Inside Outside Information

by | Mar 7, 2014

I’ve had occasion over the years to be involved in a number of giving decisions that didn’t work out as expected.  Results we hoped for didn’t materialize.  Occasionally, part of the grant was returned if it had not all been spent. In spite of the frustration, the next step was to figure out what we had learned from that failure.

I’m listening my way through a new book, The Up Side of Down: Why Failing Well is the Key to Success by Megan McArdle. She talks about many kinds of failing.  She doesn’t specifically address failures in philanthropy, but her premise is certainly helpful to any of us who make giving decisions.

Somewhere in chapter six, she says the answer to avoiding failure is really very simple, “treat outside information as if it is inside information – listen for reasons they might be right rather than all the reasons you know they are wrong.” They are the outsiders.

In previous posts, I’ve suggested that before you make a significant gift to a nonprofit, you connect with a variety of sources to ask questions you might have about the organization.  By nature, we are more likely to connect with someone in our network, someone we know and trust. McArdle considers that “inside” information.  Of course, they are the very people most likely to tell us what we want to hear. They may also be close to the organization, and for that reason, they have an insider view.

 McArdle is encouraging us to ask outsiders who are less likely to tell us what we want to hear.  The danger is they may raise questions we don’t want to think about.  This “outside” information can help prevent us from another danger she warns of earlier in the book, “sunk costs.” According to McArdle, research suggests the bigger our losses, the more we’re willing to gamble.  In the giving world, that translates to the bigger the investment in an organization, the more likely we are to gamble and make another or even bigger gift. We don’t want to admit to a poor or even bad giving decision.    

If you are thinking about a significant gift to an organization that you believe you know a lot about, spend time asking questions anyway.  Make sure sources are from “inside and outside.”  Then make your decision.  And if it turns out to be a failed gift, spend time figuring out what might have made it different. Learning from failure is philanthropy with power – the power to bring change.


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