Australian philanthropy needs more crowd power

Philanthropy’s ability to give up power will actually demonstrate the sector’s maturity, writes Krystian Seibert, who argues it’s time for Australian philanthropic organisations to move towards a more participatory grantmaking model.

At Philanthropy Australia’s Philanthropy Meets Parliament Summit in September, one of the international guest speakers, Karl Zinsmeister of the Philanthropy Roundtable, made what I thought was an interesting point about the nature of philanthropy.

Essentially, whilst government can represent a centralised and top down way of trying to address social problems, philanthropy provided a way of “crowdsourcing” solutions in a much more decentralised manner.

There are more than 80,000 philanthropic foundations in the United States. The argument goes that this “crowd” of organisations will seek to solve problems in different ways, and that such a “flexible ecosystem” can help chew through complex issues in a more responsive way and can uncover innovative new approaches to addressing social problems (for some more background to Karl’s thinking, I recommend reading this and this).

We don’t have as many philanthropic foundations in Australia, with the number here being around 5,000, with another 2,000 sub-funds. But I still like to think that philanthropy in Australia plays a role funding new and innovative approaches to solving problems, and helps provide the “risk capital for social change” that government funding may not be able to provide.

So, generally speaking, I think the “crowdsourcing” analogy can apply in Australia too – with the important caveat that philanthropy can’t solve any social problem by itself and must work in partnership with the charities and other organisations it provides funding to. If philanthropy is “private wealth for public benefit”, it relies on charities to actually transform that private wealth into public benefit. Without charities, philanthropy is just a bank account.

One area where philanthropy, both in Australia and around the world, has a long way to go is in terms of how it makes its decisions. I don’t think anywhere near enough decision making within the philanthropic organisations themselves is crowdsourced.

The decisions about who and what to fund are still, by and large, determined by a relatively small number of staff and trustees. This is an area where philanthropy still needs to evolve.

Philanthropy is now experiencing a new era of scrutiny, as I wrote about in a recently published journal article for the Third Sector Review, and more questions are being asked about philanthropy’s legitimacy – legitimacy being the perception that the behaviour of an institution is perceived as fair and just.

One type of legitimacy is so called “input legitimacy”, which is derived from stakeholders having an opportunity to participate in shaping the agenda and influencing the decisions of an organisation.

In such a climate, philanthropy can’t hold onto its decision-making powers so tightly.

In addition to the increasing scrutiny being imposed on philanthropy, there’s now a strong recognition that the most effective solutions are those shaped by people and communities with lived experience. 

Philanthropic organisations are not repositories of all the expertise about how to solve social problems. That knowledge is held by people and communities experiencing those problems, and the people and charities who walk alongside them in trying to address those problems.

Given this, philanthropy in Australia and beyond needs to more proactively seek to redesign its decision-making processes.

There are some practical steps that can easily be adopted in this regard.

We need more people with diverse lived experience as trustees of philanthropic organisations. For example, if an organisation is funding initiatives in the disability area, then it needs to have people with disabilities at the decision-making table.

At the same time, philanthropic organisations could take advantage of the collective wisdom of crowds by using advisory committees and other such mechanisms to inform its decisions. Such committees can be made up of people with lived experience, practitioners and academic experts, and can examine grant applications and provide recommendations to trustees which make the final decisions.

Whilst such advisory committees are already used by some philanthropic organisations, both informally and formally, we need to see them used more widely to shape decision-making within philanthropy.

One area which has a lot of potential is participatory grantmaking. This involves ceding decision-making power about funding, including the strategy and criteria behind those decisions, to the communities that funders seek to serve.

Grantcraft by Candid published an excellent guide to participatory grantmaking in 2018, and has since made available a whole suite of additional resources.

Although there have been discussions about participatory grantmaking in Australia, there are very few examples of it being practiced. 

However, we are seeing some very positive developments such as the creation of Koondee Woonga-gat Toor-rong, which is the first Aboriginal and Torres Strait Islander community-led philanthropic fund to be established that exclusively focuses on Victoria. The creation of this fund involved transitioning the “Towards a Just Society” sub-fund within the Australian Communities Foundation to Indigenous control.

I am surprised that more philanthropic organisations in Australia aren’t moving at least some of their grantmaking towards a more participatory model. I understand that giving up power can be difficult, but I think that philanthropy’s ability to give up power will actually demonstrate the sector’s maturity, a “coming of age” so to speak.

It may be a case that we need some more first movers, and in this regard I hope that within the near future we can see a major Australian philanthropic organisation allocate a significant proportion of its funding using a participatory grantmaking approach. Once we have a first mover, I think we’ll start to see more followers.

Philanthropy in Australia is constantly evolving, and I’ve always been impressed with the ability of people working within it to reflect on the way that the sector works and ways it could change for the better. I like the “crowdsourcing” analogy as it applies to philanthropy, and I think it’s part of philanthropy’s beauty. But I think it’s now time to take the next step, and energise Australian philanthropy through more crowd power.