Aspen Philanthropy Letter

Report #126: September 2004

The Aspen Philanthropy Letter (APL) reports on new ideas and other developments that may affect the field of philanthropy in the years to come. In contrast to other publications that cover today's breaking news, APL generally highlights emerging issues that may be visible only on the horizon. In line with its role as an early alert system for the field of philanthropy, APL intentionally includes items that are critical of current practice and policy as well as reports that are supportive. APL's predecessor, the Philanthropy Information Retrieval Project, was started in 1996 by the John D. and Catherine T. MacArthur Foundation and was transferred to the Aspen Institute in 2003. APL is currently funded by the Robert Wood Johnson Foundation, the Northwest Area Foundation, and The Philanthropic Collaborative; additional funders are welcome. Burness Communications, Bethesda, Md., prepares the newsletter's copy. As the publication's editor, I invite your comments and suggestions. - Alan J. Abramson  Director, Nonprofit Sector and Philanthropy Program, The Aspen Institute

1. SENATORS CALL ON INDEPENDENT SECTOR TO ESTABLISH PANEL TO RECOMMEND ACTIONS FOR IMPROVING SECTOR’S OVERSIGHT, GOVERNANCE

The Senate Finance Committee has asked Independent Sector to “expeditiously” convene an independent national panel to consider and recommend legislative and federal proposals aimed at strengthening nonprofits and foundations. Sens. Charles Grassley, R-Iowa, and Max Baucus, D-Mont., of the Committee sent a Sept. 22 letter to IS President Diana Aviv asking her to convene panelists committed to reform and to avoid letting a “potential minority prevent substantive improvements by requiring unanimity on proposals.” The Senators write that the panel’s recommendations will help them as they put together legislative proposals to improve oversight and governance of the sector and can also stimulate efforts within the sector to, “identify and enforce best practices in the areas of … governance, transparency, financial accountability, conflicts of interest, fundraising practices, and grant making practices.”  In the letter, the Senators also write that the panel’s purpose should be to deal with the thornier issues raised in discussions with the Committee this summer. They ask IS to convene its panel and release initial findings and recommendations by next February, with a final report in the spring. Meanwhile, the Senators suggested that earlier Committee recommendations that appeared to have “immediate support,” including those to “facilitate the collection of more useful information” about the sector, should be put in place “without delay.”

2.  GREATER SECTOR SCRUTINY COULD RESULT FROM INCREASING INFLUENCE OF PHILANTHROPY, NEWS MAGAZINE WARNS

In its July 29 issue, The Economist closes an article on the rise of philanthropy in Western countries with this question: “But is that really an attractive prospect, a world of burgeoning philanthropy, full of donors who want to control where their money goes and how it is spent?” The magazine reports on the growing numbers of the rich, who are responsible for the spike in organized giving, and the widening gap between rich and poor, suggesting that it won’t be long before philanthropists are chastised as having “undemocratic” tendencies – perhaps leading to even greater scrutiny than has recently occurred.

3.  TAX SCHOLAR CALLS ON CONGRESS TO COMBINE NONPROFIT PROPOSALS INTO ONE BILL

In a recent column, economist Eugene Steuerle of the Urban Institute called on Congress to act on legislation pertaining to nonprofits this year. In particular, he essentially endorsed the Senate’s proposed restriction of compensation to foundation trustees. Steuerle wrote in the July 26 Tax Notes newsletter of Tax Analysts that Congress should combine all of its recent efforts to increase both charitable giving and restrictions on the sector into one omnibus bill to increase its chances of passage before the end of the year. Regarding trustee compensation, he wrote that it’s not enough for the sector to say that foundation trustees deserve compensation, since some would surely volunteer their time. If restriction of this compensation, as proposed by the Senate Finance Committee, prevents some abuse and excessive pay, he wrote, a net gain may result, with more funds becoming available for charity.

4. ORGANIZATION RELEASES A NONPROFIT POLICY PLATFORM CALLING FOR GREATER SECTOR OVERSIGHT, INCREASED SUPPORT FOR DOMESTIC SERVICES

The National Council of Nonprofit Associations last month issued a nonprofit policy platform intended to engage political candidates for national office, including the presidency. Based on a survey of over 800 respondents, Nonprofit Agenda: A Blueprint for Action divides its priorities into seven areas, from capacity building to advocacy rights to accountability and oversight. The platform calls for improved Internal Revenue Service oversight of the sector, as well as for tax policies that increase incentives for charitable giving and for increased government support for domestic programs and services. In addition, the platform recommends establishment of a nonprofit equivalent of the Small Business Administration to help small nonprofits improve their management and organizational skills. And it calls for protecting the rights of nonprofits that receive government funding to lobby with non-federal funds, a right that is secure for their for-profit counterparts. Allowing federally-funded corporations to lobby, but not federally-funded nonprofits, would threaten the democratic process by excluding the less fortunate, the platform says.

5. REGIONAL ASSOCIATIONS OF GRANTMAKERS LAUNCH EFFORTS TO ENHANCE ACCOUNTABILITY OF FOUNDATIONS, INCLUDING ESTABLISHING GUIDING PRINCIPLES AND INCREASING COMMUNICATIONS

In light of heightened scrutiny of the sector, regional associations of grantmakers across the country have launched efforts to address accountability concerns. Most recently, the Donors Forum of Chicago has created a Preserving the Public Trust Initiative that, working with nonprofits and foundations, will establish and implement a set of guiding principles and best practices for nonprofits in the entire state of Illinois. These principles and best practices will address concerns about board composition, legal and regulatory compliance, stewardship of resources, and relationships with grantees, among others. A task force is currently working to establish these principles by December.  To help with implementation of the principles, the Donors Forum will create tools and resources for release in 2005.

Meanwhile, the Council of Michigan Foundations (CMF) is collaborating with the Forum of Regional Associations of Grantmakers and the accounting firm of PricewaterhouseCoopers to offer foundations specific guidance on how to more accurately report foundation activities to the Internal Revenue Service through Forms 990-PF, according to an article in CMF’s NewsWire.

Additional work by regional associations on accountability issues is being encouraged through the Forum of Regional Associations of Grantmakers’ Regional Infrastructure in Action initiative.  Through its initiative, the Forum will provide grantmakers with educational resources to help them address such issues as ethics, professionalism, and effectiveness, and it will help each regional association adopt locally endorsed principles for grantmaking members, along the lines of those already developed by associations in Chicago, Michigan, and some other areas. Alison Wiley of the Forum reports that most of its 30 members are already considering establishing such principles. The Forum will also help regional groups, in part through matching grants, build and sustain relationships with state officials and policymakers charged with overseeing philanthropy, and it will help develop regional “Philanthropy News Service” centers, or communications collaboratives, to help them better reach out to journalists. 
 
The Forum’s initiative complements national efforts, such as the Council on Foundations’ Building Strong and Ethical Foundations: Doing It Right project, which is working to enhance the Council’s role in dealing with problem foundations.

6. ACADEMIC RESEARCHERS: FOUNDATIONS HAVE HELPED GROW ADVOCACY ORGANIZATIONS

An article reviewing existing scholarship on advocacy organizations cites research which finds that foundations have played a key role in the growth of professional advocacy organizations, and that mass protest has driven the overall expansion of foundation funding.   The review paper, “Advocacy Organizations in the U.S. Political Process,” by sociologists Kenneth Andrews of the University of North Carolina, Chapel Hill and Bob Edwards of East Carolina University, which appears in this year’s Annual Review of Sociology, goes on to refer to the research finding that professional advocacy organizations, and foundation funding for them, have been critical in the institutionalization of gains by major social movements.  The authors also write that research on nonprofit advocacy that is based on tax code definitions is incomplete.  Problems arise from defining advocacy based on Internal Revenue Service definitions and ignoring small, volunteer-run entities that operate outside the confines of the tax code.

7. FOUNDATIONS TAKE TOO MUCH CREDIT FOR CHANGE BROUGHT ABOUT THEIR GRANTEES, ACCORDING TO TWO COMMENTATORS; FOUNDATION ‘BRANDING’ EFFORTS HINDER SECTOR

Foundations have to accept that they cannot take more than “a tiny bit” of credit for the changes that their grants help to achieve, according to Steven Burkeman, a former foundation leader in the U.K. Burkeman wrote in the September issue of Allavida’s Alliance Extra about foundations’ ability to achieve social justice – and not just do good – an ability that he believes is very limited, since social justice requires action at a societal level. According to Burkeman, foundations can help their grantees by using their influence and leverage to pressure government to implement social change, although he cautions that the direct pressure on government should come from nonprofits, not foundations. He adds that too many foundations try to lay claim to achievements that came about in large part by those they fund.

Jessie Gruman of the Center for the Advancement of Health considers such foundation claims – taking credit by “branding” their work with grantees – one of the ways foundations have undermined the sector. Gruman wrote an Aug 19 Chronicle of Philanthropy opinion piece that described several ways in which she says foundations have “hurt charities,” and then discussed how foundations can meet the demand for accountability without undermining the sector. Gruman says foundation branding efforts confuse the public about the independence and credibility of nonprofits, as distinct from foundations, thereby damaging nonprofits’ influence and reducing their potential to do good.

8. FOUNDATIONS OVERLOOK FUNDING FOR RURAL CONCERNS BECAUSE IT’S NOT ‘HOT,’ NCRP SUGGESTS; WYOMING NONPROFIT SECTOR STRONGER THAN EXPECTED, NEW STUDY REPORTS

Funding for rural areas and rural development is scarce partly because rural isn’t “hot” or able to generate much press coverage, according to Rick Cohen of the National Committee for Responsive Philanthropy. Cohen writes in his organization’s latest Responsive Philanthropy newsletter that foundation funding for rural development amounted to just over $100 million in 2001 and 2002 combined, compared to a total of $1.28 billion that foundations spent on community involvement and development in those years. Besides the fact that foundations are mostly urban and suburban, not rural, Cohen writes that funders increasingly look to generate press coverage for their activities, and there aren’t many major or even secondary media outlets serving rural areas and covering rural issues.

In light of the generally little amount of foundation funding in rural areas, many in Wyoming were surprised by the findings of a recent study showing just how large the nonprofit sector is in the state. The Aug. 3 Casper Star Tribune reported on a study from the foundation-funded Wyoming Nonprofit Support Initiative showing that nonprofits make up the fourth largest source of jobs in Wyoming, and they are part of its fastest growing economic sector. While Wyoming attracts few contributions from out-of-state foundations, the report, The Hidden Sector In Our Economy, identified 160 foundations in the state. And the Initiative’s lead sponsor, the Wyoming Community Foundation, is discussing with its fellow foundation colleagues in the state whether they should establish an association to combine and share resources and take more of a leadership role in shaping the state’s economic future.

9. HOW TO DEFINE FAMILY IS ONE OF TEN LEADING CHANGES IMPACTING FAMILY PHILANTHROPY, ACCORDING TO PUBLICATION

The changing definition of family, giving across geographic distances, and community foundations working with families are three of the ten trends driving and shaping family philanthropy, according to the National Center for Family Philanthropy. The Center’s most recent Passages publication highlights the changes over the past 20 years that have made family giving, once quiet and private, much more public and transparent. Most of these trends mirror those affecting all giving, including a rise in foundations and new giving vehicles, generational transfer of wealth, and greater accountability and effectiveness. But family foundations now have to consider defining who counts as a family member, with a say in the foundation’s activities, and they have to decide which community or communities to support, because family members are likely to be geographically dispersed.

10. ENDOWMENTS ESTABLISHED TO SUPPORT NEEDS OF MINORITY, INDIGENOUS POPULATIONS IN DALLAS, CHICAGO, AND HAWAII

Endowments have been established in Dallas, Chicago, and Hawaii to fund community projects and needs for Latinos, African Americans, and Hawaiians, respectively. The Aug. 7 Dallas Morning News reported on the launch by prominent area Mexican-Americans of the community’s first-ever grantmaking fund for Latinos. The Mexico Fund, the newspaper said, could serve as a model for other Latino organizations around the country. The Aug. 1 Chicago Sun-Times reported in an article in the Chicago Community Trust’s African American Legacy Initiative that will support social services, health, education, the arts, and other activities in the city’s black neighborhoods. And the Summer issue of National Committee for Responsive Philanthropy's Responsive Philanthropy reports on the Hawaiian Way Fund established by the Council for Native Hawaiian Advancement to support community needs of the indigenous peoples of Hawaii.

11. FOUNDATIONS LAUNCH CIVIL MARRIAGE COLLABORATIVE TO FIGHT EFFORTS AGAINST SAME-SEX MARRIAGE IN BATTLEGROUND AREAS

To date, a half-dozen foundations have pooled $1.2 million to launch a Civil Marriage Collaborative to fund state and local nonprofits fighting to preserve marriage options for same-sex couples. The Gill Foundation, the Evelyn and Walter Haas, Jr. Fund, the Open Society Institute, and California’s Columbia Foundation are among those that have contributed to the Collaborative, which is funding efforts across the country that go beyond legal and political battles to include public education, communications, polling, and voter mobilization. The Massachusetts-based Proteus Fund is housing the Collaborative, in coordination with the Funders for Lesbian and Gay Issues. For more information, contact the Fund’s Mike Smith.

Of Related Interest

Community Foundations Part of Election-Year Effort to Engage Citizens in Political Discussions

In this election year, at least nine community foundations are helping to lead community-wide discussions about two central political issues: national security and American jobs in a global economy, the latter of which could include local economic concerns. According to a Sept. 16 press release from the By the People Citizen Deliberations and distributed by the Council on Foundations, 17 communities will host these “citizens deliberations,” involving a representative sample of citizens, on Oct. 16.  Many of the local discussions will be broadcast on local PBS stations, and these will be followed by a national deliberation to be broadcast on all PBS stations on Oct. 21. The Community Foundation for Greater New Haven (Conn.) is a principal behind this PBS Deliberation Day effort.

Related Reading

Association Releases Paper Based on Recent Discussion About Nonprofit Accountability

The American Society of Association Executives recently released a working paper based on a National Consensus Conference on Nonprofit Governance it held earlier this year. The paper, Changing Expectations for Nonprofit Organization Governance, discusses many of the chief accountability issues in the sector. One such issue mentioned briefly is the fact that association codes of ethics are generally too focused on the business or professional conduct of members, not on governance by executive and volunteer leadership.

New Resource

Guide Offers Tips on Giving with an International Perspective

International giving doesn’t necessarily require funding outside the United States or even outside one’s own community, according to a new guide from GrantCraft. International Grantmaking: Funding with a Global View explores the topic of international giving, defining it as a style of giving that “implicitly recognizes the interplay between international and local events and processes.” The guide, the tenth from the Ford Foundation-sponsored GrantCraft initiative, identifies the resources available to funders interested in international giving, and offers examples of foundations involved in the field, including one that convenes an annual meeting of health ministers from major developed countries to discuss their concerns and to learn from each other.

Note to Readers

We would appreciate your offering us information that we can include in a future edition. If you have an item you believe would be helpful to your colleagues, please e-mail it to Doug Rule. Thank you in advance for your cooperation.