Top-Down and Bottom-Up

This is my second blog post on what I've called "listening to communities," and it comes after a lively public discussion with Bill Somerville, president and founder of Philanthropic Ventures Foundation, moderated by Sean Stannard-Stockton, author of the Tactical Philanthropy blog. In effect, the discussion was designed to flag differences between Bill's book, Grassroots Philanthropy: Field Notes of a Maverick Grantmaker, and Hal Harvey's and my newly released book Money Well Spent: A Strategic Guide to Smart Philanthropy. In reporting on last night's discussion, I'll also respond to some of the comments on my first post.

While Bill Schambra's embrace of communities comes from the right, Bill Somerville's comes from the progressive side. But he too talks as if the only nonprofits in existence are community-based organizations and argues that we should give them little or no scrutiny to ensure that they're actually doing something useful.

While community-based groups play vital roles in society, they are only a small part of the nonprofit sector. Regional, national, and international organizations concerned with civil rights, education, the environment, and global poverty, and hundreds of other issues play equally important roles in making the world a better place.

Whatever a philanthropist's goals, it would be arrogant and foolhardy not to learn from the field about which approaches work and don't work. As David Bonbright writes, this includes not just the directors of organizations and expert practitioners and scholars in the field, but those whose lives the organizations seek to improve.

Sean framed the debate as top-down (Brest & Harvey) versus bottom-up (Bill Somerville) philanthropy. But it doesn't work that way. Philanthropy is both.

Philanthropy is inevitably top-down in the sense that a philanthropist must choose his or her goals. You are not likely to be open to any and all organizations that come along--an animal shelter in Des Moines, a music program for disadvantaged youth in Newark, protecting ecosystems in Montana, and preventing malaria in Tanzania. To make the point with an extreme case, no philanthropist would fund both a group advocating for gay marriage and a group seeking to ban it.

Must philanthropists also choose the strategies to achieve those goals? Not necessarily. At the outset of a new effort, letting a hundred flowers bloom may be the best plan. But over time, evidence often builds up--if you care to listen--that some approaches work better than others. Several decades ago, reasonable people could doubt whether CO2 emissions contribute to global warming, but the science has become all too clear about the relation. By the same token, studies indicate that abstinence-only programs are less effective in preventing teen pregnancy than abstinence counseling coupled with sex education.

So if you let a hundred flowers bloom, you need to discover which deserve nourishment and which turn out to be weeds. DurhamCares' story of the success of a intuitively-based, low budget football program for disadvantaged kids is a great example of a seed that produced a wonderful flower. But we only know this because someone studied their graduation rates.

Bill Somerville argued passionately for the importance of trust in the leaders and organizations you support--and there's no disagreement here. Whatever its origins, the best strategy will fall flat on its face without a strong leader of a strong organization to implement it. Feedback on a grantee's performance is essential for the organization as well as its funders. But no system for monitoring and evaluation can substitute for a relationship built on confidence and trust.

For more about the discussion with Bill Somerville, click here.

Comments

[DavidBonbright]

Paul Brest's blog is generating both clear analyses and some great insights, pointing toward a needed synthesis between bottom-up and top-down approaches.

Our work at Keystone [www.keystoneaccountability.org] clearly shows a significant appetite among nonprofits for ‘top-down’ management tools. Paul notes that donors would be foolhardy not to learn from those meant to benefit from their funding.

But our survey of current practice [http://www.keystoneaccountability.org/node/103] shows there is a whole lot of foolhardiness out there.
• Half of donors do not think that it is essential to engage with beneficiaries in the evaluation of projects.
• Only 30% of donors expect to regularly see beneficiaries’ views translated into final reports.
• Only 22% of donors say they routinely discuss the feedback from beneficiaries with their grantees. Nonprofits disagree. They say only 5% of their donors show any interest in doing so.

My experience indicates that there are only a handful of foundations that are stepping up and investing in the craft and tools required for cultivating beneficiary feedback. The silver lining here is that these few are some of the most influential US foundations, including Paul’s own William and Flora Hewlett Foundation [www.hewlett.org], Bill and Melinda Gates Foundation [http://www.gatesfoundation.org/], Rockefeller Brothers Fund [http://www.rbf.org/], David and Lucile Packard Foundation [http://www.packard.org/], Omidyar Network [http://www.omidyar.net/], and Humanity United [www.humanityunited.org/].

[TacticalPhilanthropy]

It is so great to see the discussion at my Forum last night playing out here. I'd like to go deeper into what I mean by "top-down" vs "bottom-up".

Both top-down and bottom-up investors employ a strategy. However, top-down investors give the most weight to the general economy (interest rates, employment rates, demographics) and feel that the actual organizations they invest in are secondary to the way that the organizations relate to the theme.

Bottom-up investors (like Warren Buffett, who I quoted during the Forum) first look for great organizations to invest it. While they certainly pay attention to broad issues, they put the most weight on the organization and the search for great organizations drives their research.

To give an example: A top down investor would think to themselves "I believe the falling price of gas will leave more discretionary cash in consumers wallet which they will spend, so I'll invest in Wal-Mart". A bottom-up investors would simply go looking for a great company believing that the great organization will be the best investment and not putting much faith in the potential causal link between the potential falling gas price and consumer spending patterns.

Bill thinks great organizations (or people) are where his attention should be focused, while you believe that conceiving of and vetting a theory of change is more critical. You clearly think great organizations is important, but you put more weight in establishing a correct theory of change.

[Paul Brest - Huffpost Blogger]

Sean makes a fair point, and there is a difference between the approaches. But remember that before Warren Buffett starts looking for great organizations he already knows what his objectives are--improving Berkshire Hathaway's bottom line--and he assesses his potential investments in them based on their promise of financial performance. Strategic philanthropists can also take a bottom-up approach, but only if they know how they will eventually assess their philanthropic return on investment.

[TacticalPhilanthropy]

I think this is an area where we've been talking about two different things. I agree with you 100% that all philanthropists should have goals that they track their progress towards (or at least goals for the organizations that they fund and track).

But I've used the "top-down", "bottom-up" language because from reading your book it seems clear to me that you believe the "highest and best use" of the philanthropist is creating a robust theory of change that explains how social change happens and then finding nonprofits that fit your theory. Whereas Buffett and other "bottom-up" investors (both for-profit and social) tend to focus primarily on finding great organizations and don't worry too much about a theory of change (because they believe it is basically unknowable).

"Theory of change" development faces the same problem as predicting the economy, both are subject to many, many unpredictable inputs. Whereas great organizations, but definition, have a high likelihood of creating positive social impact (or profit) throughout all sorts of unpredictable futures.