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City Philanthropy

A Wealth of Opportunity

Pick charities which fail (at least they’re honest)

May 2nd 2013
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Thomas Edison failed more than 1,000 times before he eventually found a successful design for a lightbulb. When asked about it, he said: "I have not failed 1,000 times.  I have successfully discovered 1,000 ways to not make a lightbulb."

The work of charities is hard. And as a result they innovate a lot. So it should be no surprise that they fail a lot: failure can teach us at least as much about how to succeed as success itself.

A good charity will know which bits of its work succeed and which don’t, and will be open about sharing what they’re learning. A good trick for donors is to find those which are sufficiently self-critical to know which are which, and honest enough to tell.

Sadly, they are few, but hats off to them.

Oxfam GB is a recent joiner. It randomly selected 26 of its 362 completed programmes to include in a meta-review* of its work. The ‘review of reviews’ it  published discusses a bunch of programmes which it believed worked and several which it thinks didn’t.

Engineers Without Borders in Canada began publishing “Failure Reports” in 2008, and has now published four. They run to 30 pages and, as you might expect of engineers’ reports, are rather forensic about the reasons for the failures.   

Of course, the incentives are generally stacked against charities admitting failure – or even admitting less-than-perfect performance. As a result, if the literature is to be believed, practically all charities are in the top quartile. A miracle!

The most powerful incentives come from donors, so we can encourage and reward charities for their analysis and candour by funding those who ‘fess up. A good charity will make its learnings and lessons easily findable on its website, or if you call and ask.

The incentives are easier on philanthropic foundations who don’t have to raise money from outsiders. So it’s disappointing that so few of them publish about their failures, or even their learnings. Two stand out as exceptions. The giant Hewlett Foundation is so aware of the tendency for failures to be concealed that it has an annual award for the staff member who made its 'worst grant'. Failure is hard to learn from if it’s undiscussable.

The stand-out leader is surely the Shell Foundation, which as it approached its 10th anniversary in 2010 wondered whether it was doing a good job. It couldn’t find out, because so few foundations publish analysis of their own performance (as opposed to that of charities they fund). It broke rank, publishing a warts-and-all account of its own performance, including citing the amount of money it felt it has effectively wasted. To my extensive knowledge, the report is unparalled in the philanthropy world. Crucially, Shell Foundation tracked its ‘hit rate’ as it went along and found that about 80% of its grants failed. Something was clearly amiss, so it changed its model and improved – dramatically, getting to an 80% success-rate.

Smart donors look behind the rhetoric and the incessant alleged success, and encourage charities to learn. To better serve their beneficiaries.

*not a meta-analysis in the statistical sense.

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Caroline Fiennes is the director of Giving Evidence, and author of It Ain't What You Give, It's The Way That You Give It, a guide to effective charitable donations. Buy it discounted from www.giving-evidence.com/book

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