Making progress: An essay, Part 7

[Editor’s note: This article first appeared in the 2004 annual report of the Z. Smith Reynolds Foundation in Winston-Salem, N.C.]

By Todd Cohen

Philanthropy is the medium through which people extend themselves and work together to fix problems and follow dreams. Philanthropy can transform the way we live and work, but first it must change itself to be a more effective force in coping with and attacking what can seem like overwhelming social problems.

To change, philanthropy must become more strategic, a shift it has accelerated in the past 10 years by starting to overhaul the model that John D. Rockefeller and other philanthropic pioneers created in the early 1900s and that has evolved but still operates within narrow borders.

Times keep changing, though, and a new generation of donors and philanthropic professionals are beginning to break down the lines that have separated the charitable marketplace from the work of social enterprise, entrepreneurial innovation and policy change.

Fixing what is wrong in society is the job for which philanthropy exists, yet rather than focusing on its job, philanthropy gets bogged down in process, turf and rigid ideas about how it is supposed to work. But philanthropy is not monolithic, and innovative social entrepreneurs are pushing the boundaries of civic enterprise, and engineering new tools and strategies that pull resources and knowledge from the charitable, business and government sectors to take on social ills.

Applying their business skills to social problems, entrepreneurs are investing their money and expertise through new venture philanthropies that support enterprises, whether charitable or commercial, that are guided by a social mission. Some foundations are making loans to entrepreneurial nonprofits and, in their role as corporate shareholders, using their proxy power not only to increase their investment returns but also to further their philanthropic mission.

Some foundations also are recognizing knowledge as a powerful asset, and are starting to use technology to collect, make sense of and share the knowledge they and the nonprofits they support have acquired. A continuing and significant need is funding for research to track and evaluate the scope and impact of philanthropy and nonprofits, and to support the development of new public policy and charitable strategies.

Offering virtually untapped potential in the fiercely competitive charitable marketplace is collaboration, which gets a lot of lip service from funders but too little support. Funders need to push one another, nonprofits, government and business to work together to find better ways to solve problems and shape policy.

Last year, for example, building on its strong tradition of supporting policy change, the Z. Smith Reynolds Foundation launched an effort to assess the funding mechanisms and role that policy and advocacy can play in addressing the epidemic of domestic violence and sexual assault. The Foundation also aims to shape its own role in fighting the problem, including helping policymakers and others understand both the issue and effective strategies to deal with it, and possibly funding advocacy work and the collection of needed data.

Progress in a democracy is difficult and messy, and depends on a core of leaders who can see ahead and are relentless in pushing for change. Uprooting the overwhelming social problems in North Carolina will depend on the emergence of funders and donors willing to lead by investing their money, knowledge and influence to help transform the charitable marketplace into a more open, effective and innovative force for making our state a better place to live and work.

Crucial unanswered questions for a new generation of North Carolinians, and for the nonprofits and philanthropies that address the most pressing problems in our state, are when these leaders will step forward, and who they will be.

Other stories in the series:

Part 1: Philanthropy, more targeted and strategic, works for change. 
Part 2: Philanthropic legacy rooted in wealth from traditional industries. 
Part 3: Philanthropy plows new ground to address critical problems. 
Part 4: Philanthropy expands to engage new markets. 
Part 5: Philanthropy moves to help nonprofits gear for change. 
Part 6: Philanthropy changes to help guide the ‘invisible hand’.

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