Evaluation IN and OF Philanthropy

Par Louise Giroux , President of Philanthropia
25 March 2020

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Louise Giroux evaluating philanthropyLouise Giroux is the president and founder of Philanthropia Canada and Philanthropia France. She has over 30 years of experience in philanthropic development.

She continues to manage a diversity of significant fundraising campaigns in the hospital, cultural and university sectors. These include the ‘Grand Verglas’ campaign by the Red Cross as well as the planning and management of Université de Montréal’s major campaign of 2000 – 2003. 

In France, she has managed and supervised the campaigns of many museums, universities and research institutes, among others, that have reached or surpassed their objectives.  

Nonprofit impact evaluation is the subject of heated debates among experts: political scientists, economists, professionals in program evaluation, academics, activists of both the Left and Right. All express their beliefs based on ideology, lived experiences or scientific studies. The value of philanthropy is sometimes globally measured as a complementary mechanism to the state in improving social justice, or more precisely, on the impact of a program on a group of people.

Can we speak of the value and impact of a specific philanthropic mission if we believe that, in any case, governments are better at redistributing the wealth than philanthropists and nonprofits? 

Let us begin by discussing the question of the evaluation OF philanthropy, then to question the “feasibility” of evaluation IN philanthropy. Finally, we shall discuss cooperation among all actors and “new philanthropy.” 

Evaluation OF philanthropy

How can we evaluate philanthropy and its social impact on a global scale? Is it good or bad for the world or for one’s country? If we ask the question globally, the answer will be different in each national political system. From the outset, no one among the Canadians and Quebecois, lucky enough to live in a “Welfare State”, would accept that philanthropy be in charge of the “social fabric.” To answer the question of who is better in redistributing the wealth, it seems clear that the state is better than philanthropy. In theory, it is more efficient and more democratic to tax the rich and let the state take care of redistribution. This is how the majority of citizens perceive it, at least in theory. In contrast, the uneven success of current democratic governments is proof of the significant weaknesses in the state’s actual capacity of ensuring a just and equitable redistribution.

Let us examine the state’s weaknesses regarding its actual capacity to improve social justice and reduce inequalities in the world and ask ourselves if philanthropy could do better.

Let us begin with the inequalities between countries from the point of view of the Nobel Prize in Economics Laureate of 2015, Angus Deaton’s. Professor at Princeton University, Deaton has dedicated his professional career to the study of social inequalities and to observing people’s battle in escaping poverty. His evaluation of international aid from wealthy countries towards poverty-stricken countries is clear: it is a catastrophe!

“Nearly a billion individuals live in material misery, millions of children still die due to the randomness of where they were born (Deaton, 2016, our translation)”. In his economic publication “La Grande Évasion”, Deaton describes in detail the paradox of international aid. The total of international aid from wealthy countries was 133.5 billion dollars in 2011, which does not include the 30 billion dollars collected by NGOs. According to Deaton, this influx of capital is more than enough to eliminate poverty in the World if money was allocated directly to those living under the poverty line. However, this is not the case. How come? 

Peter Bauer described the crisis in 1972 (pp. 97-98). “If all conditions for development other than capital are present, capital will soon be generated locally…). If, however, the conditions for development are not present, then aid (…) will be necessarily unproductive and therefore ineffective”. Therefore, when aid is not paired with development, it is more profitable to those who provide it than to those it was meant to help. International aid managed by governments is at best useless, and, at worse, detrimental, as it contributes to maintaining those it is meant to be helping in poverty. Aid is often diverted by the corrupted systems that thrive on it. 

Nevertheless, international aid is not always harmful, when it comes to health, for example. UNICEF and many other organizations have saved the lives of millions of children by providing antibiotics and generalizing vaccination. Several NGOs overcame the obstacles by bringing direct aid to the target populations as well as the knowledge likely to improve their wellbeing. 

In Canada, are charitable organizations more efficient than governments in helping those in need and reducing poverty or in supporting their education? Hilary Pearson, previous President and CEO of Philanthropic Foundations Canada, relays an answer to this question on her personal blog in reaction to a debate organized by the BBC in January 2020. According to one of the guest experts, Melissa Berman of Rockefeller Philanthropy Advisors, “The answer to the question: ‘state or philanthropy?” can be summed up as both. Both are necessary. “Philanthropy can act to close gaps and assure access to services for those who are marginalized (…) it can also fund innovation and adaptation (…) As one of the BBC panelists said, philanthropy is at its best when it is not simply about generosity but about justice.”.

Evaluation IN philanthropy

If we consider philanthropy as complementary to state action, in that it allows us to attack social injustices and systemic prejudice, how is it possible to evaluate the social impact of philanthropy? Is it possible or necessary to assess the relevance, efficiency, efficacy and net impact of a particular nonprofit, when the multiplication of organizations supporting the same causes fosters competition between organizations and confuses donors? 

Could we evaluate the collective “efficiency” of all foundations and nonprofits pursuing the same objective on the same territory? Can we compare a project’s results with the financial and human resources used to reach them, to optimize the allocation of these resources? 

Impact evaluation is a very complicated procedure given the high number of contextual elements to consider, but also because of the difficulty in identifying causality. Many associations and foundations lack the necessary resources to evaluate their social impact. Researchers have given a pragmatic answer to the big question of what the best method to evaluate the impact of philanthropic action is. “The philanthropic sector, today, is very conscious that the Holy Grail (of impact evaluation) doesn’t exist and that everyone must move forward pragmatically, keeping their resources and issues in mind, to generate information that is important for their organization, be they true or not”.

Evaluating the social impact of philanthropic action is perhaps an unrealistic utopia. There is hope, with the cooperation between organizations and new notions of impact, such as nonprofits’ “footprint” in their sector. 

What is the future of social impact in philanthropy?

How to explain the omnipresent desire for impact evaluation in philanthropy? On the one hand, the philanthropic context has changed. The competition among nonprofits is increasing with the creation of new foundations and the multitude of approaches for soliciting the same dollars. On the other hand, individual donors want to choose the causes they support and to know what the impact of their donations will be. They want their contribution to have a long term “footprint” to, ultimately, change the world. In this sense, it might be preferable, as suggested by Virginie Seghers, to evaluate nonprofits’ long-term impact on the cause it defends, rather than the short-term impacts of their activities.  

Impact evaluation can help guide donors and help nonprofits distinguish themselves. However, according to several experts, another direction could be beneficial for all: the cooperation of actors around shared priorities and objectives. 

The Metcalf foundation published a report titled “Shared Platforms and Charitable Venture Organizations”. In it, they present the reasons for which a shared platform dramatically improves the health of the Arts sector. “Artists entering this challenging arts funding environment are often forced (…) to support organizational, administrative, and financial systems (…) and then find time to create and produce their artistic works”. (Marsland, 2013). The concept of shared platforms originates in an American tax provision called “fiscal sponsorship”. In the United States, tax sponsorships have become very popular in helping nonprofit organizations who serve the public interest by relieving them of this essential but difficult to manage task. 

On another note, in Canada, nonprofits in the environmental sector maintain a continuous collaboration. Environment Funders Canada, for example, brings together “private, public, community and corporate foundations, who share a desire to learn, collaborate and mobilize resources to achieve common priorities” (EFC, 2019).

Unfortunately, the few mutualization experiences that have taken place in Quebec and Canada are not supported by an appropriate tax system as in the United States. It is about time that governments update taxation’s powerful instruments so that philanthropy can achieve its full social impact potential. 


This article is part of our special edition Evaluating Philanthropy

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Bibliography

Bauer, P (1972). Dissent on Development. Cambridge: Harvard University Press.

Deaton, A. (2016). La Grande Évasion, PUF.

Marsland, J. (2013) Plateformes partagées et pépinières de bienfaisance. Metcalf Foundation. Repéré le 26 février 2020 à

https://metcalffoundation.com/site/uploads/2015/07/Shared-Platforms-and-CVOs_FreFinal.pdf

Réseau canadien des subventionneurs en environnement (RCSE) (2019). Repéré le 26 février 2020 à http://www.cegn.org