Thanks to Sean Stannard-Stockton for the key to unlock an article or two for free from the subscription-only Alliance Magazine vault. Even if I had had to pay $35 to read the free Regranting: smart humility? article by Jacob Harold, I would have gotten a better deal than poor 7-year old Olivia.

Olivia, as Harold describes (and Stannard-Stockton corroborates in a parallel piece), gave her “life savings” to the Gates Foundation, which, apparently after no small amount of internal discussion and debate, graciously condescended to accept the gift. According to Patty Stonesifer, who was serving as Gates Foundation CEO at the time that Olivia’s gift arrived,

Do you say no to a 7-year-old girl, but yes to Warren Buffett? One way or another, she did convince us to do some deep thinking.

Deep thinking, indeed.

Harold (who, it is worth noting, is a Philanthropy Program Officer at the Hewlett Foundation) describes the pros and cons of “regranting”–donors like Olivia giving foundations like Gates their money based on the conviction that a foundation is going to do a better job of determining to whom the money should be given.

Writes Harold:

In the US alone, there are over 97,000 foundations and grantmaking public charities. About 5,000 of them have paid staff. Like all institutions, they vary in effectiveness. But in that group are some superb professionals – people with decades of experience on the world’s most complex social issues, who are plugged into vast networks that include the best of the old and the new, the North and the South. They are not necessarily smarter, but they are better positioned to make philanthropic decisions than an average donor – no matter how brilliant that donor may be in her day job as a teacher or doctor or cabinetmaker.

My my my…

I know, I know: I’ll sound paranoid if I protest that it is unfair that the criteria of judging who is more effective in tackling the world’s most complex social issues, teachers/doctors/cabinetmakers or superb granting professionals, is determined by the super granting professionals themselves.

And I’ll sound simply ignorant if I contend that these superb granting professionals’ vast networks featuring the best of the old and the new can be aced out by a motivated chap sitting at a computer and utilizing the vastly more vast informal networks available to motivated chaps sitting at computers these days.

And I’d sound downright Luddite if I suggested that professionals in established foundations may be at a disadvantage compared to small, lithe, barely legitimate local organizations and networks, once one thinks about overhead, paperwork, and the ability we have to convince ourselves of just how effective we are at darn near anything when money’s involved. (Have you ever, for example, seen even a single foundation declare defeat on a major social issue after they’ve made it their granting focus for three years? How can that be? Doesn’t that make you just a little suspicious?)

But let me be as gracious in conceding each of the above points as the Gates folks were in agreeing to receive the contents of dear Olivia’s piggy bank.

Instead, let me focus on just one issue:

Why would a foundation that receives donations from individuals not measure whether donating to the foundation made the donor wiser and better equipped to tackle the world’s most complex social problems than they were before they made the donation to the foundation?

In other words, I grant that most foundations don’t place the same value as I and Mission Increase Foundation do on the impact giving has on the giver.

But ought it not to matter at all?

Fans of regranting would contend that Warren Buffet and seven-year old Olivia exercised “smart humility” in giving their charitable dollars to the Gates Foundation to dole out. They would contend further that because the Gates Foundation knows better how to spend those dollars, the world will be a better place than if Buffet or Olivia spent those dollars themselves.

But do you really believe that?

What might have happened if Buffet attempted to give his billions to Gates, and Gates rejected them, saying, “Warren, there’s one thing that could impact the world more profoundly than you giving me $40 billion to give away. And that’s you learning to become a philanthropist capable of effectively giving away that $40 billion yourself.”

Heck, what might have happened if Gates rejected Olivia’s life savings as well?

What if he had said, “Olivia, let our superb professionals train you not only how to give away that $35 yourself but also how to give away more than money so that your hand (which always ought to come attached to any money you give away) can ever more skillfully and personally make an impact on the most complex social issues facing your generation.”

As it is, what has Olivia learned?

Before you answer, it might be good for you to have a close look at the strict guidelines under which the Gates Foundation is willing to accept donations from individuals.

• Will Olivia be able to direct her $35 to a particular cause of interest to her that Gates is tackling? Nope–gifts cannot be designated.
• Will Olivia find out where her $35 went? Negatory–gifts go to the general fund, and reporting about individual donations is “not tracked”.
• Can Olivia be sure that her $35 will be spent before she dies? Er, no–the foundation does not make a commitment to spend monies in the same year they’re received. It may take them quite a while to get to spending that there $35.

So what has Olivia learned?

That changing the world is best left in the hands of the pros. Along with your check, of course.

Shame on you, Gates Foundation.

And better luck with your next $35, Olivia.