Typically, I find that I, as with many of my colleagues who write about philanthropy, extrapolate from personal experience to develop insights into good grantmaking strategies, ethics, and impact. This time, however, the reverse is true: after years of grantmaking, and teaching about grantmaking, I have learned very important things about myself.

The issue: the value of failure.

For at least the last decade, anyone who has heard me speak about philanthropy or who has taken a course with me knows that I view private philanthropy to be society’s risk capital. By definition, risk means some possibility of failure. Good grantmakers needs to develop a tolerance that some percentage of their grants will not accomplish everything that they wished or that their grantees strived to do. Grantmakers who support start-ups, early stage organizations, new approaches to almost anything, need to accept that, if they are doing it right, some failure is not only inevitable but indeed desirable.

Even grants to established organizations and projects run the risk of failure. After all, every grant is a bet on the future. And nothing is guaranteed in the future. The market may crash and erode financial stability. A key staff person may leave. A public benefit organization [aka non-profit] may have new and vigorous competition. A highly competent staff may misread early indications of interest as real demand. Unanticipated variables serve to yield unanticipated results. It happens all the time.

Those of us who are funders need to be careful not to penalize these kinds of failures for two reasons: The non-profit was true to its proposal; it just didn’t work. And we as funders endorsed their proposal by funding them; we agreed that it was worth the risk. [I want to make a very real distinction between this kind of failure and that of a grantee that doesn’t do what they say they will do, or doesn’t engage the funder in significant changes in an approved project. Funders have every right to be annoyed and, in some cases, hold the organization financially accountable.]

Let us also make clear that funders themselves have been known to make failure more likely. When funders look at a budget, see that a project needs a certain amount of money and support to have a good chance to succeed; we should not then try to see how little funding we can get away with. Organizations are so hungry for support that they will often swallow hard and accept less than they know they really need. Funders should not be surprised if this project doesn’t succeed. This is not the kind of failure I applaud. But back to our topic:

Why is acceptance of failure so important: when properly examined, one learns what went wrong and what might be done better. It helps distinguish between a great idea poorly implemented and an idea which simply wasn’t ready for prime time. It helps avoid simplistic replication and encourages constructive application.

A case in point [of many]: Some years ago, when I became ceo of the foundation I used to head, one of the first challenges on my plate was to review a very innovative project which we were funding in collaboration with two other foundations. The creator of the project only reported wonderful things about his cutting edge methodology, the wide and prestigious acceptance of the project and the great emerging demand for the program. Before I arrived, a colleague at one of the partner funders didn’t buy it. Since our foundation was the lead funder, we initiated an independent evaluation of the program – and lo and behold – we discovered that almost everything the founder of the program told us was more or less true except that virtually none of the methodology, acceptance and demand had anything to do with the reason the program existed – in other words, to use the vocabulary of some evaluators: the reports were full of “outputs” but failed miserably with “outcomes.” The challenge for us as funders was to determine whether this was a failure of an idea or of implementation, a case of ego driven leadership, or something else. We decided that the idea was a solid one – but the founder was too fond of his own Kool-Aid to see that he had not delivered. A change in professional leadership, some more hands on supervision/direction by me, and a more specific set of expectations led to the program achieving much of what it was intended to do.

It would have been easy to cut the program but we funders chose to learn from our early mistakes. I am quite convinced that the program which emerged after the failure was much better and stronger than it would have been had it not failed in the first place.

This is but one example of many, and it is gratifying that there are a growing number of those in our field who are finally openly discussing the value of learning from what has either failed or significantly underperformed. In fact, I now believe that we can only do excellent funding if we are willing to acknowledge and learn from our mistakes, errors, failures, and shortfalls.

And crucially, since there are no external standards, accreditations, or public independent reviewers of the quality of grantmakers and foundations, any commitment to this kind of quality improvement in our grantmaking must come from within. By no means a simple goal. After all:

Since not everyone takes our courses, contracts with us, or even reads these posts [shocking, I know!], I want to add a word of empathy for those who staff or lead foundations. I fully appreciate that failure is rarely rewarded. Families may see themselves as stewards of very precious resources and legacy and want to be as careful as possible. Corporate foundations may be unwilling to take risks with shareholders’ money and are cautious with possible public fallout. Community foundations want to be identified as supporting the interests of the community and may not want to risk angering or disappointing potential supporters. I am not naïve nor unsympathetic with those who choose to follow a safer – if less adventurous – path with their grantmaking strategy.

But for those who are committed to truly “making a difference”, who recognize that risk can be healthy and rewarding, and who want to push their own grantmaking to excellence, understanding and tolerance of failure are indispensable. It is important that the early efforts to report on and learn from our failures be expanded. When others ask for more transparency in grantmaking, this should be window #1. The entire sector will be the better for it.

Readers whose interest is “philanthropy” and not about me might well stop here.

What does this say to me about me? The more I have learned about the real benefits of risk taking and learning from failure in grantmaking, the more it has helped me understand certain crucial decisions made or avoided in my own professional life.

What I learned was that, for most of my career, I was too risk averse. It wasn’t that I wasn’t ambitious but that my fear of failure overruled my drive for excellence. Certainly, much success has come my way, for which I am thankful and proud, but when I look back, I realize that there were too many occasions when I settled for the good or safe when I could have achieved excellence or made a real difference. My long personal list would be of little interest to readers and perhaps a little too self revealing, but a very few examples may be helpful to others:

• In the mid 1970’s when I was still in academia, I delivered a series of lectures on post-modernism and its impact on late 20th century identity. They were popular and well received. A publisher actually offered to publish them in a book. I froze [writers block?] – and some years later others began saying and publishing those same ideas. I frankly felt a sense of failure that others were saying what I had said earlier. Sadly it was another 30 years before I finally published my first and, to date, only book. What did I learn? That I was more afraid of possible criticisms than I was motivated to get those ideas out there. Big mistake. It might have enhanced the public discourse at an opportune time. Lost opportunities to make a difference.
• I always enjoyed public speaking, and had lots of opportunities since doing so was integral to my careers I always thought I had plenty to say, but couldn’t understand why I wasn’t getting the big invites. I felt like I was a failure in a part of my career that mattered to me a lot. It was not until Mirele helped me understand that indeed I was too inconsistent in my presentation style to be in demand. No one had ever told me that before – in fact I had file folders full of complimentary letters that led me to think I was doing just fine. It was quite late – but not too late – in my career that I participated in a mentoring program offered by the National Speakers Association and learned how to be a more disciplined and much more engaging speaker. Now much of my income comes from my public speaking; return invitations are the norm and not the exception. What did I learn? That no one except you and your spouse are really committed to getting you from “good” to “excellence.” I wish I had learned that much earlier. Big mistake. It might have enhanced my role as a thought leader. Lost opportunities to make a difference.
• Before becoming self employed a decade ago, I had been an employee [even if at a fairly high level] for 35 years. That decision was a bit of a risk I would not have taken earlier, but not relevant to these personal insights. What did surprise me was the response to things I said or wrote after I became my own boss. People, many of whom had known me for many years, told me that they never realized that I had such passion for certain political positions or such a commitment to social change and innovation. My ideas, passions, and commitments had not changed and I always thought they had been evident. Apparently I was too cautious. Of course, when one is an executive and working in organizational leadership, one needs to be self aware of what one says, and when. But in retrospect I overly self-censored and, remarkably, was unaware that I did so. I feel now that I failed those ideas and organizations which would have benefited from my more public articulation of support. What did I learn? That I probably was more afraid of incurring the anger of those who might disagree than providing leadership and insights to expand the public discourse. Big mistake. I was in a leadership role and did not exercise true exemplary leadership. Lost opportunities to make a difference.

The list could go on, but the underlying message is consistent. Risk aversion and caution have their place. But if one is committed to making a difference, of changing at least some part of the world, of having an impact to the extent of ones ability, then one must take risks, incur failure, and most important, learn from them. If philanthropy is much better for that approach, so can one’s own life and career. In both there may have been lost opportunities but in both it is never too late to learn.

Richard Marker serves as an advisor to foundations, independent funders, and not-for-profit organizations; he is a Senior Fellow in Philanthropy at NYU’s George Heyman Jr. Center for Philanthropy. Richard specializes in strategic philanthropy and planning and blogs at Wise Philanthropy.