What the Failures of Philanthropy Can Teach Us

By Sheridan Wilbur

As much as we hate to admit mistakes, errors are crucial to projecting a more successful future.

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John Dewey, the early educational reformer of the 20th century, said it best: “Failure is instructive. The person who really thinks learns quite as much from his failures as from his successes.”  

Dewey understood an uncomfortable truth: failure teaches more than a lifetime of success ever could. Within philanthropy, it is common to share stories of how individuals and companies are succeeding; how they are making social and environmental changes to impact the lives of others, but it’s less common to hear about their pitfalls. It’s encouraging to read about corporations like Walmart and Kroger conquering world hunger through philanthropy when capitalism seems to blame, but it’s equally as important to recognize when money is going to waste.  

Many times, philanthropic efforts are lost in tax deductions, salaries, operating costs and most significantly, public shame. In order to make philanthropy truly about redistributing and allocating money, and improving the livelihoods of less fortunate, it is critical that the stigma of failure is removed. Just like a science experiment, diagnostics must be taken place and results need to be published after exposing a new variable to an environment.  The new variable is a financial investment, and the funds must be analyzed to determine the impact the aid had, and how to improve the project in the future.

Walmart donated over 421 million pounds of food in the past year and over 4.5% of its pre-tax profits to help combat hunger, but there are many shortcomings from philanthropic initiatives that are not as inspiring.  

Between 1982 and 1988, the Rockefeller Foundation worked to educate minorities and single parents and propel future employment by investing over $3,000 per participant in their welfare-to-work program. Unfortunately, after 30 months of job training and counseling, Rockefeller concluded that the impact was immeasurable.  

Oprah’s philanthropic initiative from 1994 is another example of failed philanthropic aid. She donated over $3 million dollars in pursuit to move over 100 families out of public housing and off welfare in Chicago, but only 3 out of 30,000 families that applied successfully completed the program.  

The Rockefeller Foundation and Oprah both share disheartening results, but there is a huge difference between their initiatives – the documentation and understanding of their shortcomings.  The Rockefeller Foundation failed to reduce welfare dependency and enhance self-sufficiency under the Minority Female Single Parent program (MFSP), but they spent an enormous amount of time evaluating their initiative to understand what went wrong.  

Rockefeller’s failure seems shameful to philanthropy at first, as well as financially burdening, but it ended up being very beneficial and cost effective.  Rockefeller tracked the progress on the MFSP program and recognized failed outcomes and where they went wrong before engaging in a similar initiative.  They were able to prevent another mistake in grant allocation by studying the diagnostics and recognizing why the welfare-to-work program busted.  

On the other hand, Oprah neglected to perform data analytics, measure the impact and evaluate the shortcomings to her welfare project. Her program, Families for a Better Life, disconnected their phone lines, reported no public record of the program and didn’t conduct any outside evaluations. As a result, little is understood on why her plan didn’t succeed and it is likely that a similar failure will happen again.

Philanthropy fails when there is not an open line of communication between the donor and recipient, and grant money is allocated to the wrong people or to the wrong places. Aid can get disproportionately spent in operating costs for clergy or in theoretical research that ends up serving the rich more tax relief, and the poor less resources. If donors don’t know where the funds should go, and what methods work best, philanthropy can become a dangerous method of perpetuating inequality, rather than closing the gap between the rich and poor.  

Therefore, it is important that foundations like Rockefeller or philanthropists like Oprah cultivate open dialogue to understand what the stakeholder wants alongside what historically works best, to make the most meaningful impact.

It’s never glamorous to highlight failed projects, but it is important to incorporate an evaluation process and diagnostic test to save foundations like Rockefeller, or wealthy donors like Oprah, time and money.  ‘Social impact’ is harder to measure than gross sales for the quarter, but important to understand what difference the money is making to ensure it is leading to more opportunities for the disadvantaged.  

Failure is the best teacher, and flunked initiatives need to be studied and published, just as often as solutions are taking front page headlines. If philanthropists can create an environment for honest and productive conversation, there will be less money wasted and more knowledge shared.

Philanthropy has the power to address social problems in a meaningful way, but reports of these efforts must be published, especially when they fall short.

 

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