Philanthropies can easily become misaligned with their money factories

People always spend money for a purpose and people usually give to philanthropies to make themselves feel good or increase their reputation. Both reputation and ego are such complex, fragile ‘products’ that it’s easy for an organization to take actions that do not deliver - especially risky or controversial actions.

Wealthy individuals can also be fickle, promising long term support but then pulling it on a whim.

In a worst-case-scenario philanthropies can fall into the trap where as an institution they continue to strive to survive beyond their use. The default state of an institution is to become a permanent thing dedicated to its own self preservation and this is particularly pernicious among philanthropies devoted to a specific cause that is no longer relevant. The philanthropy becomes incentivized to maintain the very thing that it was fighting against so that it can stay relevant. If people are donating to it in order to fight against whatever it’s supposed to be fighting against this is the ultimate misalignment. It sounds malicious but it can come about just through optimizing metrics.

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Innovation orgs need to be aligned with their money factory

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Email to Sam Molyneux

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