Risk, Value, and Equity: Parallels between Philanthropy and Financial Services

By Kate Zarouk

Executive Director, We Benefit Children

Last year, I wrote about the difference between being a donor and being a do-er, and how engaging personally in philanthropy changed my own life for the better as well as the documented health benefits of engaging in philanthropy. That reflection was rooted in my upbringing, my professional journey, and my eventual return to the kind of giving that felt most meaningful to me: giving my time in addition to financial support whenever possible.

This year, I want to take that idea one step further and focus on how concepts used every day in the financial services field are similarly used in the world of philanthropy. 

Although philanthropy and financial services are often viewed as distinct domains—one motivated by social good, the other by financial return—they rely on remarkably similar conceptual frameworks. In both fields, the principles of risk, value, and equity can guide decision-making, shape strategy, and determine long-term impact. Understanding how these concepts operate across sectors not only clarifies philanthropic practice but also strengthens its effectiveness and accountability.

Risk: From Capital Exposure to Social Uncertainty

Philanthropy faces an analogous, though differently measured, form of risk. Rather than financial loss, philanthropic risk centers on uncertainty of outcomes: whether an intervention will achieve its intended social impact, scale effectively, or produce unintended consequences. Early-stage nonprofits, innovative program models, or work in fragile contexts often carry higher risk but also the potential for transformative change. Like venture capital investors, philanthropists may deliberately pursue high-risk opportunities where traditional funding is scarce, recognizing that innovation rarely emerges from low-risk environments.

Increasingly, philanthropic institutions are adopting more explicit risk frameworks—distinguishing between reputational, operational, and impact risk—to make strategic choices rather than defaulting to conservative funding patterns that favor established organizations.

Value: Measuring Returns Beyond Profit

Value creation is the cornerstone of financial services. Investments are evaluated based on their ability to generate returns relative to risk, often quantified through metrics such as net present value or internal rate of return.

Philanthropy similarly seeks value, though its returns are social rather than financial. Social value may include improved health outcomes, educational attainment, environmental sustainability, or strengthened civic institutions. While harder to quantify, this value can be assessed through impact evaluation, cost-effectiveness analysis, and outcomes measurement.

Like financial investors, philanthropists must allocate limited resources where they believe value creation will be greatest. This involves comparing interventions, assessing marginal impact, and considering opportunity costs. The growing use of tools such as social return on investment (SROI) reflects a direct borrowing from financial logic, translating social outcomes into comparable value terms to inform strategic decisions.

Equity: Allocation, Fairness, and Structural Insight

In financial services, equity represents ownership and the distribution of financial stake, but it also raises questions about access to capital and participation in markets. Who receives investment, under what terms, and with what degree of control are fundamental equity considerations.

Philanthropy grapples with parallel issues. Equity in philanthropic practice concerns who benefits from funding, who defines success, and who holds power in decision-making. Historically, resources have often flowed toward organizations with proximity to wealth and influence, rather than those closest to the communities experiencing harm. Addressing this imbalance mirrors financial efforts to expand access to capital for underrepresented entrepreneurs and markets.

Trust-based philanthropy, participatory grantmaking, and unrestricted funding can be understood as equity-oriented mechanisms—redistributing decision-making authority and reducing structural barriers. Just as inclusive finance recognizes that equitable capital allocation improves market resilience, philanthropy increasingly recognizes that equitable funding enhances impact and sustainability.

Convergence and Opportunity

The convergence of philanthropy and financial services around risk, value, and equity reflects a broader maturation of the social sector. Philanthropy is moving beyond intuition-driven generosity toward disciplined, strategic capital deployment, while retaining its moral and social mission.

By learning from financial services—without adopting its excesses—philanthropy can better embrace intelligent risk, rigorously define value, and pursue equity not only as an outcome but as a guiding principle. In doing so, it positions itself not merely as a charitable endeavor, but as a vital system for long-term social investment.

About We Benefit Children

We Benefit Children is a 37year-old membership based nonprofit focused on improving the lives of underserved youth. WBC provides direct services to youth in need by taking them on academically focused experiential field trips, provides meals for food insecure families, provides backpacks and school supplies for foster youth and former foster youth attending post-secondary education opportunities and funds programs and projects in partnership with other small nonprofit organizations who are focused on servicing at risk youth in greater Los Angeles. To learn more about WBC or to get involved please visit www.webenefitchilren.org