{"id":7691,"date":"2012-10-22T10:55:21","date_gmt":"2012-10-22T00:55:21","guid":{"rendered":"http:\/\/blogs.unsw.edu.au\/knowledgetoday\/?p=7691"},"modified":"2012-10-22T10:55:21","modified_gmt":"2012-10-22T00:55:21","slug":"radical-philanthropy","status":"publish","type":"post","link":"https:\/\/blogs.unsw.edu.au\/BTOpinion\/blog\/2012\/10\/radical-philanthropy\/","title":{"rendered":"Radical philanthropy takes a risk"},"content":{"rendered":"

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Gina Anderson|\u00a0CSI Blog<\/a><\/strong><\/p>\n

We often talk about the role of philanthropy as \u2018venture capital for the not for profit sector,\u2019 able to take risks on new ideas, innovation and social change. However for many in the not-for-profit arena, the problem with philanthropy is the lack of ambition and lack of purpose.<\/p>\n

A fascinating new report by The Resource Alliance, supported by the Rockefeller Foundation, entitled\u00a0\u00a0\u2019Risk and Philanthropy<\/a>\u2018 examines how risks in international development philanthropy are defined, assessed and managed.\u00a0It reports the conclusions from a series of 27 interviews conducted with development philanthropists, philanthropic intermediaries, grant makers from leading international foundations and sector academics in April 2012.<\/p>\n

The report argues that philanthropy needs to become better at understanding the relationship between risk and opportunity, cognisant of the distinctive contribution that effective risk strategies can play in creative solutions to the most intractable development and social problems.\u00a0It also argues that philanthropists need to be much more accepting of failure and recognise that to achieve large-scale change much of the resource may be \u2018wasted\u2019 along the way.\u00a0Occasional failure should be seen as the acceptable cost of innovation.<\/p>\n

In the report they seek to understand more about why so many individuals and foundations are seemingly risk averse with their philanthropy.\u00a0While the focus of the report is on international development philanthropy, their examination of risk assessment, risk management and how philanthropists and philanthropic institutions use different decision rules depending on categories of risks experienced, is very useful for understanding all types of philanthropy.<\/p>\n

The report defines the two main risks that are of primary concern to philanthropists engaged in international development:\u00a0 Impact Risk and Operational Risk.<\/p>\n

Impact Risk is most often cited as the critical risk and is defined as the risk of not achieving the required impact given a specified level of philanthropic investment \u2013 in short, is the money making a difference?\u00a0There appears to be three drivers of impact risk in international development:<\/p>\n