Should Philanthropies Operate Like Businesses?

Monday, December 5, 2011

It’s your money, and you’re willing to give some of it away to a worthy cause. But you want to see results. Measurable progress toward agreed-upon goals. Regular proof that your investment is achieving maximum impact. That’s the way businesses operate, and charities should be no different.

That’s one way to look at it, anyway.

Others argue that things work differently in the world of nonprofits and social change. Tackling some of society’s biggest problems is unlikely to produce anything like the steady, chartable path of progress that investors require. And that’s simply something donors have to live with if they want to help those most in need.

So what should you expect of your charities? Businesslike efficiency? Or something more intangible, less-easily defined?

Charles R. Bronfman and Jeffrey R. Solomon, chairman and president, respectively, of the Andrea and Charles Bronfman Philanthropies, favor businesslike thinking. Michael Edwards, a distinguished senior fellow at Demos, a social issues think tank, argues that social values should take precedence.

Yes: Good Intentions Aren’t Enough

By Charles R. Bronfman and Jeffrey R. Solomon

There are many people who, like Bill Gates, have the vision and the discipline to be great philanthropists. They may not be standing on the same platform as Mr. Gates, but they use the same playbook.

Or at least they should.

Because Mr. Gates understands what any donor, large or small, should understand: that to have a sustained and strategic impact, philanthropy must be conducted like business-with discipline, strategy and a strong focus on outcomes. Organizations receiving your support should be as accountable to you as a company’s board is to its shareholders. You are a stakeholder. And that means, above all else, that you have to know your return on investment.

Source: The Wall Street Journal (link opens in a new window)