At a time when more funders are being more focused in their giving, legacy organizations would serve their interests best in the long run by being focused themselves.

by Richard Marker

Even after several years of regular posts, I find it unpredictable to know which of these opinion pieces get circulated widely. And indeed, quite flattered when they do.

The previous post: Starting with “Yes” or Getting to “Yes”  is one such. Quite a number of colleagues and informal syndicators in our philanthropy field seem to have found that it articulated an understanding of the New Philanthropy in a helpful way.

A longtime friend and onetime client challenged me to articulate the implications for legacy organizations and for those committed to the causes they represent. Will the directive and directed nature of the new philanthropists render them helpless or irrelevant? Should their funders behave in different ways? Should the organizations themselves re-cast themselves or reinvent themselves to be responsive to the new?

These are fair questions. After all, the atomized nature of philanthropy allows and fosters individual decisions regarding how we spend our charitable dollars. In the USA, the law underscores the non-judgmental and non-hierarchical nature of charitable giving. A gift supporting the hungry or homeless or ill or abandoned warrants exactly the same tax deductibility as support for an Ivy League University or a world-class symphony or a well-endowed museum. [Whether that should be the case has been the subject of much debate but not the subject of this post.]

It is also true that even the most enthusiastic advocates of the so-called New Philanthropy acknowledge that it is not without risk. Among them is faddishness. The philanthropy field is certainly as susceptible as any. Should support for “early childhood” suffer because “college readiness” is the cause of the day? How should we balance the valid and societally important mandate to respond to the variety of human needs in a predictable and high quality way with the recognition of the voluntary nature of philanthropic giving?

A second risk is the challenge of autonomy. Established umbrella organizations may be slow to innovate and have a plodding decision-making process, but it does mean that communal needs are addressed [not always met] and high-risk funding is diminished. It may be a less exciting way to give but it has the benefits of predictability and being less disruptive. For those who advocate “disruptive” philanthropy, this approach doesn’t work; for those who want stability, it does.

Nevertheless, the trends are clear. The systems of decision-making, the patterns of charitable giving, the nature of the sector are changing radically and permanently. No amount of romanticizing a more structured and coordinated community will bring it back. No guilt tripping will restore wholesale loyalty to legacy charities. “Noblesse oblige” will not supplant “making a difference” as the primary motivation for philanthropy choices.

What, then is a legacy organization to do?

1. Right-size: Much of the 20th century saw a concentration in the power and influence of a small number of umbrella regranting organizations. And they, in turn, saw themselves not simply as funders but as the central communal planners and gatekeepers. In the most extreme versions, they became virtual monopolies.

That development, though, has taken these organizations far afield from their early history and mission – to support a limited number of specific organizations and causes. Their 21st century success depends on these large umbrella organizations returning to a more modest and defined communal role. There is, I believe, an important role for these legacy umbrella regranting charities but to no longer try to be THE central agency or to have too broad a mission.

The process of determining what that more limited mission should be, and what will thus be precluded, has not yet happened in most places, and I am quite sure it will not be pain-free when it does. When it does it should ultimately lead to a mutual benefit. Funders will be able to understand where their venture and innovation dollars should be spent, and which of their dollars should support ongoing communal needs and institutions best served through an established entity. Right-sizing is knowing that one cannot be all things to all people, and being clear about what you are.

2. Demonstrate impact: The nonprofit and grantmaking parts of the philanthropy world are both well along in knowing how to distinguish in-puts from out-puts. But less far along in knowing how to judge true impact. This is especially true of legacy organizations which have so many mandates, so many organizational commitments, and such a diverse group of funders that they are hard pressed to show meaningful and persuasive ROI. That need though is very important. Funders can understand complexity and need not be patronized; they smell hyperbole. They even understand that big challenges will have multiple foci, each of which may reveal different impact, and, moreover, that long-term success is not always a straight line. Legacy charities will be taken more seriously by the “New Philanthropists” when the numbers which they show are not simply the vastness of their target markets, but the impact of the work that they do.

3. Simplify decision-making: This recommendation is NOT, I repeat, NOT a criticism of the necessary infrastructure necessary for any organization to do a quality job. So-called “overhead” is not what concerns me. What does is the typically plodding and overly burdensome decision-making process for volunteer involvement. Of course, not every legacy organization is guilty of this, but far too many are. Too many sincere and caring volunteers find that they are asked to attend too many meetings, are asked to address minutia, participate in task-forces and committees which take a very long time, and find that the need for consensus results in stifling creativity and risk. Consensus, study, balancing competing needs may be justifiable but the cumulative experiences for volunteers serves to discourage those who really want their own personal involvement to matter.

4. Don’t view innovation, or innovators, as enemies. The philanthropy sector must be committed to continual learning, and reinvention. Legacy organizations are the least agile and least equipped to do that. And that isn’t bad. That is rarely their role. Let others test out ideas, new models, and winnow new approaches. When they are ready for prime time, the legacy organizations should embrace them, but until then, they should play parallel roles.

4. Don’t be what you aren’t. I too often hear of legacy intermediary organizations establishing “venture” funds, or “innovation” funds, or the like. Sometimes they really are. But all too often these umbrella organizations have very different meanings for those terms than the rest of the philanthropy world. To give a group of “NextGen” the right to allocate a small amount of money to a pre-selected group of organizations, as happens, is hardly what venture philanthropists understand to be venture philanthropy. At a time when more funders are being more focused in their giving, legacy organizations would serve their interests best in the long run by being focused themselves. This may not excite all New Philanthropists, but it is likely to encourage those who respect clarity of mission to do so.

Change, certainly in the philanthropy world, is never sudden and radical. There are trends and fads, emerging priorities and emerging leaders, new approaches and established ones. As much as the New Philanthropy reflects a profoundly different and exceedingly exciting direction, one should not assume that all funders will suddenly become New Philanthropists, or that legacy organizations will suddenly disappear. But the environment has already changed. The legacy organizations that adapt appropriately will continue to have a productive future. Those that don’t may find themselves yesterday’s news.

Richard Marker teaches and advises funders from around the world through both the NYU Academy for Grantmaking and Funder Education and the Wise Philanthropy Institute, both of which he founded. His blog can be found at Wise Philanthropy.