Giving Compass' Take:

• Thomas Dichter explains how risk avoidance in global giving is hampering the impact of U.S. philanthropic organizations. 

• How can funders work to increase careful risk-taking? Why is risk avoidance such a prominent factor in U.S. philanthropy? 

• Learn about the value of big bets in philanthropy. 

After many frustrating years working in non-profit organizations that were unable to address the root causes of the developing country problems they set out to solve, I got lucky, or thought I did. I was hired as an officer of a respected foundation. Unlike my previous employers which all too often had to compromise their beliefs in order to raise money, I thought I’d finally be working for an organization that did not need to raise money and so we could do what made sense, take a long view, experiment with new ideas, fund deep research on issues.

My naïve expectations did not last long. Playing it safe was the business model of the foundation I joined. A lot of our funding went to efforts that were tried, true and respectable. Despite the rhetoric of boldness and innovation, we funded the usual suspects; people and organizations that were known. If something odd crossed our threshold, something intriguing from an organization we had not heard of, we got nervous. We would ask about their methodology, was it rigorously scientific, did they follow the ‘best practices’ of their field? If then we took a second look it was to see what was in it for us. Would there be measurable results and if so, how soon? Would what they proposed doing with our money have influence and if so how much and how soon? And if what they did failed to achieve what they said they would, how would this affect our public image?

In the case of international giving by U.S. foundations, a similar risk aversion is evident in what they fund. According to the Council on Foundations’ latest report on international giving, U.S. foundations’ global giving went up by over 300% in the period between 2002 and 2015. https://www.cof.org/content/state-global-giving-us-foundations-2011-2015 Yet at a time when the international aid community is talking more and more about the importance of local ownership of development efforts; about the importance of strengthening local civil society organizations and local governance, in 2015 only 12% of the almost $10 billion dollars in global giving went to organizations based in the country where programs were being implemented. Instead the foundations felt safer channeling their grants through familiar and respected organizations who could presumably be ‘trusted.’

Read the full article about risk avoidance by Thomas Dichter at Forbes.