Delusional Altruism. Kris Putnam-Walkerly

physically by never leaving the office and venturing out into the community. If you're in a bubble, you probably aren't intentionally undermining your own effectiveness—but you are deluding yourself that you're achieving the impact you'd like to see. For effective grantmaking to really happen, you need to break out of the bubble and make an effort to deeply understand and connect with the communities you serve.

Fear of Failure

      Many philanthropists, both new and experienced, frequently ask a universal, fear-based question: “What if it fails?”

      For example, they ask, “What if we launch a new funding initiative and it doesn't achieve the desired results?” “What if we invest our money in mission-related investments, but we don't get the same return rate?” “What if I don't have what it takes to be the CEO?”

“Many philanthropists have a mind-set that if it doesn't work, it's a failure. This mind-set holds them back,” explains Meredith Shields, managing director at the Sorenson Impact Foundation. “When you don't have a complete guarantee, when you can't rely on a tried-and-true strategy, sometimes you just need to do it and learn.”²

      The fear of failure is real and prevalent. Philanthropists respond to this fear with a scarcity mentality—they hold back themselves and their resources. But at the same time, they invest time, talent, and treasure on the wrong things. They engage in labor-intensive efforts dancing around the question: conducting excessive research and data analysis to unearth every facet of an issue before deciding to launch the initiative. Relentless benchmarking to see how they compare against others. Participating in endless leadership development programs instead of taking the plunge and applying for that CEO role. Or simply never trying.

Fear of Not Being a Good Steward

      Most funders, like you, take their role of philanthropic stewardship seriously. This might mean ensuring that your foundation exists in perpetuity, or that monies allocated from your giving circle are aligned with your goals. This is especially true for professional staff of family offices and foundations—people responsible for giving away someone else's money.

This appropriate sense of responsibility can turn into fear when you worry that you aren't being diligent enough. Fear of not being a good steward can spiral into a scarcity mentality.

      For example, if you're inappropriately fearful, you might do things like make smaller grants to try and stretch the funds, give a one-year grant because you worry the money won't be well spent, or force grantees to jump through excessive and punitive hoops in the name of due diligence.

      One global philanthropy expert, Charles Keidan, now editor of the global philanthropy magazine Alliance, recalled this happening to him during his first foundation job in the UK.

When I directed a family foundation, I was tougher on grantees than I would be today. I was cognizant that in the early days, the family was making big gifts to organizations based on fundraising appeals at a gala, more on the basis of relationships than evidence. I felt we had to use the money well, to be catalytic and strategic. So, I asked grantees questions they weren't ready to answer. My motivation was good, but my execution was impatient and unsympathetic.³

      One Eastern European donor wanted to position his foundation as more innovative and strategic by offering general operating funding and making it easier for nongovernmental organizations (NGOs) to apply. Although it was a family foundation, he relied heavily on the advice and guidance of lawyers, accountants, and auditors from his business. Once they got involved, the simple process designed to give NGOs a lot of freedom in how they used their funding spiraled out of control.

      His business advisors didn't trust the NGOs and began changing the rules. They asked fear-based questions such as, “How do we know these organizations won't steal the funds if we provide general operating support?” and “How do we know if they manage their books properly?”

They turned what was supposed to be an easy application process into a full-blown audit. They insisted on looking into the NGOs' bank accounts and accounting documents. They created a massive application process. They even asked the charities to create a separate bank account to receive the funds so they could track how the money was spent.

      This scarcity mentality held the charities hostage. Instead of quickly receiving flexible funding, they had to wait nine months for a grant to fund a specific program. They had to invest a lot of their time managing and reporting on the grant. The donor allowed his fearful advisors to have this influence and inflict a scarcity mentality on his foundation. In doing so, he got in his own way.

Fear of Disappointing Others

      Philanthropists don't like to disappoint people. I sure don't, and I bet you don't either. Unfortunately, philanthropy provides ample opportunities to disappoint. Sometimes it feels like the number one thing we do! Disappointing others most commonly happens by politely saying, “No.” “No” to applicants that don't fit our funding guidelines. “No” to friends who ask us to contribute to their favorite charity. “No” to nonprofit leaders who want us to serve on their board.

      One ultra-high-net-worth donor served on an NGO board that caused her stress. She didn't think they were making smart decisions or fulfilling their potential. Her efforts to help them were ignored. She really wanted off the board, but she had made a commitment and feared disappointing them. Even though the board had become a waste of her time and drained her energy, she feared saying, “No.”

The fear of disappointing others also manifests itself when funders refuse to share what they've learned. For example, a corporate giving program conducted research on three different issues they're interested in funding. Findings and recommendations were summarized into a report. After reviewing the report, they selected one issue to support, but they were afraid to share the report publicly. They worried they would disappoint the people and organizations working on the two issues that weren't selected. Stuck in this scarcity mentality, they choose to hold back information that could prove helpful to other people working on that issue, out of fear of disappointing them.

Fear of Learning You Aren't Right

      We all want to be right. After all, we're smart people. In fact, we're brilliant. We've bought and sold businesses, trained to become professional musicians, and led nonprofit organizations. We might draw upon a lifetime of challenging experiences that help us deeply understand the strengths and needs of others. We may have graduated from elite universities or the school of hard knocks. Whatever our backgrounds, we know a lot. And we want to be right!

      But many funders fear learning they aren't right. They don't want to find out they aren't as smart as they think when it comes to solving the world's problems. So they stop asking questions. They stop learning. They stop looking for better approaches to reaching their goal. This is a scarcity mind-set in action. A funder prefers to stay in denial rather than risk learning they're wrong. If they could overcome this fear and recognize ways they need to change, they would increase their ability to make an impact. But fear overcomes their desire to make a difference.

      This happens to many professional athletes who want to give back to their community after retirement. Most want to create their own foundation, without fully appreciating how hard it is to manage a nonprofit organization, create and run quality programs, and raise funds to sustain it. There are lots of other options. You can create a donor-advised fund instead of starting a foundation. That way someone else can manage the back-office operations, stay on top of taxes and reporting, and issue the checks. Or instead of creating new programs, you can invest your resources to expand and strengthen existing ones.

Charles Way agrees this would be a good idea, but it doesn't take into account the vision that most professional athletes have for themselves.