Philanthropy Is a Team Sport
By Richard Crespin
Great investors invest in great management teams. Great philanthropists should too.
In both business and social innovation we hear a lot about “failing fast, failing forward.” We hear less about how to fail fast and even less about how the relationship between the investor/entrepreneur and the donor/ social entrepreneur need to function for intelligent experimentation to occur in the first place.
I’ve never met a venture capitalist or private equity investor who invested in a great new gadget or business model. They invest in great management teams with great gadgets and business models. Yet, a quick review of the literature on the failures of philanthropy shows what Michael Hobbes, called a repeated cycle of, “[e]xciting new development idea, huge impact in one location, influx of donor dollars, quick expansion, failure.”1
Fear undermines innovation. Eric Reiss2 preaches the Gospel of the Pivot – failing forward by quickly changing the business model to deal with the realities of the market. At CollaborateUp Academy – an intensive course on Lean StartUp for social entrepreneurs and intrapreneurs – we hear dozens of stories of donor/social entrepreneur relationships that undermine the ability to pivot. The donor funded the idea or the gadget, not the team, so the team freezes in fear, terrified that an honest conversation about the need to pivot will get their funding pulled and earn a permanent black-mark on once-promising careers.
Countless great companies started as one thing but morphed into another when their original idea met the hard reality of the market. Instagram started as Burbn, a feature-rich check-in app like Foursquare. One feature – photo-sharing – became the whole company. Twitter (originally called Odeo) ditched its original podcast- subscription service when Apple launched iTunes. Even off-line firms like Suzuki pivot, going from making looms to making motorbikes, jet-skis, and ATVs.
That kind of agility requires the confidence that pivoting won’t doom the management team with current and future investors. Unfortunately, philanthropy doesn’t work the same way. Numerous NGOs are right now clinging to bad ideas out of fear of the funder’s misplaced wrath.
If anything requires agility it’s solving big social and environmental problems. The people tackling them need to quickly conceive, launch, and test ideas without fear that a failed experiment will mean a failed career. Which means funders need the patience to see ideas tested before scaling up.
Remember the PlayPump? A merry-go-round that used kid-power to pump water3, the PlayPump first launched in Zambia, and as Hobbes goes on to point out, it worked well there but for a host of reasons was doomed to failure in other African countries. But the swing-for- the-fences mentality of some donors failed to take into account the need for further market testing before scaling. 4
We can break this cycle by remaking the social compact between philanthropists and the would-be problem solvers they fund. It starts with our collective attention spans. We naturally gravitate to “gadgets” and “quick fixes” reducible to bumper stickers or PowerPoint slides.
It’s natural but not useful. For our biggest problems, if it’s easy, it’s already been done. We need long-term, systems-level approaches: complex solutions to complex problems. That takes a lot of experimentation; a lot of failure. So what to do? Here are four things you can do:
1) Research. If you’re a funder, and not just a billionaire philanthropist, if you give to any charity at any level, research the management team. It’s trite to say, “treat philanthropy like investment,” but recall one of the fundamental lessons of investing: back great teams, not just great ideas so do your research. Tools like GuideStar and Charity Navigator help, but you can’t learn everything you need to know from their ratings any more than you can learn everything you need to know about a stock from Morningstar ratings.
2) Patience. After you research your selected management team, let them know you’ll stand by them through their experiment-and-pivot phase(s).
3) Courage. If you’re a would-be problem solver, have the courage to tell your funders that it’s going to take experimentation to solve the big problem you’re tackling. Set their expectations from the start.
4) Honesty. No matter what role you play, have the courage to tell the bare-naked truth about successes and failures. Put the data in the open so everyone can learn from it.:
• Short term vs. long term, like NeoNics where benefits accrue to some near term, but may harm others over a longer time.
• One vs. many, like any utilitarian problem where what benefits the majority must be weighed against that which benefits a minority or an individual.
• Truth vs. loyalty, like when a corporate executive finds her company may have done something wrong and has to weigh her loyalty to the company against her obligation to disclose the information to the public or the authorities.
• Justice vs. mercy, like the immigration debate raging now where we must weigh the truth that illegal immigrants broke the law and the obligation to show mercy by not breaking up families through deportation.
I know these things aren’t easy. The hardest thing any human can do is look bad in front of another human and that’s exactly what I’m suggesting. But you’re not alone. In fact, we’ve created a community – our Collaboration Nation – of people just like you. Join us: www.collaborateup.com.
3. Hobbes, Michael. “Stop Trying to Solve the World – Big Ideas are Ruin- ing the Developing World,” The New Republic, November 2014.
4. Hobbes, Michael. “International Development is Broken – Here’s a Plan to Fix It,” The New Republic, November 2014.
Posted March 9, 2015 in 25115in Philanthropy