Networked technologies and big, open data are in the process of reshaping nearly every industry—music, health care, education, scientific research, and journalism, as well as the nonprofit sector, civil society, and government. The consequences of long-tail economics and wise crowds are forcing almost every institution to adapt (and hopefully improve) or face obsolescence. Except, perhaps, one prominent sector: institutional philanthropy.
Traditional foundations are independent entities that distribute private money. As such, they experience minimal political pressure or market competition. They have a long cultural history of discretion, making most of their decisions behind closed doors. They often operate in a rarefied space, removed from the daily struggles of the people whose lives they intend to improve. And the largest foundations are famously bureaucratic. Add these elements together and it's difficult to imagine this field developing the capacity to innovate or adopt the kind of transparent strategies that are becoming a business norm in a connected age.
But change is coming, and at the center of that change is Lucy Bernholz, a well-respected "philanthropy wonk" and author of the blog Philanthropy 2173 with 20-plus years of experience at the intersection of technology and social change work. Last year, Bernholz launched a "modest manifesto" for what she calls Open Philanthropy, and she believes that the most important pieces are in place to ignite a little revolution in the way philanthropies leverage their resources, especially their knowledge.
As Bernholz recently stated at this year's Personal Democracy Forum, foundations are "vast repositories of information about who's doing what in the social economy." When someone applies for a grant, "all of that information you put together about the community or the issue that you care about has disappeared into their vaults forever. Imagine being able to unlock the vaults of the Carnegie Corporation about what they know about after school programs in your community. Today, in an era of deep data mining, pattern recognition, network analysis and open government, open source and web scraping, what we need are [foundation] data."
What makes the effort so daunting? And what can we do to encourage more open philanthropy?
"It's daunting for dumb reasons. We're so fragmented, and we don't have a market incentive to solve the problem," says Bernholz. However, "20 years ago no one knew what I was talking about, but now this is a solvable problem with an identifiable set of leaders."
Standards are emerging. Bernholz points to efforts that are leading the way, such as The International Aid Transparency Initiative that makes "aid flows" easier to track and analyze. While promising, Bernholz warns that "this is a very top-down approach," that could become, "a process that furthers a divide between [the large institutional funders] and the rest of the world."
On the more emergent, grassroots side of the equation, "there are these players now who don't even realize they are touching pieces of this. They are just doing things that makes their work better in a digital age." While the large institutional funders carry a lot of weight, most philanthropic giving (roughly $240 billion in annual in the U.S.) happens when individuals give smaller gifts in the social economy.
"Ten years ago, trying to think about organizing and aggregating data about the long tail of personal giving was basically impossible. Now so much of that giving has moved onto online and mobile platforms that there is hope." Giving circles, mobile fundraising, and crowd-funding efforts are on the rise, and they are more open, more democratic, and more "webby" than the traditional funders.
For example, the Awesome Foundation (I am the founder of the organization's Seattle chapter) is a loose, web-enabled federation of local giving chapters that distribute monthly micro-grants in cash based on an accessible web application. "Everything about them is digitally native, but has deep roots in older traditions of giving circles," says Bernholz. She believes these new philanthropic startups can influence traditional philanthropy to open up "by being very loud, but very welcoming to the big foundations. They can be a very important connector between the big foundations and the long tail of givers if they think about how to create feedback loops between those players and their communities."
She goes on: "Another really important element in these newer, more digitally organized groups that is important to big foundations is their sector agnosticism, a trend in philanthropic strategy that looks for best solutions, regardless of their origin in either the for-profit, nonprofit, or government sectors."
Currently, Bernholz is spending a lot of time in the growing open government movement looking for models that can be applied to philanthropy.
She believes open government is beginning to mature. Historically it, "has been about government agencies throwing data over the fence and hoping somebody catches it. There are a lot of cool new apps, but they're not solving problems. It's a logical evolution. We're at the next stage seeing real interactions between people living in communities saying 'our problem is this; what data do you have that will help us solve this problem.'"