Giving Compass' Take:

• Olga Tarasov and Kalyah Ford explain how foundation representatives gathered at a "Theory of the Foundation Seminar" reframed risks as opportunities for philanthropy impact. 

• How can this lens help you and organizations you work with better serve your community? 

• Learn about risk in nonprofit infrastructure. 

At the downtown Los Angeles office of Southern California Grantmakers, dozens of leading thinkers from philanthropic organizations recently gathered for a Rockefeller Philanthropy Advisors' "Theory of the Foundation Seminar." The lively discussion addressed philanthropic time horizons, ways to achieve greater operational effectiveness, and driving strategic impact.

Eventually, the conversation turned to risk: the multitude of risks associated with operating in a world increasingly characterized by growing instability and need; and the importance of taking and absorbing risk as a philanthropic actor. Underlying the conversation were a number of current global trends, including:

  • growing populism and socio-political instability;
  • a backlash against private philanthropy in part based on the belief that the growing concentration of wealth is a main contributor to societal problems;
  • the expansion of what philanthropy entails to include impact investing; and
  • a renewed interest in advocacy, capital aggregation, and partnerships in philanthropy.

As the discussion revealed, risk is often believed to be innate to philanthropy, deeply tied to the sense that a philanthropist should also be an innovator, and that philanthropic giving is synonymous with risk capital.

There was broad consensus in the room that foundations should not shy away from risk. Indeed, a better solution to enhance strategic effectiveness and impact is to address it head-on. Actionable suggestions to mitigate risk included:

  • collaborating with like-minded partners to build legitimacy and increase opportunity;
  • encouraging an internal culture of experimentation and failure;
  • explicitly devoting a designated percentage of funds or funding to higher-risk activities or investments;
  • allocating discretionary funds to risky investments;
  • building trust with the communities being served;
  • shifting hiring practices to recruit staff representative of the communities served, and with skills and knowledge to effectively address risk; and
  • creating and sharing knowledge around risk.

Read the full article about risk and opportunity by Olga Tarasov and Kalyah Ford at Candid.