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The Most Powerful Lever Philanthropy Can Pull to Improve Society?

Before I dive in here, I’d like to start by saying that this post is more about exploring a question than declaring an answer. My thoughts and observations are just that. I’m eager to hear what you think, and especially interested in insights from empirical research. So please, chime in on Twitter! Here is how I posed the question originally:

There are a lot of good things philanthropy can do, but what is the most powerful use of philanthropic resources? I’m focused on this question from a practical, rather than philosophical standpoint, and am narrowing the scope of this write-up to larger financial gifts. To be even more specific, let’s say donations of $100k+, but especially by individuals and organizations that give $1m+ annually. Surely some of what I write also applies to smaller financial donations, as well as volunteerism and other forms in-kind giving, but let’s hold that aside for the moment.

Why high-dollar giving? Two reasons: when people or institutions give at this level, they tend to be vocal and pointed in asking questions about what “return” their charitable investment is likely to yield; and, realistically, these gifts have a disproportionate impact on what nonprofits do and say, how they innovate, and and how they recruit. There downstream effects are likely outsized, to be sure.

What is “Pulling Levers” in Philanthropy?

High-dollar philanthropic gift-making individuals and organizations (hereafter, philanthropists) often think about how they can improve society as a matter of “leverage” through their giving. While philanthropists can also be influential through social and professional connections, media presence, and direct political advocacy, the highest value resource for most philanthropists is the cash they donate.

In this way, philanthropists are “investors” in tax-exempt organizations that seek to improve society. The various programs and activities tax-exempt organizations perform represent the choice of “levers” available to philanthropists through investment. A lever’s power is the advantage it creates in attempting to change the direction of a social condition (homelessness, poverty, victimization, etc.).

Defined this way, what, broadly speaking, is the most powerfully leveraged investment a philanthropist can make if the goal is to improve society? We can rule out charitable relief, which is not to suggest that donating in response to a tragic incident is in any way bad or wrong, just that it’s not the type of philanthropic investment for remedying intractable social problems. We’re obviously not talking here about high society giving to symphonies and botanical gardens, either.

We can also state with confidence that the single greatest force in improving social welfare across the board is economic growth and prosperity. The caveat here is that economic growth improves society very unevenly, such that the benefits accrue to some people much faster and more readily than others.

It makes perfect sense for philanthropists to look for leveraged investments that, in one way or another, improve how fairly the benefits of economic prosperity get distributed within and across societies. A rising tide lifts all boats, except the ones with holes in the hull.

It makes perfect sense for philanthropists to look for leveraged investments that, in one way or another, improve how fairly the benefits of economic prosperity get distributed within and across societies. A rising tide lifts all boats, except the ones with holes in the hull.

This may not be exactly how most philanthropists think about their goals, but it’s easy to see how different philanthropic social causes work similarly to each other in this regard:

  • Combating injustices that prevent a person from getting a fair shot at life, such as racism, violent victimization, and over-criminalization
  • Fortifying individuals whose vulnerabilities make them more susceptible to harm, such as those born into poverty or conditions of abuse
  • Improving access to and quality of resources that are essential to success, such as education and housing
  • Guaranteeing basic needs, such as food security, health care, and clean and safe environments

Generally speaking, I don’t think the question of philanthropic leverage is about picking one cause over another, as long as you’re focusing on social change strategies that can be implemented at the scale of the problem. It’s probably a mistake to think as a philanthropist, “there’s more I can do to help society through improving education than reducing violence.”

The better questions are, “how can I invest in any social cause such that the change I seek will improve access to economic growth and prosperity?” and “can I invest proportional to the scale of the problem and population I care most about?” Answers to these questions will help philanthropists gain focus, but I don’t think they get to the question of powerful impact.

Instead, I’m inclined to believe that what matters most in real-world impact is the approach we take to pursuing change within social impact philanthropy. To explain why, first we need to unpack what “real-world impact” means for a philanthropist trying to improve society.

What Should Be the Standard for Real-World Impact in Philanthropy?

Philanthropic real-world impact can certainly include short-term improvements to problematic social conditions, but it also needs to focus on sustainable, long-term change. That’s much tougher to accomplish, but it’s unrealistic to expect the philanthropic sector to fund solutions to any problem in the long run. Priorities change, donors fatigue, and the philanthropic sector isn’t as big as many people wish to believe. Put simply, philanthropy to improve society always has to look toward changing underlying conditions in a fundamental, sustainable way. Real-world impact is a very high bar for success.

Now let’s apply this understanding of real-world impact in philanthropy to the challenge of improving fair and even access to the benefits of economic growth and prosperity. It’s no accident that economic prosperity accrues unevenly across society. Winners naturally try to keep their winnings, and then use those winnings to make it easier to win bigger in the future. In this way inequality can compound on itself, or at the very least self-perpetuate.

For this reason it is unclear to me why we should expect that “solving” any particular social problem will reduce comparative disadvantage in the long-run, i.e., achieve the kind of real-world impact necessary to improve society sustainably. Injustice and inequality aren’t static phenomena; they are features of human society that we have to manage actively, deliberately, and democratically to ensure fairness.

Injustice and inequality aren’t static phenomena; they are features of human society that we have to manage actively, deliberately, and democratically to ensure fairness.

To illustrate this point, let’s go back to education and violence reduction for some concrete examples. Imagine philanthropic investments were responsible for the following successes:

  • Introducing a wider selection of Advanced Placement (AP) courses within an impoverished, under-performing school district, while also adding support services to recruit and retain student enrollees
  • Increasing funding to residential recovery services for victims of extreme violence, such that more people get access to an appropriate level of care

Both of these changes are good, and let’s assume for a moment that there aren’t any unintended negative consequences (this is most definitely not a safe assumption in actual philanthropy, I should point out). My question is, are they powerful enough in achieving real-world impact, or is there something more philanthropy should do in either scenario to see long-term change?

What’s a Philanthropist to Do?

In the case of the educational success above, we’re already seeing elite private schools eliminating AP course offerings. These schools may offer any handful of excuses for why, but the simple reality is their business model requires a rarefied educational experience, which in this case will drive down the value to a student in an impoverished public school of taking AP courses. Winners naturally try to keep winning.

In the case of funding services for survivors of extreme violence, do the funded treatments reduce the likelihood that perpetrators re-offend against others? What does it say to the survivor and the community that experiencing victimization means leaving home? The survivor’s well-being might indeed improve, but there is little reasons to suspect that overall levels of violent offending change for the better. Despite being the culprit, the odds still favor the offender retaining the power of a winner.

In both of these cases, the people experiencing injustice are sidelined not only by the conditions of harm (an under-performing school and a violent abuser), but also through disempowerment. Meanwhile, those with comparative advantage (elite schools and perpetrators of violence) are free to continue, shift, or evolve the conditions that give them power. It is difficult to see the scales balancing out under these circumstances.

What if Philanthropic Leverage Redistributed Power?

What if, instead of or in addition to the “successes” mentioned above, philanthropy sought to redistribute power such that students in the under-performing school had as much influence on educational policy as students in the elite school? Or that survivors of extreme violence had as much say in what justice looks like as those who perpetrate it? The “successes” might be fewer and further between to come by—or perhaps just harder to articulate in an end-of-year report—but real-world impact as I’ve defined it here seems more realistic once underlying power imbalances have been minimized.

This isn’t an instinctual way of thinking about improving society for most philanthropists, which I suspect is because most of them are “winners” used to having their voices heard. For them, as for me, the system works quite well, so we’re inclined to tinker with it directly, often on behalf of the marginalized. The intentions are good because we assume the systems we share—education, criminal justice, political/voting, social services—can work to equal effect for each of us if we just shore up the underperforming ones. They underperform for a reason, though.

If you believe in the power of fairly distributed economic growth and prosperity to improve society, then your philanthropic goals should focus on sustainable improvement to social conditions that prevent people from receiving an equitable share of its benefits. We must also acknowledge that injustice and inequality are systemic: processes more so than an outcomes, which must be managed actively within democratic society. Power imbalances ensure this management favors some over others, whereas balanced power helps level the playing field and prevent the compounding effects of inequality.

In this way, it stands to reason that the most powerful levers for philanthropists are the ones that transfer power to human voices quieted and marginalized by injustice and inequality. That doesn’t necessarily mean funding political mobilization—though there needs to be more of this—but there should be a clearly-articulated path toward enabling political self-efficacy among the people whose situation a philanthropist wishes to help improve. The best way to ensure the rights and interests of a group of people are served over the long-term is first to ensure they have a sufficiently powerful voice at the table.

That might sound obvious enough, but for most philanthropists this political efficacy might be further discomforting if it comes at the expense of their own influence; especially at a micro level when they feel they are losing control over the message and social change goals of their investment. As a system itself, philanthropy is far from immune to optimizing conditions and outcomes in favor of those with power. All of this makes me wonder: how might the nonprofit sector look different today if large donors oriented their giving around short- and long-term efforts to redistribute power, agency, and platform to marginalized voices? Where would we be today if philanthropists defaulted to using their most powerful lever for improving society?