Andrew Carnegie

What does it take for philanthropy to deliver results?

June 8, 2011: 11:14 AM ET

Donors large and small often think that they can simply throw money at a problem and hope for the best. Successful giving requires more involvement than that.

By Leslie Crutchfield, John Kania and Mark Kramer, guest contributors

An illustration of Andrew Carnegie, originally published on July 25, 1903.

An illustration of Andrew Carnegie, originally published on July 25, 1903.

FORTUNE -- American philanthropy will soon celebrate its centennial anniversary. On June 9, 1911, steel magnate Andrew Carnegie was granted a charter to create Carnegie Corporation of New York, giving birth to the first major private, secular, general purpose U.S. foundation. Oil baron John D. Rockefeller soon followed suit, incorporating his eponymous foundation in 1913. Up until that point, U.S. philanthropy was mainly made up of ad hoc charity -- there was no platform for pooling American wealth and systematically giving it away.

One hundred years later, philanthropy is booming. Today, some 75,000 foundations operate in the U.S. alone -- more than half of which were founded in the last two decades; they annually distribute nearly $40 billion.

Yet if philanthropy's progress is graded not by the sums of wealth re-distributed but ­by its impact on problems -- solving the public education crisis, reversing climate trends, delivering basic health care to the poor -- then, unfortunately, you'd have to mark it "unsatisfactory."

If givers today want to help solve more of the world's complex problems, then they will need to change the way they give.

The perils of throwing money at the problem

All kinds of donors -- whether they are business executives, family fund trustees, leaders of private or corporate foundations, or just generous individuals -- fall prey to some common traps.

Many benefactors believe that simply because they donate to a cause, they'll be successful. They tell themselves, "If I give generously enough, that will fix the problem."

This misguided assumption was at the root of the recent kerfuffle surrounding Three Cups of Tea author Greg Mortenson, who ambitiously set out to build schools mostly for girls in across Afghanistan and Pakistan through his Central Asia Institute. A report from 60 Minutes claimed that many of the schools were failing or abandoned. More

Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.