Byron Harrell, Sc.D., is the President of Baptist Community Ministries, a health legacy foundation located in New Orleans and one of the largest private foundations in Louisiana. Following Hurricane Katrina, he helped lead BCM to focus its funding and talent in support of public charter schools in New Orleans as an once-in-a-lifetime opportunity to achieve systemic improvements in student performance.
Author of “Supercharged Giving: The Professionals Guide to Strategic Philanthropy” (2009), he is passionate about boosting grantmaking outcomes through the latest applied research. Dr. Harrell also wrote “Size Matters: Why Large Foundations Perform Poorly” published in Philanthropy magazine about the ground-breaking discovery of an inverse relationship between the size of a foundation and its effectiveness. He also consults on a wide range of strategic, governance, and operational issues in private foundations. Dr. Harrell is a frequent lecturer and author on strategic philanthropy based on “Concept Mapping” which is a program which graphically links the mission of a foundation and its strategies to each grant. He is also a co-founder of the new research auction site “Philoptima” which is an open innovation web-based way to find solutions to community problems.
Harrell holds a Doctor of Science degree from Tulane University with a primary interest in the performance of foundations from an organizational theory approach. His current research “The Performance of Health Conversion Foundations As Influenced By Bureaucracy And The Size Contingency” focuses on the structural design of successful foundations and the measurement of foundation performance. In addition to his experience in philanthropy, Dr. Harrell worked for more than twenty-five years in health systems management, hospitals, health maintenance organizations and related fields.
You may have recently come across the special insert on philanthropy in the November 9th edition of the Wall Street Journal. I responded to the opening article “What’s Wrong With Charitable Giving & How To Fix It” by Mr. Pablo Eisenberg. If you missed it, Mr. Eisenberg offers a number of "progressive" suggestions for foundations to follow (not many of which make any sense). Here is what I wrote to the Editor:
"Mr. Eisenberg allows his heart to over-rule his intellect when he chooses to ignore the basic fact that several studies have demonstrated that foundation spending around the mandatory minimum of 5% annually generates an even larger flow of dollars over time than those foundations spending at higher rates. The often mystical effects of compounding returns on a stable capital base tend to be over looked in such discussions. Since 1900, US equities have enjoyed an average annual return of just over 10% and bonds of about half that producing a weighted return of 8.8%. A foundation with an asset mix of 70% equities and 30% fixed income under an inflation rate of 3% and average investment costs of less than 1% maintains the real value of its corpus by spending roughly 5% annually.
As to his other suggestions for improvement, as I point out in my recent book, “Supercharged Giving: The Professional’s Guide to Strategic Philanthropy”, he misses the most important weakness of modern philanthropy. Too few donors take a strategic interest in their giving and rarely decide in advance what they want to accomplish and how they will know if it has been achieved. If an archer releases his arrow and only then adjusts the target, it is amazing how many shots are perfect."
Read more about my take on strategic philanthropy and philanthropy policy for effective grantmaking by visiting my book site: http://www.superchargedgiving.com .
If one were to start a charitable foundation, I hope they focus on "what" and "why" they make grants before they start pouring money on every nonprofit is sight.
Dr. Elinor Ostrom of Indiana University won the 2009 Nobel Prize in economics for her research into the role of voluntary associations in solving a wide range of public challenges. Typically, society manages its “public assets” (i.e. fish in the ocean, lumber in public forests, etc.) in one of two ways in order to avoid uncontrolled consumption. First, society treats the public asset like a private asset and submits its consumption to market forces. A good example is offshore oil leases in which potential users competitively bid to lease the “land” and extract oil. Second, society can manage public assets through regulation. An example of regulation is the issuance of fishing licenses that limit the species and number of fish that can be pulled from public waters. In theory, the public’s interests are protected through these two approaches.
Dr. Ostrom won the Nobel Prize for her work exploring a third way to govern the use of public assets known as “voluntary agreement”. Over many years, she documented dozens of examples in many countries where consumers of public assets voluntarily reached agreement to limit and control consumption and users were often more satisfied with the results than under marketplace or regulatory schemes. Voluntary agreement is based on the principle of “reciprocity”- -the belief that the beneficial acts of one party obligates others to reciprocate with equally beneficial acts. Reciprocity also develops trust and improves cooperation.
Deeply imbedded in the concept of voluntary agreement is evidence that it works best from the bottom up. Grassroots groups and users of assets who are closest to the scene reach more effective and durable rules than top-down efforts. Apparently, empowering the people who have the most at stake to regulate the use of a public asset is the key ingredient. How these rights are defined through “rules of the road” such as policies, practices, court decisions, and other official acts seems to be a big help in governing these scarce public resources. Dr. Ostrom has provided us with an empirically rigorous demonstration of these propositions around the world.
This is where foundations should pay close attention to advocacy that starts with grassroots support. The formula that has worked for years in philanthropy is a three-pronged approach to (1) build a large group of local supporters in favor of an effective social intervention (such as a nurse-family partnership based on a well-researched model), (2) independently evaluate a demonstration project to show that it works, and (3) advocate for the elimination of public policies that resist wide-scale adoption and expand public policies that support adoption. All too often, foundations take a “build-it-and-they-will-come” approach before considering best-practices, evaluation, or advocacy. This is known as the “Lone-Ranger” approach which most often leaves them mired in perpetually funding programs that rightfully should qualify for public financial support.
Admittedly, it will take a long time to build grassroots coalitions of the right people, start community interventions that use best practices, and develop advocacy maps so that grantmakers know in advance the public policies they want to change. However, the Lone-Ranger alternative rarely succeeds.
Powered by Compendium Blogware