Risk is a fundamental component of philanthropists' success. Philanthropists invest money to achieve certain specified outcomes, and like any investment, that transaction is governed by the interplay between risk and return. While philanthropy has taken strides in recent years to build out the monitoring and evaluation systems necessary to measure and determine our return—described as impact—we routinely ignore the risk half of the equation.
To address this gap, Open Road Alliance, Rockefeller Foundation, and Arabella Advisors convened the Commons— a diverse task force that represents all facets of philanthropy, including foundations, nonprofits, impact service providers, nonprofit attorneys, wealth advisors, and philanthropic associations. The Commons confirmed that the lack of open conversation about potential risk is a major problem for the field, and developed a first set of user-friendly tools to help funders implement better risk practices. These tools are broadly applicable across the philanthropic sector and can help all types of funders, from those first beginning to discuss risk internally to those who are evaluating the effectiveness of their risk management strategies after several years. With this toolkit, we seek to encourage funders to establish a deliberate risk profile and integrate risk management into their philanthropic practice.