Report #153: June 2009

1. PHILANTHROPY ROUNDTABLE: THE ARGUMENT THAT FOUNDATIONS SERVE PUBLIC PURPOSES DOES NOT MEAN THAT THEY MUST UNDERTAKE GOVERNMENT’S AGENDA
The Philanthropy Roundtable released a report on June 19, 2009 arguing that the requirement that foundations and other charities serve public purposes does not mean that they “must serve the purposes of the government – or the public at large.” A report entitled “How Public is Private Philanthropy?” sounds the alarm on proposals from Members of Congress and from the social sector that “urge stricter legal limits on the purposes and operations of foundations and other charities and the means by which they govern themselves.” Future editions of APL will cover this report in greater detail.

2. FEAR OF LEGISLATION DRIVING DEBATE OVER NCRP BENCHMARKS MEANT TO IMPROVE FOUNDATION PRACTICES
The National Committee for Responsive Philanthropy has gained considerable attention and concern from funders with its recent publication Philanthropy at Its Best, offering benchmarks for the field. The benchmarks include calls to increase payout to 6 percent annually, provide at least 50 percent of grant dollars to marginalized groups, and provide at least 50 percent of grant dollars for general operating support. Last month saw two organized debates about the publication. Fear of legislation seems to be at the heart of the matter. During one of the most heated of these debates, which took place at the Council on Foundations’ Annual Conference, Tim Walter of the Association of Small Foundations expressed concern that NCRP’s criteria could inform and influence Congressional legislation. Sherece West of the Winthrop Rockefeller Foundation and a member of NCRP’s board stressed that the criteria are meant to be “aspirational” and are offered as a tool to generate dialogue and self-regulation, “absolutely not” to compel government action. Nonetheless, Walter said that he does in fact expect legislation specific to the sector to emerge this year. In a May 4 article in the American Prospect, Bill Dietel of the Pierson-Lovelace Foundation and the philanthropic consulting firm Dietel Partners agreed. Dietel said that “a very hot fight” is looming between government and foundations as policymakers increasingly see foundations more focused on maintaining their corpus than on helping society. Increased needs demand increased giving, Dietel argues.

3. GRANTMAKERS FOR EFFECTIVE ORGANIZATIONS CALLS ON FOUNDATIONS TO HOLD STEADY WITH GRANTMAKING
In the current economy, foundations should work to cut their own administrative costs before they consider cutting support to nonprofits – anything less, according to Kathleen Enright of Grantmakers for Effective Organizations (GEO) would be “unconscionable.” Enright was quoted in a May 28 article in the Philanthropy Journal reporting on new recommendations from her organization. In its report Smarter Grantmaking in Challenging Economic Times: Insights for Foundation Leaders, GEO provides a series of recommendations for foundations in the current economic downturn and argues that foundations should “hold steady” with their grantmaking. Paying out more than the minimum 5 percent even when assets are down sends a clear signal of support and commitment to nonprofits. The report notes that in the current economic crisis, it is imperative that foundations adopt smart grantmaking practices, including serving as a convener and catalyst for collaborative breakthroughs, providing more flexible funding and general operating support to grantees, and working to streamline their application and reporting requirements.

4. PANEL DETAILS LESSONS FOR FOUNDATIONS FROM FINANCIAL CRISIS, INVESTMENT SCANDAL; NEED FOR GREATER DUE DILIGENCE, OPENNESS
In a plenary session at last month’s Council on Foundations’ 2009 Annual Conference, panelists discussed lessons learned during the financial crisis, focusing on the Bernard Madoff scandal, which affected nearly 200 foundations, forcing over 50 to shut down. One panelist, Melissa Berman of Rockefeller Philanthropy Advisors, argued that the scandal confirms that professional dealings should not be based solely on personal relationships. She noted that in today’s climate, foundations need to be able to comfortably fire their financial advisers if there is cause for concern. Jeffrey Solomon of the Andrea and Charles Bronfman Philanthropies stressed the value of doing basic due diligence, noting that his foundation declined to invest with Madoff after several troubling developments—Madoff’s investment group didn’t welcome an office visit, wouldn’t answer questions about its investments and employed questionable auditors.

In the Rockefeller Philanthropy Advisors’ Winter/Spring Linkages newsletter, Melissa Berman notes that a “trust deficit” is affecting all aspects of American society right now. Rebuilding trust in philanthropy, according to Berman, will require increased openness and transparency from both donors and grantees—and, by extension, foundation advisors and consultants—about resources, commitment and risk factors.

5. WANT MORE STRATEGIC PHILANTHROPY? TRY GIVING CIRCLES
According to a new, Aspen Institute-funded study, giving circle members - people who pool their resources and decide with others where to donate this money - tend to give more strategically than individual donors who do not participate in these groups. "They are more likely to give to advance a vision for change, conduct research to help decide on which organizations to support, support general operating expenses in addition to or instead of specific programs, check organizational performance data, and take into consideration cultural differences and race, class and/or gender when making funding decisions." In addition, the study, The Impact of Giving Together: Giving Circles' Influence on Members' Philanthropic and Civic Behaviors by Dr. Angela Eikenberry and Jessica Bearman (with research assistance from Melissa Brown, Hao Han and Courtney Jensen) finds that members of giving circles give more on average than donors who are not in giving circles. "Although this finding is tempered when income in taken into consideration, giving circle member self-reports and interviews suggest that giving circles cause members to increase their giving." There is also a positive correlation between participation in a giving circle and sense of civic responsibility, according to this research which was also funded by the Forum of Regional Associations of Grantmakers, the Center on Philanthropy at Indiana University and the University of Nebraska at Omaha.

6. NEED FOR MORE STRATEGIC PLANNING FROM FOUNDATIONS IN DISASTER PREPAREDNESS; LESSONS FROM SWINE FLU PANDEMIC
The H1N1 (“swine flu”) virus, so far milder and less of a pandemic than expected, has tested society and philanthropy and has highlighted the need for improved responses to various disasters in the future. During a May 7 teleconference organized by the Council on Foundations, Sandra Hernandez of the San Francisco Foundation argued that foundations should draw up memoranda of understanding (MOUs) with community-based nonprofits and safety-net providers to improve the efficiency of disaster response by offering them quick and easy money to act immediately. She also noted that foundations need to evaluate the capacity of their local health departments by cultivating relationships with officials before a crisis. Katherine Treanor of Grantmakers in Health mentioned the value of foundations convening all sectors in a community to help them plan for a disaster and decide on appropriate roles for all actors. Both Hernandez and Treanor called on foundations to help push other philanthropies in a community to create an overall philanthropic response.

7. DETAILS PROVIDED ABOUT FEDERAL NONPROFIT CAPACITY BUILDING PROGRAM, INCENTIVES TO INCREASE VOLUNTEERING
A new federal program would enlist foundations in proposed efforts to boost nonprofit operations, as it requires foundations and other non-federal sources to match federal funds on a dollar-for-dollar basis. In a May 27 letter to Sens. Tom Harkin and Thad Cochran asking them to appropriate $5 million annually for the Nonprofit Capacity Building Program, Sens. Max Baucus and Charles Grassley discuss how the program would help small to mid-size charities with educational and training needs. Through this program, the federal government would offer three-year grants of not less than $200,000 to nonprofit intermediaries, with preference given to areas where nonprofits face resource hardships, according to Independent Sector’s summary.

This nonprofit capacity program was an amendment to the Edward M. Kennedy Serve America Act, enacted into law by President Barack Obama in late April. The Act includes the Obama Administration’s well-publicized Social Innovation Fund as well as the establishment of many incentives to enlist more Americans, especially those over 55 years of age, as volunteers helping society “solve problems” and respond to disasters. According to a detailed summary, the Act also authorizes creation of a Civic Health Assessment, which will track Americans’ participation in a range of civic activities, including charitable giving, volunteering, understanding of American history and interest in public service careers.

8. BOOK CAPTURES ‘WIT AND WISDOM’ OF 10 PHILANTHROPY LEADERS; INTERVIEWS FOCUS ON IMPROVING DIVERSITY, SOCIAL EQUITY
A recent book, Wit and Wisdom: Unleashing the Philanthropic Imagination, focuses on philanthropic leaders and leadership. The book, published by the affinity group Emerging Practitioners in Philanthropy and distributed at the Council on Foundations’ Annual Conference last month, offers the thoughts of 10 established philanthropy leaders, many working in the American South, capturing their wisdom for the next generation. Author Mark D. Constantine says he specifically focused his interviews on issues of racial, economic and social equity.

Through individual interviews, these leaders separately express several common recommendations for improving the sector.

A. Need for Greater Diversity among Foundation Leaders
Gayle Williams of North Carolina’s Mary Reynolds Babcock Foundation suggests that philanthropy’s lofty aims of reducing poverty and promoting equity will never be realized until a more diverse group of people are serving on foundation boards, sharing their perspectives and world views. “Without that change, the field loses,” Williams says, bluntly. Foundations need to change the way they search for board members and advertise for staff, among other things. This means searching not just for more African Americans and other ethnic minorities, but also those from modest or poor economic backgrounds. James Joseph of Duke University, meanwhile, contends that the nonprofit sector may not be facing the leadership vacuum that many claim. Instead, recruiters may be looking in the wrong places for the next generation of leaders. They’re not likely to have “the right endorsements and the right credentials as defined by established elite,” according to Joseph. “Their accents will be different and so will their color and complexion.”

B. Need for Willingness to Generate Conflict
James Joseph says that one of the greatest disappointments over the past decade has been a lack of philanthropic leadership. It is the rare foundation leader that asks difficult and penetrating questions about the communities in which they invest, or that strays from safe, less controversial concerns. He reasons this stems from a reluctance to take a risk on issues, such as race or poverty, where there are no easy answers and no clear path to success or resolution. Lynn Huntley of the Southern Education Foundation suggests that fear of government regulations along with a preoccupation of having firm measures of success increasingly contributes to a reluctance to take a stand on serious issues. Huntley argues that many foundations are more risk-averse than ever and reluctant to support any work that might be perceived as divisive or draw scrutiny. Huntley goes on to say that the field suffers from a “culture of dysfunctional politeness,” in which no one wants to criticize how another goes about its work. This inhibits the field from having strong, vigorous debates about how to give money most effectively.

C. Need for Less Isolation, More Partnership
Linetta Gilbert of the Ford Foundation, the principal funder of this book, says philanthropy can help people imagine and work toward realizing a new future for the places in which they live – but too often, people and sectors become isolated from one another and from new ideas. James Joseph agrees, cautioning that the sector needs to work against a tide toward “balkanization” in philanthropy, in which private foundations only meet and work with other private foundations, community foundations with community foundations, and so on.

9. FOUNDATIONS SHOULD BE AS FAMILIAR WITH ADVOCACY AS WITH FORM 990S; REPORTS SHOW RESULTS FROM ADVOCACY FUNDING
According to Emmett Carson of the Silicon Valley Community Foundation, a foundation with the word “change” or “do good” in its mission is an advocate and should therefore be engaging in advocacy. Carson spoke at a special discussion on the topic at the Council on Foundations’ Annual Conference. During the discussion Rusty Stahl of the affinity group Emerging Practitioners in Philanthropy called it a discredit to the field that foundations do not know the ins and outs of advocacy. Advocacy engagement should be as basic and universal as understanding and using the IRS Form 990 among foundations, Stahl said. Carson argues that if a foundation’s lawyer says the foundation cannot engage in advocacy – a not-uncommon, though inaccurate, claim – then that foundation needs a new lawyer.

According to the National Committee for Responsive Philanthropy, foundation support of advocacy does produce results. The foundation watchdog group reports that such support helped many homeowners in North Carolina avoid losing their homes to foreclosure and was crucial in helping activists in New Mexico generate a statewide minimum wage increase higher than the federal rate. NCRP has issued two reports through its Grantmaking for Community Impact Project  showing the power of funding advocacy across the country. In the most recent report, focused on North Carolina, NCRP notes that foundations should not favor funding services over advocacy in the current economic climate, despite the natural inclination to do so. According to the report, combining services with advocacy or organizing, according to the report, can be an effective way to meet basic needs while also building the power and leadership skills of service recipients to directly participate in the democratic process.

10. REPORT OFFERS LESSONS FROM LIMITING A FOUNDATION’S LIFESPAN; SURVEY FINDS THAT MORE ARE GRADUALLY CONSIDERING THE MOVE
A foundation that limits its lifespan is advised to target its grantmaking in areas with particular potential to make a difference. It should also establish a program to help its most heavily dependent grantees diversify their funding streams. Those are just two of the lessons from the final report of the Beldon Fund, which has now spent out its assets. Giving While Living: The Beldon Fund Spend-Out Story is intended to help other philanthropists explore the option of spending out, or at least spending more, to make a difference. It focuses on the nuts and bolts of the Fund’s work in this regard, as well as noting the concrete successes it had in meeting its goal of using resources to help build public and policy support for environmental protection. The report concedes that the foundation could have used a few more years to best carry out its work and notes that it will be a while before the full results are in. But results on the ground and external assessments indicate that the Fund has helped propel environmental policy.

Meanwhile, the first large-scale study of family foundation lifespan plans finds that more and more in the field are open to limiting their work within a set timeframe. However, a recent survey, Perpetuity or Limited Lifespan: How Do Family Foundations Decide?, found that perpetuity remains the default option, and the large majority of foundations planning for perpetuity have never considered other options and are unlikely to do so in the future. This survey, produced by the Foundation Center and the Council on Foundations, with significant support from the Aspen Institute, reports on the intentions, practices and attitudes of nearly 1,100 active family foundations and sheds light on future behavior as these young foundations mature. It found that a quarter of surveyed family foundations, most of which are less than 30 years old, are currently undecided about whether they’ll operate in perpetuity. A small segment of foundations (12 percent) actually plan to limit their lifespan. The impact of these limited-lifespan foundations is still a few decades away; most have not even started the spend-down process.

11. IN FUNDRAISING GUIDE, ARTS LEADER CALLS FOR MORE CHARITABLE GIVING, PHILANTHROPIC LEADERSHIP FROM THE WEALTHY
Reynold Levy of Lincoln Center for the Performing Arts argues that more charitable giving and philanthropic leadership is needed if the sector is to truly generate solutions to some of America’s most pressing challenges. In his recent book, Yours for the Asking: An Indispensable Guide to Fundraising and Management, published by Jossey-Bass, Levy says, among other things, that leaders, such as Warren Buffett and Bill Gates, need to be persuaded to follow Ted Turner’s earlier lead in urging more of their wealthy cohorts to become philanthropists. He also calls for more pressure on and within various business sectors – investment firms, private equity firms and natural resource mining firms, most notably – so that they stop “stinting when it comes to philanthropy” and actually become new leaders in business philanthropy. Levy wrote this guide because to his knowledge, no chief executive of any major nonprofit has written about fundraising and its influence on the institution, on the donor and on the solicitor, even though it has become a central job requirement.

12. FOUNDATIONS SHOULD SUPPORT AWARENESS, RECRUITMENT EFFORTS AS FEDERAL GOVERNMENT GEARS UP FOR 2010 CENSUS COUNT
At a session on civic engagement at the Council on Foundations’ Annual Conference last month, Thomasina Williams of the Ford Foundation noted the importance of the census on federal apportionment of funds for local services as well as the value in foundations getting involved now as the Census Bureau prepares the 2010 count. The Funders’ Committee for Civic Participation has established a Funders Census Initiative to help funders support the effort. Short of becoming a 2010 Census Partner, funders can help, according to the initiative, with outreach and promotion in recruiting temporary census employees and volunteers. They can also work to enlist community-based organizations to talk up the census to their constituencies and neighborhoods, especially among “hard-to-count” populations, which include racial and language minorities, children living in poverty and citizens whose homes have recently been foreclosed. According to a funders guide from the initiative, funders could sponsor informational meetings for other funders as well as state and local government officials and civic leaders.

13. FOUNDATIONS SHOULD HELP COMMUNITIES CONSTRUCT NEW PUBLIC BUILDINGS, FACILITIES; REPORT DETAILS ‘DELIBERATIVE DEMOCRACY’
A new report calls on foundations to help engage citizens in new ways and, specifically, to help communities construct new public buildings and facilities designed for 21st Century public life. The national infrastructure of schools, hospitals, parks and other vital public facilities, built during the New Deal era of the 1930s, is collapsing, according to this report from grantmaking affinity group Philanthropy for Active Civic Engagement. PACE calls on funders to help develop white papers, research projects and design competitions that focus on the “built environment” needs of today’s democracy.

The organization made this recommendation in a guide intended to give funders a quick, early overview of an emerging field with still blurry and overlapping boundaries, generally referred to as “democratic governance” or “deliberative democracy.” According to the report, the field has proliferated dramatically in the last fifteen years as citizens address issues from education to crime prevention to environmental protection to public health. Written by Matt Leighninger of the Deliberative Democracy Consortium, the report includes several examples of “deliberation in action,” from a coalition formed by funders and leaders in Northeast Ohio to help the region rebuild and grow economically to a group in Fort Myers, Fla., working to make the city less segregated by race.

14. FUND ADVOCACY ON ENVIRONMENTAL CONCERNS OR SEED PRIVATE EFFORTS IN THE CAUSE? ALLIANCE FEATURES ‘EITHER/OR’ DEBATE
Should foundations fund advocacy and a push for shifts in climate change policy, or should they seed private efforts to tackle environmental concerns, such as research and development or investing in new practices? Climate change is one of five “either/or” topics debated in an inaugural series from Alliance Magazine. Other topics include whether foundations should ensure basic education for all or provide greater access to higher education, and whether global health funding should be focused on HIV/AIDS or expanded to support the improvement of basic health needs. In the climate change point/counterpoint, George Polk of the European Climate Foundation argues for an advocacy focus, noting that philanthropic dollars pale in comparison to what’s needed to increase the pace of environmental technology advancement. He cites an example from his foundation when action taken by the European Union in an area of the foundation’s advocacy resulted in a return of at least 600 times what the foundation spent. However, many climate solutions are beyond the reach of any one government, and philanthropy can convene experts to help propel the needed partnerships.

In the counterpoint essay, Peter Heller of the Canopus Foundation argues that now is a difficult time to convince governments to save the environment: they’re too focused on saving major businesses and overall economies. Given a lack of trust that government will take quick or even any action, advocacy does not make much sense, according to Heller. Philanthropy can achieve quicker, more decisive, results by providing venture capital funding to help speed progress in areas such as wind and solar energy, particularly for international, multi-sector efforts. 

15. AFFINITY GROUP SAYS FUNDERS NEED TO PAY MORE ATTENTION TO NEEDS OF CHILDREN OF INCARCERATED PARENTS
Foundations need to give more attention to the needs of children who have a parent in state or federal prison. According to federal statistics cited by Grantmakers for Children, Youth & Families, in 2007, there were more than 1.7 million such children, or 2.3 percent of the U.S. population under age 18, and the rate of incarceration is expected to continue to increase, leaving even more children in need. The Winter 2009 issue of this affinity group’s publication, Insight, focuses on the innovative efforts of a relatively small number of foundations that have pushed the field to begin focusing on the needs of children whose parents are incarcerated. The publication notes the needs of these children cut across many areas that child-serving foundations already address, from mental health to child poverty to unemployment to juvenile justice. Therefore, funders do not need to create new programs to address this issue; they only need to re-envision existing priorities.

16. USE OF CONSULTANTS IN GRANTMAKER-GRANTEE EVALUATION ‘A SHAM,’ ARTS LEADER SAYS; FAULTS ART DONORS’ POWER OVER GRANTEES
Michael M. Kaiser of the John F. Kennedy Center for the Performing Arts argues that the use of consultants by foundations to determine whether a potential grantee is ready or able for funding is counterproductive. He claims that a nonprofit simply cannot tell the consultant everything, and there is a pressure to ingratiate oneself with funders, so the consultative process “becomes a sham.” Writing in The Art of the Turnaround: Creating and Maintaining Healthy Arts Organizations, Kaiser notes that art donors possess a great deal of power, which forces art organizations into the position of supplicant, or begging people to donate money. Only by creating unique and exciting programming and then aggressively marketing this programming to potential consumers can art organizations usurp some of this power and reduce the need for begging.

Of Related Interest

White House Official Says Partnering with Foundations Is Key, But Will Be Learning Experience
Just as at the earlier Global Philanthropy Forum Annual Conference, several Obama Administration officials spoke at last month’s Council on Foundations’ Annual Conference. Chief among them was Melanie Barnes of the White House Domestic Policy Council, the agency that will oversee the new Social Innovation Fund. At a luncheon plenary, Barnes offered more details about the Fund as well as her agency’s plans to foster more collaboration across federal agencies in addition to working with foundations. Barnes said partnering with foundations will be a bit of “a learning experience,” but she thinks doing so is key to making progress on the issues society faces, from poverty and high unemployment to education to health care. She called on foundations to help them “connect the dots on issues” and prioritize critical areas, as well as actually “push” them to take action.