Feature Winter 2010
Matching Processes to Problems: Q&A about Philanthropy with Adele Simmons
Global Giving Matters: It seems that the field of philanthropy is in an especially stressful period. On the one hand, we face a set of big, global issues such as climate change, public health, economic inequality, war and security. At the same time, financial resources are drastically reduced. Given this reality, what trends do you think will define philanthropy over the next decade?
Adele Simmons: Well, let’s start with the financial crisis because I think that throws many of the other issues into sharp relief. The financial meltdown has increased the need for philanthropy and at the same time hurt philanthropists. Endowments have fallen, and some foundations in the United States have even closed their doors. I think that with reduced funding and greater demands, nonprofit organizations will begin to collaborate more and explore opportunities for mergers and partnerships. Ironically, groups will be forced by the downturn to work together to address social problems exacerbated by the recession. In fact, many have come to conclusion that it is best to marshal scarce resources and to work collaboratively, since so many social problems are interconnected.
For example, organizations concerned with crime, academic performance or poverty can come together to address the issue of foreclosure. If we think carefully about how to reduce foreclosures in poor neighborhoods, we will also reduce crime rates, since fewer homes will sit empty. In addition, when families are forced to leave their homes, children’s academic performance declines. It costs much less to reduce foreclosures and keep a community together than it does to fix the multiple problems that they cause. Approaching an issue in this way creates what I call co-benefits.
Transparency is another key lesson of the financial crisis. I think donors, like financial institutions, can expect more scrutiny. At the same time, financial difficulties are making philanthropies more receptive to looking at their own systems and the systems of their grantees to see how they can be improved. I expect that, going forward, they will take the extra time to ensure that their philanthropy is really effective.
GGM: It sounds like you’re optimistic that the financial crisis can actually prompt improvement in the way philanthropists go about their business.
Simmons: Yes, I am optimistic. Nonprofits focusing on survival can lose their creative edge; however, resource constraints also can challenge them to think outside the box and to focus on their core competencies. During the boom years, when I watched donors doing things that were not particularly effective I thought, “Well, they’ll learn.” And sure enough, they did, but at a cost. Now, we don’t have those extra resources. People who are entering philanthropy need to be more sophisticated and more committed to being effective right from the beginning. Donors should take advantage of best practices and build on what is known, not waste time and money reinventing the wheel.
Also, there’s a fundamental tension that donors have to sort through between keeping good things going and looking for innovative ways to address critical problems. A Synergos Senior Fellow who is involved in an education program in South Africa recently said to me, “We have really good ideas, we have really good models, we know what works. We just need help bringing it to scale. We don’t need one more donor to come in with a totally new way of doing something that doesn’t reflect or respond to what we’ve already learned.”
So if something is really working, we have to help it grow rather than trying to impose a whole new way of doing things. At the same time, however, donors can take risks, try new ideas and learn from those ideas that do not work. If every idea is successful, we are being too cautious.
GGM: How can donors support organizations that already have effective programs and models?
Simmons: Many of the groups that are bringing about change and providing key services at the local level are stretched to the max; they have cut their budgets to the bone. Most were already fairly efficient, and so these cuts are taking a big toll. So it’s really important to provide core operating support for these organizations, rather than just project support. Projects don’t happen without an effective organizational infrastructure. At least in the United States, I’ve seen more donors begin to provide general operating support, and that’s a very good thing.
GGM: It appears that, increasingly, donors are looking to achieve financial returns on their philanthropic dollars. Do you think this is a promising strategy?
Simmons: There are circumstances under which it is reasonable to expect financial returns. Micro-enterprise and small business loan funds are examples.
However, just as it can take time before a venture capital investment pays off, it can take time before a philanthropic investment pays off. Jacqueline Novogratz of the Acumen Fund [a Synergos Senior Fellow] talks about “patient capital.” The Fund has dozens of examples of where it has provided debt or equity at the early stages of a project, enabling it to become financially independent and viable in the long run. The Acumen Fund has helped to bring water to remote villages, significantly increased the availability and use of bed nets to prevent malaria, and brought alternative energy to communities that have no other access to light and power.
It’s also important to remember that just like capital investments, some philanthropic investments won’t work out as planned. Donors need to watch for unintended consequences, both negative and positive.
There are certain problems that can only be addressed through grants. If you are working to improve human rights or government transparency, you’re probably not going to do a lot of social investing; you’re going to be doing grant making. In Brazil, Marcos de Moraes and his Instituto Rukha have been working on stopping child labor and violence against children; it’s just not possible for them to look for financial return in that arena, but we’d all agree it’s worthwhile work. Protecting human rights, reducing corruption, and ensuring the basic rights of children are all critical to society.
And there are cases where although there will be economic benefit, it’s not possible or appropriate for funders to seek some of those benefits themselves. Philanthropy has supported major research that informs policy about the importance of reaching women in developing countries. The long term economic benefit is huge, but no donor will ever be able to get a financial return either for the research or for some of the basic investments in girls’ education--all of which will have a huge impact on a girl’s quality of life and her community’s economic prospects. Nike and Synergos, for example, are involved in efforts in India to do this, but not with expectations of direct returns. But benefits for the girls, and their families, are what they’re looking for, and so far the outcomes are in line with the research.
But yes, some philanthropies are involved in mission-related investing aligning the foundation’s financial assets in pursuit of its mission. Investment managers are often skeptical of this approach, but at the universities and foundations I served, we managed to find ways of producing a strong financial return while also being consistent with the values of the organization. It takes more time and effort to create that kind of blended value portfolio, but it can and should be done more.
GGM: How does a donor know if he/she is having any impact?
Simmons: This is a really important question. There is a lot of attention being given to counting to metrics. In some cases this makes sense, in other cases it does not. Einstein is quoted as saying, “Everything that can be counted does not necessarily count; everything that counts cannot necessarily be counted.” Some things we can and should count the number of children who are vaccinated, for example. But when we count the number of children in school, we also need to know about the quality of the school and how much the children are learning. And don’t forget, it’s very hard to count a negative: wars that didn’t break out, or famines averted.
GGM: Moving to global issues, what do you think are the biggest needs that philanthropy must address going forward?
Simmons: Of course, philanthropists will want to contribute to immediate relief in the event of catastrophes such as earthquakes, tsunamis and floods, but I think that the real impact from philanthropy comes from focusing on long term, systemic change.
As you know, at the 2000 UN Millennium Summit, world leaders committed themselves to eight goals that are intended to end extreme poverty worldwide by 2015. These goals -- ending hunger, universal education, gender equity, child health, maternal health, combating HIV/AIDS, environmental sustainability and a global partnership -- all present great opportunities for donors. Philanthropy has a unique ability to innovate and take risks that governments and markets are unable or unwilling to take. With our greater independence, we are the ones who need to be making mistakes and testing new ideas. We need to figure out ways to involve donors from a variety of perspectives, take the lead in finding strategic solutions and ensure that proven ideas are taken to scale by governments or the private sector.
For example, different funders can work together on the interrelated issues of climate change, poverty and water issues. The most impoverished populations suffer most from the famine, drought, and flooding that result from climate change. Global warming affects access to water for drinking and irrigation, which has a direct impact on people’s income and self-sufficiency.
Also, the struggle over natural resources is often a root of violent conflict, something that will likely increase as climate change and population growth make water scarcer. If you talk to people who have flown over Darfur, you can see how desertification in the north forced people to migrate to the south. Large movements of refugees are a major sources of conflict.
GGM: Given the many seemingly intractable global problems, how should new donors decide where to put their resources?
Simmons: It really comes down to making choices. What are the crucial issues? What will have the greatest impact? Donors need to operate on multiple levels. At the same time that they are seeking short-term results, they need to keep thinking strategically. I think it’s important to figure out what you want to do, what you care about, what’s your passion. You start with your passion, and then identify the right philanthropic tools to move forward with that passion. One of the most important parts of doing philanthropy is making sure that the tool you use is appropriate for what you’re trying to accomplish with your philanthropy.
The art of philanthropy is matching the process with the problem.
It’s critical to understand that the solutions that may look perfect from a skyscraper in New York or Dubai may not be the right ones. Working with a village or schools in the developing world is very different from running a business. As Bill Gates is quoted as saying in Philanthrocapitalism by Matthew Bishop and Michael Green, philanthropy is a “tougher game” than business. It’s especially important to ensure that the voices of the poor and disenfranchised are heard, as well as the those of the people implementing the program.
I’m always taken by a conversation I was part of at a World Economic Forum meeting, where a major donor said, “Well, I want to address AIDS in villages in South Africa--and this is what I’m going to do.” The two women he was talking to gently urged him to have his team come and spend six months or a year living in the village before they did anything. And he was taken aback. But the people he happened to be talking to were Graça Machel [Nelson Mandela’s wife] and Zanele Dlamini (Thabo Mbeki’s wife) -- people who were going to command his attention.
The Global Fund for Women is probably the most effective organization I know in making very small grants to women’s groups all over the world. They do it right because they have a team of advisors for the countries in which they work whose members really know the groups. Building trust is often the key to a successful program. Good intermediary organizations can play that role for individual donors.
GGM: What do you see as some of the threats to global philanthropy?
Simmons: I worry that some governments--particularly ones that see watchdog groups as a threat--are trying to limit philanthropy. In Russia, for example, there was a set of rules and regulations that limit philanthropy and civil society. Ethiopia has set an arbitrary limit on the amount of outside support civil society organizations can receive from outside the country. It comes back to the issue of transparency and accountability. For societies to work, there has to be accountability--in government, in the nonprofit sector, and in the private sector. Watchdog groups are enormously important in reducing or exposing corruption--and that’s a role that governments often can’t or won’t play.
GGM: Let’s close with a question about Haiti. Given the enormity of the devastation and the magnitude of the human suffering there, what role do you see global philanthropy playing as the country seeks to rebuild?
Simmons: Well, the outpouring of support has been really extraordinary. The challenge now is figuring out how you get supplies though to the people who need them, and how you ensure that the many organizations that are there are working collaboratively. That’s the short-term challenge.
But the area where philanthropy can really have an impact is in helping to shape Haiti’s long-term future. As we move into the rebuilding phase, Haitians will have to think about what their nation will look like, physically and socially. Is Haiti going to be rebuilt as a replica of what was there before? Is Port au Prince going to look like it did before the earthquake? Or is this an opportunity to put in sewers and water mains and rebuild it in a way that is stronger and more modern in the best sense of the word.
I would have Haitian architects working with architects from around the world to do charrettes about how to rebuild. We have to start thinking creatively about what Haiti can be like. I think about the rebuilding of Chicago in 1871, which was done with great imagination and vision and energy. That laid the groundwork for ensuring Chicago’s leading role throughout the 20th century. It’s important in rebuilding Haiti that people think creatively and imaginatively about what the future can look like, and how cities can work better for the people who live there. Supporting that process is tailor-made for philanthropy. Collaborative, thoughtful efforts that respect and include those who will be most affected are the hallmarks of effective giving.
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About Adele Simmons
A long-time activist, participant and commentator in the fields of philanthropy, Adele Simmons is Vice Chair of Chicago Metropolis 2020, a civic action group devoted to the strengthening of the civic and economic life of the Chicago Region. She is also President of the Global Philanthropy Partnership, which works to strengthen the infrastructure supporting global giving and social investing, Founder of Global Chicago, Co-Founder of the Chicago Global Donors Network, and a Board Member of the Chicago Council on Global Affairs and the Field Museum. She is a member of Synergos’ board of directors, and a founding member of Synergos’ Global Philanthropists Circle. Ms. Simmons served as president of the John D. and Catherine T. MacArthur Foundation (one of the world’s largest grantmaking foundations) for ten years, and also served as President of Hampshire College. She is currentlyworking on Climate Change in a global context and served as Co-Chair of the Chicago Climate Action Plan.
As we start a new decade, she shares her thoughts on the challenges philanthropy and philanthropists are facing around the world, and some of the new approaches emerging in the field.