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How Shared Value can deliver strategic philanthropy

October 16, 2012

Speaking to Matthew Bishop, a journalist for the Economist, in February 2006, Michael Porter pulled no punches in his assessment of the issues facing philanthropy.

“Foundation scandals tend to be about pay and perks, but the real scandal is how much money is pissed away on activities that have no impact. Billions are wasted on ineffective philanthropy,” he said. “Philanthropy is decades behind business in applying rigorous thinking to the use of money.”

He added that “there is a big opportunity over the next 20 years to figure out how to make philanthropy effective.”

Philanthropy Australia research indicates that Australians give slightly less than in the UK and Canada, and significantly less than in the USA. So, it’s not unsafe to assume that we have further to go in making philanthropy more effective.

However, there are some emerging examples of strategic philanthropy in Australia. Simon Lewis  is developing an ‘engaged philanthropy’ model. Akin to what the Americans call ‘venture philanthropy’, it sees The Trust Company take a strategic approach to social investment, including assessment of the capacity of partners, longer term partnerships and provision of strategic support beyond finance. The Social Ventures Australia self assessment form sets the agenda for its venture philanthropy work in education and employment from the outset.

What are the most important factors to consider in strategic philanthropy? There is a plethora of academic studies, commercial offerings and commentary on the web to answer this question. However, for the sake of brevity let’s keep it simple:

  1. Know the problem you want to solve
  2. Assess the capacity of organisations with a social purpose to solve the problem; choose one
  3. Set goals, define outcomes, establish relationship protocols and timeframes for success
  4. Determine the metrics by which success will be measured
  5. Draw up an agreement and get all partners and employees on board
  6. Ensure concensus on project communication
  7. Collaborate on the development of a project delivery/administrative model
  8. Share resources – human, financial, assets etc.

There are doubtless more aspects to consider; however, I’ll use these to illustrate what I believe is a fantastic opportunity waiting for philanthropists: the application of shared value as a facilitation and assessment model.

The concept of shared value considers the untapped potential resident in social interfaces, either person to person, or the interaction between people and an asset, process, policy etc. Approaching a problem from a ‘value creation’ as opposed to ‘objectives achievement’ perspective  is a subtle but powerful advantage on social projects. When assessing and initiating a relationship, understanding your partner’s basis for activity, the deeper drivers for their work, reveals the potential for a meeting of mind and ambition. Regardless of the institution, the people at the table will share a social perspective – that is why they are present. If they don’t, they’re in the wrong job and this is the wrong table.

When we’ve facilitated problem based workshops it is uncanny how the value people seek to create is so often shared. However, the priorities may differ and the route to value creation can be starkly different.

That initial assessment and work-shopping is critical because it sets the agenda for the growth of the relationship and the project – or it clarifies that, fundamentally, and despite the urgent need for capital, some organisations and their representatives are not suited.

Once a partnership is successfully initiated, there’s step four above: developing a practical suite of social metrics to measure success. That’s not as easy as it sounds because entrenched problems take time to solve. However, there are a readily applicable metrics the Shared Value Project has categorised to get philanthropists and NFPs started. Social change agents do not like spending time measuring and reporting when they signed up for a hands-on struggle. Unless you are a committed accountant, you probably share their aversion. So, in addition to practical metrics, there is the need for a project managements system and an appropriate reporting regime. Luckily there are a number of good cloud solutions for this (try Teamwork).

When partners are forging ahead, seeking better ways of achieving positive social impacts, shared value can continually be used as a framework to assess processes and relationships, facilitating improvements. It is about applying a social lens to the work of the NGO: not just its people to people contact, but the systems, processes and agreements it has in place that could well be working against the creation of value.

If that sounds ambiguous you only need to consider how often you shake your head in your daily life and think, ‘why do they make it so difficult?’. An hour on the phone to ‘customer service’, squeezing through a turnstile, trying for hours to find a homeless shelter when you have a mobile phone, just not a bed.

There are opportunities to create value for society everywhere. The more we can help philanthropists squeeze the maximum social return on investment, the better off we’ll be.