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Systems of Agreements, Part 1

As I noted before, my favorite description for the underlying nature of organizations is “a system of agreements.”  But before we can really talk about systems, we need to talk a little more about what we mean by “agreements.”

When I just googled the definition of the word “agreement,” the following was returned:

  1. Harmony or accordance in opinion or feeling.
  2. A negotiated and typically legally binding arrangement between parties as to a course of action.

This was exactly what I was hoping for.  Two distinct meanings, both of which are essential to the success of human systems.

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Philanthropic Enterprise: Part 1

Published on September 3, 2012 by in Philanthropy

Does a private foundation always have to be just a “foundation”?  Or can it try something different?  Something more daring?

Most private foundations follow the standard “invest-then-grant” mode of operation.  They run two distinct enterprises: (1) an investment enterprise focused on generating financial gains (profit) from the foundation’s endowment, and (2) a grantmaking enterprise giving those gains away to nonprofit (social benefit).  As a result, the standard model for foundations is a bit schizophrenic.

Some foundations now add a third enterprise that is intended to bridge this gap, popularly called “impact investing,” where the goal is to generate both profit and social benefit through the placement of investment capital.  But nearly all foundations that are engaged in impact investing still operate with a split personality — with grantmaking, impact investing and traditional investments all handled by separate staffs with separate goals and incentives.

Healing the philanthropic schizophrenia would require operating a single enterprise, operated solely for social benefit, making enough money to cover its expenses and needed reinvestment, and growing enough to keep its market value ahead of inflation.  Now that would be interesting…

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