Inside, Outside or Both?
posted on: Tuesday, April 24, 2007
Last week I attended a panel on “democratizing philanthropy” at a conference sponsored by the Greenlining Institute. One of the reporters who wrote the Los Angeles Times’ recent series on the Gates Foundation’s investment practices was on the panel, and talked about the role of the press in shining a light on foundations. The reporter’s comments reminded me, sadly, that the Gates Foundation’s reaction to the Times series may carry a lesson for NCRP and other groups who seek to influence foundation behavior. (Full disclosure: I wrote about the ironies of Gates Foundation's investment practices a while back at the Stanford Social Innovation Review, but here will focus on questions of strategy for NCRP.)
The LA Times series highlighted the foundation’s holdings in companies abroad and in the U.S. that cause significant health and environmental problems – ironically, the very problems the foundation aims to redress, in the very same areas of the world. Within days, the Gates Foundation first announced changes to its investment policies and a more comprehensive review of its strategy, then backtracked and said it would maintain its prior approach. Despite being hard hitting and receiving extraordinary attention (front page headlines in the LA Times, extensive coverage in other outlets, wide circulation and discussion within the philanthropic world) the Times stories failed to induce the Gates Foundation to change its policies.
The LA Times-Gates episode raises a number of questions for groups like NCRP that aim to influence the behavior of foundations. The dose of “shame” that the LA Times applied, in this instance at least, didn’t take. (In the long run, the Gates Foundation may well join the the ranks of the handful of prominent U.S. foundations that, as the Times noted, already consider the social impact of their investments – Ford, MacArthur, Rockefeller, and Mott, among others). In fact, while a recent study showed that negative media stories about foundations doubled in the five years from 1998-2003, it is hard to name many clear trends or shifts in foundation behavior arising from those stories. Foundation leaders have been pushed out of office in connection with corporate ethics scandals, like Barry Munitz at the Getty (though here it was probably the perception of arrogant, selfish behavior and lack of board oversight that did the trick), but examples of foundations changing their grant making practices because of media pressure don’t readily come to mind.
If high-profile shaming failed to induce the Gates Foundation to change its investment practices, how much more difficult it would be to get a foundation to change its practices in how and to whom it makes grants, an area that is much more closely tied to its core function and to the professional worldviews of its leaders? Fortunately, shaming is only one possible approach. Strategies for trying to influence foundation behavior can be divided into “outside” and “inside” approaches. The most common outside strategies are sunshine or “shaming” strategies (exposing and publicizing disfavored practices, or requiring disclosures), or directly trying to compel behavior through changes in the law or regulations (for example, the tax rules on minimum payout). In contrast, two examples of “inside” strategies are trying to change how foundation’s behave by changing how their leaders think, or trying to change who the leaders of foundations are, such as through Greenlining’s campaign to increase diversity on foundation boards.
Trying to to increase funding to grassroots, social justice and progressive organizations is NCRP’s central purpose, in my view. (I must emphasize here this is only my personal view – NCRP is currently conducting a strategic plan and may come to a consensus that is different.) Groups like NCRP should consider what mix of strategies to pursue, and I think an “inside” strategy of supporting and highlighting good grant making practices would have several advantages. Among other virtues, highlighting good progressive grant making would suggest concrete positive alternatives, would foster more discussion within philanthropy of how to improve, could lead to promising collaborative relationships for NCRP, and could help lead to the emergence of more champions within philanthropy for the kind of grant making NCRP wants to promote. This last virtue may be the most important, since it seems the opinions foundation leaders care most about are those of their peers.
In contrast, trying to compel behavior through changes in public policy is expensive, brings into play very well funded opponents, and because it gives advocates little control over what final decisions legislators or policy makers may make, brings very high risk of unintended consequences. This isn’t to say that groups like NCRP should cease being “watchdogs” and pushing for policy change, but rather that where they can add an inside strategy they should strongly consider it.
So, while articles like the Times series can in some cases lead to changes, and legislative changes, if achieved, can promise the broadest impact, the question is whether either approach is likely to produce the results we want – more funding for groups we care about. For my two cents, I lean to the view that much broader improvement in funding social justice and grassroots groups is more likely to happen when foundation leaders see their peers be recognized and praised for doing so.Labels: socially-responsible investing
The LA Times series highlighted the foundation’s holdings in companies abroad and in the U.S. that cause significant health and environmental problems – ironically, the very problems the foundation aims to redress, in the very same areas of the world. Within days, the Gates Foundation first announced changes to its investment policies and a more comprehensive review of its strategy, then backtracked and said it would maintain its prior approach. Despite being hard hitting and receiving extraordinary attention (front page headlines in the LA Times, extensive coverage in other outlets, wide circulation and discussion within the philanthropic world) the Times stories failed to induce the Gates Foundation to change its policies.
The LA Times-Gates episode raises a number of questions for groups like NCRP that aim to influence the behavior of foundations. The dose of “shame” that the LA Times applied, in this instance at least, didn’t take. (In the long run, the Gates Foundation may well join the the ranks of the handful of prominent U.S. foundations that, as the Times noted, already consider the social impact of their investments – Ford, MacArthur, Rockefeller, and Mott, among others). In fact, while a recent study showed that negative media stories about foundations doubled in the five years from 1998-2003, it is hard to name many clear trends or shifts in foundation behavior arising from those stories. Foundation leaders have been pushed out of office in connection with corporate ethics scandals, like Barry Munitz at the Getty (though here it was probably the perception of arrogant, selfish behavior and lack of board oversight that did the trick), but examples of foundations changing their grant making practices because of media pressure don’t readily come to mind.
If high-profile shaming failed to induce the Gates Foundation to change its investment practices, how much more difficult it would be to get a foundation to change its practices in how and to whom it makes grants, an area that is much more closely tied to its core function and to the professional worldviews of its leaders? Fortunately, shaming is only one possible approach. Strategies for trying to influence foundation behavior can be divided into “outside” and “inside” approaches. The most common outside strategies are sunshine or “shaming” strategies (exposing and publicizing disfavored practices, or requiring disclosures), or directly trying to compel behavior through changes in the law or regulations (for example, the tax rules on minimum payout). In contrast, two examples of “inside” strategies are trying to change how foundation’s behave by changing how their leaders think, or trying to change who the leaders of foundations are, such as through Greenlining’s campaign to increase diversity on foundation boards.
Trying to to increase funding to grassroots, social justice and progressive organizations is NCRP’s central purpose, in my view. (I must emphasize here this is only my personal view – NCRP is currently conducting a strategic plan and may come to a consensus that is different.) Groups like NCRP should consider what mix of strategies to pursue, and I think an “inside” strategy of supporting and highlighting good grant making practices would have several advantages. Among other virtues, highlighting good progressive grant making would suggest concrete positive alternatives, would foster more discussion within philanthropy of how to improve, could lead to promising collaborative relationships for NCRP, and could help lead to the emergence of more champions within philanthropy for the kind of grant making NCRP wants to promote. This last virtue may be the most important, since it seems the opinions foundation leaders care most about are those of their peers.
In contrast, trying to compel behavior through changes in public policy is expensive, brings into play very well funded opponents, and because it gives advocates little control over what final decisions legislators or policy makers may make, brings very high risk of unintended consequences. This isn’t to say that groups like NCRP should cease being “watchdogs” and pushing for policy change, but rather that where they can add an inside strategy they should strongly consider it.
So, while articles like the Times series can in some cases lead to changes, and legislative changes, if achieved, can promise the broadest impact, the question is whether either approach is likely to produce the results we want – more funding for groups we care about. For my two cents, I lean to the view that much broader improvement in funding social justice and grassroots groups is more likely to happen when foundation leaders see their peers be recognized and praised for doing so.
Labels: socially-responsible investing
posted by Pete at
7:31 PM
1 Comments:
This is a great question. We found in our study of general operating support grantmaking that foundation staff are more supportive of GOS than trustees. Our report also provides useful rationale from focus groups for providing GOS and for viewing it as a strategic way of making grants.
We have heard that at least two foundations included the report in the packets for their board and used it to argue for a policy shift towards more GOS grantmaking. This clearly illustrates the inside strategy. The reality is that foundations are full of people wanting to do the right thing, and they just need the ammunition to argue their case.
By
Kevin, at 1:31 PM
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