1. DONORS' GUIDE, DISCUSSION OFFER FUNDING IDEAS FOR BOOSTING STUDY OF ISLAM AND THE MIDDLE EAST TO COUNTER 'RADICAL ISLAM'

American philanthropy is hampered by its lack of experience in supporting Islamic-related projects. Moreover, post-9/11, federal, anti-terrorism regulations have further hindered this kind of funding by leading many funders to shy away for fear of running afoul of the law. That's according to participants at a Nov. 7 Hudson Institute discussion about philanthropic support to create a moderate alternative to "radical Islam." Among others, Hussain Haqqani of the Hudson Institute and Boston University offered ideas for philanthropy. He suggested philanthropy could help seed moderate Islamic literature and publishing entities to counter the current intellectual marketplace in the Muslim world, which he says is made up almost entirely of radical Islamic literature. And philanthropy could help strengthen the Muslim world's "weak human rights organizations." Without offering specifics, he also said that Indonesia is an example of how philanthropy has advanced moderate Islam by helping local moderates gain political and intellectual influence. A transcript of the discussion will be posted soon on Hudson's Bradley Center for Philanthropy and Civic Renewal Web site.

This discussion was led by Hudson's Hillel Fradkin, who has written a new primer and donors' guide on the subject of moderate Islam. Published by the Hudson Institute, Fradkin's American Philanthropy After September 11th suggests that philanthropy should help address an important gap by supporting the development of courses and training programs relating to Islam and the Islamic world for government, military, and diplomatic employees. Many other ideas are offered in the guide, including the need to strengthen education in the Muslim world, especially higher education and the study of the social sciences and humanities. Specific think tanks and organizations working on these issues are identified, most prominently and frequently Hudson itself. A majority of these entities and the foundations that support them lean conservative.

2. SECTOR'S RESPONSE TO ACCOUNTABILITY CONCERNS CRITICIZED AT CONFERENCE

On January 8-10, the Foundation Center, Milbank Memorial Fund, and Rockefeller Archive Center hosted a conference at the Pocantico Conference Center of the Rockefeller Brothers Fund that explored the issue of foundation accountability and transparency. This item and items # 3-5 that follow in this newsletter refer to papers presented at the January meeting. While the meeting organizers weigh their options for publishing the conference papers, the papers are only available by contacting those authors who have agreed to share them.

Particular attention at the conference was devoted to the issue of government oversight of the foundation and broader nonprofit sector. Several presenters criticized aspects of the work of the Panel on the Nonprofit Sector on this topic. In his paper, Joel Fleishman of Duke University wrote that he is currently concerned about the lack of follow up to the Panel's recommendations on government oversight. He suggested that so far there has been little "real muscle" put into lobbying for the Panel's recommendations for increased IRS oversight, and that he is troubled by the appearance that the Panel's work was "mere posturing." And because Independent Sector has failed so far to fully engage the Panel since its final report was released, Fleishman fears that much of the benefit that might have accrued to the sector by virtue of the Panel's good work may be lost.

Ruth McCambridge, Editor in Chief of the Nonprofit Quarterly, was also critical of the Panel's work. She suggested that the nonprofit sector, through the Panel, responded to criticism from policymakers in the same way that the for-profit sector typically addresses Congressional concerns, by becoming overly defensive and adopting a "talk this to death" strategy of reform. According to McCambridge, the "foundation-heavy panel" may have been structured to mask foundation problems by focusing on the more obvious but less important concerns among nonprofits as a whole. McCambridge observed that the Panel's focus expanded from a limited number of items to start with to eventually include a broad range of issues. Foundations gain from a "diluted, cluttered and delayed agenda," she reasons. However, McCambridge thinks that in the long-run the sector's defensive posturing hurts its cause, and the pressure on the field to reform will not subside. McCambridge's paper will be included in the State of Philanthropy 2006, which is scheduled to be published by the National Committee for Responsive Philanthropy in late-Spring 2006.

3. PROFESSORS ARGUE THAT POPULAR ASSESSMENTS OF FOUNDATIONS FAIL TO CONSIDER WHAT'S MOST IMPORTANT: ACTUAL RESULTS, TIED TO THEIR MISSIONS

At January's Pocantico Conference on foundation accountability (see item #2), Peter Frumkin of the University of Texas at Austin criticized the field of philanthropy for not paying sufficient attention to actual results in assessing foundation accountability. Frumkin went on to argue that, besides attending to accountability, there should be greater focus on philanthropic legitimacy - whether foundations are fulfilling their philanthropic missions, and whether foundations are perceived by their stakeholders as acting with the best intentions and in ways that are just and fair. In his paper, Frumkin stresses that it's not only when foundations succeed at social change that they should be considered legitimate: he offers examples of foundations that have reinforced their legitimacy by being candid about and explaining their failures. Only when foundations report and explain both successes and failures will they be seen as credible and honest contributors to public life.

Kenneth Prewitt of Columbia University carries this line of thinking one step further, suggesting that foundations have been successful in deflecting demands for what he calls substantive accountability, or accountability based on results, by highlighting their procedural accountability, or accountability based on transparency and professionalism. The latter practices often improve foundation performance, Prewitt argues in his paper. But they are also emphasized to ward off calls for external assessments of foundation priorities and accomplishments. Prewitt's essay is based on his chapter in a forthcoming book, The Legitimacy of Foundations, from the Russell Sage Foundation that he is also co-editing, as well as a chapter, "Foundations," in a forthcoming new edition of The Nonprofit Sector: A Research Handbook, from Yale University Press.

Though Prewitt cautions that it is difficult at this point to assess foundations' impact on society, he contends that foundations cannot take credit for large-scale social change. The best that can be said is that foundations, which have generally played catch-up with social or political forces beyond their control, have effected change only at the margins.

4. LEADER OF FOUNDATION IDENTIFIES FOUR RULES FOR SUCCESS IN INFLUENCING PUBLIC POLICY; CIRCUMSPECTION ESSENTIAL

While many foundations have offered policymakers reliable research-based information, fewer have been successful at actually influencing policy, at least in the health sector, according to Dan Fox of the Milbank Memorial Fund. In his paper prepared for the Pocantico Conference of which Milbank was one of the sponsors (see item #2), Fox identifies four rules that foundations should follow in their efforts to affect public policy. The first rule is to stay on top of developments in the policy area of concern, by reviewing relevant reports and being in regular touch with colleagues. The other three rules are procedural: be responsive to policymakers; stay sufficiently knowledgeable about issues related but not directly tied to a foundation's current programs, so you can still be helpful to policymakers; and be circumspect with reporters, responding warmly and supplying reliable information and additional contacts but not giving your own opinion. Fox stresses the last point: Media coverage of the opinions of foundation executives about controversial issues can reduce their capacity to influence policy, he says. Further, media coverage of foundations' work on health policy is seldom reliable evidence about the foundations' influence.

5. PROFESSOR SAYS CENTRIST AND LIBERAL FOUNDATIONS ARE FACED WITH 'LOOMING IRRELEVANCE' BECAUSE OF FALSE IDEA THAT PHILANTHROPY CAN BE POLITICALLY NEUTRAL

Although many foundation leaders don't like to admit it, foundation policy interventions are unavoidably political and ideological. That's according to the University of California, Santa Barbara's Alice O'Connor in a paper she delivered at last month's Pocantico conference (see item #2). O'Connor writes that because many mainstream and progressive foundations, especially, are uncomfortable wielding - or admitting to wielding - political power or acknowledging ideological commitments, they are faced with a "looming irrelevance" in society and an "incapacitation" in challenging the growing power of conservative foundations. It's impossible for liberal philanthropy that acts like it is ideologically neutral to succeed in a political culture that is now more than ever organized along ideological lines, she says.

6. FLEXIBLE, LONG-TERM SUPPORT FOR OPERATING EXPENSES CONTINUES TO BE PRAISED AS KEY TO HELPING GRANTEES SUCCEED

Offering flexible and long-term support for operating expenses continues to be touted as an important strategy for foundations interested in helping their grantees succeed. It's certainly one of the main messages drawn from ongoing coverage about the success conservative foundations have had in advancing their policy ideas. At a Nov. 3 Grantmakers in Health plenary session on "The War of Ideas", one panelist, Larry Kressley of the Public Welfare Foundation, cited a "leading criminal justice funder" that stopped supporting an anti-death penalty group after a state legislature came within three votes of passing a moratorium on death sentences and executions. A different foundation, following the conservatives' example, might have stuck with the program, hoping for more votes in the next legislative session and eventually, the moratorium's passage. But this funder, Kressley said, gave up, not believing there was sufficient progress to justify continuing the fight.

Meanwhile, the Nov. 28 Barron's suggested that flexible, long-term grantmaking for "unglamorous" capacity building or general operating support "may end up being the best legacy of foundations." Based on anecdotes from new foundation donors and quotes from experts in philanthropy, the news magazine reported in mostly optimistic terms on the past half-decade's rush among the rich to set up foundations, calling this a new era of "mega-philanthropy."

7. FOUNDATION LEADERS SAY GRANTMAKERS NEED TO ADDRESS ISSUES OF INEQUALITY ACROSS AMERICA; A RESPONSE TO LAST FALL'S HURRICANES

The goal of reducing racial and social inequality must factor more prominently into grantmaking at all levels nationwide, according to George Penick, the outgoing president of the Foundation for the Mid South. In a December Newsmakers interview by the Foundation Center's Philanthropy News Digest, Penick talks about the opportunities the destruction from last year's Hurricanes Katrina and Rita have presented the mid-South region. That is, leaders and grantmakers should work to rebuild the region to better all of its residents' quality of life, and not just repair the mid-South to its former state. One way to do that, Penick suggests in a Feb. 14 Philanthropy Journal interview, is to shake the "foundation disease" of not making new grants to nonprofits showing poor results. He explains that most nonprofits serving low-income communities "don't have the luxury of learning from failure," and that foundations can identify those with real potential and help them build on what they have, and especially what they have not, achieved with past efforts. (Next month Penick will become the founding director of the RAND Corp.'s RAND Gulf States Policy Institute, which will provide data and policy analysis to help guide policymakers in the region.)

In his Philanthropy News Digest interview, Penick stresses that the hurricanes made plain that racial and social inequality is not simply a mid-South problem. Emmett Carson of the Minneapolis Foundation makes the same point in a commentary piece in the November/December issue of the Council on Foundations' Foundation News & Commentary. Carson says the Gulf Coast hurricanes "revealed the depth of poverty" within American society and the extent to which it is wrapped up with race. Further, Carson writes that foundations need to accept that the strategies they've pursued in their efforts to alleviate poverty "have been largely unsuccessful." As such, foundations need to try new things, work in new ways with the government and business sectors, and recruit a more diverse workforce.

8. COMMENTATORS WEIGH IN ON PHILANTHROPY'S 'FAILURE' TO ADDRESS POVERTY; WILL SUCCESS COME FROM NEW PHILANTHROPISTS OR NEW TAX INCENTIVES?

Emmett Carson is just one of three commentators to weigh in recently on the failure of organized philanthropy to address poverty. But while Carson calls on foundations to try new things, another commentator sees hope in a new breed of philanthropists. Howard Husock, affiliated with Harvard University's Hauser Center for Nonprofit Organizations, wrote an article in the Winter issue of the conservative City Journal, published by the Manhattan Institute, about the "dismal failure" of large, mainstream foundations in fighting poverty over the last 30-some years. But, according to Husock, success is just a new class of philanthropists away, referring to the new donors who are emerging as a result of the past decades' information technology boom. These philanthropists demand results from their grantees and stress what he calls conservative principles, such as individual responsibility and hard work, in fighting poverty. Older foundations "won't give the social entrepreneurs the time of day," Husock says, since, as he sees it, these foundations are all talk about social change, and no action.

Meanwhile, a third commentator, Rob Reich of Stanford University, sees the problem as deriving from a lack of tax incentives that encourage giving to combat social inequality. Reich writes in the cover article of the Winter Stanford Social Innovation Review that American philanthropy is failing because the tax subsidies granted to the sector are actually worsening - rather than alleviating - social inequalities. That is, much of the money donated tax-free ends up serving the rich as much or more than it helps the poor. Reich identifies several actions Congress could take to reform incentives for giving, including offering additional tax advantages for nonprofits helping the poor.

9. REPORT SAYS FOUNDATION FUNDING NEEDED TO HELP STEM LOOMING CRISIS: IMMINENT RETIREMENT OF BABY-BOOM LEADERS IN SECTOR

Most nonprofit executives are in their 50s, and nearly all of these fifty-somethings are expected to retire within the next 15 years. Thus, foundation funding for leadership transitions is needed to help stem a potential crisis, suggests a report from the Annie E. Casey Foundation. Based on the largest national survey of its kind, with over 2,200 respondents, Change Ahead: Nonprofit Executive Leadership and Transitions Survey 2004, released late last year by the foundation, identifies other looming problems in the leadership realm. Among these: there are available only roughly half the number of "Generation Xers" who are needed to take the place of retiring baby-boomers; the nonprofit sector, with lower salaries and retirement benefits, may feel the brunt of the coming leadership shortage that will affect all sectors; and many nonprofits don't have middle management positions that could serve as an internal training ground for future leaders. The report offers short- and long-term recommendations, and says that leadership transitions offer unrealized opportunities to find new and dynamic leaders and increase diversity in the sector.

10. ANALYST SAYS INTERNATIONAL DONORS SHOULD ENCOURAGE WEALTHY IN DEVELOPING COUNTRIES TO COMMIT TO PHILANTHROPY

American philanthropists and foundations should be leaders in encouraging the increasing numbers of wealthy citizens in developing countries to commit to philanthropy, according to philanthropy news analyst Susan Raymond. Raymond writes in her Feb. 3 Observations in Philanthropy column that simply donating money across borders to help address problems in developing countries isn't as praiseworthy as the news media suggests, with its coverage of the philanthropy of Bill Gates and other new international donors. These donors are missing the biggest opportunity of their lifetimes and in the entire history of philanthropy, Raymond suggests, because they are not cultivating and sustaining local philanthropy in the developing world. Raymond calls for the establishment of a Global Philanthropy Roundtable, where economic leaders from all economies join to share best philanthropic practices and to inspire each other to invest in their own nations' and communities' needs, and not just depend on the kindness of strangers.

Meanwhile, a new report offers lessons for just such a global forum of givers. The report is intended for foundations and practitioners of community-based philanthropy, particularly at the international or cross-border level. While not a "how-to" guide, Building an International Learning Community: Lessons and Insights from the Transatlantic Community Foundation Network offers detailed examples from the first six years of the Transatlantic Community Foundation Network, an association of community foundations from Europe and North America established by the Germany-based Bertelsmann Foundation and the Charles Stewart Mott Foundation.

Of Related Interest

Research Funded to Explore Types of Foundation Support of Nonprofits
Research is underway at three institutions to assess foundation practices regarding unrestricted grants and reimbursement of nonprofit overhead expenses. As part of an initiative seeking to boost knowledge about organized philanthropy, the Nonprofit Sector Research Fund of the Aspen Institute has awarded grants to researchers at Indiana University, the University of San Francisco, and the Center for Effective Philanthropy. The studies will provide insight into how foundations make decisions about the type of support they offer, and how those decisions affect grantees in both intended and unintended ways, according to a Jan. 12 press release.

Academics Propose a Voluntary Donation Registry as a Way to Increase Money for Charity
To increase donations, the nonprofit sector should work with the Internal Revenue Service to develop an online, voluntary, donation registry that would publish the ratio of a person's contributions to annual income, while keeping private the person's absolute contributions and income. That's according to Robert Cooter and Brian Broughman of the University of California, Berkeley, who propose their idea in a peer-reviewed article in the online economics journal, The Economists' Voice. The authors, basing their idea on economic theory, suggest that encouraging people to volunteer information about the percentage of their annual income that is devoted to itemized tax donations, and especially pressuring public figures to do so, would work to increase slightly, over time, the money donated to charity, through the operation of social norms. Cooter, a legal and economics professor, and Broughman, a graduate student, offer further ideas on how to implement the registry and ways to extend it, including by creating a pro bono registry with lawyers.

Related Reading

Report Offers Recommendations for Disaster Assistance Drawn from Indian Ocean Tsunami
Foundations should help individuals affected by a disaster to get access to pro-bono legal services and culturally appropriate and professionally guided mental health care, according to a report on lessons from 2004's Indian Ocean tsunami. This report from the New York Regional Association of Grantmakers, Rebuilding Lives: The Philanthropic Response to the Indian Ocean Tsunami of 2004 offers other recommendations, especially suggestions that are relevant to foundations assisting in disasters outside of the geographical areas in which they regularly fund. In such cases, the report says these foundations could learn from or perhaps collaborate with their grantmaking colleagues that do operate in the affected region, or they could consider providing support to local diaspora organizations assisting far-flung, hard-hit communities.

Summit: Foundations Should Consult with, Assist Grantees on Measurement Tools
Foundations should consult with the social service providers they fund as they seek to identify and develop tools to measure results, and they should help these providers learn from each other about effective measurements tools and about how to develop "industry standards." Those are two findings from the Social Services Measurement Summit held last year and sponsored by the W.K. Kellogg and the William Pitt foundations. A post-Summit summary report suggests that as agencies become more experienced with measurement tools, they often have a better fix on what will work than funders. The report's main section serves as the text at the Summit's Web site.

Correction

A recent study, Beyond Compliance: The Trustee Viewpoint on Effective Foundation Governance from the Center for Effective Philanthropy found that active trustee involvement in the high-level and strategic business operations of a foundation - helping develop a strategic plan or quantitative assessment measures - contributes to trustees perceiving the foundation as effective. We regret the error in our discussion of this Center for Effective Philanthropy report in our November/December issue.