The 8/3/2011 edition of the Stanford Social Innovation Review (hat tip, LinkedIn) published a brilliant article by Kevin Starr, Mulago Foundation and the Rainer Arnhold Fellows Program Director, that examines the value of unrestricted foundation funding. Given yesterday’s article about the perilous minefield that is foundation support within the orchestra business, Starr’s article couldn’t be timelier.
In short, Starr is a proponent of unrestricted funding and he cuts right to the chase in his article by addressing the primary issue foundation’s have with unrestricted funding.
I suppose that many worry that if they give an organization unrestricted money it will be wasted or used inefficiently. The solution is pretty simple: If you don’t think an organization is smart enough to use your money well, don’t give them any.
You can’t get much simpler than that.
Perhaps even more important, Starr scrutinizes the reasons behind overly restrictive giving.
In the real world, if you were to invest in a company you thought would make you a tidy profit, you wouldn’t tell the senior management they had to make a product of your choosing, restrict the number of vehicles they purchased, or expand operations into a new country. Why should we do any differently in the social sector? Why not simply invest—fund—on the basis of return in the form of impact? Isn’t that the point?
The only potential wrinkle in all of this is Starr’s last point above; the one about ROI being measured by impact. Starr’s very good idea can go awry when intentions get hijacked by agendas of dubious merits and the term “impact” becomes hollow jargon rather than something of substance.
At the same time, this circles back to Starr’s primary point about trusting an organization to be smart enough as to know how to use the funding in the first place.
In order to get to that point, a funder will need to develop an ongoing and meaningful relationship with recipients. And in this business, the orchestra business, that means more than just the CEO, a board connection, or music director.
What might be most important here is it fosters a results based environment that rewards transparency and creativity over how big of a slice from the control pie any one stakeholder can carve out for itself.