The past two decades have seen a shift in the conversation about philanthropy. We entered the 2000s being told that what philanthropy needed was a “business” or “investor” mindset, with less clarity of course about what exactly that even meant. The first decade of the 2000s was the “Business-Knows-Best Decade.”

But, as it turns out, business didn’t know best, of course.

Strategy in philanthropy is about collaborative dynamics, not competitive ones, and therefore must be shared across organizational boundaries, rather than guarded closely as “unique” to a particular funder.   As we at CEP observed in a 2009 report on foundation strategy, “Philanthropic funders are seeking to maximize their positive social impact — not to beat the competition in a defined market. In fact, for philanthropists and private foundations, it may sometimes be that replicating the activities of others, or collaborating with them, is the very best way to maximize impact on particular organizations, communities, or fields.”

Moreover, the power dynamics between the funder and the funded (which are very different than the dynamics between either a business and a customer or an investor and a company they invest in) heightened the risk of funders devising strategies that were out of touch with the realities of those closest to the problems being addressed. Those whose knowledge and expertise were often insufficiently considered included nonprofits and, of course, the people themselves who the funding was intended to help. In education philanthropy, especially, the story played out repeatedly, with different donors and foundations making the same, predictable mistakes.

There was evidence of a welcome, albeit belated and insufficiently acknowledged, evolution among the business-knows-best evangelists. Still, the importation of business concepts — from “disruption” to “user-centered design” — remained prevalent and typically were treated without enough respect for the ways in which the dynamics differ in philanthropy.

But as we moved into the next decade, critiques of the markets-as-analog-for-everything perspective would intensify — as would a new wave of critiques of philanthropy that were rooted in concerns about capitalism itself.

Read the full article about business and philanthropy by Phil Buchanan at The Center for Effective Philanthropy.