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Report #147: May 2008
Editor's note: In my first round as editor of the Aspen Philanthropy Letter my hope is to pass on some of philanthropy's most helpful advice – such as the William and Flora Hewlett Foundation's superb report on ways to mitigate climate change – as well as concerns raised, such as worries that foundations may be growing too risk averse in their search for measurable results. The Aspen Philanthropy Letter (APL) reports on developments that may affect the field of philanthropy. In line with its role as an early alert system , APL intentionally includes items that are critical of current practice and policy as well as reports that are supportive. We are grateful for the funding provided by the Northwest Area Foundation for APL, and would welcome both the comments –and the support-- of others. Opinions expressed in this newsletter reflect the views of the sources named and not those of the Aspen Institute or its funders. Doug Rule prepares the newsletter's copy. As the publication's editor, I welcome your suggestions.
-Jane Wales, Vice President, Philanthropy and Society, and Director, Nonprofit Sector and Philanthropy Program, The Aspen Institute |
1. REPORTS OFFER FUNDERS’ RECOMMENDATIONS ON TACKLING CLIMATE CHANGE; WEBSITE SUGGESTS ISSUE COULD COMPEL SHAREHOLDER ACTIVISM
Foundations are the last of the mission-based institutional investors, long after university endowments and pension funds, to realize the power of their portfolios, according to website SocialFunds.com, which suggested climate change might just be the issue to compel more shareholder activism. In addition to reporting on a small but growing number of foundations voting their proxies to support clean energy and address climate change, a Feb. 15 article on this website noted efforts by foundations to address the issue through their grant-making. In particular, it cited a report published by the William and Flora Hewlett Foundation that outlines some steps foundations can take to help fight climate change and focuses on key areas including efficiency and renewable energy. Taking Action on Climate Change recommends that philanthropy help establish a national lobby for energy research and development, something that doesn’t exist at the moment. More specifically, foundations should focus on the “pinch points” in the energy policy system – working to improve building codes, utility regulations and auto fuel-efficiency standards.
The Hewlett Foundation was one of six foundations behind a more detailed report released last year by California Environmental Associates that also stressed the need for philanthropy’s help in pushing for stricter building codes and utility regulations. Design to Win: Philanthropy’s Role in the Fight Against Global Warming was commissioned to help foundations figure out what would be most helpful to fund, reporting that even a limited set of philanthropic interventions can have a profound impact on global carbon output. Current grant-making for climate issues totals about $200 million, according to the report, and an additional funding of about $600 million is needed annually to implement key strategies in the fight.
2. POLICY MATTERS: BOOK OFFERS STEPS TO STRENGTHEN NONPROFIT ADVOCACY
Most nonprofit leaders recognize that engaging in public policy is essential to successfully carry out an organization’s mission. But the rhetoric is not matched by action, according to a book by nonprofit advocacy’s biggest proponents, who say the real problem is that nonprofit advocacy is limited, intermittent, and un-sustained over time. Gary Bass, David Arons, Kay Guinane and Matthew Carter identify a number of factors contributing to the situation in Seen but not Heard: Strengthening Nonprofit Advocacy, which is based on a national survey and focus groups conducted through the multiyear Strengthening Nonprofit Advocacy Project. Limited resources for advocacy and the complexity and misunderstanding of tax law regarding advocacy both hinder the activity, according to the authors. Board members and foundation staff, in particular, often have poor understanding of lobbying rules, and err on the side of caution to the detriment of the field. Also a factor: the sector’s increased emphasis on improved nonprofit management efficiencies does not convey the importance of public policy involvement. And the nonprofit sector infrastructure, from academic courses to national organizations providing leadership, also places too little emphasis on advocacy.
Published and funded in part by the Aspen Institute, the book calls on foundations to create initiatives for advocacy activities, increase their use of general operating grants and remove language restricting lobbying from grant letters among a list of ten ways to stimulate nonprofit advocacy. Above all, foundations should recognize the importance of policy not only to their own charitable causes but also to the stability and health of the nation.
3. FOUNDATIONS SHOULD HELP RURAL AMERICA FULFILL RENEWABLE ENERGY POTENTIAL; AUTHOR OFFERS IDEAS FOR TACKLING GLOBAL WARMING
The environment is one key area in which foundations should help rural America develop new solutions to benefit all of America, according to the Council on Foundation’s Philanthropy & Rural America [see item #4 for more on this journal]. The bulk of America's renewable energy resource potential resides in rural America, according to Brad Crabtree of the Great Plains Institute. In his essay focused on the environment, particularly global warming, Crabtree cites that as one reason why increased philanthropy for rural areas is urgently needed; not only could massive investment in low-carbon energy development address the world’s climate issues, it could also become an economic engine to help depressed rural areas expand employment, improve wages and revitalize communities. Crabtree identifies areas in which foundations can help tackle global warming and also includes examples of such work, including foundation support that led to last year’s historic signing of the Midwestern Greenhouse Gas Reduction Accord by five state governors and one Canadian premier. He adds that greater foundation engagement with legislators from rural states on matters of energy efficiency can help finally advance stagnant federal energy and climate policy.
4. PHILANTHROPY SHOULD VIEW RURAL AMERICA AS INCUBATOR FOR PROMISING IDEAS; PUBLICATION STRESSES REGION’S NEED
Philanthropy should view rural America as an incubator of promising new ideas to help with challenges facing all of America, including population changes, economic demands and educational needs, according to a new publication from the Council on Foundations. The first in a series of journals on relevant topics for the field to come from the Council, Philanthropy & Rural America (disclaimer: the writer of this newsletter edited the publication) follows up on the conference on rural philanthropy held last summer. Rural America’s need for more philanthropic support is immediate, report several authors in the journal, partly since the intergenerational transfer of wealth is expected to happen in rural areas much sooner than elsewhere, given a more quickly aging population. Many areas in rural America lack the infrastructure to encourage and assist rural residents in advancing their own philanthropy, according to contributor Michael Schechtman of the Big Sky Institute for the Advancement of Nonprofits – meaning that much of the wealth transfer’s potential for philanthropy could be thwarted.
The journal features essays providing an overview of what foundations are or should be doing in certain issue areas, including health, education, individual and family assets, and community philanthropy. It also includes profiles of foundations and philanthropic efforts that are helping rural areas, with several authors reporting on what’s being called rural development philanthropy. This concept, launched by the Ford Foundation, is defined in the journal as a practice uniting the tools of community development and philanthropy with an aim to build a better future for rural places and people.
5. GREENLINING INSTITUTE SAYS CONGRESS SHOULD INVESTIGATE FOUNDATION PRACTICES, ASKING WHAT FOUNDATIONS "HAVE TO HIDE"
Congress should further investigate foundation practices, including those pertaining to payout, executive compensation and asset management, and it should also consider requiring foundations to spend out in grants most of their annual endowment earnings. Those recommendations stem from the California-based Greenlining Institute, the main proponent of a bill requiring large foundations to report on their hiring and giving practices related to women and minorities. The Council on Foundations and several foundation associations in the state actively oppose the bill, which passed in California's State Assembly and awaits Senate action. Foundation efforts to “kill such simple legislation," as Greenlining's John Gamboa put it in a press release, make "you wonder what they have to hide." The bill would require foundations with assets over $250 million to disclose the composition of their staff and boards and the number of dollars they give to minority-led organizations as well as to “predominantly low-income communities." Greenlining asserts the bill would simply bring foundations in line with corporate America’s transparency standards.
Greenlining has not yet actively pursued Congressional investigation into foundation practices or its policies toward minorities. But two Greenlining members wrote a Chronicle of Philanthropy opinion piece calling for investigations into foundations similar to those the Senate Finance Committee has led into university endowments. These Greenlining members, George Dean of Greater Phoenix Urban League and Nativo Lopez of the Mexican American Political Association, argue that foundations should be required by Congress to spend out in grants at least 80 percent or more of their annual endowment earnings, an idea proposed for university endowments in response to the Senate hearings. Such a move would double or triple the amount of foundation grantmaking nationwide, they write, and could be a far greater way to jumpstart the economy than Congress’s economic stimulus bill. In addition, Dean and Lopez note that Greenlining is asking the Government Accountability Office to uncover the amount foundations are provided through local, state and federal tax subsidies.
6. NONPROFITS HAVE FEWER RIGHTS THAN DRUG TRAFFICKERS, ACCORDING TO JOURNAL REVIEW OF ANTI-TERRORISM POLICIES
Nonprofits and the people they serve have fewer rights and less recourse to the courts than illegal drug traffickers do in situations where the government seizes their assets. That's the provocative finding of an article in the quarterly International Journal of Not-for-Profit Law, whose December 2007 issue featured a series of articles on the shifting legal landscape facing America’s nonprofits. Josh Friedman, a J.D. candidate at the University of California, Hastings College of Law, writes that the government's approach to combating terrorist financing tests the limits of the Constitution and does not guarantee due process safeguards for targeted charities. He suggests the history of prosecution of drug trafficking as well as organized crime offers a lesson in how the guilty can be brought to justice "without trashing the Bill of Rights or prohibiting aid to the poor." Among other things, Friedman says nonprofit leaders accused of funding terrorism should be given a fair hearing before a judge and guaranteed legal representation – just as drug traffickers are.
Also in the journal, Kay Guinane of OMB Watch provides an overview of counterterrorism tactics that have affected American nonprofits. As with Friedman, Guinane cites the lack of due process for American nonprofits shut down by the Treasury Department on accusations of terrorist funding, a practice that she says violates principles established by the State Department in response to repression of nonprofits in other countries. Guinane also cites revelations about surveillance of groups that publicly and vocally dissent from administration policies, and examples of Congressional failure to provide adequate oversight in evaluating the effectiveness and impact of current counterterrorism laws. She notes indications Congress may begin paying more attention to these concerns.
7. IRS GUIDANCE ON NONPROFIT GOVERNANCE INEVITABLE, ARGUES LAWYER WHO URGES NONPROFITS TO TAKE ISSUE MORE SERIOUSLY
Whether Internal Revenue Service guidance on the issue of charitable governance is a good thing is beside the point, according to San Francisco lawyer Thomas Silk, who argues such guidance is inevitable. “It is going to happen – either under this administration or the next,” he writes in the December 2007 International Journal of Not-for-Profit Law [see item #6 for more]. Silk cites several developments, including public statements of IRS officials and the drafting of a Good Governance Practices document, as pointing to coming IRS guidance on governance, including ethical and transparency practices. As such, he instructs nonprofits to adopt good governance policies, to follow them in practice and to respond in a complete and truthful manner on the redesigned Form 990, which for the first time asks about a tax-exempt filer’s governance practices. He says the Form 990’s questions are not to be taken lightly, since they come backed with the full enforcement power of the government.
8. SCRUTINY OF FOUNDATIONS ADDRESS CORE ISSUES ABOUT GIVING; ANTHOLOGY AIMS TO STIMULATE DEEPER REFLECTION
Increasing scrutiny of philanthropy, and new codes and regulations to prevent misconduct in the sector, do not address what it means to give well and to do good in the 2lst Century and cannot address the growing interest in larger questions about the future of philanthropy. That’s according to a new book published by Indiana University Press. Edited by the University of Chicago’s Amy Kass, Giving Well, Doing Good: Readings for Thoughtful Philanthropists is organized around these questions, similar to the nationwide discussion series, “Dialogues on Civic Philanthropy,” that Kass facilitated a couple years ago and from which the book springs. A few of the essays are adapted from papers prepared for the discussions. The questions are about: goals and purposes, and just what today’s philanthropy should aim to do; relations between donors and recipients; wisdom in legacies and bequests; assessment of success or effectiveness; public accountability; and philanthropic leadership. Taking the widest possible view of philanthropy, this anthology’s readings, nearly all previously published, were selected to stimulate reflection on the practice of philanthropy. It draws on both classic and current authors, as diverse as Alexis de Tocqueville, Anna Faith Jones, Aristotle, Waldemar Nielsen, Ralph Ellison, Jane Addams and John Gardner.
9. VETERAN GRANTMAKER SAYS GRANT CYCLE IS PARTICULARLY DAMAGING TO SECTOR; FOCUSES ON FIVE FOUNDATION "FLAWS"
The foundation grant cycle wastes time, encourages applicants to exaggerate claims and causes foundation officials to develop an attitude of “overwhelmed disdain,” according to a veteran grantmaker’s new book. But far worse, says the Philanthropic Ventures Foundation’s Bill Somerville, the grant cycle obstructs the search for outstanding nonprofit leaders: it substitutes paper for people and chains foundation officials to their desks instead of actually going out and meeting people. Getting out of the office and into the field is one of Somerville’s most oft-repeated refrains in Grassroots Philanthropy: Field Notes of a Maverick Grantmaker, which he wrote with author Fred Setterberg. Somerville argues that America’s foundations have fallen far short of their promise to accomplish things nobody else in society would even dare attempt. He attributes this shortcoming to five flaws: foundations have emulated the worst aspects of big government and created a paper-laden bureaucracy; foundations are “sleepy giants” – slow, stubborn and unresponsive; foundations are averse to risk, confusing bold action with recklessness, even though they have nothing to lose; foundations are focused on problems and expressing concern, not on solutions and taking action; and foundations are passive, insulating themselves from nonprofits.
After presenting his argument and his history in the field, including some 30 years at foundations in the San Francisco Bay Area, Somerville offers his five-point plan for philanthropy reform: locate outstanding people doing important work; move quickly (and embrace paperless giving, or at least minimize paperwork); embrace risk; focus on ideas, not problems; and take initiative. In addition, he says “humanity, honesty and humility” is needed in grantmaking.
10. ONE OF FIVE PROPOSED GRANTMAKING REFORMS GENERATES DEBATE ON LISTSERV: MAKING GENERAL OPERATING SUPPORT STANDARD
Paul Shoemaker of Social Venture Partners Seattle has proposed on a listserv five major reforms to improve the grantmaking process, and he suggests three of these could be developed as one system. The three: a common grant application process, a common outcomes framework to which both funders and nonprofits commit, and a common reporting format. In fact, the Grants Managers Network released a report in April highlighting research and proposed principles to improve grant application and reporting processes. Shoemaker made his reform proposals, and Richard Toth of the Robert Wood Johnson Foundation responded on Grantmakers for Effective Organization’s listserv, which a year ago was enlivened by a heated discussion on the subject of general operating support that ultimately led to publication of an action guide on the subject. [See the Related Reading section for more.]
But just as before, it was Shoemaker’s provocative reform idea calling on foundations to place no funding restrictions on grants that drew the most heat here. (Almost no one commented on what Shoemaker admitted was his "fuzziest reform," calling for a structured capital market, where funders are explicit about what type of organizations they fund, including their stage of development.) Most of those responding on the listserv challenged Shoemaker’s proscription against offering specific program support, suggesting doing so would "throw the baby out with the bath water." Shoemaker, in a follow-up post, wrote in agreement with much of what others posted, while stressing that he’s reticent to suggest lots of exceptions and situational variables pertaining to the principle that general operating support should be the standard. Exceptions allow foundations to cop out or "avoid dealing with these kinds of hard issues head on." He noted that the whole situation reminded him of how difficult it is to move the field.
11. GUIDE SAYS GRANTMAKERS NEED TO ACTIVELY SEEK OUT PERSPECTIVES OF GRANTEES; PAY ATTENTION TO EVERY ASPECT OF RELATIONSHIP
How can grantmakers help their grantees achieve better results? According to a new action guide from Grantmakers for Effective Organizations, the answer lies in working in closer collaboration with grantees, engaging them at every level. Imagine, Involve, Implement: Transforming Grantmaker Practices for Improved Nonprofit Results documents the findings of Phase 2 of GEO’s Change Agent Project, showing how a diverse assortment of grantmakers are changing core practices and approaches. This Action Guide focused on 25 interviewees as well as three practices nonprofits identified as most helpful: providing general operating support, providing multiyear funding and working in partnership with grantees. The guide reports that the answers to problems grantmakers seek to address lie within the community, and that actively seeking out the perspectives and opinions of grantees and others in the communities affected by their work helps grantmakers make the case for social change. Leading change, according to the guide, means paying attention to everything a foundation does as an organization that supports or hinders grantee results.
12. FOUNDATIONS’ FREEDOM THREATENED WHEN IMPACT IS NOT KNOWN; PUBLICATION SAYS THEY NEED TO TAKE MORE CREDIT
The impact of foundation-supported work is not registering with critical audiences, a result of the culture and communications practice of foundations themselves, and a development that represents a serious threat to their effectiveness, even their freedom. That’s according to the foundation-funded Philanthropy Awareness Initiative, which recently published an overview of a discussion on the subject of foundation impact. This publication, Five Questions about Demonstrating Impact: How Foundations Can Show Their Value and Why They Should, reports that the sector is not consumed enough with "demonstrating impact" – defined as both assessing the impact foundations are or are not having and communicating the results.
The field is also too concerned about overstepping grantees by publicly taking credit for successes. Paul Grogan of the Boston Foundation sees that mindset as getting in the way of dealing with the issue of poor understanding and appreciation of foundations: "If you don’t think foundations can have something to do with helping grantees be successful, why are you in this field?" Grogan later noted that the practice of minimizing their own work has made foundations often unaware of their own accomplishments over the years. Tim Walter of the Association of Small Foundations went so far as to suggest in the publication that the sector may generate more political empathy if "a few foundation folks would get publicly canned for not delivering impact."
13. SCHOLAR CALLS FOR MORE RESEARCH TO ASSESS WHETHER TODAY’S PHILANTHROPY SERVES SOCIETY, OR STATUS QUO
Is modern philanthropy, “often bureaucratically organized and expertly managed,” exerting the socially beneficial, pacifying power of philanthropy past? Compared to history, does the nonprofit sector now subvert or sustain the status quo? Kevin Robbins of Indiana University-Purdue University of Indianapolis raises those questions and argues that they are topics worthy of more academic research. Philanthropy, according to Robbins, has historically helped integrate human communities and moderate their socioeconomic tensions, in part by articulating the needs of minorities and smoothing relations between different social strata. He questions if that’s still true today in his lead chapter to a revised textbook on the sector. Edited by Stanford University’s Walter Powell and Richard Steinberg of Indiana University-Purdue University of Indianapolis, The Nonprofit Sector: A Research Handbook, Second Edition provides an overhaul of an earlier edition published two decades ago.
In another historically-minded chapter, Peter Dobkin Hall of Yale University writes that increasing demands, and even legal requirements, for more public disclosure of nonprofit financial activities is creating what he calls a “new regime.” This regime replaces nonprofit scrutiny by “often toothless regulatory bodies” with scrutiny from the general public. Such public disclosure empowers the public to make informed judgments about whether organizations are worthy of support, Hall writes. It also often provides the information needed to spark journalistic exposes and initiate civil litigation.
14. REPORT CALLS FOR MORE SUPPORT FOR GAY, HUMAN RIGHTS GROUPS WORKING IN DEVELOPING COUNTRIES UNDER DURESS
The first-ever study analyzing grantmaking for gay-related issues in the developing world found that most of the funding originated in and was even received by groups based in North America and Western Europe. This study, A Global Gaze: Lesbian, Gay, Bisexual, Transgender and Intersex Grantmaking in the Global South and East, released by Funders for Lesbian and Gay Issues, reports that 40 private and public grantmakers from around the world awarded nearly $10.5 million to more than 200 organizations focused on gay issues in 2005. Most nonprofits in what the report refers to as the Global South and East were launched in the last decade, operate with minimal staffing and survive on small, annual incomes, often under $5,000. As such, the report is intended to serve as a call to grantmakers to increase support for these groups and others in the broader human rights arena that are transforming communities even under harsh conditions and political opposition.
15. SCHOLAR CALLS ON FOUNDATIONS TO HELP CLARIFY ROLE OF ARTS AND CULTURE IN MARKET-ORIENTED AMERICAN SOCIETY
Foundations should continue to fund efforts to analyze and clarify the role of arts and culture in American society and to help distinguish between the public and private benefits of the arts, something that has never been fully answered. That’s according to Georgetown University’s James Allen Smith, writing an article in the Fall issue of the Reader, the publication of Grantmakers in the Arts. Smith makes a historical distinction between philanthropy for arts and culture and that for more “scientific philanthropy,” a distinction that emerged in part because culture has never been strictly defined as either a public or private good. Nonprofit cultural institutions have always operated within a commercial cultural economy, and American culture has long had a market orientation. As such, art nonprofits have never been able to turn their backs on the marketplace –and foundation funding for culture has always faced the “conceptual obstacle” that assumes cultural activities should always try to pay their own way. According to Smith, foundations should continue to fund research to try to help answer perennially unanswered questions in the cultural context such as: Who should pay? For what? And how much?
Of Related Interest
New Publications to Cover Issues for Foundations, Nonprofits in New Ways
Two new publications will launch this year covering issues for foundations and nonprofits in ways that differ from current publications. The Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University will begin a quarterly, peer-reviewed journal called The Foundation Review at the end of the year. According to a Call for Papers, the focus is on learning the tools used and also the results of foundation-funded programs, especially those describing "hard lessons": efforts that were not successful in achieving intended outcomes in the planned timeframe. Each year will focus on an overall theme and each issue will concentrate on a particular topic, with the first round focused on Community Change and Comprehensive Community Initiatives. According to a Feb. 8 press release, the goal of the journal, with support from the W.K. Kellogg Foundation, is to improve foundation philanthropy.
Meanwhile, a free, online features-oriented magazine for nonprofits has debuted providing what a press release calls "intriguing, nourishing and delicious content." Edited by nonprofit consultant Jan Masaoka, Blue Avocado will appear twice a month and feature investigative pieces on topics including lawsuits facing foundations. But the focus will be on columns offering advice for nonprofits and their employees on subjects from copyright issues to human resources to personal finance.
Consulting Firm Issues First Annual ‘Top Ten’ List of ‘Urgent’ Funding Opportunities
In consultation with an advisory group of foundation executives and opinion leaders, the consultancy Arabella Philanthropic Investment Advisors recently released its first annual list of the "top ten under-recognized but urgent philanthropic issues." Intended for all donors, including foundations, High-Impact Giving Opportunities: Philanthropy that Makes a Difference focuses on issues allowing donors to have significant impact across issue areas including education, health, poverty reduction and arts and culture. Among the ideas: work to improve financial literacy among America’s youth and increase access to financial services for the nation’s low-income "un-banked"; helping entrepreneurs around the world expand their businesses beyond the micro-credit level; and facilitating trust-building among those engaged in armed conflict around the globe through conflict resolution.
Related Reading
Guide Seeks to Inform, Inspire Foundations to Offer More General Operating Support
General operating support is not a panacea for the performance and effectiveness challenges facing many under-resourced nonprofits, but it can become a platform for helping a grantee think about the outcomes of its work, shifting the focus from individual projects to the overall impact of the organization. That’s according to an action guide from Grantmakers for Effective Organizations that makes the case for such support. Simply titled General Operating Support, this guide is intended to inform and inspire foundations to think about offering more general operating support. The guide notes the consequence of not providing more operating support – i.e., more of the status quo in which nonprofits don’t have the infrastructure to perform effectively, widespread burnout among nonprofit leaders, and a lack of openness and trust between grantmakers and grantees. The report also dispenses with common “myths” expressed by foundations about core support, including a perceived loss of impact and evaluation.
Brief Focuses on Challenges of Strategic Foundation Communications for Public Policy
Most foundations that have a communications arm engage in what is known as “FYI” communications, including annual reports, Web sites, press releases on grant awards and newsletters. Strategic communications is far more challenging, according to an Issue Brief from Grantmakers in Health, which notes that foundations are far more likely to focus on the tactics of conveying specific news and information than on what the intended audiences actually need to know to compel action.
Communicating for Policy Change was issued to help funders consider how communications can fit into efforts to influence public policy and looks at specific techniques that health funders are using in public policy work. Based on a discussion with grantmakers, the report argues that it is important to see communications as a mindset, part of an organization’s culture, not an ancillary function. As such, program officers need to be advocates for issues not just architects of a list of grants, and combining responsibility for programs and communications in one leadership position can also help. |
