The Resource Alliance, in partnership with the Institute of Development Studies and the Rockefeller Foundation, published a report in May 2012 on Risk and Philanthropy. The report is a product of the November 2011 Bellagio Summit on the Future of Philanthropy and Development in the Pursuit of Human Wellbeing.
The report discusses the importance of collaboration across sectors to improve fundraising and grant-making outcomes and emphasizes the need for philanthropic organizations “to become better at understanding the relationship between risk and opportunity.” It reflects sentiments from twenty-seven international development professionals.
Neelam Makhijani, CEO of the Resource Alliance, said, “One of the key points that resonates with my experience would be to see philanthropists identify projects that have a better fit with the levels of risk they are comfortably used to taking.”
“People weigh their risk assessment more heavily on their past experience than they should and take less account of the ‘real’ risk in the context of their philanthropic decisions,” according to the report. One solution is for philanthropists to engage in more thoughtful reflection about their giving. Reflection would allow donors to more accurately assess the impact and worth of a gift, making them more confident in their gift choices.
The report tells us, “In evaluating philanthropic impact, philanthropists and philanthropic institutions need to consider both the impact on society and the impact on themselves. ” Most philanthropists fail to reflect on their personal gain. The report suggests that, “As selfish as this reflection might seem,” philanthropy will benefit if individuals recognize the impact that their contributions have on their own sense of worth.
Another finding detailed in the report is that ambiguity can cause unnecessary risk for philanthropists. Without detailed, accurate project descriptions and measurable outcomes, donors often are not convinced their investment will have a significant impact.
Overall, the report offers insight into donor-organization relationships and how managing risk is useful. The report explains that having clear communication and expectations on both ends is key. Also, taking time to exchange knowledge and reflect will build stronger ties and aid in mitigating risk.