What is Effective Philanthropy?

"Effective" philanthropy is philanthropy that has impact. It is philanthropy that succeeds at amassing, managing, then allocating financial and human resources in ways that have the greatest positive impact in the sectors that foundations choose to fund. To allocate resources effectively, foundations must have vision and strategies for their grant making that allow them to analyze issues and concerns they want to influence, identifying both challenges and potential resources. They must be able to find the nonprofit organizations most likely to produce the results they intend. They must be able to structure their grants in ways that will be most useful to their grantees. And they must evaluate what they do to ensure they are having the intended impacts.

So how do foundations have impact, and what makes them effective? The most important findings from our research -- and the central theme of this book -- are the links between foundation effectiveness and institutionalizing nuanced understandings of diversity, including gender. Why diversity? As we describe in more detail in chapters 1 and 2, the foundation and nonprofit leaders interviewed for this first phase of our research most often define effective philanthropy in terms that can be summed up as "democratized" philanthropy and "democratized" organizational dynamics. Benchmarks for effective philanthropy that emerged from the first phase of research for this book replicated findings from our earlier research and helped us frame the concept of "deep diversity."

"Democratized" philanthropy encourages responsive "bottom-up" grant making as well as effective "top-down" funding initiatives that include stakeholder input and stress the importance of responsible, mutually respectful relationships between funders and grantees. And "democratized" philanthropy makes an effort to include in foundation decision making and priority setting those working "closest to the ground," grantees as well as foundation staff and trustees -- all of whom have either (preferably both) firsthand experience or breadth of knowledge in the areas foundations seek to fund. Benchmarks for effective philanthropy also include risk taking on the part of both funders and grantees; the importance of making multiyear, core support grants and sticking with grantees over time; leveraging support from other funders on behalf of grantees; building collaboratives with other funders that can publicize for public benefit both grantees' and foundations' expertise; and finally "transparency" -- clear guidelines and accessibility coupled with internal and external evaluations of the effectiveness and impact of foundations' own grant making as well as evaluations of the quality and impact of grantees' work -- all of which enable funders to improve both their accountability and their expertise.