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Thoughts on Philanthropy
03.14.11

 

One of my former colleagues at Google just emailed me about philanthropy -- apparently she and her boyfriend want to get more active in it. She came to re-connect with me because she was reading this book "Philanthrocapitalism" [link] and an organization that is featured in it, SV2 [link] -- I'm connected to. When I lived in the Valley, I used to be a partner and on their board for a period of time -- they did a little marketing piece on me because I was one of the few younger partners (probably meaning <30) and that's how she ended up making the connection.
 
I started off doing stuff with non-profits probably in high school. I used to volunteer at the local chapter of the American Cancer Society -- they weren't particularly computer savvy and so I would go in for a few hours every so often and do some very light database work. I really didn't have any connection to ACS but I did like the idea of doing something "good". I will say that I felt totally disconnected to the cause or even a sense that I was doing anything good -- I think it's hard to feel that when you're just going into an office, sitting at a computer, and then emerging a few hours later -- especially when you're 16 or so.
 
In college, I did probably nothing non-profit wise -- which is weird because that's probably one of the best times to do things. You're just surrounded by potentially a lot of like minded and socially active individuals. I was probably too focused on my grades and my future business career prospects (or at least worrying about them) and didn't take advantage of a great opportunity.
 
However, when I was at amazon.com, a new thought occurred to me. Here it is, "Non-profits are run by passionate individuals who may or may not have business experience. Couldn't I, as someone who has some business experience, bring that to a non-profit and help them?" So I set about doing that -- first by volunteering with a firm that basically provided free consulting help to non-profits. It was me + an ex-Boeing exec helping a non-profit founder / ED (Tanya) who was creating a non-profit that did cancer therapy through knitting. We helped her write the business plan.
 
I also joined the board of a non-profit in San Diego called StandUp for Kids which helps homeless children. I've long been drawn to causes that, for lack of a better term, give people a chance in life. Not everyone gets a chance and the resources and the opportunities -- the thought of children being homeless was (and still is) mind-boggling to me. What future does a homeless child have and, of more immediate importance, how in the world can they get off the street and start building towards something?
 
These experiences were broadly very instructive and still heavily define my perspective on non-profits and philanthropy to this day. Over the years, because of various roles I've played, I've gotten to know maybe not dozens, but many non-profits and their founders. With rare exception, they're universally extremely passionate, driven people who want to do good. With almost equally rare exception, I felt like very few of them really understood how to build and operate a non-profit. I should obviously caveat this by saying that I myself have never built and run a non-profit so I'm sort of like the consultant who never worked in a company here. But here's an example. The founder of StandUp for Kids is an amazing man by the name of Rick Koca. He's built up a non-profit that has branches across the United States and has built up significant partnerships with companies like Virgin Mobile (I even saw one of their ads promoting StandUp for Kids in Times Square) and entertainment figures (from music to sports).
 
When Rick founded SUFK, he was particularly struck by a tour he gave himself of the streets of San Diego and discovered that there were homeless kids. Rick gave me the same tour himself and unfortunately, I'll never look at San Diego the same way again. You learn the ins and outs of what a homeless kid actually look like, where they might sleep, and the many dangers lurking for them. I actually got a chance to spend some time with a handful of them and it was a very sobering experience.
 
Rick proceeded to pour all his savings into SUFK. This wasn't enough though, he proceeded to sell his home and move into a 2-bedroom apartment that he SHARED with another employee of SUFK so he could save even more money to put into the organization. Rick and I would have long conversations about the need to build infrastructure -- both operational and also developmental. I think there's a psychological barrier for many people -- not just donors -- around infrastructure. It's one of the reasons I really liked SV2 -- a lot of their grants were specific to funding infrastructure grants because donors typically don't fund that. They want to make restricted donations that only go to the people the organization is serving -- not to pay the salaries at headquarters. But the problem is without the organization, there would be no way to deliver any goods or services. We'd all love to think that all these people work for love and self-satisfaction, but they have to pay the bills too. We may blanche that some of these people even make 6-figures, but that's the going rate for well qualified individuals at senior posts or large non-profits. A red flag for non-profits for me is when too high a % of their donations go to the people they serve. That may sound counterintuitive, but that basically means they're just a pass through and not investing in building the organization.
 
Rick would describe the situation to me as this (he was amazingly self-reflective as well). "If I have a homeless kid in my office, I'll give him $20 for food before investing it in the organization. How can I say no?" Rick always had homeless kids in his office. But then how could the organization grow?
 
The short answer is it couldn't and even though I left several years ago, I don't think anything has substantively changed.
 
So I guess the larger question here is, what to do if you're a person with some means, maybe some ability + time, and some interest in doing "good" so to speak? Here's what I've done:
 
1. Don't Bother Trying to Change Organizations
 
Like StandUp for Kids -- they are what they are. I think all the board members I interacted with were generally quite aligned in terms of vision and longer term goals. But we're board members, not operating execs. The short term needs of the organization were always too present and great and long term planning went out the window. I've seen this over and over again. Organizations either believe in this or they don't. No amount of logic, cajoling, meetings, or whatever else has been effective in my very humbling experience. A few years ago, I saw this panel of NFL coaches and one of the coaches asked Marv Levy (took the Buffalo Bills to 4 Super Bowls) how he motivated his players. His response? "I don't know how to motivate players. I pick highly motivated players."
 
2. Donate and Expect Nothing
 
I don't think people necessarily expect anything when they donate. But I think it's fair to say that donations are roughly a giant black hole. You give money -- sometimes small, sometimes big -- and they go. Sometimes you get a thank you note, sometimes you get a banquet invitation, sometimes the ED follows-up with you with phone calls essentially trying to keep the relationship warm. I don't want to be too critical, but it's a little bit of a charade. Even from a donor perspective, I have unfortunately not met a single non-profit that I think does an excellent job of managing and cultivating their donor base. Maybe Tipping Point in SF -- they're pretty good. I guess my point in this is this -- I imagine that folks in tech have a bias towards action and tangible progress. It's hard to give some sizable amount of money and then literally nothing changes. But I expect this nowadays. Maybe if I was giving away millions of dollars (which I can't do) -- I would see something much more tangible. Employees specifically hired. New locations opened. Expansion of services.
 
3. Helping non-profits is very tricky
 
I think the theory of pairing people with specific domain knowledge (marketing, operations, finance, strategy, etc.) with non-profits is a good one. I used to run a program at SV2 that specifically did this and it was one of the more rewarding things I've done. The most successful ones definitely seemed to be the tactical ones -- non-profits have immediate needs, maybe it's a PR plan because they're getting national exposure, maybe it's a marketing plan because they've gotten a sizable donation to expand their footprint. The next tier would probably be of the 5-year strategy plans / board governance type of work. I'm not a huge fan of this work. I broadly think of it as a lot of meetings for a document or documents that might not fundamentally impact the non-profit that much. It's not that I disagree with doing this work -- it's that the work seems typically almost disconnected from the reality of what's happening at the non-profit. Broadly, the non-profit would be completely understaffed and then the founder has to go to a meeting about 5-year goals when they have hours and hours of work before they can go home. Even if the plan gets done (and they're usually of low priority) -- will it really impact the actual running of the non-profit? I doubt it.
 
The short of it is I used to go in thinking, "Wow -- look at all the ways I can help this non-profit!" I really haven't cracked the nut in terms of my involvement making, as far as I can tell, a dramatic difference in the growth, trajectory, and performance of a non-profit. They say very nice things to me, but I haven't seen the results. It's very humbling.
 
I like growth. I want to help great non-profits go from small to huge. I want them to have a giant footprint and help lots and lots of people. I don't know how to do this. I suspect one path is in finding the right non-profit -- one that's run by a founder / ED who believes in investment and infrastructure and growth. It's really hard to diversify off of donations as the primary revenue stream -- but one that has some cushion not to be running after every donation just to keep its lights on. And frankly, probably one that has great marketing ability -- orgs like Robin Hood and Tipping Point have proven this to be true.
 
The alternative, which is an idea that I've been toying with for a long time but haven't figured out a model that I like or how exactly I'd like to fund it, is to found my own non-profit. I have a suspicion it has something to do with helping other non-profits start or grow, but I'm not sure yet. I'm dubious about it helping non-profits start because that's really rough and it takes forever to scale in the non-profit space. It just takes too long to raise money -- donations are tough. But is there something around scaling? Giving infrastructure grants is great -- but that's SV2's model and I think there's quite a bit of limit to the impact unless you're running a massive fund (tens of millions+ and that's nowhere where SV2 is.)
 
Here's the question I need to answer. How did great and large non-profits of today get there? Was there some trigger beyond slow, massive growth over time? I want to figure out which ones went from helping 0 to 100,000 in 5 years and how'd they do it -- and then figure out how to help more become like that. If I was doing that type of work, I think I would be (at least much more) satisfied with what I do in the non-profit world. But until then, I think what I do is largely as a diletante and of quite limited utility.

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