Turning the Dials on an Outdated System

I think one of the hardest things for me to deal with in my professional life is that I am making a living off of the misfortune of others. Without the inequalities that exist in our society, the organization I work for would not have a purpose, and I would not have a job. I have a comparatively privileged lifestyle to those I am trying to help and I live comfortably while they do not. If their problems were solved, or didn't exist in the first place, I would not be able to do what I love, and get paid for it too.

Last week, Lenore Hanisch of the Quixote Foundation wrote a guest blog post on Tactical Philanthropy on its recent decision to spend down all of its endowment by 2017, which resonated with my struggle to be comfortable with my work. Hanisch commented on how the decision to spend all of the foundation's reserves will put her into some personally difficult situations:

Erik [her husband whose father started the foundation] and I have always been clear in our belief that the foundation and its assets exist for the purpose of progressive work—not to give us purpose. This field can be seductive: when you’re associated with a foundation you’re suddenly always funny and interesting, with people eager to hear your opinions. When the money is gone I’ll not only need a new job, I’ll also be left out of quite a few parties and someday, someone might even admit they don’t like me. In other words, spending everything puts us in a fairly normal situation as far as our jobs are concerned.

For those that work in the social sector, our goal should always to put ourselves out of a job, otherwise, we are just making money off of poor people. As I learn more about the field, I'm realizing that nonprofit funding is very donor-driven and subject to the whims of major donors and foundations. This creates a capital stream that is fragmented and variable, which doesn't help encourage organizations to focus on long-term solutions to society's problems. Instead, we get caught in a cycle of charity that aims to fill the needs of the underserved, rather than creating large shifts in systems and values. I benefit from this constant cycle, as I will be constantly employed.

I think the only way I can truly feel good about working the social sector (and, by extension, the whole social sector itself), is to create a shift away from donor-driven cycles of charity. These changes are happening all around with the rise of social entrepreneurship and venture philanthropy, but I feel like it is not enough. It is important for foundations to spend down their endowments and for organizations to work on accomplishing goals so they are no longer needed, but this is only one piece of what is needed. To make a true shift away from charity to solutions-driven change, we need to reshape the rules of the nonprofit sector.

Lucy Bernholz and Steve Goldberg recently had a fascinating exchange about the place of philanthropy in the long term. While discussing the different innovations going on in the nonprofit world (from those great social entrepreneurs and venture philanthropists), Lucy commented that:

[P]hilanthropy as an industry is "designed" by policies. It is a regulated industry. It is shaped by the rules. And the rules, currently, favor "donor centric, fragmented, etc"... The game itself doesn't change because there are new players - it needs new rules.

All of the changes to nonprofits that are currently going on, Lucy said, are mainly financial innovations, or business model innovations. Thinking about effective management or outcomes measurement for nonprofits is important and can create some lasting change, but those changes are just turning dials on an outdated system that can't respond effectively to the needs of the population. Instead, we should try to think about the assumptions that the nonprofit sector is built on and change those.


Developments on this level are the most exciting to me. The creation of L3C's, the growing market for impact investing, and reforming the tax-deductible donation are areas which seem to have the most potential to create some pretty profound systems-wide change. I think that if we can find a way to blend business and philanthropic capital effectively, we could create a capitalist economy that is based on solving society's problems, rather than creating profit. I'm not sure how to do this, but I'm excited to try to figure it out.


                                                                                                   
Disclaimer: The postings on this site are my own and do not represent the positions, strategies or opinions of Venture Philanthropy Partners