“People and places around the world, as well as the earth itself, face formidable, complex, and connected problems.”
I wrote that a year ago. Events since then have underscored just how challenging those problems are, among them the pervasive loss of trust in major institutions of government and society.Philanthropy is not immune from that trend. Most large foundations are considered “elite institutions.” Yet to be effective, we must facilitate, and operate in, an environment of trust and goodwill.
In this essay, I address the task of building trust in a time of flux and challenge. Philanthropy, I argue, must learn from the ways that technology and new modes of communicating are reordering our world. We need to examine critically our history, structures, and practices, and where necessary, take new directions. We must listen more, be more flexible and inclusive, and allow those who experience directly the problems we seek to address even more room to participate fully and lead.
We cannot take trust for granted; it must be earned in all we do, every day.

Crisis of legitimacy
How did this happen? Just a few decades ago, some believed that the world was progressing inexorably toward shared values and objectives.
There is much to celebrate: unprecedented advances in material prosperity; progress in technology and medicine; advances in communication, mutual understanding, and international co-operation. But history has a way of upsetting over-confident expectations.
Destabilizing trends abound—rising inequality, economic stagnation, and a lack of effective leadership. In Western countries, there is a political uprising against “the establishment” and those associated with it. The Trump and Sanders campaigns, the vote for Brexit, and the rise of nationalist parties in Europe are manifestations of a widespread and heartfelt populist energy that cannot be ignored.
Here at home, many Americans feel powerless, betrayed by those they see as “self-serving elites.” Law enforcement is seen as tragically unaccountable, sparking angry demonstrations against police actions and policies. The legacy and continuing reality of racism affect many lives. There is little faith in the social compact, an ideal that historically has bound our country together.
This loss of faith is serious, and it extends well beyond government. Post 2008, there is diminished confidence in banks and the financial system. Polls reveal that many people no longer trust traditional media, health and education bureaucracies, political parties, national security agencies, government reports, even church hierarchies, or, with incalculably grave danger for the country, the administration of laws and justice.
A healthy democracy takes at face value the proposition that most of its institutions and practices are reliable and trustworthy. Trust is the currency that facilitates every social transaction. Without trust, society risks moral bankruptcy.
When people in America and around the world feel that systems are failing or not working in their interests, we need, first, to pay close attention. And then we need to find solutions that do work.
That is a tall order that philanthropy cannot fill on its own, but we can make trust a priority.

The role of philanthropy
Historically, American foundations are the result of a national experiment to show that private capital can be used for the public good.
Born in the Gilded Age, the first foundations advanced an approach typical of the time: led by experts, standardized, centrally planned and managed. That approach produced notable successes over decades, such as raising the quality of medical education, eliminating diseases, founding pensions for teachers, pioneering humanitarian aid, establishing public television, fueling the Green Revolution, and more.
Over time, two powerful critiques have been levelled at foundations, to some extent with just cause. The first is that they lack democratic accountability and are elitist, intrusive institutions with far too much undeserved influence. The second is that they support the establishment, are fickle, quickly lose their innovative edge, and become dated and ineffectual.
Such criticisms spurred reflection and changes in approach over time; perceived abuses triggered significant legislative changes in the 1960s. Today seems to be a similar period of critique and reform, when heightened skepticism demands attention to securing the trust that lies at the core of philanthropic effectiveness.
What can philanthropy do? I argue that we need to up our game and ensure that we play a decisive, outsized role in addressing this crisis, leading by example. We need to become even more flexible, to experiment with new ways of deploying capital and generating creativity, and to focus on what it takes to fully understand and support the forces for positive change, even when they take us out of our comfort zone.

New approaches to philanthropy
A new generation of foundations has emerged from fortunes made in technology and finance. As before, the new philanthropists seek to bring insights from their business experience to bear on social problems.
Both these new players and historic foundations have made concerted efforts to be more transparent, to communicate their mission and objectives widely, to involve the public in informing choices, and to be more responsive rather than directive in their relationships with grantees.
How far foundations will go in increasing their democratic accountability remains to be seen. Leadership often has broad latitude to set objectives and choose areas of work. Yet, if foundations are to sustain the public trust, more of us, including MacArthur, need to find the right balance between two critical elements of a solution—the insights and practical evidence from “on-the-ground” and what research tells us about “what works.”
In addition, the rapid pace of tech innovation has upended an older business paradigm that included detailed strategic planning, long-term research and development, honing products to perfection before they are released to the market. In its place is a model that focuses on speed, agility, and iteration. A minimally viable product is brought to market, tested in practice, and the lessons learned quickly applied to an improved next generation. Risk and failure are not only tolerated but encouraged as ways toward positive evolution. Instead of working in protected silos, doomed to fail in isolation, companies are embracing open innovation, networking the best ideas and encouraging co-operative alliances.
Philanthropy has much to learn from this approach about experimentation, rapid prototyping, measuring progress, and constant adaptation. We need to embrace fully the notion that we can provide society’s “risk capital” and that we must learn and evolve in real time as conditions change.

Julia M. Stasch is President of the MacArthur Foundation (US)

Source: https://www.macfound.org/annual-report/2016/president-essay/