Risk, legitimacy and philanthropy

September 2019, Wasan Island, Muskoka Lake, Canada



In an era where the legitimacy and authenticity of foundations is being questioned, how can we encourage the philanthropic sector to take more risks?  

Context

Foundations all over the world are grappling with their role in the emerging field of data and artificial i Many leading foundations want to establish new more explicit ways of talking about risk in their organisations and with their boards — or indeed, self imposing risks that would enable them to address bigger issues and have more transformative impact. If funders want to have deep, systemic impact, their notion of risk needs to change. This must align with the dialogue on the roles, legitimacy, and the effectiveness of funders, which is gaining momentum within and beyond the sector

About the retreat

Building on our work on risk and systems change in 2018,, SIX brought another global funders to dive deeper into the culture of risk in philanthropy, exploring three types of risk: calculable risk, positive risk and existential risk. Many foundations are still risk averse, despite operating with fewer constraints compared to other sectors. This retreat was rooted in the belief that foundations should spur more innovation to achieve transformational change by supporting each other to take more risks.

We explored:

  • How can we evolve our definition and understanding of risk in relation to innovation and the philanthropic sector? How does this translate into grant making practices and operationalise in a portfolio?
  • How do foundations best prepare for different futures? How can they focus on the right risks (rather than just going for the big bets)?
  • How do funders bring your board and staff along with them on this journey?
  • Where do foundations get their legitimacy from? How are they operating authentically? How does this play out in their risk management structures?
Insights and learning

We produced a report highlighting the learning from the retreat. The report is intended to help and work with funders on how they can self-impose risk and create the tools and frameworks necessary to enable risk as a positive asset. Too often, philanthropy develops bureaucracy over considering positive risk. Or, funders think more about risky solutions to simpler issues, instead of focusing on the riskier problems we should be addressing — like climate change or the rise in populism. 

While many funders have due diligence tools for calculable risks or risk mapping for their endowments, there are few formal risk frameworks for addressing existential risk or framing risk as an asset — or even a necessity. Foundations are uniquely independent entities with little formal accountability, facing the least risks. Being in a safe position should be a driving force for more funders to embrace risk. In many ways, facing no risk or being risk averse are the sector’s biggest risks.