Now More Than Ever Philanthropists, Foundations, And Not-For-Profits Need To Make Sure That Their Money Is Well Spent
Posted in : Business:
- On : May 12, 2009
A new generation of philanthropists has come of age. Self-made, focused on accountability, and determined to be as successful giving their fortunes away as they were making them, these hands-on donors are forcing the United States’ 1.4 million not-for-profits (who receive around $260 billion in gifts each year) to take a long, hard look in the mirror.
Philanthropists like Bill and Melinda Gates, Wendy Kopp, and Don and Doris Fisher and not-for-profits like the Harlem Children’s Zone, Teach for America, and the Ploughshares Fund are not satisfied to measure their achievements in terms of dollars given and grants made. They care instead about social impact: how many lives their charitable activities have changed for the better.
Not-for-profits that make a great social impact have something that other not-for-profits don’t: a smart strategy. In a new book, Money Well Spent: A Strategic Plan for Smart Philanthropy (November 2008, Bloomberg Press), Paul Brest, president of The William and Flora Hewlett Foundation, and Hal Harvey, president of ClimateWorks, explain how to create and implement a strategy that ensures meaningful results. Components of a smart strategy include:
§ Achieving great clarity about one’s philanthropic goals
§ Specifying indicators of success before beginning a project
§ Designing and implementing a plan commensurate with available resources
§ Evidence-based understanding of the world in which the plan will operate
§ Paying careful attention to milestones to determine if you are on the path to success or if midcourse corrections are necessary
Drawing on examples from more than one hundred foundations and not-for-profits,
Money Well Spent gives readers the framework they need to design a smart strategy, addressing such key issues as:
§ Effective use of tools—education, science, direct services, advocacy—that can achieve your objectives
§ How to choose the forms of funding to achieve stated goals
§ How to measure the impact of grants or programs
§ When to be patient and stick with a winning strategy and when to abandon a strategy that isn’t working
This is a book for everyone who wants to get the most from a philanthropic dollar: donors, foundations, and not-for-profits.
Examples of strategic philanthropic successes included in
Money Well Spent by Paul Brest and Hal Harvey are:
§ Ploughshares Fund, whose mission was quite large—preventing the use of weapons of mass destruction—used its $4-million-per-year budget to make a principal contribution to the International Campaign to Ban Landmines, helped renegotiate the Nuclear Nonproliferation Treaty, and also supported high-level, off-the-record negotiations between senior U.S. analysts and North Korean officials that may have averted a war during the Clinton administration.
§ The F. B. Heron Foundation, which focuses on asset building in low-income communities, notes that its core support grants are evaluated on the basis of the grantees’ planning documents, and the foundation thus measures progress in terms of the organizations’ own ambitions and plans.
§ The Abdul Latif Jameel Poverty Action Lab (J-PAL), a research center at MIT, specializes in conducting random controlled studies in developing countries. For example, J-PAL randomly assigned girls in Kenya either to a group that was promised merit-based scholarships and cash grants for school supplies if they scored well on academic exams, or to a control group. Just being eligible for scholarships led the girls to think of themselves as “good students” and led to higher academic grades. Both student and teacher attendance improved, and even boys showed improvement in their test scores.
The U.S. Charitable Sector: A Snapshot, 2007**
Approximately 1.4 million nonprofits are registered with the IRS.
The nonprofit sector of the economy accounts for 5.2% of GDP.
The nonprofit sector is responsible for 8.3% of the salaries and wages paid in the U.S.
In 2005, individuals, foundations, and corporations gave $260 billion in donations to nonprofits. In 2005, 25% of Americans, 65 million people, volunteered their time to nonprofits.
In 2004, the 1.4 million nonprofits received around $1.4 trillion in revenue
and controlled $3 trillion in assets.
1,400 nonprofits have assets over $500,000,000.
263,200 nonprofits have assets over $1,000,000.
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Hal Harvey, left, and
Paul Brest, right
Photo: John Storey
About the Authors of Money Well Spent
Paul Brest is the president of The William and Flora Hewlett Foundation. Before joining the Hewlett Foundation, he was a professor at Stanford Law School, serving as dean from 1987 to 1999. He teaches a course on judgment and decision making in the Public Policy Program at Stanford University and is coauthor of the forthcoming book Problem Solving, Decision Making, and Professional Judgment.
Hal Harvey, a former director of The Hewlett Foundation’s Environment Program, is now the president of ClimateWorks. He is also the president of the New-Land Foundation and has held positions at several different not-for-profit foundations, including the Mertz-Gilmore Foundation, the Heinz Endowments, and the Ploughshares Fund.
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