Forbes: Only a Systems Change Approach Can Repair the Broken Systems

March 12, 2021

Forbes | By Tim Hanstad and Anna Korzeniewska

CEE Philanthropy Series 2021: Only a Systems Change Approach Can Repair the Broken Systems Revealed by the Pandemic

Over the last year, the pandemic has exposed weaknesses in our health, economic, and governance systems. We’ve witnessed overwhelmed hospitals, small businesses shutter,  and governments incapable of mounting effective responses. Systems change, little known in CEE but increasingly embraced in Western Europe and North America are the most impactful and durable way to address these systemic challenges.

In response to COVID-19, residents and businesses located in Central and Eastern Europe  have sewn masks, donated laptops, and stocked food banks – just like their colleagues in the United States and many other countries. In fact, a recent survey found that 15 percent of CEE residents reported that the pandemic prompted them to volunteer or give to social purpose organizations for the first time in their lives. But more donations and volunteers will not necessarily translate into more impact. The success of our ongoing efforts will be determined, in large part, by our strategy.

To ensure that our time and resources are having maximum impact, leaders across government, corporate, civil society, and philanthropy should shift resources away from Band-Aid salves towards addressing the roots of the challenges we face by adopting a systems change approach.

Systems change involves working with others to tackle the root causes of a problem by changing laws, policies, or institutions; how markets function; the flow of resources; and social norms.

Consider the problem of homelessness. To address this heart-wrenching challenge, people have traditionally given directly to homeless people begging on the street or volunteered in a soup kitchen or donated funds to a homeless shelter. And certainly, each of these are good and needed. But they are not the most impactful way of addressing homelessness.

The most impactful and durable way to address homelessness is to identify and address its causes even while tending to its symptoms. Depending on the setting, those causes might include problematic land-use policies, affordable housing policies, tenancy laws, real-estate financing mechanisms, market pressures on the construction industry, or low wages.

These have the potential of not only reducing homelessness, but also preventing it – in a sustainable and durable way at scale. This is systems change – an approach that CEE’s social purpose organizations and donors can and should adopt and support.

To adopt a strategic, systems change approach, social purpose organizations and donors will need to modify their practices in three key ways:

First, given its ambitions, systems change approaches requires much more engagement with governments and with businesses.  In the case of the homelessness example, philanthropists and social purpose organizations might need to collaborate with government and advocacy organizations to change policies, and with the building industry to identify and fix market pressures that prevent the construction of low-income housing. By harnessing the power and scale of government and/or business we can do more good at scale. Currently, most social purpose organizations don’t partner with the business community or government and will need to develop the staff and skills to do so.

Second, systems change approaches require persistence and a long-term perspective. A study examining 15 successful systemic change breakthroughs around the world found that these efforts took at least 20 years, yet the average foundation grant is only 18 months long. Short-term funding or thinking is not system-change friendly.

Third, systems change is risky and doesn’t happen in a straight line. It requires continual adjustment and engagement. Whipping up dinner for the homeless in your community in an afternoon is a relatively straightforward endeavour and will accomplish its modest goal. You follow a recipe, create a shopping list, and execute. But fixing the systems that create homelessness is a less certain exercise, without a recipe to follow. It requires iteration, learning along the way, and changing course as needed based on new evidence and the changing external environment. Today, most donors and social purpose organizations are more comfortable adopting and executing on a short-term, straightforward, low-risk and low-reward plan. This approach condemns our children to fight the same battles we are waging today.

All of this requires a change in behavior for social investors. They need to think bigger, more long-term, and be less focused on the attribution of credit. They need to forge uncommon partnerships which harness the speed and power of business, the scale of government, and the deep local knowledge of social purpose organizations to catalyze durable, systemic change.

Strategic philanthropists interested in adopting a systems change approach can start by becoming familiar with the approaches of donor collaborations like Co-Impact, or learning from resources available at Scaling Solutions to Shifting Systems Initiative, Investors in Change, Bridgespan Group, Ashoka or New Profit Fund.

The pandemic has parted the curtains to reveal unmistakable and extensive structural challenges across our health, economic, and governance systems. Let’s not turn away. Philanthropy and social purpose organizations can seize this moment to adopt an ambitious systems change approach to build back better.

The article was co-authored by Tim Hanstad (CEO of the Chandler Foundation, co-founder of Landesa) and Anna Korzeniewska (Founder of Social Impact Alliance for Central & Eastern Europe) as part of “CEE Philanthropy Series 2021”.

It was originally published on on March 12, 2021.