Pragmatic philanthropy is imperative for sustaining and growing nonprofits in the 21st century. Americans have supported nonprofits, which have appeared in various forms, since our country's founding. Our history shows a generosity of spirit for one's fellow American in need. With the signing of the Declaration of Independence, philanthropy was quietly acknowledged, as the pursuit of happiness and regard for covenant, became part of our culture. The Constitution promises to "promote the public welfare". James Madison, one of the Framers of the Constitution, considered our citizenry to have "a prudent regard to their own good as involved in the general and permanent good of the Community." George Washington, in 1789, spoke of philanthropy as part of "advancing and confirming the happiness of our country." Strategic philanthropy emerged in the 1990s but has largely remained policy institutes’ method for promoting change through white papers or corporate America’s endeavor to garner publicity by “doing good”. Neither produces an accurate metric for real change. Pragmatic philanthropy is strategic and reciprocal – it must also be embraced by nonprofits receiving funds to truly measure social impact.
History of Philanthropy Evolves
As our nation grew, philanthropy continued to thrive, a reflection of our democracy. A government employee in France, Alexis DeToqueville came to America in 1831 to learn about our democracy. In writing Democracy in America, DeToqueville marveled about the unique quality of "associations" which served the public good and improved the lives of our citizenry. DeToqueville was impressed by the way these associations would develop in the United States as one or two people would have an idea and gather others around them, ultimately crafting a cause, resources and the infrastructure to support the idea. Eventually, these associations evolved into nonprofit organizations – the charity industry. The ideas of the associations took shape with organizational “missions” to define purpose. It was an inevitable change, if one accepts that nonprofits reflect the framework of the government in which they incubate. In other words, as we live in a democracy, nonprofits have changed as the problems of our society and public solutions have changed. Philanthropy, on the other hand, while still draped with self-interest for the welfare of others, has failed to keep pace with how to give.
Indeed, despite widespread praise across centuries and disciplines, philanthropy and its progeny, the nonprofit sector, is in peril. Before the current economic crisis, the best known authority on competition and strategy, Michael E. Porter, posited that “Billions are wasted on ineffective philanthropy. Philanthropy is decades behind business in applying rigorous thinking to the use of money.” The father of modern management, Peter Drucker, suggested that volunteering in the nonprofit sector "restores the civic responsibility that is the mark of citizenship, and the civic pride that is the mark of community" , and that the nonprofit sector might provide solutions for the ills of our post-industrial society. The time for nonprofits to provide solutions may be now or never.
What’s Next for Nonprofits
Will philanthropy, in its antiquated “do good” mode, respond differently to the current economic crisis or has the recession forced a deleterious, irreversible change in charitable giving? While volunteering is a noble expression of civic duty, it is not enough, nor did Professor Drucker infer that it was. Philanthropic giving – financial support – is essential to the survival of some nonprofits. The pragmatic philanthropist is not asking whether to give; he or she is asking how to give. The list of unmet needs is almost infinite. Charitable giving is decreasing just as the need for nonprofit services is increasing. Neither volunteers nor random gifts will secure sustainable nonprofit service delivery. Waving a tin cup or seeking short-term grants for long-term problems is not the answer. Most crucial is this – nonprofits that brand themselves as beggars, not businesses – may perish, too.
Pragmatic Philanthropy Crucial to Nonprofits' Survival
With a pragmatic approach and a prudent regard for their own good, nonprofits with strong business models will survive. Philanthropy will not perish but will emerge as pragmatic philanthropy, informed by and connected to nonprofits that deliver measurable services - the transformation of the third sector. Money will be tied to results as the nonprofits –third sector – rise as viable partners for change. Nonprofits will be required to show data-driven value. As an outcome, the third sector will have an equal and dynamic role in society among the public and for-profit sector, delivering solutions for the post-industrial society. The safety net, reinforced by metrics for progress, will survive as well, prepared – better than before – to promote the public welfare.
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