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  • Matt

Living Systems and Renewing the Promise of Philanthropy

Updated: Aug 22, 2019

During 15 years in philanthropy, I saw many seasoned foundation staff develop an unease about philanthropy’s unfulfilled promise to create social change. The sequence went like this:

  • Careers begin with the earnest hope and expectation that charitable money will make the world a better place. (What an opportunity! Let’s do this!)

  • Gradually the challenge of engaging talented people, great ideas, and effective programs toward a common goal takes hold. (What do I have to do get the “right” people in the “right” meetings…and then agree on something? More snacks?!)

  • Finally comes the creeping realization that, after spending lots of time and money, little difference is being made. (There are many cool things being funded, but…the opportunity gaps aren’t closing, the environment is less stable, and there's more division than ever on critical social issues. What gives?)

Seeing this trend motivated me to search for a different path. I became interested in how our unexamined assumptions about “how things work” create distortions that limit us.

I've found that Living Systems design principles can help us reconsider these assumptions and expand our options. Living Systems design looks to Nature as a "model, mentor and muse" for how to foster thriving, innovative and adaptable systems.

Below are a few common assumptions held in philanthropy. For each assumption, I offer an alternate way of seeing that is rooted in Living Systems design.

Assumption #1:

  • A foundation’s greatest asset is its money.

  • The power to decide where money goes belongs inside the foundation because that’s where the best decisions are made.

  • Making these decisions is an act of stewardship.

Another option:

  • A foundation’s greatest asset is its relationships with community.

  • Decisions are most effective when made by the communities who must live with those decisions.

  • Letting communities decide where foundation money goes is the high bar of philanthropic stewardship.

Foundations take stewardship extremely seriously. Protecting donor assets and making investments that reflect donor intent are hallmark concerns in philanthropy. Traditionally, many foundations adopted bank-like cultures to foster this careful responsibility.

Unfortunately, when a foundation seeks to change community, this inward stance is an Achilles heel. No single organization can contain the constellation of perspectives needed to make wise, effective community choices. Even diverse, interculturally-competent foundation staff are limited by the privilege of being inside the foundation’s walls. Awareness of key perspectives, insights, and pitfalls that drive the complex community system go unseen. Power imbalances incentivize outsiders to selectively share information, making it hard for foundations to know what’s really going on.

Relationships are the fundamental currency of philanthropy.

What if a foundation saw its greatest asset as relationships instead of money? More provocatively, what if a foundation’s grant deadline passed and no applications were submitted? What would that suggest about where power resides? At the very least, it would illuminate that foundations are fundamentally dependent on others to achieve their goals. Relationships are the fundamental currency of philanthropy.

Looking to Living Systems for inspiration, we see that Nature “rewards cooperation,” “banks on diversity,” and “depends on local expertise.” These interdependence-forward, power-dispersing principles challenge foundations that operate as though they are “apart from,” rather than “a part of,” community. It is heartening to know that more foundations are experimenting with externalizing due diligence. This is difficult work. It is easy for the process to become lip service or window dressing. It can create tension with organizational priorities and the preferences of foundation staff.

Living Systems help us understand the strategic, practical power of this participatory approach to grantmaking. Living Systems “only accept solutions the system itself helps create.” This helps explains the disconnect between ambitious philanthropic goals and the difficulty of gaining community traction toward them. Conversely, allowing community members to take risks, make mistakes, and learn from their choices is itself a transformative charitable gift. And it’s a gift that multiplies, as community members apply their deepened discernment and learning capacities to other important community decisions.

Assumption #2:

  • Non-profits are the vehicle through which social change happens.

Another option:

  • Community is the vehicle to create social change.

Most philanthropic money goes to 501(c)3 non-profit organizations. This is a result of IRS rules and foundation bylaws. It is notably not driven by analyses showing that non-profits are an effective mechanism for creating social change—that’s just assumed. Don't get me wrong, many non-profits do great work and can point to local improvements as a result of their actions. But it’s clear that economic forces create large scale social change more regularly, rapidly, and profoundly than the non-profit sector. Examples include suburbs, iPhones, the internet, industrial agriculture, and coming soon: driverless cars! Meanwhile, long-standing issues that many non-profits care about like inequities and environmental harm are getting worse. Why aren’t non-profits more effective? Is this a case of them being the wrong tool for the job?

What if we assume that community is the best vehicle to create social change instead? By community, I don’t mean people with similar traits, such as “the community of left-handed plumbers.” I’m referring to governmental, private sector, social sector, and voluntary organizations, along with individuals and families, that together create a shared experience. Communities are fundamentally diverse places where people who disagree have to figure out how to live together. This makes communities messy, but they do have a key connective trait: a shared investment in a shared future.

Knowing your future is intertwined with someone else’s is a game changer. Social problems manifest in the behavior of entire communities, and it takes community-wide solutions to address them. It’s easier to work toward those solutions if there’s a shared sense that the future depends on it. Plus, communities outlast organizations. Social problems are generations in the making, and finding solutions requires a similar time scale.

Unfortunately, organizational leaders have their hands tied by rules and expectations that require inward organizational focus. They need to show value by creating a dynamic vision, compelling strategy, and fundraising prowess. Many leaders feel a deep responsibility to excel at this silo-ed organization-building. There are few incentives to defer power and priorities to collaborative external efforts, even if it could make a huge difference to the community.

Living Systems can help us bridge from organizational mindsets to community mindsets. In Living Systems, “change in one part of the system influences other parts of the system in expected and unexpected ways.” We see this when organizations plan overlapping fundraising efforts, causing ill will and dissipating the effectiveness of the campaigns. Or when redundant voter engagement efforts are carried out, creating skepticism and fatigue among neighborhood residents who disengage. Living Systems design emphasizes creating robust feedback loops that assume interdependence. The resulting free flowing communication helps a community put its limited resources of time, attention, and money to optimal use.

Assumption #3:

  • Philanthropic money will transform society.

Another option:

  • Even the largest foundations are small compared to other forces shaping society.

Sometimes it seems like foundations are our best hope for social change. There’s lots of money, proven leaders, cutting edge thinking, and exciting opportunities. Some expect that the sheer weight of philanthropic momentum will soon unleash a cascade of social good.

While foundations can be influential, it’s important to keep their scope in perspective. Imagine all the financial forces that create the status quo in a community as the force of a river’s flow. In a mid-sized U.S. city, that river force could be approximated as the city’s $70 billion annual GDP. Then imagine a large private foundation that has $100 million annually to invest in changing that community. Sounds like a lot, right? It’s only .001 of the river’s flow. It’s like standing in the river with a garden hose, trying to shift the river channel.

If foundations see themselves as heroic drivers of change and innovation, it may be disappointing given their relatively small scope. But considering that Nature “fits form to function” and “taps the power of limits” can help foundations see themselves in fresh ways. By realistically tapping the power of its limits, a foundation can be more empowered.

One example of a powerful, right-size function is convener. Many foundations are uniquely positioned to bring together diverse change-makers and ask some simple questions, such as, “What is worth taking action on together?” or “How can we work together to improve our community?” A foundation can earn a reputation as an honest broker across disparate stakeholders, one who builds trust and creates conditions for new solutions to be discovered. The de facto impact increases when a foundation owns a supportive role fitting its true scope, rather than claiming an outsized one.

Part of the function at Blue Dot Consulting is exploring how philanthropy can improve upon its limiting assumptions through Living Systems design. If this sounds interesting to you, let’s visit. Meanwhile, please check out the sage work of my friend and mentor Kathy Allen, author of Living from the Roots: Nature Inspired Leadership Lessons for Today’s World. Her articulations of Living Systems design principles are woven throughout this article and help animate the work of Blue Dot Consulting.

Finally, a hope for us all:

May the hidden assumptions that hold us back become well known friends who help us see new paths forward.


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