History lesson for philanthropy

By Todd Cohen

DURHAM, N.C. — New philanthropists are generating excitement in the charitable world but also creating risks for it, the president of the Ford Foundation says.

While it is attracting attention from the news media and among funders and nonprofits, mega-donors’ business-oriented approach to giving could hurt philanthropy by prompting other donors to abandon traditional strategies for those favored by the new generation, Susan Berresford told a Duke University seminar.

To retain the strengths of traditional philanthropy while adopting the innovations of newer philanthropists, and to counter a popularly perceived “dangerous dichotomy” between “old and new philanthropy,” she said, foundations need to do a better job telling the story of their accomplishments accurately.

Media attention to mega-donors has helped spread the idea that new philanthropy “is always better,” she told the Foundation Impact Research Group, a seminar series organized by Duke professor Joel Fleishman, author of the recently-published The Foundation: A Great American Secret. [See review in PJ.]

Defining philanthropy as “altruistic concern” for human welfare that can range from “charity to change,” Berresford said she was “very worried that a lot of people are disparaging the charity end of our field.”

She said new donors’ approach to philanthropy tends to be strategic, address the root causes of big problems that often are global, and take a businesslike approach that demands measurement-based results, often within three to five years.

A growing number of foundations are embracing that business model, sometimes known as “venture philanthropy,” a trend that Berresford said worries her.

That risks “miniaturizing ambition” if every foundation adopts that model, she said.

Major philanthropic undertakings in the past, like the tough and lengthy fight against apartheid, would not have succeeded had foundations set arbitrary deadlines and limited metrics for success, she said.

While new donors, many from the high-tech world, often bring to their philanthropy the strategies that helped them succeed in business, and often think of themselves as problem-solvers rather than patrons, Berresford said, traditional philanthropists also saw themselves as problem-solvers.

And focusing on strategic change, root causes, global issues and measurable results is not new, she said, but rather has been central to much of traditional philanthropy.

Berresford said she also worries that more and more foundations are “driving all their own initiatives,” a departure from past practice in which foundations made a healthy share of grants in response to needs and initiatives outlined by charities in grant requests.

The new approach “can shut out innovation coming to you,” she said, “and it cuts off the people who should be arguing for your existence.”

She said she also worries that a logical outcome of accepting the idea that new philanthropy is better than old philanthropy is to allow or force old foundations “to die.”

And rising efforts to toughen regulation of philanthropy, particularly at the state level, coupled with the emphasis on venture philanthropy by mega-donors, could discourage giving by smaller donors, Berresford said.

A core strength of philanthropy, she said, is the diversity of approaches it represents, including the fact that foundations can exist in perpetuity with a focus that ranges from addressing immediate needs to tackling the underlying causes of complex problems like racism, poverty, violence, disease and global warming.

“We have to be very careful not to oversell the venture model,” she said, adding that wholesale adoption of that model could lead to the “distortion” of philanthropic strategies that have been effective in the past.

Berresford, who joined the Ford Foundation in 1970, was named president in 1996 and has announced she will retire in January 2008, said mega-donors and traditional foundations both can do more to bridge the gap between new and old philanthropy.

Both groups can share with one another their approaches to problem-solving, she said, while new donors can use their media savvy to celebrate the value of charity and “defend the most controversial part of change philanthropy” that focuses on hot-button problems like AIDS.

Berresford also said fewer and fewer foundations have been willing to invest in comprehensive strategies to address complex issues, like improving public education, that involve highly sensitive issues like race and class.

Ultimately, she said, philanthropy works because of its diversity.

“Philanthropy is based on a very simple idea,” she said. “Success by one can support the hopes and dreams of others. That can be done in whatever way the successful person wants.”

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