Meaning: This quote by Michael Porter, a renowned educator and economist, addresses the issue of inefficiency in philanthropy and the need for a more strategic approach to the use of funds. Porter suggests that philanthropy lags far behind the business sector in terms of applying rigorous and strategic thinking to the allocation and utilization of resources. This assertion raises important questions about the effectiveness of philanthropic efforts and the potential for more impactful outcomes through a more business-like approach.

In the world of business, decisions about resource allocation, investment, and strategy are typically guided by rigorous analysis and a focus on maximizing impact and returns. Businesses utilize tools such as cost-benefit analysis, risk assessment, and performance measurement to ensure that their investments yield the desired outcomes. However, Porter argues that such rigor is often lacking in the philanthropic sector, leading to the wastage of billions of dollars on initiatives that fail to achieve meaningful and sustainable results.

One of the key reasons for the inefficiency in philanthropy, according to Porter, is the lack of rigorous thinking and strategic planning in the allocation of funds. Unlike businesses that carefully assess the potential risks and rewards of their investments, philanthropic organizations often operate with a more ad-hoc and reactive approach. This can result in a fragmented and unfocused use of resources, leading to limited impact and inefficiencies.

Moreover, the quote highlights the need for philanthropy to catch up with the business world in terms of applying rigorous thinking to the use of money. This implies the necessity for philanthropic organizations to adopt a more strategic and data-driven approach to their decision-making processes. By leveraging tools and methodologies commonly used in business, such as impact assessment, outcome measurement, and performance evaluation, philanthropic efforts can become more effective and sustainable.

Porter's assertion also underscores the potential for philanthropy to learn from the best practices of the business world. By embracing concepts such as strategic planning, risk management, and performance evaluation, philanthropic organizations can enhance their ability to create meaningful and lasting change. This requires a shift in mindset, moving away from traditional, often reactive approaches, towards a more proactive and strategic mode of operation.

It's important to note that the call for more rigorous thinking in philanthropy does not necessarily imply a purely profit-driven or mercenary approach. Rather, it advocates for a more disciplined and strategic use of resources to maximize the positive impact on society. By adopting a more business-like approach to philanthropy, organizations can ensure that their efforts are directed towards initiatives that deliver sustainable and meaningful outcomes.

In conclusion, Michael Porter's quote sheds light on the need for philanthropy to embrace a more rigorous and strategic approach to the use of funds. By learning from the best practices of the business world and applying tools and methodologies that prioritize impact and efficiency, philanthropic organizations can maximize their potential to create positive and lasting change. This shift towards a more disciplined and strategic mode of operation holds the promise of a more effective and impactful philanthropic sector.