Category: Blog

By Larry Kramer, President, The William and Flora Hewlett Foundation

November 7, 2019

This post first appeared on India Development Review and has been reshared from The Center for Effective Philanthropy.

A lot of people today talk about how philanthropy needs to be more business-like, about how we need to incorporate principles from the for-profit business sector into the nonprofit and traditional grantmaking sector. I think that is a big mistake, and I urge you to take care before doing it.

1. People

The people who come into our sector — whether in foundations or in the kind of nonprofits that foundations fund — come with passion for the work, they care about the issues we work on, and care enough to make the financial and other sacrifices the work requires.

To manage them in the same manner you would manage someone in the for-profit world, where the culture and motivations attract people who want to move up the hierarchy and earn a higher salary, is a mistake. The people in these different sectors are different, they come for different reasons, look for different rewards, and should be managed in ways that acknowledge these profound differences.

2. Measure of success

In the for-profit world, there is a single metric for success, everyone agrees on what it is, and it’s easily measured and tracked. It’s simple to know when you are doing well and when you are not, and it’s the same metric and measure for every business.

That’s simply not true for the vast bulk of work in the nonprofit sector. So much of the impact we are trying to achieve is not easily quantifiable; it’s complex. And if you are an organization like us — working across several different fields — what success looks like is incommensurable from one body of work to the next.

3. Competition

In the business sector, the success of your business organization necessarily comes at the expense of your competitors. Whereas in philanthropy, I’m not trying to outdo other foundations, or maximize the glory of the Hewlett Foundation. It’s exactly the opposite: I’m trying to develop and be part of ecosystems of organizations, including other funders with whom I want to partner, in ways that will help achieve solutions to social problems or help improve everyone’s social good. It’s a profound difference at precisely the level where business principles could matter: me with everyone else is not me versus everyone else.

Read the entire article on the Center for Independent Philanthropy’s website. If you’re interested in ways The Alliance to develop or refine your strategic philanthropy, send us an email at person@alliancems.fahrenheitcreative.com or call (601) 968-0061.

Obviously, there are things that overlap. We all want to manage well, we all want our organizations to be efficient and operate appropriately. But those aren’t business principles as such. They are just good practices for running an organization in any sector or endeavor.

For-profit and nonprofit organizations work in different ways, on different problems, toward different goals — and those differences matter. Here are a few things I think are important as distinguishing features:

We cannot let the perfect be the enemy of progress. Within complexity and nuance, we find hope for the year ahead.

Dear Colleagues and Friends:

As I begin my seventh year as president of the Ford Foundation, I find myself reflecting on all that has changed in our world since 2013. If asked to encapsulate this tumultuous period in a single word, a reasonable observer might rattle off a list of possibilities—aberrant or abhorrent, appalling or inhumane—or they might reject the question entirely. Too much has happened, too quickly, for one term to perfectly capture it all.

If pushed, however, one might gravitate toward a telling adjective: “extreme.”

This is the age of extreme weather and extreme inequality. The age of extreme hate groups, extreme nationalism, and extreme populism around the world. The list goes on.

The business case for the extreme is well documented. The loudest voices garner the most coverage and clicks, while media companies and social networks reap the rewards. And these extremes beget more extremes, coarsening our discourse and dividing our societies.

The problem is that “extreme” is not just a descriptor of gathering crises for our planet—or the political personalities most breathlessly covered in the news and amplified in the echo chambers of our newsfeeds. Extreme opposition seems to have entered the playbook of leaders in every category. In this worldview, it’s all or nothing, good or evil, the best or worst.

Nuance and complexity, meanwhile, are nowhere to be found. And our extreme challenges remain extremely unsolved.

In the boardrooms of businesses and museums, on committees and campuses—and everywhere in between—seeking common ground has been replaced by a retreat to our corners. Like fighting fire with fire, the fiery is met with fiery, and no one seems willing to turn down the temperature. Nuance is a concession no one seems willing to make.

And yet, while nuance and complexity are clear victims of this new normal, they are hardly the only victims.

Our ability to solve our collective problems—especially, but not only, in our politics—is called into question. Common goals are framed as coercive demands; potential partners and experts unnecessarily cast as victims or enemies.

Rather than building bridges and relationships based on mutual understanding or shared respect, this oppositional, nuance-averse posture rewards ideological purity and public shame—the very things that scuttle strong working relationships and incentivize people to dig in their heels.

To be sure, there are cases where ineffective incremental progress has contributed to the frustration and anger that many in our society rightly feel. Now is no time for small steps or half measures—especially when it comes to extreme inequality and injustice.

And yet, ambition and animosity need not be linked; in fact, the latter impedes the former.

We must recognize that what has nuance on the run are distorted incentives, which in turn create more destructive behaviors.

This same flywheel drives every category of inequality—from economic disparity to racial injustice—and pits selfishness against social welfare, when the latter is in everyone’s self-interest.

One powerful example comes from our collective response—or lack thereof—to the global climate crisis. Too often, the debate about climate change is dominated by an extreme form of denial—by the voices who refuse to acknowledge its very existence and who denigrate the efforts of the people, communities, and organizations working to address it. The solution, of course, is not just in the middle, but on the ground—with the indigenous communities who face the most immediate and dire consequences of our climate catastrophe. Yet, these are the same groups that are dismissed as anti-development.

We at Ford have learned the impact that comes from honoring and amplifying the voices and experiences of the communities most directly affected by injustice. So, we support individuals and institutions that understand a simple idea: averting a climate catastrophe cannot mean displacing, disassembling, or ignoring indigenous communities. And, for their part, indigenous leaders have proven time and again that they are in fact open to development—providing that it is done with their input and creates opportunities and benefits for their communities.

Another example is closer to home: New York City’s effort to close Rikers Island, a complex of eight separate Department of Correction facilities on 413 acres in the middle of the East River. For decades, Rikers has represented the very worst of America’s criminal justice system. It is infamous for barbaric conditions, insidious corruption, and unrelenting brutality. And, as a consequence of America’s broken for-profit bail system, some 80 percent of the incarcerated at Rikers have not yet been tried for any crime. Instead, many thousands of innocent-until-proven-guilty people are waiting for their trials—sometimes for years.

Rikers has been in desperate need of reform—if not a wrecking ball—for longer than any of us can remember. And yet, it was only in 2016 that the Independent Commission on New York City Criminal Justice and Incarceration Reform was established—a group of judges and lawyers, activists and educators, nonprofit leaders and justice advocates—to finally devise a plan to shut it down.

As a member of the commission, I am proud of our work to propose reasonable, workable solutions to shutter this warehouse of inhumanity and to end its long history of abuse and injustice. This was heavy lifting, full of competing interests and complexity—of nuance.

Meanwhile, some advocates—including some community leaders who have moved the needle on criminal justice reform—oppose the construction of smaller, replacement jails, which will make the shuttering of Rikers feasible. No doubt, some simply are NIMBYs who don’t want these facilities in their neighborhoods. Many more—courageous visionaries whom I admire and respect—argue that these new jails will fuel the forces that lead to mass incarceration.

Without question, as a community, we will need to hold replacement jails to account, especially in light of the negligent affronts to human dignity at other New York City jails. And, more broadly, we must work together to address the root causes of mass incarceration—to develop and deploy a more just approach to criminal justice.

But we cannot let the perfect be the enemy of progress. If we skip steps, we risk creating a new kind of gap—a gap of missed opportunities and lost alliances.

Indeed, these examples help inform the path forward—a journey away from the extremes.

To begin with, we need to reestablish incentives that encourage our leaders to seek more nuanced solutions and reject unproductive extremes. For instance, the way we measure value has lifted up quarterly earnings without fully accounting for environmental or social costs. The way we delineate political districts and decide elections favors ideological purity over persuasion. And the way we practice philanthropy too often allows for the obscenely wealthy to whitewash or greenwash their reputations through charity, rather than dismantling the systems that make their charity necessary in the first place.

We must also recognize the ways in which a patient, inclusive, and nuanced approach already has resulted in more productive conversations and constructive solutions.

We can see how our capitalist systems have broken down, while also appreciating that markets have helped reduce the number of people around the globe who live in poverty. Indeed, we can and should acknowledge the positive step forward by the Business Roundtable and a group of 181 global CEOs, who, this summer, committed to redefining the purpose of a corporation in order to benefit all stakeholders, not just shareholders. Now, let’s ensure that BRT members follow through on the changes in corporate behavior reflected in the lofty principles in their manifesto.

We can see the historical failures of our own republic on fault lines of race and gender and sexual orientation and class—as the New York Times has illustrated with deft, delicate care in its 1619 Project—while also protecting and promoting democratic values and institutions, and participating fully in democratic processes, around the globe.

We can be critical of ill-gotten fortunes, while also appreciating the current need for private capital to fund certain valuable public goods, and encouraging wealthy individuals to understand their own privilege and support institutional reforms.

Of course, even the need for nuance is not without its nuances. Some cases are so morally odious and corrupt that no nuance is required: We can disagree about immigration policy without accepting that a government separates parents from their children, or warehouses babies in cages. We can disagree about tax rates and the reach of regulation without accepting white supremacists marching in our streets. We can disagree about the exact scope of the United States Constitution’s Second Amendment without accepting violence and terror as an inevitable fact of American life.

Within this kind of rationality—within this kind of complexity—I believe we can find reason for hope: Hope that we can reclaim the commons and common ground; hope that we can join in common cause for a common good; hope that we can extend our hands, and our good faith, and, occasionally, even the benefit of the doubt.