Money Well Spent: A Strategic Guide to Smart Philanthropy

Nonprofit enterprises make up a multibillion-dollar sector of the U.S. economy, yet their funding decisions are often shots in the dark. They make a lot of mistakes. Investments that initially seemed inspired do not produce positive, measurable results. Paul Brest and Hal Harvey aim to change all that. Their "strategic philanthropy" process aligns goals, strategy and implementation, and includes accountability and measurements. Their book is full of pertinent, real-world examples that help to bring their points home. Although the guide is theoretical and abstract in parts, getAbstract recommends it to foundation directors and program officers who are tired of wasting their organizations' money.

I ran a big foundation for 18 years. I ran a nonprofit for 8 years. I wish I had this book by Brest and Harvey when I got started...or anytime. It is the best guide to DOING philanthropy I've ever read. The primary reason for its usefulness is that it's subject-neutral. You can run a big foundation focusing on brain research or a small nonprofit delivering meals-on-wheels -- or a for-profit business for that matter. Why? Because the authors are looking at an encompassing approach where the focus is on knowing what you are assuming, what you are doing, and how you are doing it. You can keep your passion. You can keep your theories of the universe. What you can't do -- and this book tells you why -- is be ignorant of strategies that will drive you toward clarity, intelligent choices and a greater likelihood that those choices will pan out. And the strategy includes building-in feedback loops, so you can change course in mid-stream. (Full disclosure: I read and commented on an early draft of this book.) The book is divided into three parts; the first is a framework for doing strategic philanthropy, the second contains tools of the trade, the third talks about how to structure the organization and employ your dollars (or euros or any other currency for that matter). For my money, the first part is the best. For example, early in the book they introduce three central questions that are the basis of the philanthropic choices you make. First, "Does the problem diminish quality of life, or does it threaten life itself? Second, "How long will the harm persist?" Finally, "What is the scale of the problem?" Then they arrange the three questions in the form of a three dimensional cube that illustrates the implications of your philanthropy depending on where on the axis you choose to put your money down. But keep on reading. You'll see the value and pitfalls in defining your goals, mission and, perhaps most important, "theory of change." This latter term is in vogue now, but all it is is a theory of causality -- if you do (a) then (b) will happen. If you believe that giving everyone in your city $1,000.00 will cure poverty you've probably got a flawed theory of change. If you think one great novel will lead to more great novels, that's probably flawed, too. Tie your theory of change into a strategic plan (or, in common parlance, your "logic model"), determine the risks involved in choosing one strategy or another and you're on your way. And, at the end, you'll have a framework to know (via "metrics" which you develop) whether you're efforts are successful and to what degree. Toward the end of the book the ride gets a little wonky and the lift goes out a bit as it becomes more detailed and focused on strategic philanthropy. No matter. What you -- a rich individual, a program officer of a foundation, a CEO of an organization looking for a grant, a philanthropy advisor, a board member -- get is a road map which directs you how to use your money wisely and we

The book gives a clear and public picture of how the authors conduct their grantmaking, something I believe is relatively rare in the sector; I'd like to see more people in this area laying out their approach and their positions on key debates (summarized below), as Brest and Harvey have. I recommend this book to grantmakers interested in an overview of good general practices in grantmaking. Note that the focus is general (grantmaking strategy in the abstract) rather than on specific issues (i.e., what the most promising programs are). Concise and example-backed arguments are given for principles including: -The importance of forming a clear theory of change (i.e., laying out where a given program fits in the causal chain necessary to achieve desired outcomes, and what evidence there is that each link in the chain works as hypothesized). -The case for providing general operating support (Brest and Harvey concede that there are times for restricted funding, but on balance feel that more gifts ought to be unrestricted). -The importance (and meaning) of rigorous evaluation. -Why "charity" can be as good a use of funds as "philanthropy." -The case for quantifying "cost-effectiveness" of different approaches (although I disagree with the authors' emphasis on "social return on investment" as measured specifically in dollars). -Most importantly, a plea to "consider how failure can contribute to the knowledge base," and publicly publish impact studies even of failed projects. (Good examples of such studies are scattered throughout the book.) The authors also discuss many topics of more interest to larger funders, which are less salient to me due to my professional focus. I am the co-founder of GiveWell (www.givewell.net), an independent charity evaluator that aims to help individual donors with their giving decisions. Holden Karnofsky www.givewell.net

I received my review copy of Money Well Spent, the new book on strategic philanthropy by Paul Brest and Hal Harvey, back in August. I sat right down and read the book, but waited to post this review to align with the timing of the book's public availability. Given that there's been a "slight" change in our financial structures since August, I'm glad I held back. Harvey and Brest can't rewrite the book before it hits the shelves to account for the changing economic fortunes across the U.S. or the new landscape of investment banking, Wall Street, and mortgage lenders (to say nothing of taxpayers and mortgage owners). Nor can (this edition of) the book ponder the implications of these crisis-driven shifts in the financial industry or regulatory systems on the philanthropic industry. But I can. So let me use the occasion of this book review to remind us of how interconnected the business of giving is with the fortunes of finance and the vagaries of regulation. I have always contended that philanthropy is a regulated industry. Three forces define the outlines of philanthropy as we know it - markets are the first and regulatory structures around personal taxes and institutional tax exemptions make up the second. The third, a concern for others, is the only one of these forces that flows from within humanity and stands outside of human institutions and systems. Lets get on with it. The book marks a significant moment in the marketization of philanthropy. It is, in its own words: "...intended to do for philanthropists what the best books on business strategy do for business entrepreneurs and executives: provide readers with the concepts necessary to design a strategy to achieve their goals - in this case their charitable goals." (preface, page xi, review copy) Why does this matter? Because such a 'manual' couldn't have been published 10, maybe even 5 years ago. Why? For at least three reasons: First, there was not enough material, hadn't been enough discussion, not enough real development of strategic technique and thinking. Even though foundation philanthropy - which the two authors know best of philanthropy's many forms - has been around for almost 100 years, there was not, until recently, the commitment to an industry, a demand for strategy, lasting challenges to the status quo, or a significant quantity of players, thinkers, institutions, vehicles and experiments about philanthropic practice to actually inform a book such as this. Second, and perhaps more important, there was no visible demand. The market of individuals who might become philanthropic, and of philanthropists who might become strategic, and of advisers who'd like to sell to this market, and of financial companies who wish to manage assets for these individuals - these were all too fragmented, too under-the-radar, and too quiet. Only in the boom of the last six or seven years have critical numbers of each of these developed to the point where there was an identifiable, reach