The Way Funding Should Work

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.

About Drew McManus

"I hear that every time you show up to work with an orchestra, people get fired." Those were the first words out of an executive's mouth after her board chair introduced us. That executive is now a dear colleague and friend but the day that consulting contract began with her orchestra, she was convinced I was a hatchet-man brought in by the board to clean house.

I understand where the trepidation comes from as a great deal of my consulting and technology provider work for arts organizations involves due diligence, separating fact from fiction, interpreting spin, as well as performance review and oversight. So yes, sometimes that work results in one or two individuals "aggressively embracing career change" but far more often than not, it reinforces and clarifies exactly what works and why.

In short, it doesn't matter if you know where all the bodies are buried if you can't keep your own clients out of the ground, and I'm fortunate enough to say that for more than 15 years, I've done exactly that for groups of all budget size from Qatar to Kathmandu.

For fun, I write a daily blog about the orchestra business, provide a platform for arts insiders to speak their mind, keep track of what people in this business get paid, help write a satirical cartoon about orchestra life, hack the arts, and love a good coffee drink.

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0 thoughts on “The Way Funding Should Work”

  1. If I had that kind of money to hand out, “smart enough” wouldn’t be my concern. “Incorruptible enough” would be, and anyone can be corrupted if you drop $15 million into their laps. Much as I love the arts, I wouldn’t hand a chunk of money with that many zeroes on it to John the Baptist without some strings attached. Consequently, I don’t think his statement really addresses the problem. Foundations probably aren’t as worried about stupidity as cupidity. Not that their money might be wasted on dumb things, but that it might be embezzled.

    Not being filthy rich, I’m guessing. But if I were, the potential for corruption would be uppermost in my mind, not the potential for idiocy.

  2. No arguments there but I was including the sort of moral corruptibility you mentioned in my perspective. In the end, I’d still lump those together in what Starr call “smart enough” but instead of addressing that issue via strings, it would be easier in the end to insist on an auditing process that makes it substantially more difficult to conceal that activity than is currently the case.

  3. The real challenge is the too many Foundation leaders are following the new golden rule and not the old one. They use the ‘he who has the gold – rules’ rather than ‘treat others as you would wish to be treated yourself’.

    The underlying problem is that there is a lack of respect for the career leaders in the public benefit sector. Those who provide the public services ‘need to be controlled and protected from their foolishness’ with restrictions, rather than respected for their leadership . The early point that one should not donate where their is no fundamental trust is the key one. Public benefit sector leaders who alter their mission to chase the donor’s dollar risk not serving either constituent groups well.

  4. No arguments there either Andrew. And to elaborate on your final point, it would be good (albeit unpleasant for some) if funders made it clear, publicly, why they do or do not have confidence in an institution that rises to the level of trust as defined by Starr. Transparency would do this segment of the business some real good.

  5. Yeah, open books is the way to go with this sort of thing … I guess that’s a “string,” but not an artistic or programming one.

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