Funders Urged Not to Return to “Normal”

Funders should not return to "normal"

A month ago, in Philanthropy Thinkers On Not Returning to “Normal” (August 4, 2020), we wrote about the nonprofit sector “…anxiously await[ing] the time it can return to ‘normal.” 

But the pre-pandemic “normal” was imperfect at best. COVID-19 has suddenly and sharply reminded us of the weaknesses in our healthcare and economic systems; they have largely collapsed under the strain and the crisis is nowhere near over in the United States.  And the deep inequalities and structural deficiencies in our society have come into painfully crisp focus.

Now, “many philanthropy thought leaders increasingly urge against going back to how things were before COVID-19 turned the world on its head.” As commentator Arundhati Roy points out in The Pandemic is a Portal (April 3, 2020), Financial Times, “nothing could be worse than a return to normality. Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next….” 

As the pandemic lingers, “organizations and individuals across the spectrum – nonprofits, foundations, citizens, governments, families – must “grapple with what “normal” means now and in the future.” 

We concluded our August 4th post with the promise that we would return again to this important discussion. We’ll begin here with advice from experts on how, in the coming weeks and months, philanthropic funders should pivot away from the pre-pandemic status quo. 

          Funders Should Discard The Status Quo 

Among the nonprofit sector’s thought leaders speaking out on the urgency of taking bold action is David Morse, a former top communications official at Atlantic Philanthropies, Pew Charitable Trusts, and the Robert Wood John Foundation. 

In Philanthropy, Take the Lead in Building a Better Normal (May 4, 2020), Mr. Morse acknowledges the question we all hear so often these days: “When can we get back to normal?”  But he cautions that “…the more crucial questions, and not just for philanthropy, are: Should we get back to normal? Is business as usual good enough?…” He responds with a clear “no.” Getting back to normal is “nowhere near good enough” because “… the old normal wasn’t so great” and it would be a “huge undertaking” in any event.

The right path is to create a “better normal.”  That will be “monumental. But it’s doable. Maybe.” And he echoes other commentators who hearken back to Rahm Emanuel’s advice during the 2008-9 economic meltdown: “Never let a good crisis go to waste.” 

“What might foundations and philanthropists do to help create the better normal?” David Morse asks rhetorically. “First, simply what they’re now doing to provide support to their grantees who desperately need it, just more of it and quicker. And just do it; it’s a waste of time, space, and money to crow about it.”

To a significant degree, funders have stepped up to the plate with generosity and flexibility.  See, for example, our March 26th blog post, Some Good News: Funders Are Stepping Up.

Second, Mr. Morse urges funders to “embrace what is an all-too-alien concept in philanthropy: real partnership.” He points out that ‘[g]rant makers talk about partnership but rarely engage in it. Multitudinous announcements by foundations tell the story of what they are doing individually, but not much about what grant makers are doing together.” For a recent example of collaboration, see our post from July 22, 2020: Foundations Launch Huge Bond Program.  Take a look, as well, at Philanthropy, Meet Our Matrix Moment: Which Pill Will You Choose? (April 2, 2020) Dana Kawaoka-Chen, The Nonprofit Quarterly.

Of course, the task is too large for private philanthropy alone. “What we need to follow the pandemic is a Grand Bargain on steroids,” advises David Morse, “and this time foundations can and should pull together business and government to help emerge from the pandemic with a fairer America that works for the many, not just the few.”

       Funders: “This is The Rainy Day”

The Nonprofit Quarterly’s editor-in-chief, Ruth McCambridge, is a big fan of Vu Le, popular blogger (Nonprofit AF.com) and seasoned nonprofit executive who has just begun a much-needed break to write and reflect.

Early in the pandemic, Ms. McCambridge flagged Mr. Le as a particularly valuable voice in these challenging times. See Heads Up! Says Vu Le: Foundations, Nonprofits, and Our Response to COVID-19 (March 10, 2020) The Nonprofit Quarterly. She referred specifically to Vu Le’s March 8th blog post: A few things for nonprofits and foundations to consider in light of the Coronavirus

There, he reminds philanthropy funders that “nonprofits are having to do extra work in response to this virus, on top of all their regular responsibilities, and with the risk of funding being jeopardized due to canceled events and programs.” So he urges them to be “thoughtful and generous”; to “… reassure grantees that you got our backs, by relaxing your expectations on outcomes and timelines, providing rapid response funding, and not withdrawing your sponsorships and grants for postponed or canceled events and programs.”  

 In the next few weeks, Mr. Le churned out more tour-de-force blog posts, amplifying his frequent pre-pandemic truth-telling including – but not limited to – how “tone deaf funding practices” are now, more than ever, “… not just annoying but actually endangering people’s lives, such as funders requiring anything to be signed or mailed.” See, particularly:

On April 9, 2020, Vu Le was the featured guest on Tiny Spark, a podcast by Amy Costello and Frederica Boswell. They write about it in COVID-19 Crisis “Requires Us All to Be Bolder” (April 9, 2020) The Nonprofit Quarterly, and include a link to the 25-minute session. They praise Mr. Le’s efforts in talking about “… why the COVID-19 crisis is requiring nonprofit leaders to push philanthropy in ways it never has before.” Ms. Costello and Ms. Boswell also mention #CrappyFundingPractices, a recent Twitter hashtag that Mr. Le created to shine light on “some of the most egregious examples.” (To acknowledge innovative funding reforms, there’s also his #AwesomeFundingPractices.) 

Part of the effectiveness of Vu Le’s musings on his blog and elsewhere is that he “says the quiet part out loud”; that is, in the good way of stating the obvious and telling truth to power. See, for instance:

       Conclusion

It’s the right time to re-imagine our future; to “rethink the doomsday machine we have built for ourselves,”  according to Arundhati Roy. “We can choose to walk through it, dragging the carcasses of our prejudice and hatred, our avarice, our data banks and dead ideas, our dead rivers and smoky skies behind us. Or we can walk through lightly, with little luggage, ready to imagine another world. And ready to fight for it.

Philanthropy must take a good look at itself, including how it is – and should be – responding to this unprecedented crisis and to the challenges ahead.

Funding Pie: Rural CA Groups Want Bigger Bite

Disparity in 501(c)3 Funding

Across the United States, the need for philanthropic help is broad and deep. Sadly, though, funding for 501(c)(3)s serving those needs has been – and remains – deeply unequal.

For instance, according to a recent survey by the National Committee on Responsive Philanthropy (NCRP) on funding for immigrants’ rights, just 14 cents on the dollar goes to front line state and local organizations. Instead, national organizations and policy advocates get the biggest part of that pie. Other studies, including a major one we discussed recently in Who are the Funders Funding? (August 22, 2019), confirm similar funding disparities across a broad swath of issues and causes. 

  The Funding Gap: More Findings

Close to our home base in Southern California comes another report in early 2019 by the Funders Alliance of San Bernardino and Riverside Counties. Titled Inland Empire: Changing the Narrative—Toolkit for Nonprofits, it provides new evidence of the disturbing disparity between urban and rural communities. 

Data shows that coastal Los Angeles County’s nonprofit organizations receive about $245 per capita – just a bit under the California statewide average of about $263 per capita. But moving east to Southern California’s two largest non-coastal counties – Riverside and San Bernardino – the amount drops precipitously. There, it’s just over $25 per capita. 

Together, Riverside and San Bernardino are known as the “Inland Empire.” From a population standpoint, the Inland Empire is fairly new compared to Los Angeles (which – itself – is relatively new when compared with the more established communities of – say – the East Coast of the United States).  

The perception is that the Inland Empire is poorer than its Western neighbor by the seaside. But that’s not accurate. Los Angeles County has a population of just over 10 million people and its median household income is $61,015. Compare Riverside County, with 2.45 million residents and a median household income of just over $60,000. Similarly, see the statistics for San Bernardino County, with its 2.17 million people and median household income of just a few thousand dollars less: $57,176. 

What accounts for this disparity? “Clearly, funding is not less because the need is less.” Long story short: There are more foundations in L.A. County than in the Inland Empire because Los Angeles is older and more established. “Almost by definition, growing areas (like the Inland Empire) are newer and younger, so they don’t have as many institutions with a long history of success and fundraising.”

There’s been some improvement in closing the gap in recent years; for instance, foundations have gone from granting $61.3 million in 2013 to $115 million in 2016 to Inland Empire nonprofit organizations. But there’s still a long way to go.

  New Funding Pitches  

That’s where impressive local organizing comes into the picture. 

The 2019 report – Inland Empire: Changing the Narrative—Toolkit for Nonprofits – was partly a response by the Funders Alliance of San Bernardino and Riverside Counties to a scathing report over a decade earlier that painted a bleak picture of the area and its nonprofit organizations. 

In 2008, The Irvine Foundation published The Inland Empire Nonprofit Sector: A Growing Region Faces the Challenges of Capacity. That report “characterized Inland Empire nonprofits as weak, with poor management practices” while noting the mitigating factors that “with few exceptions, most foundations in the Inland Empire are small, and the numbers of people and nonprofits per foundation are dramatically higher than in surrounding counties and the state.”

The lack of funding, of course, necessarily contributed to the fact that most Inland Empire groups are small, which in turn led to an incapacity to hire people to go after more grants. Currently, about “two-thirds of Inland Empire nonprofits have budgets of under $25,000.” This chicken-vs-egg conundrum was in no small part the impetus for last year’s  Inland Empire: Changing the Narrative—Toolkit for Nonprofits

In Why do nonprofits in Riverside and San Bernardino counties get so little funding? (November 27, 2019), local leaders explain to a reporter from the San Gabriel Valley Tribune exactly how they have set about changing the narrative with the Toolkit developed by the Funders Alliance of San Bernardino & Riverside Counties and a local public affairs firm. 

The aim is to pursue a strategy of rebranding the Inland Empire away from the commonly held vision by “outsiders” as “… a dusty desert lined with warehouses surrounded by soot-spewing diesel trucks.”  These local organizers developed a “one-page cheer sheet and a comprehensive tool kit” with materials focused on describing the area as “… a place of natural beauty, affordable homes and unlimited potential.” 

The Toolkit was distributed to hundreds of nonprofits and government groups in 2019, with positive feedback as well as encouraging results. According to Susan Gomez, CEO of the Inland Empire Community Collaborative, a technical advisory group for some 74 area nonprofits, it “hasn’t been easy to turn the narrative around” but they are now trying hard to change it.  “Instead of us waiting for a funder, we said we need to be the change agents and identify the bright spots in our communities that they were not talking about.” 

They report that “one by one, these entities learned to shake off negative imagery … crafting new pitches, better grant applications, and story-telling videos.” Then “they started to see more money pour in.” 

  Conclusion

The lengthy story in the San Gabriel Valley Tribune is worth a read. It gives specific examples of how exactly certain nonprofits successfully changed their narratives and funding pitches along the lines recommended by the Toolkit. 

A Sunsetting Foundation in Its Twilight Hours

Sunsetting Foundations

In June 2017, in The “Sunsetting” Foundation: Trend of the Future? we wrote about the small but growing trend of foundations to “sunset”; that is, to choose to end activities and formal corporate existence by a certain date instead of going on “in perpetuity.” 

When any corporation, for-profit or nonprofit, is formed, there is generally no mention at all of the duration of the entity. The default ending date for a corporation is – well – never. But, as 19th century billionaire philanthropist John D. Rockefeller observed many years ago, “perpetuity is a very long time.”  

  Sunsetting: Not a New Concept

“The concept of sunsetting – that is, planning an end date for the charity” –  is not new; “it’s been around for decades.” 

In Founders’ Fortunes and Philanthropy: A History of the U.S. Charitable-Contribution Deduction (August 27, 2019), Nicolas J. Duquette explains that during the debates over the major changes to the 1969 federal tax code, there was a proposal to require sunsetting of all foundations in 40 years. It was not included, though, in the final bill enacted into law that year. 

The most well-known example of sunsetting is the Bill & Melinda Gates Foundation, created in 2000 with the stated intent to spend down its billions in assets.

There are a number of reasons why a foundation chooses to sunset; “primarily a “concern about the mission and values of the foundation shifting away over time from the original intent of the donor’ and  – sometimes – a frank acknowledgment that children or other family members are uninterested in assuming the responsibility for the foundation. Whatever the specific reason, the “process of ‘sunsetting’ is not the same as merely “going out of business.” If a foundation has done its work right, then its values, relationships, and other non-financial contributions, will have “become a lasting part of the community.” It will have sown the seeds for the good works to be taken up by others and reinvented for a new generation. 

   Edna McConnell Clark Foundation

In our June 2017 post, one of two recent examples we discussed of foundations making the sunsetting choice is the multi-billion-dollar Edna McConnell Clark Foundation (EMCF).

The story behind EMCF “begins in the 1880s when David Hall McConnell, a door-to-door book salesman in New York State, discovered that a vial of homemade perfume he gave away as an incentive was more popular than the books he was offering.” He recruited “housewives to sell the perfume as a way to augment their family income.” That brilliant idea eventually grew into the Avon cosmetics empire.

Mr. McConnell’s daughter, Edna, married Van Alan Clark, who became chairman of Avon’s board in the 1950s. The couple “decided to put much of their resources into a foundation. Initially it made modest grants, mostly to universities and hospitals, although other recipients, including the Henry Street Settlement and the Foster Parents Plan, forecast future directions for the family foundation.”

In 1969, they launched the Edna McConnell Clark Foundation, out of what had been a very large organization but with no staff. With more money and the help of the Clark sons, over the next 50 years EMCF flourished into one of the leading foundations in the United States. In the website sections “Our History” and “About Us,” the reader can learn more about the important details of its expansion and charitable priorities and activities. 

Notably, when the Clark family formed the foundation in 1969, it didn’t envision it as a perpetual entity. What they wanted was the Foundation to make decisions that would lead to the best results consistent with the Foundation’s mission of improving the lives of disadvantaged children and youth. 

  The Sunsetting Plan

In December 2016, the EMCF board announced it would spend down its assets over a 10-year-period. At that time, this news was described as a “surprise” to the philanthropic community.  But the decision of when and how to sunset had been under consideration for a long time. The board spelled out the particulars of the plan and process to wind down in public announcements and on the website. See, also, The Formidable Edna McConnell Clark Foundation Bets the Farm and Opts for Sunsetting (December 14, 2016) in The Nonprofit Quarterly.

True to the plan, there has been significant progress. On October 18, 2018, the Foundation issued a long-anticipated press release and update announcing that the Foundation is “entering its final phase of life.” Once again, The Nonprofit Quarterly posted an article discussing this development: Edna McConnell Clark Foundation Expands Its Work and Plans Its Demise (October 19, 2018).

The trustees decided to spend down all of the resources (approximately $1 billion) over a decade by providing large infusions of “growth capital to effective nonprofits and their visionary leaders.” Also, the Foundation “has not just been spending its own money; instead, it has spent the past five years helping to attract other money to a new, collaboratively managed poolBlue Meridian Partners (asset base – not endowment – of $1.7 billion as of the fall of 2018). 

This new entity has been “incubated and informed by the foundation’s model of growth capital investment” but as a new – standalone – 501(c)(3) organization, with some EMCF’s key staff and board members. The plan envisioned Blue Meridian Partners not spending right away; instead, it is attracting “new partners and money to do multi-year, capital-intensive grantmaking to scale.”

Eventually, each of Blue Meridian’s grantees “will be provided with as many as 10 to 12 years of performance-based investments totaling to as much as $200 million; “sufficient to set these organizations on a path to assured and sustainable impact.”

  Sunsetting Progress

The website of the Edna McConnell Clark Foundation explains the progress of the sunsetting plan from its original announcement in 2016, through the interim progress report in 2018, up to the present.

The Foundation’s “staff and operations have … transitioned to Blue Meridian Partners, “the collaborative philanthropic investment vehicle that EMCF incubated and in which it is a national General Partner. This independent organization is helping EMCF fulfill its commitments and perform necessary staff functions so the Foundation can complete its strategy efficiently and responsibly.”

With a “small board overseeing the management and distribution of its remaining assets,” EMCF is paying out its last grants and concluding its work through Blue Meridian Partners , a “partnership of philanthropists seeking to transform the life prospects of America’s children and youth, from birth to age 30, living in poverty.” Surviving as well is the Youth Development Fund (YDF)  which “has been EMCF’s core program since 2000, concentrating on helping high-performing youth-serving nonprofits achieve greater impact.” 

Continuing, too, is PropelNext, launched in 2012 to “assist promising nonprofits in strengthening their capacity to use data for learning, self-evaluation and ongoing improvement.” It will open a pipeline for “other promising approaches that have not yet had the opportunity to prove their impact.” EMCF will not fold PropelNex into Blue Meridian Partners; instead, at some point, the Foundation will set it free to continue as an independent entity. 

  Conclusion

Other foundations, just now making sunsetting decisions, can look for guidance to the well-planned and executed demise of the Edna McConnell Clark Foundation. 

One example is Memphis-based Plough Foundation  which announced in August 2019 it will spend down its assets.  The organization will make its last grants to local nonprofits and close its doors within four years. Since its founding in 1960, the Foundation has awarded over $300 million “to a wide array of nonprofits.” 

Founder Abe Plough made his fortune in pharmaceuticals beginning in 1908 with a local healthcare company he called Plough, Inc. By 1971, the successful firm merged with pharmaceutical giant Schering Corporation, which later merged with powerhouse Merck Co. Between Mr. Plough’s retirement in 1976 and his death in 1984, he “devoted all his time to the Foundation and to the people of Memphis and Shelby County.” 

The Foundation’s work has been carried on by his daughter, granddaughters, and the organization’s trustees.  It was they who made the call that the time is right to wind down. They pledge to carry out this sunsetting plan in a “positive and meaningful way,” taking special care to make the transition as easy as possible for local Tennessee organizations who have relied on Plough Foundation’s generous support over the years.

What is Participatory Grantmaking: Part One

Participatory Grantmaking

In Philanthropy Thought Leaders: Hot Topics (June 24, 2019), we included Rhodri Davies, a leading commentator on philanthropy, whose recent article for the World Economic Forum begins: “Philanthropy is at a crossroads…” 

There are huge “challenges,” he points out, “…, including global climate change…,” technological advancement and disruptions, “shifting demographics and social trends [that] are changing our notions of community, society and nationhood beyond recognition.”  And the “concept of philanthropy” itself is “coming under attack” for reasons including “whether it can remain legitimate within a democratic society.” 

Davies takes the issue to some extent with philanthropy critics like Anand Giridharandas, author of Winners Take All: The Elite Charade of Changing the World, who focus on the “structural inequality in society” that includes, many assert, the philanthropy sector. “For these critics,” Davies argues, “philanthropy is only ever part of the problem rather than part of the solution, and it provides an unhelpful distraction from the real work to be done in driving structural change.”

Rather than “…abandoning philanthropy altogether,” he joins “…plenty working to craft approaches to it that can deliver genuine structural reform.” Among them is “democratizing philanthropy” which, done properly, “finds ways to give away not only money, but also power.” 

   Participatory Philanthropy

This reflects the recent school of thought best described as “participatory philanthropy.” New Zealander Lani Evans wrote an excellent essay and report in 2015. In her “Participatory Philanthropy: An Overview,” she explains that her deep interest in philanthropy compels her to consider “whether or not philanthropy hinders social change.” She asks if “our decision making practices and our decision makers themselves [are] restricting our thinking and therefore our ability to make meaningful change.” 

A research fellowship allowed Ms. Evans to travel to North America and the United Kingdom, connecting with a “wide range of intelligent thinkers, radical philanthropists, and participatory practitioners.” It gave her the time and resources to consider whether – accepting the premise that philanthropy as currently structured and practiced “hinders social change” – if “participatory practices and modifications in funder behavior help to alter that.”  Her answer is a resounding “yes.” Participatory philanthropy actively “engag[es] people on the ground” and “values” them and their input.

Ms. Evans begins her analysis with an insightful quote from Peter H. Pennekamp, author of Philanthropy and the Regeneration of Community Democracy (2013) that wonderfully sums up the premise of this concept. “The most intractable obstacle to the proposition that modern, organized philanthropy can become a lively actor in a vibrant democracy,” explains Mr. Pennekamp, 

“is the culture-laden belief, often unconscious but seldom questioned, that possession of a greater material wealthy or professional expertise is necessarily accompanied by superior skills to make things better no matter what the circumstance. It’s simply assumed that people with these assets know more. This top-down cultural presumption extends to narrow beliefs about the identification, measurement, and evaluation of effective philanthropic practice.”  

From start to finish, Ms. Evans’s Participatory Philanthropy: An Overview is well worth the read for its contributions to this theory along with the many examples of early efforts of this innovation that she highlights.  

  Participatory Grantmaking

“Some see participatory grantmaking as one of many types of participatory philanthropy,” explains Cynthia M. Gibson, in an important new article published in July 2019 in The Nonprofit Quarterly: Moving beyond Feedback: The Promise of Participatory Grantmaking. She points out, though, that “others see it as distinct, because it moves decision making about money to the people most affected by the issues donors are trying to address.” 

Ms. Gibson, who helped design one of the first national participatory grantmaking initiatives with the Case Foundation, explains that “participatory philanthropy” can and does properly include wide-ranging activities and applications that can be – and are already – “used by funders at different points in their process.” More particularly, “participatory grantmaking draws on broader participatory philanthropy approaches but zeroes in on how funding decisions get made. Why? Because money is power, and power dynamics are ubiquitous in philanthropy.”

She aptly describes the concept of participatory grantmaking, which goes beyond mere “listening and feedback” approaches which are now believed to be “necessary but insufficient for breaking down power imbalances” many of which are “deeply entrenched” and a “hallmark of institutional philanthropy.” 

In her article, Ms. Gibson presents the perceived pros and cons of participatory grantmaking (including resistance efforts and arguments sometimes presented) and highlights recent examples of this more democratized form of philanthropy in practice.

    Conclusion 

Ruth McCambridge, editor-in-chief of The Nonprofit Quarterly, considers Cynthia Gibson’s essay so critical that she sent a letter last month to readers urging them to read it and share it with colleagues.  Back in 2015, Lani Evans concluded her pioneering work on participatory philanthropy with a timely question: “Philanthropy was always supposed to be the radical disruptor, able to take risks to innovate solutions. What are we waiting for?” 

In Part Two, we dive more deeply into Ms. Gibson’s article and other references and resources about participatory grantmaking. And, in a surprise twist that took the staff at The Nonprofit Quarterly a bit by surprise, there were certain rebuttals offered up quickly. We’ll cite and take a look at those, too. 

 

Advancing Advocacy by Philanthropies

Recently, the Center for Effective Philanthropy (CEP), noticed a shift in the focus of many foundations away from a historical reluctance “to embrace advocacy.” Governments have become less willing or able to tackle societal problems because of gridlock and dysfunction, coupled with a policy of budget cuts, so “funders are increasingly turning to policy advocacy as a lever for change.”

CEP’s mission is to develop “data and insight” to help foundations better address and solve these “pressing social needs.” It turned to Arabella Advisors, a Certified B Corporation that provides “strategic guidance for effective philanthropy,” to document and analyze this apparent trend of supporting advocacy and, sometimes, “experimenting with institutional and staffing structures, or seeking to use their convening power and influence in addition to grants, to advance policy change.”

Arabella Advisors was tasked with the interview of a “diverse group of 11 philanthropies to learn how they are approaching advocacy.” CEP now reports these discussions yielded “four common threads” that are “promising funder practices for advancing technology.” 

  • “Philanthropists are increasingly willing to spend on lobbying and elections and are creating institutional structures that allow them to do so.”

For many good reasons of law and policy, philanthropists have shied away from dipping into advocacy and have, instead, “deployed their capital through private foundations.” But their 501(c)(3) grantees face lobbying limits, “armies of lobbyists” and big political war chests; it’s like “bringing a white paper to a knife fight.” And recent events and experiences have shown that to make headway in public policy, the “capacity to petition elected officials to support specific legislation and to hold them accountable for their actions at the voting booth” is necessary. 

Many philanthropists, including the newer ones like Laura and John Arnold or Priscilla Chan and Mark Zuckerberg have turned to different legal vehicles – LLCs – as the “primary home for their philanthropy.” In connection with their advocacy goals, they are also more likely to partner with 501(c)(3) and 501(c)(4) “fiscal sponsorship intermediaries capable of deploying capital for lobbying and political activity in ways that private foundations cannot.

  • Foundations are creating advocacy teams with specialized experience to support their program officers and grantees — and that sometimes play a lead role in driving advocacy campaigns.

The switch to an aggressive advocacy posture means a need for specialists in advocacy who bring a new set of skills to “complement the expertise of issue-focused program teams and help program teams develop and execute smart advocacy strategies.” A good example is the Chan Zuckerberg Initiative: it created an internal advocacy team (a “horizontal”) that works with three “issue-oriented verticals.” This innovative approach helps to refine the target issues, identify suitable grantees or policymakers for collaboration, and analyze the needed capacities to “achieve policy change.” 

Others have created teams to lead advocacy efforts independent of their established program teams. An example is The Rockefeller Foundation which recently led a campaign to “promote strong U.S. foreign assistance.” This project has its own goals, financial support, and separate grantee-collaborators. 

  • Foundations are investing significant resources into convening and network building to encourage strategic alignment among their advocacy grantees.

Since combining forces can only benefit the policy-change goals in the long run, funders are stepping into the role of “encouraging collaboration among advocacy organizations that otherwise compete for resources and have incentives to work independently.” There are better results when the focus is on building relationships and networks instead of forcing efforts through the “mandate” of grant-making. 

Examples of funders using this approach are initiatives by the William and Flora Hewlett Foundation and by the Ford Foundation that facilitate “convenings” so organizations can “share best practice and advance field-level change.” And several major foundation are giving support to the Farm to Fork Initiative, which, itself, brings together advocacy groups that “promote federal good food policies.”

  • Funders are investing in long-term field building through multiyear grants, general operating support, and new capacity-building programs for their advocacy grantees.

Philanthropists recognize that policy-change success may depend on their making  “long-term investments to build capacity and nurture strategic flexibility in their advocacy grantees.” For instance, the Ford Foundation is one of the leading foundations announcing its commitment away from the traditional focused grants to providing general operating support, over a number of years, to its grantees to help them on their way to financial sustainability. 

Many funders also train grantees on critical skills and knowledge including, for example, how to comply with lobbying rules and how to develop and carry out communications efforts.

Conclusion 

CEP points out that “not all these practices are new” but there is important “experimentation among advocacy funders as they become more creative about their approaches to advancing policy change.”  This “innovation” is critical in using advocacy to make societal change. 



More Thoughts from Philanthropy Thinkers

In June, we posted Philanthropy Thought Leaders: Hot Topics to highlight just a few examples of the useful and provocative commentary popping up regularly from expert observers and leaders of our sector. 

Continuing on this month – and it may turn into a regular series – we present introductory tidbits and links to a few more worthwhile articles with a “philosophical ‘big-ideas’ tone.”    

One of the recent books having a significant impact in the philanthropy community is Decolonizing Wealth by Edgar Villanueva, an internationally recognized expert on social-justice philanthropy. He has long consulted with nonprofits around the world about “advancing racial equity inside of their institutions and through their investment strategies.” He is currently Vice President of Programs and Advocacy at the Schott Foundation for Public Education. 

A prominent blurb on the website for this bestseller aptly summarizes Mr. Villanueva’s viewpoint: “We have to be honest about the sources of wealth and how wealth was accumulated in this country—a great part of it was on the backs of people of color, and now those communities are benefiting from just a very small percentage of dollars….” The end of this quote is his call to action: “Once you know, how can you not be equitable about how you’re distributing the money?”

Certain criticism of Decolonizing Wealth focuses on challenges to one extent or another of Villanueva’s underlying premise about the sources and distribution of wealth. Michael Seltzer, though, is a fan. He notes that Villanueva is an admirer of Frantz Fanon, author of The Wretched of the Earth (1961), who describes the “necessary conditions for the overthrow of colonialism”; that is, a “whole social structure being changed from the bottom up.”

Mr. Seltzer describes Decolonizing Wealth as “… perhaps the most refreshing and insightful of the recent spate of books on foundations” because of Villanueva’s “… spotlight on how colonialism has been perpetuated and the importance of eliminating its persistence in today’s wealth and philanthropic circles in particular.”  He also lauds the author’s “eye-opening prescription of how foundations can dismantle the power divide that has historically separated funders from those nonprofit organizations that seek their support.” 

Villanueva “differentiates himself from many of philanthropy’s contemporary critics” by “focusing our attention specifically on the grantor decision-making process.” Villanueva’s current work at the Schott Foundation for Public Education involves overseeing grant investments in the U.S. for education justice campaigns; he also has the insight of being a member of the Lumbee tribe, “the very first people on the North American continent to experience directly the arrival and invasion of Europeans.” 

An important aspect of Decolonizing Wealth is that in conjunction with Edgar Villanueva’s “calls for foundations to give up or share control in decision-making with the people most affected…,” he highlights certain foundations that have taken “modest” steps in that direction, discussing, among others, San Diego’s Jacobs Family Foundation and Philadelphia’s Bread and Roses Community Fund, formerly known as The People’s Fund.     

Mr. Piereson and Ms. Riley, it’s fair to say, observe the issues of the day facing philanthropy from a decidedly different perspective and ideology than Edgar Villanueva or his reviewer, Michael Seltzer. 

They discuss what they believe is a misguided and flawed public debate about so-called “tainted money”; that is, when – or if ever – a nonprofit institution should refuse it from uber-wealthy donors or return contributions already made. Referring to certain of the “latest ‘woke’ assaults” making headlines recently, they point to decisions by the Metropolitan Museum of Art, the Tate Modern, the American Museum of Natural History, and the Guggenheim to reject (or return) money from Sackler family members who have been tied in one way or another to Purdue Pharma, of opioid crisis notoriety. 

Another example Mr. Piereson and Ms. Riley include in the “‘woke’ assaults” category are is the clamor for the Whitney Museum of American Art to eject one of its vice chairmen who is CEO of a company “which activists claim has been used against migrants at the border.” Similarly, they point to controversy about “…the Koch family” which “has been the subject of such protests for years  because, the activists claim, their businesses contribute to greenhouse-gas emissions and global warming.”  

The authors take issue with the premise underlying this current debate over “tainted” donations partly because, they write: “Making money in a way that ‘imposed harm on other people’ is a subjective and broad category.” More particularly, they argue, “such a mix of benefits and losses often comes with the accumulation of wealth. Many products that have created personal or family fortunes have brought great benefits to society along with some collateral damage.”

They also discuss a current idea proposed by certain commentators including Robert Reich, Stanford professor and author of Just Giving: Why Philanthropy Is Failing Democracy and How It Can Do Better. He argues that “nonprofits can be complicit in reputation-laundering of their donors. If the donor made money in a way that was illegal, or imposed harm on other people, philanthropic use of the money does not balance the ledger.” 

The authors’ response: “Donors don’t donate to charities to cleanse their reputations …. This is a crude fairy tale.” The uber-rich are like everyone else: they “give their money away primarily to help others or contribute to some public good.” They disagree with “the critics’ view” that “business and wealth are inherently bad and charities exist to balance the moral scales. In fact, our great charitable institutions are creatures of the business system and the wealth it generates and continues to create.” 

Charity leaders, Mr. Piereson and Ms. Riley assert, “should generally reject activists’ calls to ban specific donors on debatably moral grounds” because they will end up “soon banning everyone,” and lose their own jobs as well as depriving the nation “without financial support” for our “most cherished institutions.” 

Conclusion

We’ve covered these issues and the debate over “tainted money” in many earlier posts over the years. This topic shows no signs of disappearing any time soon. 



Philanthropy Thought Leaders: Hot Topics

As we choose the topics for each month’s blog posts, there are certain items that miss the cut-off for no reason other than we have too much to write about – not too little. In the online feeds that each day bring us so much tantalizing information, there are often intriguing articles and writings that have a philosophical “big-ideas” tone.

We’ve selected several noteworthy ones here for a brief mention – and convenient link if you’re interested in taking a peek.

While experts consider how charitable organizations and foundations can tackle pressing issues like income inequality, some commentators have taken a more radical stance, arguing that institutional philanthropy may have inadvertently been complicit in the continuance – and worsening – of societal problems.  One of the most outspoken critics is Anand Giridharadas, author of Winners Take All: The Elite Charade of Changing the World.

Mr. Buchanan, while approving generally of aggressive critiques of the philanthropic sector, calls foul on some commentary as taking the criticism too far – into the “realm of the absurd” – as it were. He lobbies volleys in particular at some of Giridharandas’s pronouncements. For instance, while lauding the generosity of billionaire Robert Smith in paying off the student-loan debt of Morehouse College graduating seniors, Giridharandas loudly laments that we shouldn’t have to rely on philanthropy to remedy the societal failure to provide affordable higher education.

Giridharandas takes aim, too, at institutions that take or keep “tainted money,” arguing that “philanthropy launders bad reputations” too often. He also recently claimed on MSNBC that “nonprofits are a very crucial part of how the rigged system gets rigged … as enablers for plutocrats to continue to harm society.”

Buchanan joins Giridharandas in the view that government should be stepping up to the plate more often to fund important needs. “But,” Buchanan writes, “in the meantime, here we are” and “[w]e should recognize and respect the work of nonprofits, and … encourage, not deride, the instinct to give back.”

Ten years ago, the NCRP – the nation’s “independent watchdog of foundations” published its Criteria for Philanthropy at Its Best. The pushback was immediate; “more than a few people [were] aghast” we had the “temerity to assert that any set of criteria be applied to the field of philanthropy, let alone criteria grounded in [the] belief that grantmakers needed to prioritize marginalized communities and support grassroots-led problem solving….”

Ten years later, according to Dorfman, “few would bat an eyelash” if the same document were released. “Philanthropic sector discourse” now accepts and parrots the concepts presented by NCRP a decade ago, but “the money didn’t follow.” Recent data shows that foundation grantmaking over these years “for the intentional benefit of marginalized people” has inched up only a few percentage points.

Dorfman highlights four foundations that have made remarkable progress in adopting not just the talk but also the walk of the Criteria for Philanthropy at its Best. He concludes by emphasizing that the “way money and power moves in philanthropy” must change.

“This is a difficult time for philanthropy” with global challenges like climate change “demanding collective action on an unprecedented scale.” New technology and “shifting demographics … [are] changing our notions of community, society and nationhood beyond recognition.” But at the same time that these issues loom large, “the very concept of philanthropy is coming under attack.”

Nevertheless, “[f]or those who continue to believe in the value of philanthropy – the idea that private assets used for public good can be a powerful force to shape society for the better – there is a lot of work to be done.” New efforts are needed in this new reality. Davies presents six categories for consideration:

  • “Acknowledging how money is made.”  Recent debates about “tainted money” point out that, historically, the source of many philanthropists’ wealth was unsavory or exploitative. “How money is given away can no longer be separated from how it is made.”  
  • Embracing structural change.”  Some observers assert that philanthropy – as part of the problem – can’t be the solution, and are “an unhelpful distraction from the real work to be done in driving structural change.” Davies disagrees that philanthropy is incapable of addressing these challenges. Many people are “working to craft approaches … that can deliver genuine structural reform.”
  • “Democratizing philanthropy.”  If philanthropy is to address inequality, it cannot be “seen as merely a tool for the powerful to entrench their advantage.” It must give away “not only money, but also power.”
  • “Reflecting diversity.” Philanthropy must reflect societal diversity and “the people and communities it serves.”
  • “Innovation and discovery.”  Philanthropy can drive discovery, “but this may raise difficult questions within the context of a democracy.” When the mega-rich place “philanthropic big bets,” they are “taking risks and driving innovation in a way that the government cannot.” But critics see it as “self-indulgent crusades by donors whose view on issues is entirely shaped by the industries in which they made their money.”
  • “Transparency and openness.” A challenge for philanthropy will be ensuring transparency in the face of a trend by ultra-rich donors to choose other than “traditional philanthropic structures” like LLCs.

Conclusion

In future months, we’ll select and bring you more thought-provoking commentary and opinion from experts in philanthropy.

 

What is Liberatory Philanthropy?

Recently, in the charitable sector, deep theoretical discussions have moved from the quiet dark corners of academia into the light.  

According to Rodney Foxworth, executive director of the Business Alliance for Local Living Economy (BALLE) in Oakland, California: “The past year ushered in a new level of poignant and popular critique of the business of philanthropy, catalyzing widespread discussion and debate about philanthropy’s role in perpetuating and exacerbating economic inequality and racial injustice.”

Writing for the Nonprofit Quarterly on February 28, 2019, Mr. Foxworth notes that books like Decolonizing Wealth by Edgar Villanueva and Winners Take All: The Elite Charade of Changing the World by Anand Giridharandas have become “essential reading and struck a chord throughout the social sector and mainstream society.”

Reexamining Philanthropy

Mr. Foxworth’s article is titled How Liberatory Philanthropy and Restorative Investing Can Remake the Economy. It focuses on the hard truth that philanthropy not only is the “product of wealth inequality,” it also “thrives in an environment that perpetuates privilege, white supremacy, and entrenched power” – whether the latter is “deliberate or not.”  He cites thought leaders like Giridharandas, Villanueva, “and others” for the “compellingly clear” point that “institutional philanthropy often reinforces economic exploitation and extraction.”

This revolutionary notion flies in the face of long-held conventional wisdom that philanthropy has had nothing less than a positive effect on remedying societal problems like poverty.

Accordingly, Foxworth asserts that “the field of philanthropy must wrestle with its complacency in the systemic accumulation and concentration of wealth; the system that results in the world having 2,208 billionaires and 36 million millionaires” while “literally billions are left behind.”

For that reason, he writes, “philanthropy needs a liberation.” There must be a “movement to redress these systemic failures and restore equality.”

Actionable Steps for Philanthropy

Mr. Foxworth offers the example of Oakland-based Justice Funders, a foundation affinity group that has developed a Resonance Framework called Just Transition. The purpose is to provide foundations with clear, step-by-step, guidance to move forward to tackle one of several existential threats to our society: economic inequality.

Under this approach, called “restorative economics,” foundations must “… acknowledge the impact of the extractive economy on marginalized communities, repair the harms of our long history of exploitation, and reject the continued accumulation of wealth and power in the hands of a few.”

He links to a recent article in Yes! Magazine titled Foundations Have a Not-So-Charitable Secret. There, author Chris Winters explains that a huge pot of money is available for “good” instead of perpetuating the status quo. Citing Foundation Center statistics from 2015, about 86,000 charitable foundations held more than $890 billion in assets. But they made grants of – on average about seven percent; that is, about $62.8 billion. (Under current federal tax law, foundations are required to pay out 5 percent of their endowments each year.)

What to do with the rest of that money—$827.3 billion—has presented both problems and opportunities.”  

Changes in Investment Strategy

This excess-over-grants amount is being invested in Wall Street purportedly to “ensure that philanthropic largess remains in perpetuity.” But in order to “make liberatory philanthropy a reality,” foundation leaders can and should carefully reevaluate “how they manage and invest their endowments.

In Doing Good and Doing Well, Marc Gunther similarly points out, in the Chronicle of Philanthropy in January 2019, that “old fashioned investments still eat up most of foundations’ assets.”  “Why,” he asks, “isn’t a bigger slice going to impact investing?” Mr. Gunther notes that “there’s been lots of talk, but the vast majority of foundations are sticking with a century-old bifurcated model of philanthropy: Money is given away on one side of the house, invested on the other, and never the twain shall meet.”

The good news, according to Chris Winters, is that “more foundations are starting to recognize the wasted opportunity for investing their massive amounts of capital and are correcting course.”  But Marc Gunther laments that –  of the 15 largest U.S. foundations – “only Ford, Kellogg, Kresge, and MacArthur have committed part of their endowments to align with their missions.” Too much money currently sitting in charitable endowments is not being “invested in alignment with their missions.”

Mr. Foxworth asks: “What if foundations divested from Wall Street altogether and instead invested in local economic enterprises that are building wealth in communities of color and low-income communities? He asserts that “[t]he most popular and mainstream forms of impact and mission investing … [still] fail to interrogate how wealth accumulation, capital supremacy, and concentrated power perpetuate injustice and inequality.”

Worthy Examples

Rodney Foxworth points to the Heron Foundation as an example of how to make meaningful and positive change. In 2015, the $275-million private foundation recognized that it was investing in the largest operator of private prisons in the United States. So it made a change, developing a “set of metrics for evaluating investments in its portfolio for community, social, and environmental impacts, what the foundation calls “net contribution.”

Another “remarkable example” is the Buen Vivir Fund, founded by Thousand Currents, an organization that has supported self-determination in the Global South for over thirty years. Thousand Currents and its partners—including NoVo and Swift Foundations – invest directly in grassroots economic change, following principles of the Resonance Framework.

Conclusion

Mr. Foxworth concludes his article by urging foundations to “fundamentally change their way of operating by redistributing wealth, democratizing power, and shifting economic control to communities.” Of course, “this requires a shift in our underlying assumptions about the role of capital and our underlying approach to philanthropy.”

Those in power “must give some of it up.” He believes that “foundations are ideally positioned to model the way.

Ford Foundation Chief: Transform Philanthropy Now

Philanthropy, honey, it’s time for an intervention.” – E. Villanueva

When one of the philanthropic community’s most influential leaders, Darren Walker, head of the Ford Foundation, makes an impassioned call for change, it is newsworthy. And when Ruth McCambridge, the editor-in-chief of one of the sector’s leading publications, The Nonprofit Quarterly, writes that he “hits it out of the park,” that, too, is noteworthy.

At the close of an old year and the beginning of a new one, it’s not unusual for people of a philosophical bent to take stock and make resolutions for the future.

The Coming of Hope: A Vision for Philanthropy in the New Year is Darren Walker’s important and inspirational article on January 9, 2019, in the Ford Foundation blog Equal Changes.It is beautifully written and while “expressing faith in hope and collective longing for shared peace and prosperity,” Ms. McCambridge points out that Mr. Walker pulls no punches and “succinctly names the problem that challenges us all.”

This existential threat is growing inequality; it must be addressed now, and the philanthropic community must acknowledge some complicity in it.

Inequality as Key

“Millions of people,” writes Mr. Walker, “feel frustrated with, and excluded by, an out-of-balance global economic system they are decreasingly willing to tolerate.”

The causes are known;  “global capitalism” contributing to ever-growing inequality, “authoritarian leaders” who stoke this discontent; rapid technology changes with little-understood consequences, “and the long-standing evils of racism, classism, ableism, homophobia, and patriarchy.”

Making these problems worse is the unrelenting assault on facts and truth as well as the conduct of leaders who “openly disdain, demean, and deconstruct vital public institutions designed to serve us and our system of self-government” and the “disregard for what democratic government can do to promote equality, justice, and human dignity.”

But then Mr. Walker lowers the boom: Philanthropy, for all its achievements and good intentions, is part of the system in which this inequality germinates. And “philanthropy is by no means immune from the plague of inequality.”

The Role of Philanthropy

Walker notes that, recently, many thought leaders have presented important “critiques of philanthropy as an enterprise.”  He lists three good examples who raise valid concerns: “Many have pointed to the ways philanthropy replicates the worst dynamics and inequalities of our broader system.” He notes that he doesn’t necessarily agree with each and every point of these books or others in a “growing chorus.” But we “ignore them at our own peril.”

  • Winners Take All: Anand Giridharadas.  It “rightly skewers that segment of philanthropic giving that boasts of saving the world while fundamentally strengthening the economic and social structures that separate the haves and have-nots.”
  • Decolonizing Wealth: Edgar Villanueva. The book explains how “colonialism and oppression” contributed to our current imbalanced financial system and how “structural racism continues to shape philanthropy today.”
  • Just Giving: Robert Reich. While expressing admiration for the past of philanthropy and its potential, he discusses the “undemocratic nature of wealth and philanthropy” and calls for more transparency and accountability “in service of democratic values.”

Going Forward

The current crises did not develop overnight, and will not be solved quickly either. But, right now, “philanthropists and funders of every stripe must invest in the architects and architecture of progress—the individuals, ideas, and institutions that make change happen.”

A first step – “placing meaningful resources close to the people” – is one that the Ford Foundation itself is championing by important changes in its own grantmaking.  Philanthropists must “trust those we fund, and fund them adequately to do what they believe is best, not what we think is best, including “entrusting organizations with long-term general support funding and project grants that provide adequate overhead.”

A second step is committing to “good government” notwithstanding differences of opinion among philanthropists about the size or function of government. “Good works require good government.”

A third step is “reckoning with privilege.”  Darren Walker wants funders to examine their own “unconscious biases” and more clearly understand “how others experience the institutions of philanthropy – how remote we can be, how insular, how difficult to navigate.” He wants philanthropists to recognize that “the communities most proximate to the problems possess unique insights into the solutions.” That means committing to diversity – especially at the top of organizations.

Conclusion

The president of the Ford Foundation concludes his call to action with optimism and hope. “The good news is that I see a growing movement to appreciate the criticisms of philanthropy, and to face them head-on,” to move from “generosity to justice.” To him, this is “the best response to philanthropy’s deepest flaws and inherent contradictions.