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‘Risk’ Is A Four-Letter Word

September 8, 2012

I’m happy to see my post on big philanthropy mentioned in Social Velocity‘s August top 10 picks for what’s worth reading in the world of social innovation.

But Derrick Feldmann, CEO of fundraising consultancy Achieve, articulates the problem of risk-aversion in philanthropy more eloquently than I can. Playing it safe with philanthropic investment isn’t all bad and can yield benefit, but it also discourages innovation and decreases the likelihood of discovering solutions and more efficient approaches to complex social and environmental problems.

Feldmann suggests four ways philanthropy can embrace more risk:

• Adopt the entrepreneurial spirit of leading philanthropists, e.g. Carnegie, Gates, et al.

• Set aside funds for riskier ventures

• Ask new questions during the proposal and due-diligence stage

• Foster an environment and community of learning among grantees and funders

Most nonprofits are already plagued by a starvation cycle that prevents them from creating effective organizational structures and cultivating human capital, so while nonprofit leadership could better articulate the need for risk-taking and patient philanthropic investment, donors and funders must take the lead.

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