While our sec­ond edi­tion of Mon­ey Well Spent con­tains many updates and improve­ments, it dou­bles down on the first edition’s unabashed com­mit­ment to strate­gic phil­an­thropy.  This approach gained con­sid­er­able praise, but it also received crit­i­cism, sug­gest­ing that we favored the head over the heart and did not pay ade­quate respect to grantees and ben­e­fi­cia­ries.

Our own view of the sup­posed head-heart dichoto­my is reflect­ed in a guide pub­lished by the Hewlett Foun­da­tion near the end of Paul’s tenure as pres­i­dent in 2012: “Out­come Focused Grant­mak­ing: A Hard-Head­ed Approach to Soft-Heart­ed Goals.” The basic point is that the choice of goals is a mat­ter for the heart, but the design of strate­gies to achieve those goals is for the head.

To begin with the heart: The social, envi­ron­men­tal, and oth­er val­ues that moti­vate phil­an­thropists are extreme­ly var­ied and lead to the pur­suit of a vir­tu­al­ly infi­nite num­ber of heart­felt goals.

Some phil­an­thropists hold reli­gious, moral or polit­i­cal views that mil­i­tate toward par­tic­u­lar goals. This is true for phil­an­thropists on both sides of the abor­tion issue, as well as for “effec­tive altru­ists,” who believe that their phil­an­thropy should be devot­ed to the most dis­ad­van­taged peo­ple of the world and to avert­ing glob­al cat­a­stro­phes.

Strate­gic phil­an­thropy has noth­ing to say about the choice of goals. Rather, it only comes into play after that choice has been made. For bet­ter or worse, the frame­work is value-neutral—as use­ful for Nation­al Right to Life as for NARAL Pro-Choice Amer­i­ca; as use­ful for the Brady Cam­paign to Pre­vent Gun Vio­lence as for the Nation­al Rifle Asso­ci­a­tion.

But once the heart has made its choice, phil­an­thropists must use their heads to achieve their hearts’ desires. Whether they devel­op their own strate­gies or scru­ti­nize those pre­sent­ed by a grantee orga­ni­za­tion, a suc­cess­ful strat­e­gy must have five ele­ments:

  1. Clear­ly defined goals
  2. Evi­dence-informed plans for achiev­ing them
  3. Capac­i­ty to imple­ment the strat­e­gy
  4. Pro­vi­sions for mon­i­tor­ing progress in order to make appro­pri­ate course cor­rec­tions, and
  5. Pro­vi­sions for eval­u­at­ing the ulti­mate suc­cess

Not sur­pris­ing­ly, non­prof­it orga­ni­za­tions, no less than retail sell­ers, use clever mar­ket­ing techniques—the teary-eyed child, the polar bear on an iso­lat­ed ice floe—to short-cir­cuit donors’ ratio­nal process­es. The donor who suc­cumbs to these images but actu­al­ly cares about results will be left with a bro­ken heart.

Nonethe­less, William Scham­bra, for­mer direc­tor of the Bradley Cen­ter for Phil­an­thropy and Civic Renew­al at the Hud­son Insti­tute, has been a per­sis­tent crit­ic of strate­gic phil­an­thropy, argu­ing that the focus on out­comes is anath­e­ma to com­mu­ni­ties and civ­il soci­ety:

[W]e need a vital local civ­il soci­ety, right in front of our faces, to draw us out of that indi­vid­u­al­is­tic iso­la­tion, to engage us in the affairs of our own imme­di­ate com­mu­ni­ties, where­in we learn through direct, dai­ly inter­ac­tion with oth­ers to become respon­si­ble, self-gov­ern­ing cit­i­zens. Our vast, bewil­der­ing, and ever-grow­ing pro­fu­sion of nonprofits—in all their naïve, ama­teur­ish, bum­bling, redun­dant glory—may appall those who want to see social ser­vices deliv­ered in a neat, order­ly, ratio­nal­ized and cen­tral­ized way. But Toc­queville would have said that this is a small price to pay for the edu­ca­tion in demo­c­ra­t­ic self-gov­ern­ment pro­vid­ed by our thick, organ­ic, local net­work of civic asso­ci­a­tions.

While Scham­bra views these mat­ters from the right, Bill Somerville, for­mer head of the Penin­su­la Com­mu­ni­ty Foun­da­tion, echoes his sen­ti­ments from a pro­gres­sive point of view, argu­ing that phil­an­thropists should not ques­tion the intu­itions of the staffs of com­mu­ni­ty orga­ni­za­tions.

Empow­er­ing a com­mu­ni­ty is a laud­able phil­an­thropic objective—but it is as dif­fi­cult to achieve as any oth­er. If your goal is to cre­ate a thick, organ­ic net­work of civic asso­ci­a­tions, then you are still faced with the ques­tion of how to accom­plish this. Would you just write checks to every group, spread­ing your mon­ey like mar­garine across the town? Or choose the biggest? Small­est? Those with reli­gious affil­i­a­tions, those with­out, or a mix­ture? Sin­gle-time capac­i­ty build­ing grants, or mul­ti-year com­mit­ments? Match­ing require­ments?

The point is that even if your goal is to have com­mu­ni­ty groups enrich the world by their own lights, you as a fun­der have real­ly impor­tant choic­es to make. We are not sug­gest­ing that you should sup­plant grantees’ judg­ments with your own, but rather that you can­not avoid mak­ing your own choic­es and judg­ments. So do it ratio­nal­ly, and then test the results.

One impor­tant devel­op­ment in the decade since the first edi­tion of Mon­ey Well Spent has been the emer­gence of “ben­e­fi­cia­ry voice” as a crit­i­cal way to ensure that phil­an­thropic strate­gies are tru­ly respon­sive to the needs of their intend­ed ben­e­fi­cia­ries.

At the same time, the tech­niques of “human-cen­tered design” have respond­ed to the basic insight that, whether you are design­ing con­sumer prod­ucts or social inter­ven­tions, you must immerse your­self in the lives of your cus­tomers or ben­e­fi­cia­ries to under­stand their moti­va­tions, needs, and behav­iors.

As we empha­size through­out Mon­ey Well Spent, and as we’ve recent­ly reit­er­at­ed, effec­tive strate­gic phil­an­thropy accords great respect to the exper­tise and auton­o­my of grantee orga­ni­za­tions as well as their shared ben­e­fi­cia­ries.

But our own expe­ri­ence is that all orga­ni­za­tions improve their strate­gies when they are required to make them trans­par­ent, explain why they think they will work, and sub­ject them to the scruti­ny of crit­i­cal friends. With this in mind, a phil­an­thropist can work to strength­en civ­il soci­ety. But this requires a thought-out grant­mak­ing strat­e­gy rather than the scat­ter­shot fund­ing of “ama­teur­ish and bum­bling” orga­ni­za­tions.

A dif­fer­ent com­plaint about strate­gic phil­an­thropy is that it entails using quan­ti­ta­tive met­rics, which press for risk-averse, short-term out­comes rather than the risk tak­ing essen­tial to ambi­tious phil­an­thropy aimed at social change. In 2004, Den­nis Collins, for­mer pres­i­dent of the James Irvine Foun­da­tion, wrote:

Hyper­ra­tional­ism” and “man­age­ri­al­ism” are tak­ing over the non­prof­it sec­tor, includ­ing phil­an­thropy. These new “isms” appear to be crowd­ing out a more val­ues-dri­ven, mis­sion-cen­tered approach to phil­an­thropy and replac­ing it with tech­ni­cal­ly based, effi­cien­cy-dri­ven, out­come-cen­tered process­es. In short, sup­plant­i­ng art with a pseu­do-sci­ence that imag­ines met­rics and matri­ces are real­i­ty rather than a set of use­ful but lim­it­ed tools…

One of the most per­ni­cious con­se­quences of this rush to pro­fi­cien­cy is the impulse to avoid, if not elim­i­nate, fund­ing to address big, com­pli­cat­ed, messy, seem­ing­ly insol­u­ble prob­lems, prob­lems rife with uncer­tain­ty, risk, and inef­fi­cien­cy, and projects whose poten­tial for fail­ure is high. Indeed, a  trou­bling fea­ture of the “new” phil­an­thropy is an enthu­si­asm to fund projects and activ­i­ties that are eas­i­ly quan­tifi­able and high­ly vis­i­ble, which may result in short-term “wins,” but do lit­tle to change the under­ly­ing caus­es of the prob­lems at issue.… The reluc­tance or inabil­i­ty of foun­da­tions to “swing for the fences” is dis­cour­ag­ing.

We entire­ly agree that social change efforts are not amenable to the sorts of cal­cu­la­tions appro­pri­ate for ser­vice deliv­ery orga­ni­za­tions. But a decade and a half lat­er, Collins’ fears have not been real­ized. On the con­trary, the years since his cri­tique has seen unprece­dent­ed phil­an­thropic resources devot­ed to long-shot, sys­tems-chang­ing strate­gies, includ­ing efforts to reduce glob­al warm­ing, estab­lish mar­riage equal­i­ty, reform pub­lic edu­ca­tion, reform the U.S. polit­i­cal sys­tem and the admin­is­tra­tion of crim­i­nal jus­tice, and reduce pover­ty.

Many of these efforts have been fund­ed by the most strate­gi­cal­ly ori­ent­ed foun­da­tions in exis­tence today, includ­ing the Lau­ra and John Arnold Foun­da­tion, the Open Phil­an­thropy Project, and the William and Flo­ra Hewlett Foun­da­tion. Read­ers who are sim­i­lar­ly inclined will find a pletho­ra of exam­ples in Mon­ey Well Spent, which devotes con­sid­er­able space to think­ing through grant­mak­ing in realms where the sys­tems are large and com­plex, the time hori­zons are long, and the con­se­quences of fail­ure are pro­found.

Strate­gic phil­an­thropy is premised on the belief that expert intu­itions informed by evi­dence will lead to bet­ter out­comes than intu­itions alone. It is an unfor­tu­nate fact that many intu­itive­ly obvi­ous strate­gies fail, not for the good rea­son of hav­ing made long-shot bets, but for want of thought­ful plan­ning, fol­lowed by mon­i­tor­ing progress. Strate­gic phil­an­thropy is essen­tial­ly a bet on the val­ue of ratio­nal deci­sion mak­ing. At a time when Enlight­en­ment val­ues are under siege in many oth­er domains, this is an impor­tant moment for phil­an­thropists to dou­ble down.