Strategic vs Tactical Philanthropy

The best thing I read this week was Sean Stannard-Stockton‘s blog post, “An Investment Approach to Philanthropy.” In it, he articulated a favorite theme of his — strategic versus tactical philanthropy — in a way that felt very clear to me.

Here’s my two line summary:

  • Strategic philanthropy is about trying to solve social problems
  • Tactical philanthropy is about investing in organizations trying to solve social problems

Sean was trying to articulate the difference between the two approaches without passing a value judgement, a tough proposition considering the name of his blog — “Tactical Philanthropy.” I think many of the folks who commented on his post got caught up in that, which is too bad, because they’re missing out on a very provocative question:

Is it possible to do both effectively?

Sean states that the competencies required to do these things are very different, and he suggests that it is very hard (but not necessarily impossible) to do both effectively. I’m not sure why people would find this such a troubling proposition. It seems to me that this insight helps unravel a number of fundamental tensions that institutional philanthropy often faces.

One of those is around leadership. Foundations want to empower other leaders, but in doing so — through convenings, through research, through hiring very smart people — they often become leaders themselves. What follows is this awkward dance where foundations either avoid exerting their own leadership for fear of overpowering those they’re trying to empower, or they exert their leadership too strongly, unintentionally reinforcing a power dynamic that is very hard to circumvent.

Choosing to focus on either strategic or tactical philanthropy, but not both, could potentially resolve these tensions. For example, a funder could decide to focus exclusively on creating systemic, network-oriented change by funding convenings and research and not investing in organizations. That would allow those foundations to establish more open, authentic partnerships with people who might otherwise be depending on those same foundations for their livelihood and are behaving accordingly.

Accountability in the Social Sector

Nokia CEO Stephen Elop wrote an internal memo recently that’s been making the rounds. In a nutshell, he writes that Nokia — the long-time market leader in mobile — is in danger of losing its position, and that it needs to change or die.

His memo is remarkable for its urgency and candor. It reminded me of a pivot I got to witness first-hand in 1995, when Microsoft admitted that it had missed the boat on the Internet. In the ensuing six months, it ended up dominating a market that it had been completely ignoring.

Reading the Nokia memo got me wondering about nonprofits and foundations. Has there ever been a similar pivot by a philanthropic foundation or a large, well-established nonprofit? Will we ever see one?

My guess is that the answer is no, although I’m anxious to hear stories to the contrary. There are no widely agreed upon ways of measuring accountability in the social sector, and thus, there is no accountability. The platform is burning, but everyone is on the same platform.

In contrast, in the for-profit world, winning and losing is defined by market share. Revenue may be problematic as a proxy for value, but it keep the whole system moving. Companies are accountable for what they’re doing now, and those that get complacent eventually lose.

In the absence of structural incentives for change, leadership becomes even more critical. Institutional philanthropy is in a wonderful position to be these leaders, and, by and large, they’re taking a pass. Foundations are wonderful at thinking deeply about very hard problems, but they are very poor at modeling change. (Last year, Monitor Institute published a great report suggesting how foundations can start doing this.) This is a sector that badly needs it.

I had an interesting Twitter exchange on this topic with Jeff Lindsay and Philip Neustrom, which motivated me to flesh out my thoughts here. Philip pointed me to Van Jones’s 2007 keynote speech at the Craigslist Foundation’s Nonprofit Boot Camp, where he talked about the importance of brutal honesty in the nonprofit sector. Read the whole speech; it’s wonderful.

Also, Sean Stannard-Stockton and Lucy Bernholz recently had a fascinating exchange on ways to introduce more accountability into the nonprofit sector.