Catalytic Philanthropy

“Catalytic Philanthropy” was coined by Mark Kramer in an article he wrote for the Stanford Social Innovation Review in 2009.  The article states that a grantor’s role in traditional philanthropy is typically limited to writing a check to a nonprofit and otherwise having a pretty much hands-off approach (besides its performance of the more administrative duties of managing the grant application process and post-grant follow up procedures).  In this traditional model, grantors effectively delegate to nonprofits all responsibility for devising and implementing solutions to social problems.

Kramer describes traditional philanthropy as ineffective and presents the following statistics to back this up:

Between 1980 and 2005, U.S. annual charitable giving in constant dollars grew by 255 percent and the number of nonprofits more than doubled to 1.3 million. Today, per capita giving in the United States is three times greater than any other country in the world. Yet, during this same 25-year time period, the United States dropped from second to 12th among the 30 countries that are members of the Organisation for Economic Co-Operation and Development (OECD) in basic measures of health, education, and economic opportunity.

Kramer identifies a host of problems responsible for this disparity including: the vast majority of nonprofits being underfunded (90% of nonprofits in 2009 had an annual budget under $500,000), lacking in collaboration with other nonprofits, having little to no clout to influence the government, and lacking a sufficient scale to achieve national impact.

Catalytic Philanthropy—The Details

In order to make philanthropy more effective and impactful, Kramer presents the idea of   Catalytic Philanthropy which asks grantors to think outside the box and become powerful mentors, leaders and educators to the nonprofits they’re funding.  In particular, Catalytic Philanthropy suggests effectuating change by using the whole host of nonmonetary resources available to grantors—creating results in ways perhaps even more effective than their money can.

Some examples of nonmonetary items in a grantor’s toolbox can include:

  • Knowledge and Experience: A lot of nonprofits are learning, growing, and sometimes drowning in the startup phase (or even in their post-startup phase!). Grantors can provide their own unique, high-level expertise, as well as that of their officers and board members, to help with everything from legal compliance, business advice, budgeting guidance, investing tools, marketing ideas, fundraising guidance, etc. 
  • Networking and Connections:  Grantors can introduce the nonprofit to a wide-variety of people that can help them learn and grow quicker, including other grantors, other movers and shakers in the community, eager volunteers, or even just introductions to trustworthy and reputable business advisors that will be the best fit for their organizational needs.
  • Advocate:  Grantors are often well connected and can directly advocate on behalf of a cause or community, draw public attention to an issue, influence the government, and more.
  • Time, Effort, Sitting on Boards:  Grantors can get deeply involved in guiding nonprofits, and advising the best way to spend that check by devoting their time and effort to lengthy calls, mentorships, on the ground efforts, serving on committees and even sitting on the nonprofit’s board.

There are four main practices to consider when using these tools: 

1. Take Responsibility for Achieving Results

This practice asks grantors to get directly involved by becoming deeply knowledgeable about the issue at hand, actively recruiting collaborators, and, Kramer suggests, even creating a new nonprofit to further the cause.  Instead of relying on nonprofits to come up with solutions, this approach encourages grantors to come up with their own ideas to solve problems, using their own skills, connections and resources (such as those mentioned above).

2. Mobilize a Campaign for Change

Sometimes the issue isn’t that the solution to a problem isn’t know. Sometimes the solution is clear, e.g.:  we need more educated teachers, we need kids to understand the consequences of drug-abuse, we need to provide teens with birth control, etc.  However, even with an understanding of these solutions, uncoordinated actions, red tape, insufficient resources and conflicting incentives can get in the way of effectuating change. Catalytic Philanthropy suggests collaborative efforts, building alliances, and networking, as well as nonprofits learning from each other and pooling resources. In this situation, the grantor’s role would be, in their unique position of influence and power, to help coordinate these efforts, make introductions, and heighten awareness.

3. Use All Available Tools

This calls for grantors to use every resource available to them, such as using members from their world-class corporate team to expand the efforts of the nonprofit—marketing gurus, investment advisors, technology experts, etc.  Other suggested tools include advocacy, litigation and lobbying when needed to further a cause.

4. Create Actionable Knowledge

Instead of simply relying on grant applications to gain an understanding of the social issues the nonprofit is tackling, this practice calls for grantors to gather their own knowledge and understanding about the problem (often through the gathering of data) to inform themselves and to motivate others in an emotional and inspiring way.  For example, a grantor gathered and provided data to the government that extending public school to impoverished preschool aged children would produce a net benefit of $511 billion to the economy, inspiring change on a governmental level. Another example provided by Kramer is a grantor creating a social action campaign through creating a company that filmed An Inconvenient Truth, one of the highest grossing documentaries of all time, directly leading to over 106,000 tons of CO2 off sets as well as the introduction of four bills on climate change to Congress.

Combining a monetary grant with the foregoing nonmonetary tools and four guiding pillars of practice can help nonprofits to rapidly grow, bring in more money and become more educated, efficient, connected, thriving and savvy—allowing the nonprofit, and the impact of the grantor’s check, to go exponentially farther. 

Issues with Catalytic Philanthropy

The idea of a grantor getting so heavily and passionately involved with its community and/or cause is very intriguing, and just might be able to cause some true, catalytic change. But the obvious issue here is that Kramer is practically asking the grantor to take a chief leading role in a nonprofit and to give it the resources of a Fortune 500 corporation, and we must take some considerations in that regard:

First, the grantor may not have the time, desire or valuable nonmonetary resources to contribute to some or all of its grantees.  In addition, while some nonprofits could benefit from some grantor guidance, many nonprofits are highly educated and knowledgeable in their field.  The grantor may have far less expertise, and experience than its grantees in determining how best to use the grant funds, and extra involvement by the grantor may be, and may be perceived as, intrusive, undesired, and another facet of supremacy culture.

Ultimately, there are nuances in deciding what forms of contributions and interventions, if any, are most appropriate when grantors directly impact their grantees. However, for those grantors that limit their involvement to simply writing checks, they should thoughtfully consider, along with a grantee’s consent and input, how they can provide additional support and/or advance their common goals in a supplemental manner—that just may result in some catalytic change.