Data, data everywhere

This editorial features an American perspective on recent trends and topical issues in philanthropy.  Our columnist is Melissa Berman of Rockefeller Philanthropy Advisors, which helps donors create thoughtful, effective philanthropy throughout the world.

‘Information overload’ is cited so frequently, and so despairingly, that it seems irresponsible and inhumane to suggest that we need even more.  Alas, even a brief glimpse into the debate on effectiveness in philanthropy reveals gaping holes in the available information and our ability to answer apparently simple questions about ‘what works’.

On the one hand, we have so-called ‘philanthrocapitalism’ whose adherents are depicted as fanatic followers of a quantitatively driven return-on-investment model.   True devotees have been heard to claim that they know that they are funding the “best” microcredit program in the world.  When asked “best at what?” they look shocked and annoyed.  At the other end of the spectrum is what might be called ‘philantertainment’, whose practitioners apparently engage in giving because it makes them feel so good. One prominent New York donor won a round of applause for honestly declaring that the only outcome that he assessed was his own satisfaction.  Naturally, the extremes of either behaviour are rarely found in the real world, where motives are mixed, and in fact the two viewpoints are neither wrong nor mutually exclusive. 

In truth, however, a recent review of ‘outcomes literature’ and findings in philanthropy finds mostly data on efficiency (meaning the cost to serve a particular population) or on short-term outputs (such as decrease in infection rates or higher graduation rates), but little on the true outcomes that we seek.  As Dr Paul Farmer, co-founder of Partners in Health so movingly puts it, what does it matter if he can cure a woman of tuberculosis so that she can die of malnutrition? The real result we seek is not the absence of tuberculosis, it’s the presence of health. Likewise, the real result we seek in funding schools is not education, which is after all a process, but a better life.

Lacking much in the way of significant findings, the tension between philanthropy as investment and philanthropy as self-expression continues to absorb more time and energy than it deserves. Even worse, it leaves many potential donors frozen in place as they weigh conflicting messages about making analytical decisions versus following their singular passion. Many potential donors feel that they can do neither.

And how would more research help here? Sad to say, we do need more research, and we also need different research.

Due to the steadfast efforts of organizations like the Foundation Center, the European Foundation Centre, Guidestar, the Urban Institute, the Center for Effective Philanthropy and a growing cadre of academic centres in Europe and North America, we do have more data than ever before. But we still often suffer from a lack of meaning.

From the time of the ancient philosophers, experts have made important distinctions between and among data, information, knowledge and wisdom.   For example, data is the percentage of a population without access to sanitation. Information is how that percentage relates to other locations, or has changed over time. (The bridge between data and information is analysis).  Knowledge is the deduction of the critical factors that would lower or raise that percentage.  (The bridge between information and knowledge is expertise).  And wisdom is the capacity to apply those deductions usefully.  (The bridge between knowledge and wisdom is experience).

When we talk about research and results in philanthropy, we often confuse data with wisdom.   Too often, we are grappling in philanthropy with studies that provide us with data and information only.  

Why is that?  It’s certainly not because researchers in our field lack knowledge and wisdom.  Rather, the challenge is lack of resources and infrastructure.   Even considering the relative sizes of the for-profit and the non-profit sectors, the for-profit sector is far more richly endowed with sources of knowledge and wisdom than we poor cousins. (Full confession:  that is a data-free assertion.  I have absolutely no idea what the actual comparative level of knowledge resources is for the for-profit and non-profit sectors. But I doubt anyone has figured out the algorithm or performed the calculation, so it feels pretty safe to lay the columnist’s sweeping claim. And therein lies a tale: lots of what we assert in our sector are anecdotes masquerading as trends).

Consider the sorts of data, information and knowledge available in the for-profit sector: public-good data and information; analyst research and credit ratings on publicly traded companies; academic research at business schools and other parts of the university, independent research institutes, sector-specific research for industry associations; information and insights from the leading consulting firms; and business journalism (Did any of this prevent the mortgage meltdown? Sorry, wrong column). All of those resources allow true investors to gather data, information and knowledge to build the wisdom to answer questions about whether a particular company is the optimal choice given certain investment goals. 

Looking over the landscape of knowledge resources for the business sector reveals not only the relative paucity of resources for philanthropy but also highlights the second major challenge: the infrastructure issue.  Many of the sources of data, information and knowledge noted above are independent of both investor and investee, or at least they are supposed to be.

But in philanthropy, we rarely get independent knowledge. Often the funder pays for the evaluation study of a grant or grant program. In essence, foundations and donor say, “Look, here’s some money. We have lots of it. Tell us if we made smart decisions. If you do a good job on this assessment, we will probably hire you again.”  This is not an attack on funders.  In fact, we just did this ourselves at Rockefeller Philanthropy Advisors: we hired an evaluation firm to assess the results of a capacity-building programme in the Caribbean that we developed for a charitable trust. The evaluation firm has a good reputation and presumably keeps it by not allowing itself to be ‘bought’ by its client. In philanthropy, we have no other way to get knowledge except through this system. But it’s not exactly complete and total independence, right? 

What’s the alternative? Who should pay for the kind of knowledge-building that will lead to wisdom?  In the olden days (i.e., pre-1980) we thought it might be the public sector, since this is after all for the public benefit. Then in the heyday of venture philanthropy (1995-2001) we thought it would be the investor-donors, who would demand the same quality of analysis for the philanthropic sector as for the business world. Recently, some serious efforts to identify the best grant opportunities using a business-style level of rigor have emerged – New Philanthropy Capital, for example. 

But is there the level of long-term funding that would be needed to build this knowledge for all the major issues affecting all the major regions of the world? The evidence, pardon the phrase, is scanty and discouraging. But surely there is an opportunity now for foundations and donors to think about the return on investment in building a field of wisdom. 

Melissa A. Berman is President & CEO of Rockefeller Philanthropy Advisors.