OP-ED: Philanthropic Leadership, Money, and Collective Goods

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The following essay was prepared for a discussion on philanthropic leadership—part of a series of six discussions entitled "The Dialogues on Civic Philanthropy: Perfecting Our Grants" (2005-2006). By clicking the links to the right, you can access more information on this series, learn about the Dialogues project as a whole, read other prepared essays, and download discussion transcripts.

LEADERSHIP IN the philanthropic world raises, in my view, at least two complex issues.  The first has to do with the fact that money—philanthropy’s primary source of influence—does not by itself confer a mantle of leadership.  True, money translates into power, and the exercise of power conveys an expectation of leadership.  But, despite the great deference paid to the power of money in this society, money alone does not a leader make.  So we are left with the question, What, in addition to money, can give philanthropy a legitimate claim to leadership?

The second can be described as the conundrum of private wealth seeking to produce collective goods. It is a universally accepted principle in philanthropy that the pursuit (and, to the degree possible, accomplishment) of a distinctive mission should be a primary driving force in foundation work.  Indeed in recent years foundation donors, boards, and staffs have spent increasing amounts of time on strategic planning designed to produce clarity about philanthropic missions.  The result is an ever expanding number of distinctive agendas pursued by private foundations.  Ironically, however, the cumulative impact of this pursuit of independent visions by multiple entities can work against the achievement of the collective goods that all are pursuing.

Together, these two problems pose a fundamental challenge to leadership in philanthropy.  Leadership in the social arena requires, at a minimum, an exercise of authority that is sufficiently respected for others to follow.  That respect is generally earned through some form of peer or public approval process, for example through a political election or scholarly review system.  Philanthropy, lacking the feedback process that exists in most other fields, exercises power that accompanies the distribution of money but without the reference point of an approval process. 

It seems to me that to overcome this, philanthropy needs to strengthen its ability to listen to and interact with the nonprofit organizations in the fields in which it is active.  This is an especially difficult task, because the power wielded by foundations is very intimidating to nonprofits, inhibiting candid feedback.  Thus, even with the best of intentions, foundations have a hard time generating accurate information about their work  And this in turn leads to a lack of credibility in the field, illustrated by the innumerable honorary dinners that fete major donors (both individuals and foundations) at which a polite exchange of accolades is accompanied by a universal understanding that the primary purpose of the occasion is to generate future support for the organization rather than to honor great accomplishment.

The real challenge is for funders to develop genuine expertise in their chosen areas of activity and then to generate truly candid feedback to test the validity of that expertise.  The funders who are able to accomplish those two tasks are those who, in my experience, engage in a serious mutual learning process and are regarded as true leaders in the field. 

Yet even when funders are able to generate respect as leaders, there remains a secon