A Mild View of Philanthropy

Practical advice without vilification

Books_A Mild View of Philanthropy
Giving Done Right: Effective Philanthropy and Making Every Dollar Count
By Phil Buchanan

When Phil Buchanan began work on Giving Done Right in the summer of 2016, he set out to aggregate all he had learned from his years as president of the Center for Effective Philanthropy (CEP). He could not have predicted that the book would publish in 2019 amidst heated debate about the legitimacy of wealth, accusations that nonprofits and their donors are part of a “rigged” or “colonized” system, and data revealing that charitable giving in the United States is beginning to decline. But despite the storms raging in, and around, philanthropy, Giving Done Right holds up as a thoughtful guide for donors determined to make a difference.

Buchanan is particularly eager to refute the “make nonprofits more like business” crowd. Beginning with the 1999 Harvard Business Review article, “Philanthropy’s New Agenda: Creating Value,” certain proponents have advocated for more “business thinking” in giving, which Buchanan says has “only grown more intense.” To be fair, there was a good deal of solid giving advice in the Harvard piece: define clear goals, focus your resources, fund over longer periods of time, support evaluation, etc. But exaggerations of the argument pulled donors toward ill-fitting bottom-line analogies. Buchanan rejects attempts to blur the lines between the corporate and nonprofit worlds, and casts doubt on overblown promises of “social purpose” in impact investing and for-profit business.

Distinguishing nonprofits from the corporate sector is crucial, Buchanan insists. Conflating the two can lead to public- policy decisions that hurt nonprofits. It can draw donors into a fruitless search for “a simple universal performance measure” that will work for organizations as diverse as a national art museum in New York City and a regional domestic-violence center in Topeka. It ignores the broad array of skills required of nonprofit managers, whom he labels “America’s unsung heroes.” It can feed the notion that civil-society organizations are less valuable than businesses.

The most memorable passages in the book recount Buchanan’s conversations with leaders of successful charities like BellXcel of Boston, which helps inner- city children overcome summer learning loss; UTEC of Lowell, which steers young adults with criminal histories away from violence and poverty; and ECHOS of Houston, which provides the most vulnerable families with a broad array of services.

Buchanan believes in the power of philanthropy to transform lives—“with far-reaching positive consequences for givers and recipients.” Helping donors connect with effective charities and the staff members who drive them is the core of his advice. The bulk of his book focuses on how to define goals, choose the best vehicle, establish the optimal timeframe, find the right grantees, and incorporate the appropriate assessment tools for one’s philanthropy.

The chapter on defining goals introduces the “effective altruism” arguments of Peter Singer whose influence is strongest in Silicon Valley. The author recommends balance. A truly effective donor will weigh head and heart, blending hard empirical goals with the personal passion and commitment that will keep a philanthropist engaged over time. Should you focus on root causes or immediate needs? Both efforts are worthy, Buchanan argues, and neither is superior to the other.

He warns that overly broad missions will neither make your giving thoughtful nor weed out inappropriate applicants. Unrealistic or oversimplified goals like “disrupting poverty” will lead to frustration when funders butt up against complex problems. Donors must know what they won’t do. And while it may sometimes be necessary to get involved in ancillary issues—like addressing substance abuse when your goal is to reduce homelessness— “undertaking many disparate initiatives” can mean “doing none well.”

Buchanan’s discussion of philanthropic vehicles is not exhaustive, but does cover “checkbook” giving by individuals, informal collaborations like giving circles that provide learning and social opportunities, community foundations, private foundations, and LLCs. He holds a generally positive view of donor-advised funds as “a convenient and useful way to manage your giving,” while giving equal time to DAF critics. “Is the increased use of DAFs leading to a decrease in funds available to nonprofits,” he frets, “because it’s replacing checkbook giving, which would have gone straight to nonprofits but is now sitting in accounts that may be spent down slowly?” He praises private foundations for their ability and willingness to tackle problems other sectors can’t or won’t address, but criticizes some of their actions as insular and prideful.

Much of Buchanan’s content derives from research done by CEP, particularly the organization’s Grantee Perception Report, which anonymously surveys a foundation’s grantees about the relationship between funder and recipient. Over 300 institutional givers have commissioned GPRs, and Buchanan details many of the findings. In the end, the not-so-surprising key element in the best relationships between donors and grantees is trust. Building that trust is not easy, and Buchanan provides a list of ten rules for developing effective relationships that range from “don’t force a fit” to “decline applicants in a way that’s honest and respectful of their time.” He also calls out donor mistakes that he considers most egregious: favoring only large, well-known organizations while regarding small ones as inefficient and wasteful; pulling back from ongoing support of an effective nonprofit simply out of fear of “dependency;” refusing to consider general-operating support because of an obsession with “overhead;” and making unrealistic demands—without corresponding financial support—for performance assessment.

For donors struggling to identify charities most likely to achieve their goals, Buchanan suggests use of the Performance Imperative, a measure developed several years ago by a group of nonprofit leaders. “Few organizations will be strong on every dimension,” Buchanan warns, but the index is “a good reference for assessing capacity.” Donors can be invaluable in nudging charities toward continuous internal improvement and external mission effectiveness, and Buchanan’s insights and advice on assessing what matters highlight the book’s strongest chapter.

Giving Done Right has its flaws. There is virtually no discussion of donor intent and the critical role it can play in ensuring mission focus, consistency, and impact in one’s philanthropy. Nor does Buchanan give much attention to decisions around timeframe, although he advises those who launch foundations in perpetuity to give future generations the power
to sunset. And Buchanan’s notion that individual givers and foundations should recognize that “tax revenue has been forgone” when they voluntarily give away money seems strikingly out of place given his celebration of the nonprofit sector as “a distinct part of the American fabric, with its history in the religious freedom the early European settlers sought.”

At the heart of Buchanan’s narrative is a resolute defense of the private giving that fuels our civil society, with a simultaneous insistence that we can always do more—and do it better. Coming on the heels of books charging much of philanthropy with “uplifting colonialism,” imposing plutocratic bias,” and “giving back in ways that sustain an indefensible distribution of…resources,” Buchanan’s balanced optimism is most welcome. Anyone concerned that giving in the United States appears to be declining should welcome his call for “a positive and forceful case for the distinctiveness of philanthropy and the nonprofit sector as essential parts of what has made America, even with all its flaws, the successful, vibrant democracy it historically has been—and what will make it still more successful tomorrow.”

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