Delusional Altruism

Why Philanthropists Fail To Achieve Change and What They Can Do To Transform Giving

Kris Putnam-Walkerly

• Publisher: Wiley
• Year: 2020
• ISBN:
  9781119606048
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Organizaciones sin ánimo de lucro y benéficas

How you give matters. Discover philanthropic strategies for creating transformational change.

Whether you regularly donate to charity, run a small family foundation, or are responsible for millions of dollars in grants, you are a philanthropist. Delusional Altruism: Why Philanthropists Fail To Achieve Change and What They Can Do To Transform Giving looks at how you can create transformational change. It reminds us that how we give is as important as the amount we give. The author describes common practices that hinder transformational change and explains how to avoid them, ensuring that your gifts help create the impact you seek.

Delusional Altruism —a set of all-too-common errors in philanthropic strategy—can derail a program of giving and result in a loss of efficiency and effectiveness. This book asks philanthropists and charitable organizations to consider whether they have fallen under the spell of Delusional Altruism. Are you cutting out impactful giving in order to save money or avoid uncertainty? Is your philanthropic approach unnecessarily restricted by traditional thinking? This book will help you answer these questions and determine how you can achieve better outcomes through the process of Transformational Giving.

• Ask questions that spur learning and fuel innovation
• Believe that investment in yourself and your operation is important
• Increase the speed of your actions to increase the impact of your giving
• Give in ways that create lasting, sustainable change
• Follow strategies to make your philanthropy unstoppable

Although enhanced opportunities for philanthropic giving are on the horizon, changes to philanthropic practice are needed to prevent this philanthropy boom from becoming under-leveraged. Implementing updated approaches now can lead to positive change for the future. Read Delusional Altruism to learn how you can transform reality with strategic giving.

PART I
Delusional Altruism

1
You Save Money on All the Wrong Things

Philanthropists like to save money, but they save it on the wrong things. Let me explain what I mean.

Foundation leaders, donors, professional athletes, corporate executives—all philanthropists—want to be good caretakers of their charitable wealth. They want their assets and profits to grow, so there's more wealth to give. They also want to reduce their charitable costs and save money, so there's more left over to give to the causes they care about.

All of this is well and good.

The trouble is, in their altruistic effort to be frugal, they hold back on investment in important things like talent, strategy development, research, evaluation, technology, relationship building, and even their own personal learning. They hold back investment in their grantees, too.

They do this by setting arbitrary limits on how much money can be spent on nonprofit “overhead,” or on when they expect to see grantees' results, but at the same time they refuse to fund evaluation costs. When they do this, they hamstring themselves and the nonprofits they support. They genuinely want their philanthropy to change the world, but they're under a misguided belief that saving leads to impact. They're delusional about the damage caused by their thrift.

Frugality rarely leads to social change.

This type of destructive frugality happens to all types of philanthropists. Let me give you a few examples:

The CEO of a foundation with more than $200 million in assets refused to allow his staff to take company laptops on business trips. Why? For what he felt was a good reason: He worried his staff would accidentally break or lose them, and he didn't want to spend $1,700 for each replacement machine. The problem, though, was that on business trips the staff couldn't get work done.

You might be wondering, “Why couldn't they use their smartphones instead?” This was in the early 2000s. Sure, they had cell phones back then, and even some early versions of smartphones like the BlackBerry. They weren't the powerful, multitasking microcomputers we today call smartphones. The problem for foundation staff was that without laptop computers, they couldn't make productive use of their time on airplanes or in hotel rooms. They couldn't prepare grant recommendations or research funding opportunities. Responding to emails was cumbersome. They certainly couldn't access the foundation's grants management system to review proposals. In other words, while they might have attended a useful conference, foundation staff got nothing else done for three days every time they made a business trip.

Why? The CEO didn't recognize that the value of investing in his employees' productivity far exceeded the unlikely expense of $1,700. With $200 million in assets and an annual grantmaking budget of $10 million, the laptop expense should not have been a concern.

Here's another example, from the grantee's perspective.

A nonprofit requested a three-year policy advocacy grant from a donor to advance an innovative approach to drug treatment. The donor, however, authorized a grant of only one year. But influencing public policy can require consistent effort over the course of years. Efforts include conducting research, raising public awareness, organizing residents, educating the media, and meeting with policymakers. It takes time.

Because the nonprofit lacked a realistic three-year funding commitment, its CEO couldn't hire top talent. The experienced person she wanted wouldn't leave her current job and risk her family's financial security for a one-year gig. The CEO ended up hiring someone who was less proven.

In the no-laptops-on-trips and one-year-of-money-instead-of-three examples, the funders saved money up front. But they did so at the cost of staff productivity and program expansion. They saved money on the wrong things. They were under the delusion that they were being good stewards of their philanthropic assets. Instead, they were getting in their own way.

Why does this happen? Part of the spell of delusional altruism is a scarcity mind-set. Yes, you read that right. Despite access to wealth, philanthropists live, work, and breathe with a scarcity mentality.

The scarcity mind-set happens to all philanthropists. It probably happens to you, too.

A scarcity mind-set is the misguided belief that a Spartan operation equates to delivering more value on the issues funders care about. It's a belief that, by not investing in their own capacity, talent, research, learning, strategy, technology, effectiveness, and infrastructure (or that of their grantees), funders can allocate more money to the causes they support and therefore achieve a greater impact.

Surprisingly, the scarcity mind-set has little to do with money. It has everything to do with belief.

Scarcity-minded donors believe that investment in their own operation is only warranted when the need is urgent. They limit their opportunities based on current capacity, not potential impact. Improvements they make, therefore, are only incremental. They feel they should always do more with less. In fact, they often believe they don't deserve what's best, fastest, or most efficient.

After advising ultra-high-net-worth donors and philanthropy leaders for more than 20 years, I believe this scarcity mentality is one of philanthropy's most detrimental self-created restraints.

The problem with a scarcity mentality is that it hinders your talent, stalls your creativity, and hijacks your opportunities to create systemic change. And it seeps into just about every aspect of philanthropic giving.

I realize you don't want to hear this. You don't want to be a glass-half-empty philanthropist! No one does. But read on. Part of what makes “delusional altruism” so delusional is that we get in our own way without realizing it. Let's learn about how we inadvertently allow a scarcity mentality to creep into our lives.

It Starts in Your Mind

A scarcity mentality is the lens with which many donors view their philanthropy. It's important to understand that this is a belief system that misguides your thinking. It's a trickster. It fools you into believing that you are saving money. That the less you invest in your talent, infrastructure, and knowledge, the more you can help others.

This is of course ridiculous. The deceptive scarcity mentality is all in your head.

Before we talk about the ways that the scarcity mentality shows up in philanthropists' lack of investment, I want to talk about the guises it takes in your mind.

This happens most often when you don't trust yourself to make a decision, you limit yourself based on your current capacity, you believe you don't deserve something, or you believe you are too small to make a difference.

Not Trusting Yourself to Make a Decision

Too often, funders don't trust themselves to make decisions. Instead, without realizing it, they shroud themselves in a blanket of “more information.” Here's how it works: You know (or are pretty darn sure you know) the answer. Then, you waste lots of time and money reassuring yourself you're right.

Here's an example: The leader of a corporate foundation wanted to hire a consultant. Two consultants were recommended highly. Still, she wasn't sure whom to choose, so she cast a wider net. She spent months developing a request for proposals (RFP) to find a consultant and another few weeks disseminating it widely. Next, she spent two months sifting through the dozens of proposals she'd received, scheduling and conducting interviews with finalists, selecting one consultant, and negotiating the contract. Six months later, she is ready to make the hire. Unfortunately, she's now lost half a year of her time, wasted countless hours of dozens of consultants' time, her project is delayed, she's behind in her other work, and the people her company is ultimately trying to help have been forced to wait—again.

What's even worse? After all that time and money she spent to find the consultant, she probably didn't find the best one. Why? Top talent in high demand wouldn't waste that much time applying!

Why do philanthropists do this to themselves? Their scarcity mind-set holds them back. They don't trust themselves to make decisions.

Look, sometimes the people involved genuinely don't know something, and they need to take time to learn. I get it. But in this example, the leader was smart. Think of how much better off everyone would have been had she met with each of the two recommended consultants, plus a couple more she could have easily found by asking trusted colleagues, and simply made a decision.

Limiting Yourself Based on Your Current Capacity

Too often funders say, “I can't” because they look at their current capacity and abilities and simply cannot imagine taking on a new task.

Does this ever happen to you or your colleagues? You postpone a project of strategic importance because you are “too busy” right now. You decide you can't address the root causes of a problem because you don't have enough funds, so instead you fund projects to address the symptoms. You decide not to fund something because you don't know enough about the issue. You choose not to ask community members to inform your funding strategy because you don't feel equipped to address the issues they might raise.

Here's the thing: You might be busy, lacking information, and ill equipped. You mig...

Table of contents

• Cover
• Table of Contents
• Foreword
• Introduction
• PART I: Delusional Altruism
• PART II: Transformational Giving
• Acknowledgments
• About the Author
• Index
• End User License Agreement