Key Questions About Philanthropy, Part 1: What Is the Role of a Funder?

Throughout the post, “we” refers to GiveWell and Good Ventures, who work as partners on the Open Philanthropy Project.

As a new funder, we’ve found it surprisingly difficult to "learn the ropes" of philanthropy. We’ve found relatively little reading material – public or private – on some of the key questions we’re grappling with in starting a grantmaking organization, such as "What sorts of people should staff a foundation?" and "What makes a good grant?" To be sure, there is some written advice on philanthropy, but it leaves many of these foundational questions unaddressed.

As we've worked on the Open Philanthropy Project, we've accumulated a list of questions and opinions piecemeal. This blog post is the first in a series that aims to share what we’ve gathered so far. We’ll outline some of the most important questions we’ve grappled with, and we’ll give our working answer for each one, partly to help clarify what the question means, and partly to record our thoughts, which we hope will make it easier to get feedback and track our evolution over time.

We'd love to see others – particularly experienced philanthropists – write more about how they’ve thought through these questions, and other key questions we've neglected to raise. We hope that some day new philanthropists will be able to easily get a sense for the range of opinions among experienced funders, so that they can make informed decisions about what kind of philanthropist they want to be, rather than starting largely from scratch.

This post focuses on the question: "what is the role of a funder, relative to other organizations?" In brief:

The spectrum from passive to active funding

There is a good deal of variation in how "active" different funders seek to be. If we were to articulate two ends of the spectrum, we'd say that:

Most major funders seem to be somewhere in between. They provide a mix of unrestricted and restricted funding. They develop their own in-house expertise, create their own strategies, pitch ideas to potential grantees, assemble convenings, and often get involved in grantees' work at a level beyond simply cutting a check. At the same time, their relationship to most grantees is that of a supporter who checks in periodically rather than a partner who is involved day-to-day.

Our provisional take on the funder's role

As we've written before, we initially envisioned taking a highly passive approach, but we have learned that there is a strong case for being active in certain ways. For us, the key question is what we, as the funder, are positioned to do better than others. We believe it makes sense to be active where we can offer something (besides money) that our grantees don't have. But we want to avoid micro-managing grantees, who have more knowledge of their issues and their capabilities than we do. What a given funder has to offer will depend on what sorts of expertise and staff that funder has built up. But to generalize, it currently seems to us that:

Outside of the above situations, we ideally seek to have only high-level involvement in our grantees' work – more analogous to that of a board member than that of a manager or consultant. We aim to check in periodically, assess high-level progress, ask critical questions, and drill down when we don’t understand a grantee’s answers. We aim ultimately to defer to the grantee on most details. We don't think this is necessarily how every funder should behave – funders with certain kinds of expertise or staff may seek more involvement, or even to operate their own programs – but it is what we are aiming for.