The less we understand what philanthropy is all about, the less our ability to have the impact that we want. Guest Phil Buchanan, the President of The Center for Effective Philanthropy, greatly advocates for the importance of philanthropy and the nonprofit sector and helps foundations and individual donors to maximize their impact. Today on The Discovery Pod, Phil dives deep into the link between thoughtful leadership and effective philanthropy, giving advice to leaders who are being pulled into starting their own organization. He lays down the difference between social profit and philanthropy and shares his perspectives on the “right” indicators of performance, the importance of “getting proximate” to the people within and without the organization, and the challenge of creating an organizational culture and processes to identify and pursue the best ideas.
Listen to the podcast here:
The Link Between Thoughtful Leadership And Effective Philanthropy with Phil Buchanan
On this episode, we have a special guest. To date, all of our guests have been CEOs of social profit organizations. We have one on the show who’s written a book about effective philanthropy, Phil Buchanan, the CEO of The Center for Effective Philanthropy. His book is called Giving Done Right. It’s a powerful contribution to the conversation about what constitutes effective philanthropy in the United States, Canada and around the world. Phil, welcome to the show.
Thanks for having me on, Doug.
There are very few people in the sector who haven’t read the book yet. Tell us a little bit about where the idea started to write this book and who you are hoping to reach with it.
I would only wish that everybody had read the book. We will see but thank you for that vote of confidence. I’ve been in this role at The Center for Effective Philanthropy for many years now. We’ve been focused on trying to help donors to be more effective in their giving. I have had a strong desire to put together what we’ve learned as well as what I’ve observed in one place. As I worked on that, I realized there’s an opportunity to write a book that is relevant, not just for the institutional donors that have been the bulk of our focus at The Center for Effective Philanthropy but also for individual donors. Some of the same lessons apply and that some of the same myths pervade both individual and institutional giving. I wanted to do what I could puncture some of those myths and offer useful resources in one place for people who, for whatever reason, find themselves with the opportunity to use resources for good.
One of the points that I thought was particularly powerful was you’re underlining the complexity of the problems that philanthropy is often trying to solve. Through that complexity, it’s hard to find the right answer and if there were an easy answer, we probably would have already found it.
Not everything can be easily disrupted in the jargon of Silicon Valley. It’s a little bit more difficult when you’re working on the things that have resisted market or government solutions.
I was talking to a colleague who’s the CEO of United Way who said, “A lot of the talk about disrupting philanthropy means making a mess.” We need to take what’s best from that but to stay focused on what we do best in the sector. One of the other pieces that were exciting to me or I was nodding along was when you talked about the difference between philanthropy and social profit and how different they are from running a business. You used consistently your experience of doing your MBA at Harvard as a reference point throughout the story. How long in your journey at Harvard and then immediately following, did you realize this distinction was as stark as you make it in the book?
I realized that before I got to business school. I had worked in higher education administration and one of the issues that I worked on as the assistant to the president of two different colleges was what are the right indicators of performance for us to discuss with our board to answer the question, how are we doing overall? It wasn’t as simple as financial statements or ratios calculated from financial statements. I realized it’s difficult to measure the ultimate impact of something like a college relative to the measurement of the business, which ultimately can be boiled down to profit or ROI. I was a little bit surprised when I got to business school about the pervading notion that the business lens was the answer to everything.
Even when I took a second-year elective on so-called Social Entrepreneurship, what we often had was a parade of folks with MBAs telling us that the nonprofit sector was broken and didn’t have effective leaders and what they needed was the hardheaded discipline of the business world. That didn’t quite make sense to me or resonate with my own knowledge or experience of the nonprofit sector. I went into strategy consulting after that in the corporate world and I thought, “There’s a lot of mediocrity everywhere.” The question is not one sector’s doing everything right and the other sector needs to emulate it. There’s a mediocrity in every business, in government and the nonprofit sector. There’s excellence and there’s worse than mediocrity in all three sectors but they’re all different. If we don’t understand their differences, it will lead us into some unfortunate errors that will undermine our ability to have that impact that we want to have.
I see a lot of social profit leaders drawn into that conversation into the finance and audit committee or the full board or the donor, “What’s our ROI on this project? What are we hoping to accomplish?” which are very different questions. What advice would you give to social profit leaders who are being pulled into that discussion?
[bctt tweet=”‘What are we getting for what we are spending?’ is a reasonable question, but a mathematical ROI is probably not sophisticated enough to provide a reasonable answer.” username=””]
It’s often with board members, whether in a full board meeting or a committee meeting, explicitly naming the ways in which measurement of a project. For example, let’s say related to helping young people to do better academically by providing low-income folks with great summer programming so that they don’t backslide to the same degree that they otherwise would and to a greater degree than more affluent kids. Measuring that is much more complicated than measuring the uptake on an app or the profitability of a company.
Naming that and not being afraid. Nonprofit leaders often get a little cowed by the bluster of the business types on their board and they decide to adopt the lexicon in the boardroom rather than saying, “To assess that program that I talked about, requires a level of sophistication in evaluation techniques that goes way beyond what you learned in business school. If we want to know if that program is helping young people to achieve greater outcomes than they otherwise would have, we can assess that but here’s what it would take.” Bring board members into the complexity and ask them to learn with you so that it’s not so easy for them to say, “Tell me the ROI,” as if it’s simple.
The ROI can be whatever we want to make it because it’s not the relevant measure.
The ROI, the Return On Investment, narrowly defined is not the right measure. I don’t like the use of that term in our sector, although sometimes what people mean is what are we getting for what we’re spending? That is a reasonable question. I try to understand what’s behind that question and then let’s talk about the complexity of answering that question.
There’s often the tension in a lot of organizations where for communicating to donors, you want to make the message as simple and as compelling as possible for them to access. With conversations with the board and understanding and being comfortable with the complexity of the work. The two things taken together often put social profit leaders in a difficult place, particularly when they have donors on their board. We’ve had a few founders on the show and people started their own organizations. I always ask them, “What advice would you give to somebody else who was considering starting their own organization?” Maybe not surprising to you, they all say either joking, half joking or very serious, “Don’t start your own organization.” That came to mind in reading the book because you talked about the advice for donors who are going to get into or starting their philanthropic journey. You encouraged them to get to the front lines, to understand and embrace what the issue is they’re trying to solve. How have you seen that applied in the organizations that you worked with at CEP?
The most effective donors, whether they’re individuals who are giving their own resources or whether they’re program officers at foundations recognize the importance of, as Bryan Stevenson says, “Getting proximate,” and that it is only when you spend time with the people who are affected by an issue that you understand. There are many mistakes that are made when that isn’t done. I tell the story which was reported in the media at the time to encourage Bill and Melinda Gates’ effort, to encourage poor people in developing countries to raise chickens through a partnership with Heifer International, to provide 100,000 chickens to poor people in developing countries and the government of Bolivia rejected the gift.
The Minister of Finance was quoted in the Financial Times or something saying, “Who does he think we are? Some backward people living 500 years ago? We don’t want your chickens.” The Guardian ran a great headline that said, I think it was, “Cluck you, Bill Gates.” I see a lot of positive things to say about the work the Gates Foundation has done in global health and the book, which has been hugely important but that’s a good illustration of the tendency to think that we know better than others on what they need. Even if we were right, it doesn’t matter because you can’t get anything done alone in our sector. There needs to be a shared appreciation for, “This is the right approach,” including by the people who are supposed to benefit from that approach and if you don’t have that it’s not going to work.
I try to write about donors who did get that, whether it’d be the program officer at the Stuart Foundation, who I described and piloted a new approach to working with foster kids that became a national model. She got there iteratively talking with people working on the front lines and talking with foster youth themselves about their experience. Whether it’d be Jason Hackmann, the individual donor from St. Louis who I described and wanted to do something about child slavery in Ghana. He didn’t just write a check, he made many trips and spent time with a small local nonprofit as well as large international nonprofits. He spent time with children who had been affected by that terrible crisis and became a much wiser giver as a result.
With the Bill & Melinda Gates Foundation, it’s back to the complexity of the sector. The annual letters that talk about all the things that they’ve got right but also highlight and underline the things that they’ve gotten wrong is a good lesson for all of us in the sector. These intractable issues that many of us are trying to solve are difficult. We’re going to make mistakes but it’s about learning from those mistakes and trying something different.
It’s also about trying to avoid mistakes in the first place when you can. Learning from mistakes is crucial. You’re never going to get it right. All these success stories involve iteration and then sometimes people write about embracing failure in the nonprofit sector the way they do in Silicon Valley. I feel like I’ve read twenty articles that say that and don’t sufficiently acknowledge that the human consequences of a mistake when you’re launching a weight loss app, that’s not a good example because there are real human consequences there. Let’s say you’re launching a silly game that people play on their phone. If the company doesn’t get it right because people don’t like the game, there’s not a lot of pain caused. If you get it wrong in our world, there can be real human consequences. That’s why it’s important to pilot and start small before going big. Sometimes it’s right to go big but when you know that something works, otherwise you can have unfortunate, unintended and negative consequences.
[bctt tweet=”It is only when you spend time with the people who are affected by an issue that you understand.” username=””]
There’s a lot that our sector can learn from the Silicon Valley ethos but the one that does not apply is fail fast. The opportunity cost of getting an organization off the ground or getting a program off the ground takes huge institutional effort. There are other real human consequences if it doesn’t work. It also implies that there is some randomness to finding the right answer. One of the things that you touched on in the examples in the book and something we see a lot in our work here at the Discovery Group is the organizations that are effective have a lot of things in common. In terms of how they’re aligned between their boards and their management teams, the culture of the organizations, the way they communicate with their donors and the way they report back.
The organizations that are struggling and don’t have that alignment have many different types of things going on in their organizations that are constructive and they are quite different. We know that there are best practices for developing these programs and we need to replicate that as much as possible across the sector. You have your own board and has been CEO for a long time, how have you managed to keep fresh with the board or handle the turnover that’s happened on your own board?
I sometimes worry about the dynamic of having been in the role a long time. That can create a situation which board members don’t hold someone’s feet to the fire and the way that they should. You have to try to actively counteract that by creating settings in which board members can ask very tough questions about whether the strategy is right by being totally open with the indicators that you’re tracking and pointing to what isn’t going well. Inviting the critique and inviting on a periodic basis the board to fire you is a good practice. “Has it been too long? Are you satisfied? What should be better?” Really pushing so that folks don’t feel that there’s anything undiscussable in the boardroom.
This is standard accepted best practice. The executive sessions at every meeting that start with the CEO present and end with the CEO not present are crucial. If board members are uncomfortable with something and for whatever reason, they don’t want to say it in front of me, they can say it not in front of me and the chair can talk to me about whatever the issues are. It’s a challenge to get the balance right. Once you’ve got traction and some things that are working that you think are having influence in the direction that you want to have influence, you institutionalize that, you’re doing that well and you’re constantly seeking to iteratively improve that. It’s a challenge at the same time make the space for new thinking, new initiatives and new ideas.
We’ve worked hard to do that in a variety of ways with both our board and staff. I’m sure we don’t get it all the way right. With our staff, for example, we have a week in which everybody will work on something that isn’t what they normally work on and they’re going to decide, it’s going to be an innovation. It’s got to advance our goals as articulated in our strategic plan. Other than that, people can do whatever they want. There’s no need to check with anyone and we’re going to see what happens. You’ve got to break out of the norm, with board and staff. The norms and habits you get into in terms of your daily work and create that space for blank slate thinking.
Can I take a guess and assume that your CFO is probably the least comfortable with that?
There are some people I don’t want to implicate any particular person. Not everybody necessarily thought this was the best idea when they first heard about it but mostly everyone’s pretty excited about it.
That’s a great way to mix things up for the management team. How have you personally as a leader been able to keep things fresh over several years?
My role has changed so much because, in the first few years, we were only a few staff. It was very different. Partly, it is true that it’s only been for the second decade that things felt stable and I was playing a normal CEO role, whatever that means. Looking for those new challenges and ways to push to have greater influence, whether that’d be by seizing new opportunities, moving beyond the assessments that we do at CEP. Like our grantee perception report to provide more customized advisory services to foundations and broadening our audience as we are to reach individuals and folks who might not be doing or giving through a foundation. The book has also been a huge project in the last few years that has very much kept things fresh for me.
As a leader, how do you find those new ideas or that inspiration to keep the energy up in focus strong?
[bctt tweet=”There is a tendency in the social profit sector to think that we know better than others on what they need.” username=””]
We have a very open and participatory culture with board and staff in which we’re looking for ideas wherever they may come from. We have an advisory board that we’re always using to try to bounce our ideas off and also solicit new ideas. Including people you disagree with is important to keep the thinking fresh. Making sure to invite debate and sometimes we go so far as to literally assign people different roles so that we can stoke a debate about a particular topic. There are a lot of different ways I think. I don’t feel I am generating good ideas for CEP. I see myself as responsible for creating the culture, climate and processes that lead us to be able to identify the best ideas to pursue and then to pursue them.
One of the things and you’ve probably seen this in the sector as well, that feeling of it’s lonely at the top and you meet CEOs or Executive Directors, who exhibit all the signs of isolation within their own organization. Aside from what that means for the organization, for them personally, they often seem worn out or near burnout on a fairly regular basis. Keeping things open as you described is probably a good protection against that.
It sounds such a cliché but relationships are key. Nothing energizes me more than having lunch with whoever happens to be having lunch in the kitchen in our office and talking to someone who’s six months out of college, wanted to work at CEP and learning from them. Over time, you realize how you want to be able to turn to them. There are people who I will call for different kinds of questions or problems come up and know that they’re there to talk things through with me and maybe I do the same for them in whatever context I can be useful. That’s the heart of it. It’s those relationships that are built on trust and that allowed you not to feel isolated and then, of course, to cultivate the other parts of your life so that there are other parts of your life other than work and that you have relationships in your life in which you don’t talk about work is also important.
It’s to have at least one or two of those.
It’s stuff you read that has nothing to do with work that’s so important. I’ve seen people who their 24/7 life is their work and every conversation, everything they read and that’s not healthy long-term.
It can contribute to myopic thinking in a pretty quick way. If you’re only thinking about one thing or one set of issues, you’re going to miss a lot of the connections that are going to help you solve those issues. What can your team do to earn an extra gold star with you? As that new person out of college that wanted to work at CEP, what are you looking for?
I love it when people see opportunities contribute that are outside the bounds of the job description and they seize the opportunity. Another thing that may be related is when people help somebody else who needs help with something. This is something that’s so important in our culture. If somebody is struggling, it’s taking them longer to learn something or there’s some particular analytic approach that we use here that isn’t coming easily to that person. See the people who rally around that person and say, “I’ll help you through it,” or “I’ll sit with you in a conference room for a couple of hours,” or “We’ll do it together,” or “You’re nervous about that presentation. Why don’t you practice it on me?”
That’s what makes organizations strong is when people are motivated and inspired to think about something bigger than their own individual narrow career, self-interest or whatever. Sometimes that comes through in powerful ways. I don’t think I appreciated this until I started at CEP. The real test of the organizational culture is when someone goes through something terrible in their life and the rest of the organization responds and rallies around that person so that things can be not going to be good for that person during that time but they’re less bad than they would otherwise be. I always find it inspiring to see that. That’s become an important part of our culture that everybody here recognizes that we’re all humans. Life is complicated and full of ups and downs. Sometimes the thing that’s due next Wednesday is a lot less important than what’s going on for somebody, then other people can step in and get that thing done so the other person can do what they need to do. Knowing that things will probably flip around in terms of who needs what at some point, you’ve got to take the long view on this stuff.
In the book, you talked a lot or you mentioned several times this concept of collaborative dynamics. It sounds like you’ve done a good job of building that into your own organization.
I hope so. There is a lot of cult of personality leadership in every sector and there is a need for the person who’s in the chief executive role to often be like an external voice and to be out there. It’s important not to overly fixate on any one individual within a team or a group and to cultivate the larger good and the organization as a whole. I try to create an environment in which that can happen or help create it. I can’t single-handedly do much of anything and that’s the point.
[bctt tweet=”We learn from our mistakes because all these success stories involve iteration.” username=””]
Those collaborative dynamics reflect the important role that The Center for Effective Philanthropy plays in the sector and with large funders.
I certainly hope so. For example, as we have studied strategy and written about strategy, we have tried to suggest that. It goes back to what we were talking about before, those differences between the business and philanthropic context. Whereas in business, it’s zero-sum and competitive and you’re focused on your strategy as your strategy only. In this work, it’s got to be shared to the point of the story about the chickens that I mentioned. We like to try to bring foundation leaders together in various ways. Through our research, what we’re often doing is elevating the voices of folks, like grantees who have to be a key part of the collaborative effort to getting things done. The best examples of philanthropic success in the US and Canada were as it often is ahead of the curve on this one relative to the US but on the issue of marriage equality, it wasn’t one donor, one foundation or one nonprofit that played that key role. It was a collaborative of funders that pooled $153 million across a number of different institutions and decided to pursue a shared strategy. That’s the way real progress happens.
You have a truly unique perspective on the sector given your role and you are a very thoughtful leader. It comes through in the book. Given your perspective, if you could change one thing or one way of thinking, what would that be for the sector?
It’s so hard to pick one but what I’m thinking a lot is who’s in the boardroom at both foundations and nonprofits. Here in the US, the lack of diversity on the boards of many large foundations for instance. I’m talking about racial diversity and diversity of experience are inhibitors to greater effectiveness and impact. If I could pull one switch and make one change, it would be the change who’s in those boardrooms. That’s often though not always true at nonprofits as well. It isn’t that we shouldn’t have business folks in boardrooms at foundations and nonprofits. We should but the balance should be different. We should place much of a greater priority on, for example, the community based nonprofit leader’s experience. Maybe they came out of the community, maybe they first encountered the nonprofit where they work because they were a recipient of services and they’re running it. What would that person bring to the boardroom of a foundation? A ton and I’m concerned about how little improvement there have been in that area at least in my time in the sector, based on the statistics that I see.
With a little bit of magic left in the wand, how do we get started? How do we start to make that change?
I wish I knew. There are some foundations that are doing this well and we can hold them up whether it’d be foundations no one’s ever heard of outside their region. Like the Hyams Foundation in Boston or foundations that everybody’s heard of that have granted they’re household names but real leaders who come out of community on their board, like the Ford Foundation. There are foundations like those that have prioritized and been able to get to a greater level of diversity in the boardroom. They can tell their story and show people how they did it. That’s probably part of us continuing to raise this issue. Sometimes in various ways and this is hard for people to do. Sometimes bowing out ourselves when we’re not the right people for something and saying, “You’ve got that experience covered,” in my case to say, “Do you need another white dude pushing 50 on this board?” I don’t want to be a reductionist and make it all about demographic characteristics but there is a time to say, “Thank you but what if you get a little more creative in who you were thinking about for that particular opportunity?”
Like so many issues we are trying to address in the sector, changing the sector itself is a complex long-term proposition. I want to remind everyone to go get this book, Giving Done Right: Effective Philanthropy and Making Every Dollar Count. It is an important contribution to the sector and to the perspective of all that we can accomplish through philanthropy and in the not for profit sector. Thank you very much for writing this book and thank you for being on the show.
It’s very kind of you. Thank you for having me.
- The Center for Effective Philanthropy
- Giving Done Right: Effective Philanthropy and Making Every Dollar Count
- Bill & Melinda Gates Foundation
- Hyams Foundation
- Ford Foundation
About Phil Buchanan
Phil Buchanan, president of CEP, is a passionate advocate for the importance of philanthropy and the nonprofit sector and deeply committed to the cause of helping foundations and individual donors to maximize their impact. Hired in 2001 as the organization’s first chief executive, Phil has led the growth of CEP into the leading provider of data and insight on philanthropic effectiveness. CEP has been widely credited with bringing the voices of stakeholders to funders and with contributing to an increased emphasis on key elements of effectiveness.
Phil is the author of Giving Done Right: Effective Philanthropy and Making Every Dollar Count, released in the spring of 2019. He is a co-author of many CEP research reports, a columnist for The Chronicle of Philanthropy, and a frequent blogger for the CEP Blog. Phil is also co-founder of YouthTruth, an initiative of CEP’s designed to harness student perceptions to help educators and funders accelerate improvements in K–12 schools and classrooms. In 2016, he was named the Nonprofit Times “influencer of the year.” Phil serves on the board of directors of Philanthropy Massachusetts.