely, including current and former members of our board of directors. I seek always to bring sober eyes to my discussions of their work. When describing donors and foundations, I relate only publicly available data or information from direct interviews with those involved. In several instances, I describe client engagements or conversations using pseudonyms instead of real names, and I’ve taken pains to ensure those examples aren’t identifiable.

I focus primarily on the US context simply because it’s what I know best. I don’t claim to have all the answers, but I believe there are certain practices, principles, and approaches that will help you achieve greater success in your giving. In many—maybe even most—cases, the tenets of giving effectiveness run directly counter to conventional wisdom and to what you may have heard or read.

I believe givers can play a role in our society that other actors can’t or won’t, and that when they do it well the impact is profound. I’m inspired by many of those with whom I’ve had the privilege of working and from whom I have learned much. I hope, over the pages that follow, to inspire you to do the hard work required to be effective.

The fundamentals of effectiveness in giving are timeless and difficult to master. Just as there’s no shortcut for the aspiring young soccer player through the painstaking process of developing her foot skills—juggling the ball for hours on end—so, too, the effective giver must learn and practice to become good. The effective giver must develop the skills and techniques that separate the philanthropic stars from the also-rans.

And just as skills for soccer differ from those required for success in basketball, what’s needed to be effective in your giving is different from what’s needed in business. It’s not easy. It takes a lot of work, deep thought, humility, and a willingness to grapple with difficult-to-answer questions. But it pays off in greater progress toward your giving goals, whatever they may be.

It’s worth the effort.