A Hippocratic Oath for philanthropy?
We need a Hippocratic Oath for the philanthropic sector. One that says“first do no harm”. This might seem obvious but, everyone knows that changing the world “for the better” is incredibly hard. Most humans want the world to be a better place. If it was that easy, it would already have happened.
I could talk about all the things that have gone wrong with philanthropic investments, but I want to focus on one aspect, which doesn’t get spoken about much outside of IDR’s humor columns.
Most donors (very reasonably) ask for low overheads (<15%), efficiency (return on investment in terms of e.g. for livelihood programs it might be income/funds invested) and impact (how many lives, how much area etc.). But what’s missing is some critical reflection on how their own choices make things worse.
I want to make a case that we need philanthropies to change how they give money. The sector needs its own efficiency metrics, taking into account externalities imposed on the non-profits, in addition to any impact metrics foundations already track.
My argument is that donors sometimes impose tremendous “externalities” on the non-profit sector, which do not get accounted for. Let me illustrate this argument through case studies.
- The Prize
There is a foundation that gives out one large prize each year. Dozens of NGOs apply. The whole process is well managed by a highly paid consulting firm. The consulting firm pays multiple visits to the field sites and audits the accounts of every applicant involving dozens of hours of NGO staff time. One year, an entire school was reopened a day early to accommodate the consultant’s visit. Floors were polished, kids prepared a special presentation but the consultant failed to show up. When the NGO staff called the consultant, he was on vacation at a fancy beach resort. He had not discussed his vacation dates with his assistant, who had been coordinating with the NGO! The consultant didn’t face any consequence because the NGO didn’t dare complain, should they be blacklisted in the future.
2. The co-designed project
Then there are the three times, foundations approached us to co-design a project. The programme officers gave us a loose budget and a big picture idea they wanted to flesh out. In each case, over ten weeks were spent by multiple high-level staff working almost full time to do the literature survey and flesh out the half-baked idea into a grant proposal.
But once the proposal was submitted, the programme officers either took it to their Board and failed to convince them or bailed in the last minute and simply ghosted. All that work that was explicitly solicited by the donor, which the non-profit would not have otherwise done was not even followed up with a note saying “thanks for the work, here is why we could not fund it”. Since non-profits are soft money funded, staff time is usually billed to other projects. Consequently, the people ended up spending their vacation working to fulfill their regular deliverables.
3. The small grants programme
I have sat through my fair share of meetings that involve small grants. An anchor institution gets money to administer a smaller grants programme on a subject on which they have expertise. They open up a call and get 1500 applicants. Then work day and night to whittle them down to a smaller number and finally announce 20 finalists who will each get 15 lakhs (~$20,000). They are thrilled by the response; tired but satisfied that they picked the best team after much internal wrangling. The problem is no one calculated the opportunity cost of the hours spent by 1500 teams in developing the applications or the volunteer review team. When you run the Math, it works out to Rs 3 crores ($400K), which exceeds the total grant amount of the entire small grants programme.
Sometimes the grant can be larger. But if it is a global call involving a complex three-step application process with multiple workshops, videos, letters of support, and social media campaigns, the time investment by thousands of applicants can add up.
In other words, to get the grant, the non-profit sector must collectively spend the same amount that was given out in the first place. Who pays for this? It’s a hidden cost imposed on non-profit sector staff, who must just work longer hours. In the end, no one wins.
What’s the way forward?
I don’t think any of the foundation staff realize they ARE the problem. Throughout my years in the sector, I have found most to be sincere in their desire to create a better society. But there are clearly instances where the way grants are given is itself the problem, because of how the process is structured.
I am going to offer four concrete unsolicited suggestions to funders (with the sinking feeling that no one will ever give me money again!). Nonetheless, I hope more people will speak up and these “do no harm” norms will become industry standard.
First, track and acknowledge total unpaid time invested by non-profit sector partners on RFPs in ANY interaction, including workshops, peer-review, and grant writing. Have programme officers report the ratio of hours of unpaid to paid hours of non-profit staff time. The ratio of money given to money spent writing the grants should be > 2. Effectiveness of impact assessments should internalize unpaid staff time.
Second, pay NGOs (not just consultants) through small grants to flesh out incomplete ideas. Budget explicitly for it and don’t externalize this onto NGO staff, who are on soft money and over-extended. Think carefully about the co-design process including how much volunteer labour “lean, low-touch” engagements entail and who is ultimately paying for them.
Third, solicit anonymous feedback from your social sector partners to prevent abuse of power by your own staff and third-party consultants. I have found the power-play/ entitled/ disrespectful behavior by some donor representatives to be appalling, something that we are all silent on. If I, as an upper-class IIT-Stanford educated professional have faced this then I can only imagine what field staff must regularly face.
Fourth, if your prize/small grants programme has less than a 5% chance of a win, it is probably best to join hands with another donor and boost those statistics somewhere between 10–25%. Give feedback on all proposals, if possible even making the section-wise scoring available to each applicant.
I have heard three arguments justifying the status quo: First, the proposals are of such poor quality that no more than 5% of them are worth funding. I would like to counter that proposals are bad because NGOs are running like chickens with their heads cut off trying to simultaneously submit multiple identical proposals to different donors in different formats. But if 95% of proposals are truly unworthy, perhaps what is needed is to build the capacity of the sector. This also makes it even more critical to offer feedback so we can save everyone’s time next time around. Second, it is too hard to get donors to collaborate. I found this one ironic as it came from a donor, who was setting us a small grants programme specifically to encourage non-profits to collaborate more. Third, small grants are meant to be top-up grants, not core, survival grants. This is fine but only if someone, somewhere is willing to offer core grants. If every donor makes this argument, we won’t have a non-profit sector left!
I truly believe everyone involved even in the cases above, acted and spoke sincerely and even a highly paid consultant needs time off (I say this in sincerity as I am married to one!). But as they say “the road to hell is paved with good intentions”. India’s non-profit sector is struggling under the burden of the new regulations. We need a Hippocratic Oath for philanthropies, so the non-profit sector isn’t killed by good intentions.
To be fair, many foundations do follow these best practices. Many have paid non-profits for ideation or strategising. When I have received such grants, it has been a lovely experience to be able to spend the time thinking during office hours instead of having to do it between 9 pm and midnight. A few offer core unrestricted support and we are endlessly grateful to those!
But overall we need much more self-reflection and transparency from the donor community if we are to weather this storm. I am not sure how that will happen if no one ever speaks out, because we are all too scared.
