What will the financial crisis mean for philanthropy?

Who's giving, who's getting.
Nov. 13 2008 6:42 AM

The Rise and (Potential) Fall of Philanthrocapitalism

Billionaires brought their business sense and ambition to charitable giving. Now what?

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Evidence suggests that humility—or some common ground—had arrived before the crash. In June 2007, the Wall Street Journal and others touted a Seedco report, "The Limits to Social Enterprise," which found that many nonprofits, pressured to launch commercial enterprises, had their work derailed by the distractions of running businesses. Since this spring, the Stanford Social Innovation Review, an intellectual weathervane for the social sector, has featured articles calling for a more realistic assessment of the achievements of venture philanthropy and for the use of "social innovation" (rather than "social enterprise") as the lens for "understanding and creating social change in all of its manifestations." Accordingly, "social innovation" recognizes the "cross fertilization" that occurs between the "nonprofit, government, and business sectors" rather than the unidirectional business-influence-on-philanthropy thesis of philanthrocapitalism.

"Cross fertilization" may have found its most articulate advocate in Luis Ubiñas, who in January succeeded Susan Berresford as the head of the Ford Foundation. Ubiñas, who came to Ford from McKinsey's Silicon Valley office, seemed to many the quintessential "philanthrocapitalist" choice. Yet in one of his first public interviews with Alliance Magazine in September, Ubiñas sounds refreshingly humble:

I'm new enough to be cautious about making pronouncements across the foundation world. I think that learning across sectors is inherently valuable. I think that there are things that foundations do that would be very interesting to businesses—taking a long-term approach, taking a more holistic approach, attacking problems from multiple angles, learning about qualitative measurement. At the same time, I think there are things from business that philanthropy can learn: thinking about grants as investments, thinking about the possibility of expecting returns, thinking about grantees as partners instead of grantees, people we work with on an ongoing basis, closely, in a shared, open dialogue. I think the question isn't what can philanthropy learn from business, it's what can philanthropy learn from itself, from business, from government? Establishing a learning environment is what matters, who we learn from is secondary. …

Let's hope cross-fertilization bears fruit. Ubiñas has his work cut for him.

Georgia Levenson Keohane is a writer and consultant in the fields of social policy and philanthropy who often works with nonprofit organizations. She lives in New York City.