1. EMERGING ISSUE:  NONPROFIT VS. FOR-PROFIT HEALTHCARE

A critical question of importance for nonprofit and foundation leaders that is now being considered on Capitol Hill is whether nonprofit hospitals continue to deserve their tax-exempt status.  The House Committee on Ways and Means recently held hearings on the topic, and the Chair of the Senate Committee on Finance, Sen. Charles Grassley, R-Iowa, recently sent a letter to the nation's largest nonprofit hospitals asking them to account for their charitable activities. National experts Mark Schlesinger of Yale University and Brad Gray of The Urban Institute responded to this question at a June 20 luncheon for senior congressional staff hosted by the Nonprofit Sector Research Fund of the Aspen Institute.

At the luncheon, the scholars argued that the charges being made on Capitol Hill - essentially that nonprofit hospitals do not significantly differ from for-profits and therefore do not deserve their tax-exempt status - are, on the whole, mistaken. After studying several hundred empirical studies comparing nonprofit and for-profit healthcare services, Schlesinger and Gray concluded in a report, "Why Nonprofits Matter in American Medicine: A Policy Brief," that "form of ownership" - whether an institution is for-profit or nonprofit - affects the quality, accessibility, and cost of healthcare services, but does so in ways that vary across different forms of medical care.  Some consistent differences apply, however: 1) for-profits have larger markups of prices over costs; 2) nonprofits adopt more trustworthy practices; 3) nonprofits serve as incubators for new health services, using philanthropy in part to subsidize innovations; but 4) nonprofits are slower to react to changing conditions.  The authors also criticized nonprofit healthcare for inadequate levels of community involvement and public accountability. Copies of a summary of the Schlesinger and Gray report and the full text of their paper are both available online. 

2. ONLINE POSTING OF FOUNDATIONS' CONTACT INFORMATION COULD BE THE FIRST IN A NEW STYLE OF FUNDING ACTIVISM

Contact information for ten large Atlanta-area foundations has been posted on a new philanthropy-specific Web log, or blog, and readers are urged to pressure these foundations to help a struggling Atlanta nonprofit cover an impending loss of $65,000 in federal funding. The June 8 post to the months-old Philanthropica blog has the potential to become a model for similar, new-media-focused funding campaigns, especially as blogs continue to grow in number and cover more topics. Among the dozen or so blogs to emerge in the past year that regularly cover philanthropic concerns, Philanthropica is unusual in its willingness, even eagerness, to make blunt demands and go beyond diplomatic criticism of the sector. In earlier posts, the author, identified only as "Madmunk, philosopher and philanthropoid," called on foundations to stop complaining about the quality of research about foundations and do something about the problem by increasing support for independent university research. He's also expressed outrage at the "elitist" suggestion that foundation abuses could be curbed by requiring that foundations have assets of at least $1 million.

This blogger's willingness to be so frank is likely a reflection of his anonymity. Madmunk provides no personal contact information, identity, though it is believed that he works as a donor consultant. By email, Madmunk declined to reveal his identity for readers of this newsletter.

3. TWO EXPERTS, WITH DIFFERING POLITICAL VIEWS, THINK BLOGS WILL FORCE FOUNDATIONS TO BE MORE POLITICAL

As blogs increase in popularity and influence, an important issue will be how they impact the work of foundations. Mark Schmitt of the New America Foundation, a Washington think tank, argues that foundations need to brace themselves for a more politicized media. Many of the policies that foundations support, from reducing global warming to increasing voter participation, are being treated as political in a way they never were before, Schmitt writes in a May 18 post to his Decembrist blog. The very idea of "rationality and objectivity" in foundation grantmaking and policy advocacy is at stake, Schmitt writes, with largely conservative bloggers leading the charge to question foundation activity. His post was in response to a May 12 Chronicle of Philanthropy opinion piece from the Hudson Institute's William Schambra, in which Schambra said that foundations' implicit political inclinations are being vetted far more thoroughly and publicly than before. Schmitt agreed with the principles of Schambra's arguments, though he disagreed with its specifics and tone.

4. IN ADVANCE OF A BOOK OFFERING FOUNDATION LEADERS' VISIONS FOR A BETTER WORLD, BLOGGER SOLICITS IDEAS FROM ORDINARY CITIZENS

Blogger Philip Cubeta, a Dallas-based financial services consultant who writes Gift Hub, is one contributor to a forthcoming book, The World We Want, by Peter Karoff of The Philanthropic Initiative. As reported in an online overview of the book, Karoff has asked a host of foundation leaders and observers to share their visions for a better world and explain how they think their visions could be realized. Although the book itself will not be published until next spring, Cubeta has already established another blog on the topic, where he invites any reader to contribute his or her vision. His purpose is to get ordinary citizens' views and ideas into the mix so that it's not just a conversation among the "elite" who control charitable dollars. In his first post on the new blog, dated May 15, Cubeta asks about the funders Karoff has queried for the book, which includes many familiar names: "Might they actually foment a conversation of democracy and then listen? Rather than inflict their view on us, as we shudder and cringe beneath the onslaught of worlds someone else wants?" On June 2, Madmunk, the unidentified Philanthropica blogger, also posted to his blog, "A Vision for Philanthropy," based on Cubeta's invitation.

5. FOUNDATION LEADER CALLS ON HIS COLLEAGUES TO SPEAK OUT ON CRITICAL PUBLIC ISSUES, FUND EFFORTS TO IMPROVE CIVIC DEBATE

Foundation executives should speak out on critical public issues and not rely on grantees or other nonprofit leaders to stand up in their behalf, according to Edward Skloot of the Surdna Foundation. In a May 2 speech, Skloot urged his colleagues to claim the "high road of citizenship," to demand civility in a time of shouting and bashing, and to fund efforts to build effective citizens. Skloot spoke at the inaugural conference of Philanthropy for Active Civic Engagement, or PACE, a foundation affinity group. Eight essays were prepared as part of that conference, which focused on philanthropy's role in strengthening American democracy. These essays offer numerous recommendations for foundations and policymakers to follow to encourage civic renewal.

In conjunction with the conference, PACE also co-published with the technology-focused E-Volve Foundation, a snapshot survey of the current state of online democracy. Power to the Edges: Trends and Opportunities in Online Civic Engagement reviews trends in the development of the Internet and its increasing use in civic engagement. It is intended to serve as a guide for donors and foundation staff who are considering - or are already - investing in online engagement efforts.

6. SKOLL FOUNDATION AND ITS FOUNDER UNDERTAKE EFFORTS TO PRODUCE 'SOCIAL CHANGE' FILMMAKING

The Skoll Foundation and its founder, former eBay president Jeff Skoll, are undertaking initiatives to increase the impact and "cultural exchange" value of filmmaking, including both documentaries and big-budget features. The Skoll Foundation provided major funding for and is helping to promote The New Heroes documentary, which profiles social entrepreneurs around the world who are developing breakthrough solutions to "impossible" social problems. According to its Web site, the foundation is encouraging individuals to host house parties to watch the documentary, which is currently airing on PBS stations, and solicit donations to the entrepreneurs' work. The foundation will match $100,000 in donations offered by the public to projects that are profiled in the documentary. Actor Robert Redford is the host of The New Heroes documentary, and his Sundance Institute has partnered with the foundation to produce additional documentaries that aim to educate and inspire the public, and not just entertain. Meanwhile, the San Jose Mercury News reported in a June 22 article on Jeff Skoll's new Participant Productions, a for-profit organization working with major Hollywood studios to back films "promoting social change." Several of these films will be released this year.

7. FOUNDATIONS SHOULD INCREASE TIES TO GRASSROOTS, ACCORDING TO COMMENTATORS AT A DISCUSSION ON CIVIC PHILANTHROPY

Foundations should support grassroots nonprofits that are working to address community problems in their own ways, according to essays written for the first Dialogues on Civic Philanthropy discussion. Though they have different political views, Rick Cohen of the National Committee for Responsive Philanthropy, Marvin Olasky of the University of Texas at Austin, and William Schambra of Hudson Institute's Bradley Center for Philanthropy and Civic Renewal all essentially agreed, in essays written in advance of the March 2005 dialogue on "Goals and Intentions: What Should Today's Philanthropy Aim to Do?," that foundations should have stronger ties to grassroots groups. A project of the Bradley Center, in conjunction with several foundations and foundation associations, the Dialogues series aims to explore fundamental questions about the sector's practices with philanthropy leaders and observers. Essays from the first dialogue, as well as a second one on accountability, are already posted online. Transcripts from the first two sessions, as well as essays for a third meeting exploring the nature of giving grants, are expected to be posted by mid-July. The new six-part Dialogues series, led by Hudson senior fellow Amy Kass, is an outgrowth of a similar seminar series, the Project on Civic Reflection, that Kass led last year and which explored more general questions about giving.

8. TWO NEW GUIDES AIM TO HELP FOUNDATIONS ENGAGE IN ADVOCACY; 'NO SOUND' ARGUMENT CAN BE MADE AGAINST THE PRACTICE

There are excellent arguments in favor of advocacy grantmaking and "no sound" case against it, according to one of two new guides for funders on supporting advocacy. The latest Grantcraft guide, Funding Advocacy: The Philanthropy of Changing Minds, was funded by the Ford Foundation and written by Tony Proscio. It's rich in anecdotes and advice from foundations that fund advocacy, most of which, the guide says, let their grantees take the lead role in decision-making. It quotes one foundation official who enlisted her donor's support for advocacy based on a three-part assessment: their state's policies needed to change; philanthropy would be much less effective without such a change; and concerted support for advocacy was thus worth the commitment of the time and resources. Another section of the guide offers tips on preparing for resistance to a foundation's advocacy efforts.

Meanwhile, Northern California Grantmakers has just launched an online Public Policy Grantmaking Toolkit to demystify advocacy grantmaking and encourage more foundations to support it. Beyond providing the basics of what it calls "public policy grantmaking," this Web-based toolkit offers numerous case studies of grantmakers nationwide engaged in the activity, what it identifies as best practices, and information on how funders can evaluate their public policy grantmaking.

9. FOUNDATIONS URGED TO BUILD ON UNHERALDED 2004 ELECTION GAINS ON MATTERS OF ENVIRONMENTAL CONCERN

In the 2004 election, environmental concerns were winning issues in most places where they were voted on, and several foundation leaders are encouraging colleagues to build on these unacknowledged successes. The Environmental Grantmakers Association invited 11 grantmakers to weigh in through commentary pieces in its Winter News & Updates publication on the next steps that environmental funders should take. In line with the thesis of The Death of Environmentalism, a controversial foundation-funded paper issued earlier this year, the commentators generally agree that the environmental movement should try to broaden its appeal. Environmental leaders should reach out to moderate Republicans and citizens residing in conservative areas. For their part, grantmakers should move away from their current "only three years of funding" and "no general operating support" approaches, according to Betsy Taylor of the Town Creek Foundation. And they should focus more of their attention at the state and local levels, where the election gains were made.

10. WORKER CENTERS ATTRACT FOUNDATIONS SEEKING TO REDUCE IMMIGRANT POVERTY, INCREASE INTEGRATION, ACCORDING TO STUDY

Worker centers have largely supplanted unions, fraternal organizations, and the like in serving immigrant workers, especially at the local level, a new study reports. And these centers are an emerging investment opportunity for foundations interested in reducing immigrant poverty and increasing immigrant civic integration, according to Worker Centers: Organizing Communities At the Edge of the Dream, published by the Neighborhood Funders Group. Foundations account for over 60 percent of the budgets of worker centers, part of a growing infrastructure for recent immigrants through which they gain support and services, including employment. But most centers have limited budgets and are poorly connected to each other, the study found. And despite the fact that worker centers are local phenomena and impact local communities, very few community foundations support them, according to the report. This report is drawn from a larger book that Cornell University Press and the Economic Policy Institute will publish this fall.

Of Related Interest

With Nonprofit Panel Recommendations in Hand, Senate Plans for Legislation Next Month
Sen. Charles Grassley, R-Iowa, chair of the Senate Finance Committee, plans to introduce legislation pertaining to the nonprofit sector by the end of July, according to Diana Aviv of Independent Sector. Aviv and her colleagues heading up the Panel on the Nonprofit Sector held a media teleconference June 22 after they had presented to Senator Grassley and his colleagues the Panel's final recommendations to improve oversight of the sector. The report, Strengthening Transparency, Governance and Accountability of Charitable Organizations, features numerous recommendations grouped into 15 categories, but it's not actually the last word from the Panel. The Panel will offer a supplemental report in the fall to address lingering issues, such as accreditation policies in the sector and specific ways financial reporting forms can be improved.

Georgetown to Analyze the Globalization of Philanthropy and Its Effects on Democracy
The adoption of American-style philanthropy around the world is one overlooked aspect of globalization that Georgetown University plans to analyze over the next several years. Steven Heydemann, director of Georgetown's Center for Democracy and the Third Sector, wrote an article in the Spring issue of the Center's Democracy & Society publication about activities the Center will undertake, from seminars to research, to investigate the changing relationship between philanthropy and democracy. The aim, according to Heydemann, is to gain greater understanding of the globalization of philanthropy and its effects on democratization and on the norms and practices in established democracies.

Related Reading

Lessons Learned from an Unusual, Successful Collaboration Involving a Foundation and a Grantee
A foundation considering joining in a collaboration in which it is on equal footing with a grantee should ensure it has effective due diligence grantmaking procedures in place, according to an analysis of one such unusual collaboration. Such a foundation should also share information openly with other grantees about the project's goals and limits, according to the new report from the Building a Regional Voice for Environmental Justice Collaborative. This report, named after the collaborative, focuses chiefly on the lessons learned from the collaboration among the Liberty Hill Foundation, Communities for a Better Environment, and researchers from the University of California, Santa Cruz; Occidental College; and Brown University. In addition to Liberty Hill, the California Endowment provided support for the collaborative in a traditional foundation role.