Philanthropy Information Retrieval Project

Report #113: May 12 – June 12, 2003

The Philanthropy Information Retrieval Project (PIRP) aims to identify and report, in a timely fashion, new ideas and other developments that might affect the field of philanthropy in the years to come. PIRP reports on emerging issues that may be visible only on the horizon, including items from a broad range of sources. The newsletter does not emphasize today’s news, such as the debate over the payout issue; refrains from repeating items from major national news sources; and does not try to cover all sides of issues, though it does strive for neutral analysis. PIRP was begun in 1996 by the John D. and Catherine T. MacArthur Foundation and was transferred to the Aspen Institute in 2003. Burness Communications, Bethesda, MD, prepares the copy. As the publication’s editor, I welcome your comments and suggestions at – Alan J. Abramson, Director, Nonprofit Sector and Philanthropy Program, The Aspen Institute

1. WORLD'S SECOND WEALTHIEST MAN – WARREN BUFFET –INTENDS TO CREATE WORLD'S WEALTHIEST FOUNDATION; WILL BE GIVEN FREE RANGE TO TACKLE MOST DIFFICULT PROBLEMS

The world’s second wealthiest man, Warren Buffett, intends to create the world’s wealthiest private foundation with limitless domain but focused on “very big things” lacking in support, according to the May 15 Business Times. This daily Singapore newspaper offered some of the most detailed evidence yet of Buffett’s plans for philanthropy. The Omaha-based billionaire, the chief executive of Berkshire Hathaway, told the newspaper that he’ll wait until both he and his wife die before donating large sums to charity. But upon their deaths, all of his assets, currently valued at $35 billion, will be turned over to a private foundation – and not his children. The foundation’s trustees, whom he’s already selected, are advised not to give “a million dollars here and a million dollars there,” but to focus instead on large grants addressing important, difficult problems that resist intellect and money, according to the article.

2. THINK TANKS LAUNCH WEB EFFORT TO EXPOSE FUNDERS, ACTIVITIES OF NONPROFITS THEY SAY WORK AGAINST CURRENT U.S. FOREIGN POLICY

Two institutes have established a Web site to expose the funders and the activities of international nonprofits or non-governmental organizations that they say are at odds with current U.S. foreign policy. In a June 12 article, the foundation-funded, international human rights Web news site OneWorld reported on the just-launched site, NGO Watch, which is sponsored by the American Enterprise Institute and the Federalist Society. These organizations, according to the article, were two sponsors of a June 11 conference launching the site where speakers asserted that international nonprofits are so powerful – with little accountability – that they threaten “U.S. sovereignty and free-market capitalism.” NGO Watch will provide information about the operations, funding sources, and political agendas of these nonprof its, including Amnesty International, Greenpeace, and Oxfam. OneWorld reported that an American University law professor at the conference called these nonprofits part of a culture – with the United Nations and the World Bank, among others – that "wants to constrain the United States" with ideas about world order that "are not congenial to the ideas of [the Bush] administration,” OneWorld reported. A George Washington University professor at the conference said that many international nonprofits are “anti-corporate” and are leading a “biz war,” the title of this professor’s forthcoming book.

3. FOUNDATIONS IN PITTSBURGH, CHICAGO RESPOND TO DWINDLING ASSETS BY 'SHAKING UP' NONPROFIT PROFIT GRANTEES, NEWSPAPERS REPORT

Pittsburgh Tribune-Review reported on local funders’ increased push to evaluate grantees, including, at one large foundation, the hiring of a full-time evaluation officer. Meanwhile, the May 26 Crain’s Chicago Business reported on a “shakeout,” through closures and mergers, in what the newspaper called the city’s “bloated nonprofit sector.” This so-called shakeout is likely only in its early stages, the newspaper reported, and it quoted one foundation leader as encouraging mergers between “redundant groups,” allowing foundations to be more focused givers.

4. EFFORTS TO IMPROVE FOUNDATION EFFECTIVENESS NEED TO FOCUS LESS ON EFFICIENCY, MORE ON RESULTS OF PHILANTHROPY, REPORT SAYS

Evaluation of foundation effectiveness has been perhaps the biggest trend in the field during the past several years, but most research into understanding the concept has actually focused on “foundation efficiency” and not effectiveness, according to a recent report. Based on a scan of existing research and a survey of practitioners, this report, funded by the W.K. Kellogg Foundation, found that most research on foundation effectiveness to date has focused on improving the practice of philanthropy, or efficiency, not on how to boost results achieved by grantmaking, or effectiveness. Too much focus has been on foundation operations and grantmaking practice by itself, according to the report, and not on the connection between funders and grantees, on actions and results. Written by a former Kellogg program officer, Joel Orosz, now a professor of philanthropy at Grand Valley State University in Michigan, this report, Agile Philanthropy: Understanding Foundation Effectiveness also calls for increased sharing of knowledge and information about effectiveness beyond individual foundations through networks such as affinity groups.

5. PHILANTHROPY: FOUNDATIONS CAN ACHIEVE BETTER RESULTS BY FOCUSING LESS ON 'SCIENTIFIC' EVALUATION AND MORE ON 'EYEBALLING' ASSESSMENTS

When evaluating prospective grantees, foundations often look past truly significant if subtle indicators of effectiveness in a rush to see an audited statement, a sophisticated accounting system, or an elaborate method for tracking or reporting outcomes, according to the Hudson Institute’s William Schambra. Writing in the Philanthropy Roundtable’s May/June Philanthropy magazine, Schambra called for foundations to focus less on “scientific” attempts at evaluation and focus on what he calls “eyeballing effectiveness.” This effectiveness approach requires site visits, allowing grantmakers to see how active the nonprofit is, how adaptive it is to impromptu community needs, how much tangible community respect it garners, and how much first-hand knowledge leaders and staff have with the problems being addressed. This approach especially can help smaller foundations outperform large ones in uncovering truly effective grantees, the article suggested.

6. SEVERAL PHILANTHROPY OBSERVERS OFFER SUPPORT FOR CONTROVERSIAL CONGRESSIONAL PAYOUT RATE PROPOSAL

Several philanthropy observers have thrown their support behind a Congressional proposal to strip administrative calculations from inclusion in the annual payout rate, while most of the foundation community and others – including prominent newspaper editorial pages – oppose the provision or want Congress to take more time to consider the issue. Susan Raymond writes in her May 30 Observations in Philanthropy column that foundations are reacting to a modest increase in annual payout as if it were a development of Shakespearean proportions. “Don’t whine, win with imagination,” the regular philanthropy columnist argues, by welcoming the change as an incentive to become more efficient and experimental in grantmaking procedures. The “push back” from foundations has only encouraged the proposal’s lead sponsor, Rep. Roy Blunt (R-Mo.), that he’s on the right track, according to a May 26 article in the San Jose Mercury News, the newspaper that has essentially led coverage of the controversy (and editorialized against the proposal). And the National Committee for Responsive Philanthropy issued a report June 2 that challenges several of the key arguments against the proposal. One of its main contentions: self-regulation of foundation administrative expenditures is not working, as recent scrutiny of questionable foundation spending was undertaken not by the philanthropic community but by the media.

7. GRANTMAKERS IN HEALTH'S LATEST SURVEY FINDS 165 CONVERSION FOUNDATIONS, ACCOUNTING FOR OVER $16 BILLION IN ASSETS

Health foundations established over the past two decades now number at least 165 and account for over $16 billion in total assets, according to the latest annual report from Grantmakers in Health. That’s an increase of about 20 foundations and of more than a billion dollars in assets since last year’s report from the affinity group. The latest survey, A Profile of New Health Foundations, May 2003], was released last month and reported that more than two-thirds of these foundations, commonly called conversion foundations, were formed when nonprofit hospitals converted to for-profit status. Only 43 percent of these “new health foundations” are registered as private foundations; just slightly over half are registered as public charities. And while they can be found in 38 states, 61 percent are found in just 10 states, with California and Ohio leading the pack, the survey reported.

8. REPORT SAYS FOUNDATIONS HELPED IMPROVE 'EARLY ADOLESCENT' EDUCATION; EXPRESSES CONCERN ABOUT FUTURE, WITH WANING SUPPORT FOR EDUCATION REFORM

A new report identifies the achievements of foundations in reforming public education in grades five through nine, but expresses concern about the future as prominent grantmakers leave the field. Released by Grantmakers for Education, the report says that foundations are largely responsible for creating an understanding about the importance of education for youth between elementary and high school, and especially in convincing educators that “early adolescents” are capable of rigorous learning. The question is, what’s next for “middle grades reform,” now that the principal funders – the Edna McConnell Clark and W.K. Kellogg foundations, the Carnegie Corporation, and the Lilly Endowment – are concluding their long-term initiatives? The report offers a number of ideas, and suggests that, if nothing else, any philanthropic effort at fostering education reform should follow the lessons of the middle grades reform: the importance of data-based evaluation, building networks, creating and supporting intermediary organizations, and developing targeted strategies for dissemination. But the report, Maturing Investments: Philanthropy and Middle School Reform], cautions that foundations aren’t generally attracted to building on the work of others, even if it involves new approaches, preferring instead to create their own initiatives.

9. FOUNDATIONS SHOULD SUPPORT THE ARTS, ENGAGE ARTS ADVOCATES IN REVITALIZING OR CREATING 'LIVABLE' COMMUNITIES, REPORT SAYS

Funders of community development and “smart growth” efforts should work more directly with arts advocates, according to a recent report. Produced jointly by the Funder’s Network for Smart Growth and Livable Communities and Grantmakers in the Arts, this report stresses the inherent relationship between community advocates and arts proponents; arts and cultural activities create a greater sense of shared community and make physical communities more livable. The paper, The Arts and Smart Growth: The Role of Arts in Placemaking, recommends that foundations work to boost the presence of arts groups in community development efforts, especially in creating or revitalizing public spaces. The report offers examples of arts and community development partnerships in urban, suburban, and rural communities across the country.

10. FOUNDATIONS SHOULD HELP INCREASE ACCESS TO DECENT, AFFORDABLE RENTAL HOUSING FOR LOW-INCOME FAMILIES, REPORT SAYS

Foundations should help increase access to decent affordable rental housing in healthy neighborhoods, according to a new report. Stable, affordable rental housing for low-income families can enhance philanthropic efforts in other social service arenas, including health, education, and employment, according to this briefing paper, released last month by the Neighborhood Funders Group. The paper, Affordable Rental Housing and the American Dream: The Role for Foundations], profiles funding efforts of large foundations and makes several recommendations for foundations, especially smaller ones, to improve the rental housing market. These include helping establish or support housing trust funds for use by public officials; supporting local housing advocates to work with public housing authorities; and supporting public housing residents associations.

Related Reading

New Stanford Publication: Nonprofits ‘Teach to the Test’ to Succeed at Push for Effectiveness

Just as the push for standardized testing in education has led many schools to “teach to the test,” grantees also are doing only those things that prove their effectiveness – while scaling back activities that are harder to assess – according to one nonprofit management consultant. Jan Masaoka wrote about “the effectiveness trap” plaguing foundations and grantees in the inaugural issue of the Stanford Social Innovation Review, published by Stanford University’s Graduate School of Business. Other articles in the Spring Review explore issues of nonprofit innovation, corporate social responsibility, and foundation management.

Note to Readers

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