Think Philanthropically

“Billions are wasted on ineffective philanthropy” – Michael Porter

I will risk being a bit repetitive. This column has frequently focused on the need to change the way we think and act philanthropically. It would be easy to counter Michael Porter’s assertion by suggesting that it is the thought that counts. In the absence of any coherent way to assess the outcomes of our charitable activities we can always revert to the tradition of praising the sacrifices of the good-hearted people who labour in the sector. The challenge of the 21st century philanthropist is not merely to attempt to use funds do good things. We must seek to apply the right resources to the right problem in the right way.

“We must seek to apply the right resources to the right problem in the right way.”

The overarching model of philanthropy that we have inherited was developed and refined in an era when it was part of the top down approach of the very wealthy.  Back in the 19th century a number of enormously successful business tycoons created a new social class. This has been documented in books like “The Robber Barons” and serialized in programs like “The Gilded Age”.  Along with the concentration of incredible wealth came a concentration of urban poverty which, in turn, created the need for some form of response. In that era services for the sick or marginalized were largely the domain of the church, however the scope of social and medical needs quickly became significant and church-funded institutions simply could not cope.  Modern philanthropy and charitable organizations began to emerge in response to the need. It was considered essential, a true badge of honour, to give to the poor and act in support of noble causes. The services offered and the handouts became a means of maintaining existing class distinctions while appearing to be genuinely altruistic.

“Many non-profit organizations still operate with a handout mindset, a modern take on ‘noblesse oblige’.”

This outdated philanthropic model is far less effective in the 21st century and a number of its assumptions have been called into question.  While philanthropy continues to be relevant, change is coming. Will the institutions and structures in the non-profit sector proactively change – or if they will become the victims of external disruption? What do I mean? Many sectors of the business world have been disrupted by new technology or new market entrants.  When disruption happens, the long-established institutions are often slow to respond. One only needs to be reminded of how Netflix disrupted Blockbuster or how Uber disrupted the taxi industry.

“Will the institutions and structures in the non-profit sector proactively change – or if they will become the victims of external disruption?”

In the past 25 years the world has experienced a profound level of technological change. At the same time, the world of philanthropy has largely clung to the same way of doing things. It can be argued that the sector embraced new technologies like digital fundraising. Nonetheless, a careful analysis would conclude that the philanthropic sector has merely done a “cut and paste” of newer methodologies and attached them to a tired model. It can also be argued that there has been a shift in how the philanthropic sector approaches the sensitive cultural concerns connected with things like international aid. Despite a somewhat less “colonial” way of operating, reform is still essential. Many non-profit organizations still operate with a handout mindset, little more than a modern take on the concept of “noblesse oblige”. What shifts does philanthropy need to make? That will have to wait for the next column! In the meantime…be generous and be kind!

Sam Watts serves as the CEO of Welcome Hall Mission  www.welcomehallmission.com  He serves on several non-profit boards and is an appointed member of the National Housing Council of Canada.  He is the author of Good Work…Done Better www.goodworkdonebetter.com

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