A conversation with the Executive Director for the Center of High Impact Philanthropy.

Katherina Rosqueta: Katherina Rosqueta, Executive Director for the Center of High Impact Philanthropy at the University of Pennsylvania.

Question: What is high impact philanthropy?

Katherina Rosqueta: It’s less about a particular organization or a particular activity, it’s about whether or not you’ve given the money in a such a way that you can actually have some confidence that’s it’s going to make the change in the world you want. And that change can be, you know, having another student at risk of dropping out actually being able to graduate on time. That change could be getting an existing cost effective drug for malaria to a child in time that you save that person’s life.

I distinguish between high impact philanthropy and other types of philanthropy because some philanthropy isn’t practiced in such a way that it can assure those kinds of results. And, in fact, many philanthropists don’t necessarily give with the idea of trying to maximize the social good of the philanthropy.

So for those folks who are giving out of a sense of obligation or reciprocal giving. “My buddies on the board, he gave money to my fundraiser so I gave money to his fundraiser.” Or… “I don’t care so much about,” I’m speaking from the point of philanthropist, “I don’t care so much about whether or not I am really maximizing the impact of my gift but I’m really happy that my name’s on that big building.” High impact philanthropy is different from that kind of social or reciprocal philanthropy in that. It’s squarely focused on improving the lives of others.

All philanthropy, especially high impact philanthropy where people are really focusing on results, it starts with a personal commitment. It’s a personal commitment to making a change in the world. And how people got to that commitment is a very unique and personal journey. I don’t think you want to disrupt that journey.

Because one of the things with high impact philanthropy is you have to have a commitment to ongoing learning. There are no silver bullets so you have to be able to care enough about the issue, to learn when you goofed up, and to redirect or add more resources than you thought you needed in order to achieve your good.

And what’s exciting is when a philanthropist says I’m committed to making a change in this area, whatever that area is, once you get to that point, then you say, great, how can you translate that commitment and those good intentions and whatever resources you’re bringing to the table to actually making the difference you want to make? You know, that’s where, hopefully, our work plays, is to translate those good intentions and that commitment to actual impact.

Question: Why do people donate to charity?

Katherina Rosqueta: We do know there are several motivations for why people give. I mean, one of the biggest ones is, simply, they are asked. And so, it’s a reaction or request by somebody who either they have a personal connection to or who’s describing a need that somehow resonates with them.

Other folks give because they see themselves as a member of a particular community. And they feel like they have a responsibility or role in that community as a leader. And philanthropy is one way that they demonstrate that leadership.

There are others who have been motivated because of a particular trigger event. They lost their mom to cancer and because of that personal experience, have become committed to addressing that issue and hopefully alleviating some of the pain and suffering that they experience in their family as a result of mom having cancer.

One thing that was interesting from a study that we conducted, where we interviewed 33 high net worth individual philanthropist, was how much of the information they get around their philanthropy comes from a pretty narrow set of information sources right now. It’s the popular press, the sort of major periodicals. And it’s their friends, their social network, their peer network.

And one of the reasons our center [The Center for High Impact Philanthropy at the University of Pennsylvania] was started is because, if you’re really trying to figure out where your dollars can do the most good, you need some pretty good information to make a smart decision.

We talk about the million dollar question of the kinds of philanthropists we’re trying to help are asking. And that is, “I’m not the kind of guy who wants the name on the building. This isn’t about social philanthropy. This is about my trying to figure out where I can do the most good with the dollars I have.”

Question: What information do philanthropists need?

Katherina Rosqueta: The top issue is, right now, a sense of frustration that they’re not sure whether or not they’re making a difference. And so, what was top on the minds of the folks that we were talking to when we started discussing philanthropy was, how can I have more confidence that I’m actually making a change. And if I’m going to continue doing this, I need to know better that my dollars are actually improving someone’s life. And that’s not only findings from our study but other studies where people have asked the question, what will make you give more? And it was better information on cost and better information on impact. I don’t even think in the top five or ten it was more of a tax benefit.

Question: How involved should philanthropists be?

Katherina Rosqueta: What we do know is that there’s a lot of talk surrounding a kind of generational shift in philanthropy, a set of philanthropists who want and expect more involvement in whatever philanthropic activity they are engaged in. The idea is that if that’s where they’re starting, if there is this desire to be more than just writing the checks, then, I think, what the sector needs to do is figure out how can you leverage those good intentions and, frankly, a lot of talent that could be servicing the mission of the organization. And make sure that that talent, that energy doesn’t go to distracting folks from the mission of the organization or that organizations don’t, somehow, get beholden to the whims of a philanthropist that thinks that this is their pet project.

Question: Will nonprofits be ranked in the future?

Katherina Rosqueta: The problem right now is there isn’t enough good information around the nonprofit’s results in order for you to give a meaningful ranking. So ideally, with a nonprofit, what you want to rank on is their ability to transform their resources into good.

Given the state of the field, what we have are information on certain inputs, like the amount of money that goes into programs. But input is not really what high impact philanthropists or most of these nonprofits care about. This is not about counting the number of dollars you spend, it’s about the other side of the equation, which is given the number of dollars you spent, what results did you see?

I think what you look for in a nonprofit organization is not are they solving the root cause or putting on a band-aid but given what they’re trying to solve, are they doing that well?

Question: What problems do philanthropists and nonprofits face?

Katherina Rosqueta: People seem to forget that with philanthropy, just like with any other decision, there are three things that could happen. One, you could do good. You could have the results you intended. Two, you could throw a lot of resources and not make a wit of difference. Or three, you can actually do harm to the communities that you intended to serve. So the notion of high impact philanthropy is can you approach philanthropy in such a way that you weight the outcome to the first, which is doing as much good as you can.

There’s a study that Bank of America had sponsored a center on philanthropy in Indiana, produce the study, and they looked at what prevented people from giving more. The question may have been phrased, what would cause you to give more than you’re giving? And the top 2 answers were related to cost and impact.

When we did our own study, which was called “I’m Not Rockefeller” because that was actually a remark we got from multiple people, some sentiment like, oh, you’re calling me a philanthropist, that’s not really who I am. Despite the fact, by the way, that they gave, on average, a million dollars a year.

What we found was there’s a great deal of latent philanthropy. So what we heard in the answers to our questions was, frankly, a lot of angst about the fact that they weren’t giving as much as they knew they financially could or as much as they wanted to. So it wasn’t for a lack of good intention. In many cases, they had actually put the money aside, specifically, for philanthropy. And it wasn’t for lack of financial capacity, they had plenty of money there to give, it was for lack of confidence that that money will make a difference. And at least the way they saw the field now, they couldn’t figure out how to get that confidence that they were making good decisions without essentially turning it into a full-time job.

For folks like them, who want to make a difference and who have the financial capacity, is there a way we can get them to smarter decisions faster so that we begin unlocking that capital. And… You know, that is one of the chief challenges that our center [The Center for High Impact Philanthropy at the University of Pennsylvania] is trying to address. By doing some of the legwork for them, doing the due diligence, going blurry eyed reading these academic studies, that we can actually do a lot of homework that will get them to making the smart decision faster.

Question: What can nonprofits learn from private enterprise?

Katherina Rosqueta: One structural difference between the nonprofit and the for-profit sector, is in the for-profit sector, the payer, the person who gives the money to the organization is also the recipient of the good. So you got a nice little virtuous cycle, right?

If you had two lemonade stands and you had, for profit, one stand has great lemonade, one stand has terrible lemonade, the consumer of the lemonade decides and starts giving the money to the good lemonade stand. The bad lemonade stand dies.

In the nonprofit sector, the whole point of their work is they are trying to help individuals and households and communities who don’t have the dollars to spend to help themselves. And so, you don’t have that nice reinforcing loop and that’s one of the reasons why it’s so difficult to have the kind of performance management that you would want to see.

The interesting thing with microfinance, microlending is that it’s got a lot of attention because it is using a market-based activity, lending, where a return is expected in terms of interest, to a social ill, which is poverty. So I think it’s part of a broader trend around looking at kind of hybrid solutions to social issues.

It’s double bottom. These are some of the terms that get floated around, this kind of hybrid approach to doing good, philanthrocapitalism. Double or triple bottom line investing, impact investing.

Those are all ways to think about: Can you apply business/market models or principles to doing good? And I think microfinance is one example of a way that you can.