The limit of objectivity

The new era of philanthropy is driven by objectivity. For the modern poverty interventionist and philanthropic investor, we want proof our interventions create real, measurable social impact. Indeed, the shift in language away from donor in favor of investor is emblematic of a collective desire for objectivity.

Despite the benefits of increasing objectivity in a sector that has historically been burdened by anecdotes, objectivity has its limits. Sean Stannard-Stockton wrote a post on his Tactical Philanthropy blog about the Rise of Issue-Agnostic Philanthropy. Issue-agnostic investing is where a funder invests in agencies where she will have the greatest impact, irrespective of philanthropic focus.

I’m all for outcomes-oriented social investing. A focus on outcomes and social impact not only helps move funds toward organizations implementing proven interventions, it also incentivizes organizations to objectively evaluate their own work. To that end, I fully support agency-agnostic investing, where a funder invests in the most effective organization in a particular region that focuses on a specific issue.

But the idea of issue-agnostic philanthropy illustrates the true limit of objectivity. The decision to give originates from an inherently subjective sense of social responsibility. Taken to its logical extreme of truly being agnostic, how would one even decide what investments are philanthropic? If an investor’s single goal was impact magnitute, that investor would probably be better served investing in a massive for-profit than any charitable organization.

In fact, the idea of issue-agnostic philanthropy could create a dangerous incentive in the social sector. If all funders focused on was big impact regardless of focus area, funders would drive funds away from harder to solve problems, like chronic homelessness, into more superficial yet easier to impact causes.

Deciding what focus area to invest in is the most important decision a social investor makes. That decision is the one where the investor decides what change she wants to see in the world. I can see how objectivity is valuable at the point of selecting agencies to implement one’s social vision, but how could the social vision itself ever be objectively chosen?

How can one honestly decide between investing in the environment versus poverty, objectively? We suck at comparing the impact of two anti-poverty programs, how can we possibly claim to be able to compare the impact of a particular poverty intervention against the social value of planting a tree? It’s an impossible premise.

While our sector has benefited from drawing some inspiration from financial investing, social investing is still a very different, unique practice. In for-profit investing an investor can more easily be industry-agnostic because to the financial investor, monetary gain, not industry progress, is the driver of the investment. But in the social sector, the impact we seek is issue-specific, making it impossible for philanthropic investments to be issue-agnostic.