Expectations with the Level of Risk
are two philosophical topics that go to the heart of effective
giving that haven't been treated thoughtfully elsewhere.
The first is the notion of risk. In a regular investment
situation, investors understand that if I make a bet on
an oil strike or a gold mine, my chance of success is
low and my payoff is very high. They understand these
investments as being high risk. Philanthropy, however,
is the one area where neither experienced nor inexperienced
donors understand the risk and nature of what they do.
For example, a $10,000
grant is significant when you make it as an individual.
It is also significant to the organization that receives
it. But should you expect that the organization will solve
poverty in your community because you gave it $10,000?
No, it's not realistic to expect that-yet people do. Only
the lottery gives the kind of odds that people expect
from philanthropic investments: a small amount of money
to bring a huge return. You don't play the lottery as
an investment strategy. The same is true in philanthropy.
As a donor, you need an understanding of the size of the
problem you're trying to solve, relative to the amount
of money you're investing.
Outcome Measures to the
other topic that's neglected has to do with the question
of outcomes. Although this is discussed a lot, it is not
a nuanced discussion. Donors need to ask themselves: "How
much am I putting in and what is reasonable to expect
that the organization will be able to do with it? And
how does the organization measure outcomes against the
For example, let's say
I support a feeding program for the homeless. I can tell
you every night how many people we served a meal to, how
many didn't go to bed hungry. But have I affected longrange
hunger? Have I made systemic changes in my community?
No. The outcome is easy to count, it's straightforward
and easily understood, and it fulfills the mission of
the organization. However, it may not fulfill the mission
that you prefer to fund.
An effective giver has
to ask: "What is the mission of the organization
I'm supporting and what is success in those terms?"
You cannot just look at an organization and conclude that
it is successful because it has what I call "counting
success." Its success measures must be appropriate
to its mission. As a donor, you are right to talk about
standards and accountability, but the conversation must
also be about what the mission is and determining reasonable
benchmarks. One program may be 50% effective,
another may be 75% effective, according to their outcome
measures. But the 50% effectiveness rate may in fact be
very high, given the mission and the risk involved.
Depends on What is Valued
point to understand is that what is effective can depend
on the population being served. For example, people will
argue for hours that McDonalds' french fries taste better than Burger King's. To me, they're
the same, but to my ten-and-a-half-year-old daughter Yeti,
there's a difference. Similarly, if I've got a youth program
serving Spanish-speaking kids and a traditional youth
program that doesn't, to some people that difference may
be important. I'm an African-American and am sensitive
to taking Yeti places where there is no African-American
presence. I want her to have a certain experience that
provides a positive image for her as an African-American
So, just because there
are two programs that appear to provide the same service
does not mean there is a duplication of programs. In general,
donors are not encouraged to understand that what may
be an irrelevant difference from their point of view is
a critical difference to others. That critical difference
can account for differences in success rates with different
populations. The people who support a particular program
believe it is best for what they're interested in. That's
why you have to relate the mission of the organization
to the outcomes.
--From a conversation with
© 1990-2005, More Than Money, All rights reserved