Decision-making in Philanthropy: Headless, Heartless, Clueless

Decision-making in philanthropy

There seems to be an obsession in philanthropy these days with “data-driven decision-making.” There is no argument in philanthropy less productive than the supposed fight between strategic vs. compassionate grantmaking. Should a donor decide where to put its money using its head or using its heart.  It’s the “versus” that creates the problem, suggesting the head and the heart are two entirely separate organisms, and that never the twain shall meet.

Doug Donovan, author of “Hewlett ends effort to get donors to make dispassionate choices on giving,” (The Chronicle of Philanthropy, April 10, 2014) is obviously a student of mainstream media’s practice of creating fights between falsely posed propositions; “head versus heart” begins to take on the aura of another media-bated controversy, “nature versus nurture.”

What about head AND heart?

The pro-head people, according to the author, allegedly want donors to “behave more like data-driven investors.” The pro-heart people warn that “the demand for immediate results” and “short-term measurements” is “at the expense of worthy efforts that may not bear results for years.”  The pro-head people, according to the author, allegedly “emphasize quick returns,” but the pro-heart people allegedly say this “discredits the personal motivations of most Americans.”

Donovan quotes Paul Brest, “Personal philanthropy may sometimes be so profoundly emotional as to be invulnerable to rational analysis,” but he doesn’t pick up on the key word “sometimes,” and leaves “other times it can be downright sensible” as unspoken and even unconsidered.

Can I get a “both-and”?  In our opinion decision-making in philanthropy should involve both heads and hearts.  Must the activities of the heart be random, thoughtless, ungrounded, disconnected to purpose – ineffectual and brainless? Must the activities of the brain be disconnected from feelings for family, neighborhood, and community — heartless and unconcerned?  Doesn’t the heart meet the brain somewhere, sometimes – with everyone? Just as all species require both “nature and nurture” to thrive, philanthropy requires both “head and heart” to be effective.

Knowing is not anti-heart. A wish to know how we’re doing is neither anti-heart nor anti-brain. A wish to make gains on tough societal issues is no more head than heart, and no more heart than head. Ditto the wish to help a hungry person.

The obsession with data-driven decision making

It’s evidently fashionable to bash data as inherently heartless, but that’s bunk. If one cares about an issue, then evidence of progress, pitfalls, and what does and doesn’t work is useful – especially if one cares passionately. Evidence, of course, can come in many forms. Numbers is only one form, and even numbers come in varied degrees of precision. Evidence has to be interpreted, after all; that’s a job for both head and heart, which is why even two brainy people can disagree with what a set of data means. A useful mantra is “no numbers without narrative, no narrative without numbers.” Add graphics, and you’ve got evidence that communicates.

The problem is that too often “impact” is conceived by investors (aka funders) in grandiose ways with heavy-duty, save-the-world, distant bottom-line indicators (“eradicate hunger,” “eliminate disparities”) attached to big system performance, all pursued in the name of accountability. This is seen by some as heady, but actually it’s clueless. This way of pursuing impact does not acknowledge all the short-term gains that need to be achieved, strung together and parlayed into longer-term gains, and it inadvertently holds organizations responsible for outcomes they cannot control or even influence. It’s the near-range benchmarks that should be pursued and funded until achieved, and funded further to link to other activities that ultimately can move the needles indicating hunger or equity. You’d think a business-oriented investor would know that, but these days too many are obsessed with quick bottom lines and have foisted their preoccupation onto the nonprofit sector, whose boards they occupy.

Can decision-making in philanthropy be based on “understanding” and “knowing”?

Perhaps a useful reconciliation can be imagined using the precepts of “value investing” à la Warren Buffet. He doesn’t shoot for short-term profits, and he ignores the fluctuations of the stock market. Instead he invests in companies that promise continuous improvements in performance and delivery on their mission in their own marketplaces. He’s not a quick-buck artist, but buys into the whole project, the whole mission, and is in it for the long term. He’s most definitely data-driven, but uses different data than the in-and-out types. Value investing uses data that speak to the long term viability and performance of the organization, data that come, dare I say, from the heart and soul of the organization.

Such a value-investment formulation should work well for those saying “just give operating money to us organizations that are doing a good job” (positioned erroneously by Donovan on the heart-side of the divide). It should also work well will donors saying “give me real evidence that this organization is doing a good job.” I submit that all stakeholders would like to know something about the well-being and progress of their beneficiaries.

There’s a hunger for this kind of knowledge from all stakeholders engaged with the nonprofit arena – those using their heads and their hearts.

See also on this site: Downsides to Philanthropy: The Way We Think About Charity is Dead Wrong.

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Steven E. Mayer, Ph.D. / Effective Communities Project

Originally published on this site March 26, 2013 / Most recently revised November 5, 2021