13 min read

Michael E. Hartmann talks to the president of The Center for Effective Philanthropy and author of “Giving Done Right: Effective Philanthropy and Making Every Dollar Count.”

People who give their money away naturally want it to do some good. Maybe as naturally, there’s never any shortage of other people willing to give them advice about to whom that money could or should be given, and how those grants in particular would do the most good.

When Phil Buchanan offers such advice, he does so on the basis of almost two decades’ worth of experience. Buchanan is president of The Center for Effective Philanthropy, which was founded in 2001 and provides research and performance-evaluation services to some of American’s largest foundations.

His new book Giving Done Right: Effective Philanthropy and Making Every Dollar Count essentially summarizes the practical guidance he offers, on the basis of this experience. In the process, it warns against trying to apply business acumen to the problems faced by philanthropy and nonprofits. The book comes out, moreover, amidst a wave of cynicism about billionaires and their philanthropy. Some observations of mine on the book are here. 

Below is the edited transcript of a discussion Buchanan was kind enough to have with me in mid-June.

 

Hartmann: So how’s the book tour going?

Buchanan: It’s been good. People have said nice things nice about it, at least to my face.

Hartmann: Is the book tour a more fun part in all of this than writing the book?

Buchanan: Oh, I enjoyed parts of the process of writing it a lot and then other parts were painful. And then I would say the same is true for the tour.

It’s been fun to get out there and to have people say, “Boy, this book is really useful to me,” especially people who are just getting started in philanthropy. I feel like maybe if I help them avoid one predictable mistake they would have otherwise made, that's gratifying.

The other thing, and maybe we’ll get into this, but I didn’t really anticipate that the book would come out amidst such a degree of cynicism about philanthropy. Obviously, you could see some of it coming, but not to this degree. So that has been interesting and has made me really motivated to try to get the word out, to counter what I think is kind of a dangerous level of cynicism about giving back.

Hartmann: I do want to talk about that, yes, but let’s just quickly talk about you and The Center for Effective Philanthropy a little bit first. What did you do before you came to the Center?

Buchanan: I wanted to be a journalist when I was in college. I had a few jobs out of right out of college, including being a reporter for a very short period of time for a health-care trade publication in D.C.

Then the president of the college that I went to, Wesleyan University in Connecticut, asked me to come work for him as his assistant. I did that for a year and then worked for the interim president for a year after he left. The interim president became the president of Mount Holyoke College, and I went and worked for her there for about three and a half years as her assistant. That was a great experience.

Then I went and got an MBA and worked as a strategy consultant at a firm called the Parthenon Group, a boutique strategy-consulting firm. It was founded by some guys who had left Bain at the time. It was maybe 120 consultants.

Hartmann: How did this higher-education and business-related experience before you got to The Center for Effective Philanthropy help you once you got to the Center?

Buchanan: I think it definitely allowed me to see firsthand how different things are when you are in a zero-sum competitive environment versus when you are in an environment in which collaboration and shared strategy are actually crucial to success—when you’re in an environment in which the ultimate measures are captured in the financial statements versus when you’re in an environment in which the financial statements really don’t tell you what’s most important.

 

A new organization

 

Hartmann: And then The Center for Effective Philanthropy …

Buchanan: So I heard that there was a job listing for the executive director of a basically not-yet-formed organization that had two co-founding board members. One of them was Mark Kramer, who had already established the Foundation Strategy Group—a consulting firm. The other was Michael Porter of Harvard Business School—maybe the most well-known, for better or worse, business-school professor in the world.

They had had some difficulty fundraising for their initial idea, which was more or less to promote their notion of what effective philanthropy looked like. But then a couple of other people got involved, including Joel Fleischman, who was then at Atlantic Philanthropies. He said, “Why don’t you start by doing an initial research study on performance assessment in the foundation world?” Atlantic agreed to provide some initial funding, as did Packard and Surdna—a grand total of $345,000.

In retrospect, I don’t know what I was thinking, but it seemed like a very cool opportunity. And so I was hired to do that initial research project and then create an organization, although the funders weren't even sure there should really be an organization. They provided project support for that initial effort.

Relatively early on, it was clear to both me on the one hand and to Mark and Michael on the other that our visions of what the sort of promising path was for The Center for Effective Philanthropy were completely different. There were some other early board members who, it turned out, to my pleasant surprise, agreed with me that there was a tremendous appetite on the part of foundation leaders for more and better data about practice and that there was a big opportunity for CEP to contribute. So Mark and Michael left the board fairly early on, in 2004.

Hartmann: When did CEP start doing its signature Grantee Perception Reports?

Buchanan: In our initial research study in 2001-2002, we sort of piloted the idea of a confidential comparative survey of grantees. Actually, the model in my head was the student survey data we had looked at Wesleyan and Mount Holyoke.

The reason that was a good analogue is that that data was meaningless without comparative data, because people generally rated toward the high end of an absolute scale when thinking about their college experience, because college is pretty fun. When you add the comparative data, all of a sudden, things take on a different meaning. I said to my colleague Kevin Bolduc—who I worked with at Parthenon and who came over with me to CEP and who’s still here—“What if we did like something like the comparative student surveys that that I’m familiar with from my past work life, but for foundations and with grantees. So we experimented with that and then offered it up as a product in 2003.

The Rhode Island Foundation, the community foundation in Rhode Island, was actually the first to raise their hand and say, “We’ll do it.” We had unexpected level of uptake in that first year. I think we had 23 foundations sign up for it in the first year, and I remember I had told the board that maybe we’d have eight.

There are a lot of reasons for that. People wanted feedback. They knew that they weren’t getting meaningful feedback, because they’re surrounded by people who tell them what they think they want to hear. Also, the context was one at that particular moment of some increased scrutiny, on the part of both media and Congress, of foundations. I think some foundations may have been looking to see what they could do to demonstrate that they were holding themselves accountable and that they were open to feedback.

Hartmann: Do you see foundationsas clients, or is that not the proper way to be thinking about it?

Buchanan: Well, about half our budget is from grant funding, which supports a wide range of different research projects. All our research reports are on our website. They’re free for download on topics from foundation-grantee relationships to foundation strategy, all kinds of different topics.

The other half is fee-for-service, earned revenue. It’s private foundations or community foundations commissioning Grantee Perception Reports or our other assessments (such as our Applicant Perception Report or Staff Perception Report) or more-customized advisory services of various kinds, mostly related to either survey work or benchmarking and data analysis.

We have worked with, I believe, over 350 unique foundations at this point. We've worked with a majority of the largest 100. In any given year, we work with over 100. We are increasingly seeking to broaden our audience to include donors who might not be using a foundation as their vehicle for giving.

Hartmann: This might be just another word-game thing, but would it be improper for me to consider you part of “establishment philanthropy” in America? Really, that’s you whom you serve.

Buchanan: Well, yes and no. God forbid anyone take on the moniker of “establishment,” but yes, we work with well-established foundations. But I do think it’s also important to note that we work with a lot of brand-new, emerging foundations and the donors behind them. That’s the thing, right? Things change very quickly, so yesterday’s newcomer is tomorrow’s establishment foundation.

We also do a lot of sort of informal advising. I can think of three different major foundations that are getting established where we’re in conversations with folks about how they might think about that. In one case, the foundation doesn’t even have a website yet. They’re just getting started.

I guess I would just say we work with both the brand-new folks, as well as the folks that have been around a while.

Hartmann: Would the ideological worldviews of the foundations for whom you do research and work be diverse or would they be considered more on one side than the other? Any conservative foundations in there?

Buchanan: Oh, sure. I mean, it all depends how you define these terms, but yeah. We work with the Walton Family Foundation as a client. They’ve also been a lead sponsor of our conference last three years. I think there is a fair amount of ideological diversity. I also think there’s probably a lot of foundations where it would actually be genuinely difficult to say where they are on the political spectrum.

In fairness, we probably work with a higher number of folks who an impartial person might categorize as left-of-center than right-of-center, but we've certainly worked with a diversity of folks, including some that are more conservative.

 

Power, profits and nonprofits, and people’s perceptions

 

Hartmann: Your book says “givers don't have customers,” but aren’t CEP’s Grantee Perception Reports just essentially like customer surveys? What's the difference between those and the kind of consumer research that companies have to do to survive? If grantees aren’t customers, in other words, why should foundations be so solicitous of them?

Buchanan: I think that the similarity is that it’s feedback from people who are really important to your enterprise and to achieving your goals. The difference, and it’s a profound difference, is that the money is flowing in the opposite direction.

Therefore, the power dynamics are completely different, which is why I tell the silly story in the book of my family at a restaurant where there were mice everywhere and the fact that I felt no hesitancy about slamming that place online, even though they would have known it was me because I was just there and I was the guy making a scene about them. Actually, that’s taking too much credit; my wife probably made a bigger scene than I did. We collectively made a scene together.

I would not slam a program officer online at a particular moment in time because they might know I just had the bad interaction with them, which is why the Grantee Perception Report aggregates up many, many perspectives collected at particular moments in time. It’s much safer to provide feedback in that way. You need that vehicle because the dynamics are different because, again, the money’s flowing in the opposite direction. I don’t mean to be overly simplistic about it, but to me, that’s the difference.

Hartmann: On the point that business is not like philanthropy, isn’t there a lot of business that’s not like other business? “Business” is a wide swath. Might there be somebusinesses that are kind of like the philanthropic exercise and others that aren’t?

Buchanan: I have to give that deeper thought. I think I would just jump on the phrase you just used: “business is wide swath.” Yes! Which I think is exactly why it's not helpful to say to nonprofits or foundations, “Act like a business,” because I don’t know what that means.

Whether it’s the law firm or the dry cleaner, they’re really different, but they’re both businesses. I don’t want to take this to some kind of absurd extreme where I say you can’t possibly learn anything across the business-nonprofit boundary, because of course you can—but I but I do think that it’s fundamentally different when your ultimate objective is something other than profit.

Hartmann: Your book recommends that monied people with experience in business not automatically think they can do philanthropy as well. What’s a good example of someone with experience in business understanding that distinction and maybe sort of applying its lesson?

Buchanan: Warren Buffett would be one example. He could have established a foundation of his own, but he decided to give his money to an existing foundation. I think another example might be Mario Morino, though he came to understand the distinction only after trying to bring his business knowledge to philanthropy. He then opened himself up to know the real work and learning that is required to get good at something different.

Michael Jordan was a great basketball player. He turned out not to be a great baseball player.

In most domains, we recognize that being excellent at one thing does not necessarily mean you're excellent at another, different thing. But somehow, in philanthropy, if you’re Sean Parker, you can write an op-ed and say, “I've got the new approach to philanthropy. It's hacker philanthropy.” Because I’m a hacker. You get a big  op-ed in The Wall Street Journal before you've actually done any philanthropy. It’s very strange.

Hartmann: Are conservatives maybe more susceptible to this malady? I don’t know.

Buchanan: I don’t either, actually. A lot of the Silicon Valley folks who enter with much bravado about how they’re going to apply their startup secrets to philanthropy or whatever, then realize it’s way harder than it looks, they might be considered liberal or libertarian. I don't really know.

 

Resources and reality

 

Hartmann: How do you place your book among the other, I think harsher critiques of philanthropy that came out when your book did? I’m thinking of Anand Giridharadas’ Winners Take All, Rob Reich’s Just Giving, and Edgar Villanueva’s Decolonizing Wealth. Have they sort of “outflanked” you in harshness?

Buchanan: Well, it’s so funny, because I think my book is actually harsher about specific instances of philanthropic failure than any of the three others. I didn’t know how people would react to me saying I can’t understand why so much money is given been given to Teach for America, for example, given that I don’t think they’ve delivered results that remotely live up to the hype. Or how people would respond to the degree to which I critique the Gates Foundation and its work in education. And there are some other things that I wrote about without naming folks for various reasons.

But I also write about some great successes and examples that I think we can learn from.

My book is different. To me, it’s not better or worse. The goals of each are different. My book is more pragmatic. It’s rooted in the reality that here we are on planet Earth, where there are a lot of folks with a lot of resources and they can now choose what to do with them. And we can have all kinds of debates about whether they should have been taxed differently or how the money was made, but now here they are and they have a choice whether to give or not and they have a choice whether to do the hard work to learn how to give effectively or not. And that has enormous consequences for the vast and diverse range of nonprofit organizations doing, in some cases, really important work in communities and on issues in our country.

Entire critiques of philanthropy are being written without any discussion—literally, no discussion—of nonprofit organizations that are supported by philanthropy. Now here we are today and we’ve just learned, because the Giving USA numbers just came out, that indeed giving declined in 2018 relative to 2017 in inflation-adjusted dollars. It’s probably only going to get worse as people fully internalize how changes to the tax code will play out for them.

We can talk about what the capital-gains tax rate should be, and we should talk about that, but that isn’t going to affect people who already have their wealth. I think we should be able to kind of have both conversations at once, and I think there’s been kind of an odd conflation of frustration with inequality, and with our approach to taxation, with a sort of broadside against philanthropy.

Hartmann: Sounds like you you’re having to defend philanthropy, as a concept, more than you thought on your book tour.

Buchanan: I want to be critical of stupid philanthropy, and I want people to learn from what’s been done wrong and do it better. Obviously, I would join in on critiquing philanthropy that’s specifically designed to distract from evil-doing you know, as perhaps the Sackler’s philanthropy was, but what I don't follow is this sort of reasoning by extreme anecdote. The Sacklers were terrible, yes, and suddenly everybody’s the Sacklers. No, they're not.

Hartmann: Do you think there might be at least some commonality among the four books in the following way: humility is warranted on the part of philanthropy?

Buchanan: Yes, I think there’s probably agreement there.

I think there might be agreement, too, that you're much more effective in your philanthropy if you form deep connections with people in the communities that you’re seeking to help.

Hartmann: If there’s a commonality about the need for humility, would that be because it’s just such an easy thing with which to concur, because it’s at a high enough level of abstraction that most everyone can agree?

Buchanan: I guess that’s right. Everybody would sort of agree in the abstract. But then you see things like the Mark Zuckerberg $100 million challenge, so $200 million total, on the Newark education intervention. I know there’s disagreement about what it achieved, but it certainly didn’t achieve what it set out to achieve. A big part of that, it seems to me from reading Dale Russakoff’s pretty-exhaustive reporting on it, was that there was a certain arrogance that solutions could be drawn up for people, without those people having any input into the solution. This happens all the time.

People think that they know better than other people. That’s the point of the whole Bill Gates chicken story that I tell in the book. [Gates thought that raising chickens was the best thing someone living in extreme poverty can do, and he wanted to donate 100,000 hens to developing countries. One country, Bolivia, rejected them.] It doesn’t even matter if you’re right and if you have a great idea if people don’t think you’re right and don’t share your vision.

I guess somehow even if everybody agrees that humility is key, it seems that somehow it’s hard to practice in reality.

Hartmann: Are there examples of successful grantmaking by conservatives?

Buchanan: Of course. One that is not only a conservative victory, but I would say included donors across the political spectrum is criminal-justice reform. There’s been some real progress. So that that would be one.

And then another obvious one that comes to mind is school choice.

There are, of course, a lot of folks on the left who would who would draw a very bright line from conservative philanthropy to Trump’s election, just as there are folks on the right who would draw a very straight line from the Open Society Foundations to every political outcome that they don’t like. I think both sides overstate their cases.

Hartmann: What’s been encouraging to you about the reception of the book?

Buchanan: What’s encouraging to me is how many individual and institutional donors really, really want to make a difference and want to have impact: they want to do what it takes. That’s been encouraging. Even all of the cynicism that we’ve seen over the last months and year has not squelched the desire that people have to give back in their communities and beyond.

I think it’s pretty cool when you spend time in a nonprofit, in which you often have staff and volunteers across all kinds of differences—whether its race, gender, or politics, but they’re not even talking about politics. When the volunteers show up at an organization that’s helping folks who are really poor in a neighborhood in Houston, like the Epiphany Community Health Outreach Services (ECHOS) that I write about, they are joining together with the staff in helping people and making the community stronger.

When Hurricane Harvey came, folks showed up to try to help, and folks showed up who needed help, and they connected with each other. That gives me some hope in a time when people are not forming enough relationships across differences. Philanthropy and nonprofits are often a way that that happens. That’s a positive thing.

I feel like whenever I talk about the book and I tell a couple of stories from the book like that, I hear five more that I’ve never heard before.


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