Philanthropy Is Changing — Governance Must Change, Too

Philanthropy is more needed than ever, but without governance that reflects today’s complexity, it risks losing its relevance.

In a world reshaped by climate instability, democratic erosion, and rising inequality, the problems funders seek to address have grown more complex, interconnected, and urgent. Yet many foundations rely on governance models built for a different era: ones that assume stability, linearity, and control in a time that demands flexibility, adaptability, and collaboration.

In my work with foundations and in conversations with other strategy and learning consultants, I see a clear pattern: program and evaluation staff are evolving their approaches to reflect the complexity of today’s challenges, but governance structures often remain anchored in older models of oversight and control. This disconnect frequently shows up as a tension between the need for adaptive, participatory approaches on the ground and a board-level preference for predefined metrics, linear logic models, and risk-averse decision-making.

The result is a growing misalignment between those charged with implementing strategy and those tasked with overseeing it. This tension is more than a governance glitch. It’s a fundamental threat to philanthropy’s ability to meet the moment. Without evolving governance structures and mindsets, foundations risk undermining the very strategies they claim to champion.

How Philanthropy’s Understanding of Change Has Evolved

To understand the growing disconnect between strategy and governance, it’s helpful to look at how philanthropy’s understanding of its role in creating change has evolved. Otto Scharmer, Ph.D., co-founder of the Presencing Institute, describes four stages in the evolution of large, institutionalized philanthropy. Building on his framework, I’ve adapted a version that traces how philanthropic strategies have shifted. These shifts reflect a deepening understanding of what drives progress — and what philanthropy’s role should be. In Scharmer’s staging, philanthropy takes the following forms:

• Philanthropy 1.0 is characterized by efforts to alleviate the symptoms of inequitable systems, focusing on providing direct services to meet basic needs.
• Philanthropy 2.0 shifts towards achieving better outcomes for participants in nonprofit and public programs, reducing the need for ongoing services.
• Philanthropy 3.0 responds to the need for systemic change, with foundations working in closer collaboration with grantees to target the root causes of social problems rather than their symptoms.
• Philanthropy 4.0 takes a whole-systems perspective, critically examining power dynamics within philanthropy, which is recognized as a result and ongoing expression of systemic inequalities.

Each stage represents a different set of assumptions about how change happens and how philanthropy should engage. These stages remind us that as our understanding of social change deepens, so too must our willingness to evolve the structures, strategies, and mindsets that guide philanthropic practice.

Learning and Evaluation Have Evolved Alongside Strategy

As philanthropy’s understanding of change has evolved, so too have its approaches to learning and evaluation. Each stage brought with it prevailing norms about what should be measured, who defines success, and how progress is understood — often reflecting broader assumptions about control, causality, and accountability.

• In Philanthropy 1.0, evaluation was straightforward, focusing on output metrics like the number of meals served or shelter beds provided. While efficient for tracking immediate relief, this approach overlooked both program outcomes and deeper systemic issues.
• Philanthropy 2.0 introduced outcomes-based evaluation, which measured program effectiveness against specific, often donor-defined goals. This approach sought to link philanthropic activities with improvements but rarely addressed systemic conditions or questioned the appropriateness of those goals.
• Philanthropy 3.0 marked a significant shift towards inclusive and collaborative learning, with evaluation processes becoming tools for systemic change. Methods like developmental evaluation, which adapt and evolve with the efforts they assess, reflected a deeper understanding of philanthropy’s potential for fostering sustained, systems-level change.
• In Philanthropy 4.0 evaluation isn’t just about measuring change; it’s about being the change. Participatory and equity-focused evaluations do more than track progress; they challenge assumptions, redistribute power, and ground efforts in the experiences of those most proximate to the issues at hand. This shift allows learning to become a force for collective sensemaking, real-time strategy, and shared accountability in the face of complexity.

These approaches recognize that we cannot solve today’s problems with yesterday’s tools. Our learning approaches must be as dynamic and adaptive as the systems we’re trying to change.

Why Governance Hasn’t Kept Up

Despite clear evolution in philanthropic strategy and learning, governance hasn’t kept pace. Adaptive, participatory, and trust-based approaches are becoming more common in program strategy and evaluation — but at the governance level, they often encounter resistance. This misalignment shows up in familiar ways: a preference for simplified program logic and pre-determined measures that assume linearity and predictability. For example: “If nonprofits reach 20,000 more participants, we’ll see a 10 percent improvement in population outcomes.”

These frameworks can feel satisfying in a boardroom, where numbers and control offer comfort. But, they don’t align with the dynamic, nonlinear nature of systems change. Too often, boards expect strategy and evaluation to behave like clocks — predictable, orderly, and controllable — when the realities of systems change are far more like clouds: dynamic, emergent, and shaped by complexity. This mindset doesn’t just miss the mark — it obscures the relationships, learning, and collaboration needed to respond effectively to today’s most urgent and unpredictable challenges.

To be clear: board members are not acting in bad faith. They have a legitimate interest in understanding progress and stewarding resources. But they often lack a clear picture of what strategic oversight looks like in the context of Philanthropy 4.0 — and how their roles and the culture of their institutions must evolve in response.

This misalignment points to the need for new frameworks, capacity building, and dialogue — not only to align governance with adaptive strategy but also to build fluency and comfort with new learning approaches. The Center for Evaluation Innovation offers one such pathway through “Rethinking Boards: Strategies for Engaging Boards in Adaptive Governance,” which provides valuable insight into how boards can transition from overseers of compliance to active participants in strategic learning. This evolution isn’t just helpful — it’s essential for ensuring that governance supports, rather than stalls, the adaptive strategies foundations are already investing in.

Redesigning Board Composition, Mindsets, and Culture

To move beyond managing the symptoms of governance misalignment, foundations must take a deeper look at the composition, power dynamics, and mindsets of their boards. Holding foundations accountable to their commitments and ensuring they remain purpose-driven requires reimagining who is at the table, what power they hold, and how decisions are made.

That includes shifting who has voice and influence by creating space for people with lived and proximate experience alongside individuals who bring expertise in systems thinking, adaptive strategy, and participatory practices. It also means interrogating traditional notions of rigor that privilege tidy logic models and linear success stories. Foundations that do this well move from a narrow focus on risk mitigation to a more expansive commitment to shared learning, humility, and alignment with community-defined outcomes.

These shifts help boards operate not as gatekeepers but as stewards of collective possibility — asking better questions, embracing uncertainty, and grounding decisions in a deeper understanding of how systemic change happens. Foundations don’t need to overhaul everything overnight. But they can begin by experimenting with governance norms, decision-making processes, and board development strategies that reflect the realities — and relational nature — of systems change.

A Call to Transform Philanthropic Governance

Philanthropy’s future depends on more than bold strategies and visionary program design — it depends on whether governance can evolve to meet the demands of this moment. Each stage of philanthropy has mirrored prevailing beliefs about its role in society, shaping strategy, evaluation, and accountability practices. As we move further into the realities of Philanthropy 4.0, the challenge isn’t just adopting new frameworks — it’s transforming what Scharmer calls the “mindsets and operating systems” of philanthropy itself.

This requires moving beyond performative metrics and linear theories of change and asking: Are our governance structures fit for purpose in a world defined by complexity, interdependence, and disruption?

Governance isn’t a neutral backdrop to strategy. It is strategy. And unless foundation boards evolve alongside the world they seek to influence, even the boldest strategies may fall short.

By embracing this transformation, philanthropy can rise to meet this moment — not just by funding change but by modeling it. In doing so, foundations have the opportunity to remain relevant, trusted, and truly aligned with the complex realities they seek to address.

Clare Nolan is co-executive director of Engage R+D. Find her on LinkedIn.