Lack of Clarity Ends Up in Poor Leadership

For those who have closely monitored the charitable sector and its leadership, few will be surprised by the sanctimony of its elite. They are the true believers in the purity of the nonprofit sector. A perfect illustration was the Charlie Rose Show segment on philanthropy with Judith Rodin of the Rockefeller Foundation, Joel Fleishman of Duke University and author, The Foundation: A Great American Secret and Mathew Bishop of The Economist.

The show illustrated the mixed signals that that the leadership of the philanthropic sector is sending, the role of government oversight and the financial commitment of government and philanthropy to those in need.

The discussion was basically between Fleishman and Rodin. The two of them are from the nobility of the philanthropic society. Fleischman is former President of the foundation Atlantic Philanthropies and former chair of the Markle Foundation and presumably a good friend of Rose. Rodin is a former president of the University of Pennsylvania, and a provost at Yale University. Poor Bishop; he was drowned out by crosstalk and interruptions.

The discussion is reminiscent of Fleischman’s book— an attempt to stay on the fence and not ruffle anyone’s feathers. Fleischman said that with his book, he hoped that foundations realize that “they need to open up themselves so that they get ideas from the outside, criticisms from outside. The problem is the foundations aren’t really accountable to anybody except their own boards.” He quickly clarified that by “outsiders” he didn’t not mean government, nor regulatory structures, but people from the nonprofit sector such as other foundations. Just minutes later he suggests that he wants foundations to ‘be more carefully watched, essentially, by the governmental apparatus…There really isn’t effective oversight at the governmental level not just of foundations but of the whole nonprofit sector.’

As an activist in the Expert Advisory Group of the Independent Sector’s (IS) Panel on the Nonprofit Sector, Fleischman shared the Independent Sector’s original position against outside regulation. Based on his conflicting positions, we are not certain as to his current position. We do know that despite its public protestations against regulations, the Independent Sector has converted. It has pandered to the lawmakers and coveted regulations.

It’s simply startling and certainly inexplicable! In the Independent Sector’s final document, which Fleischman presumably endorses:
· They asked the government to assist in educating board members and professional leaders because both are not aware of the expectations and requirements imposed upon them. (That says a ton about what IS thinks about the sector and the quality of those who lead it at the agency level.)
· They requested government assistance for resources to facilitate full implementation and new regulations to prevent abuses. (This is particularly interesting because they have said that the abuses are perpetrated by a few. Why punish all?)
· They endorsed overall tax enforcement and improved oversight of charitable organizations as well as audits and investigations and additional resources. (Contrary to public pronouncements, nonprofit leaders must believe that there is significant abuse to warrant increased audits and investigations.)
· They asked the Internal Revenue Code to impose penalties on board members and other managers of charitable organizations who approve of self-dealing or excess benefit transactions, including excessive compensation, not only if they knew that the transaction was improper but also if they “should have known” that it was improper. (Where was the IS when many of the nonprofit stalwarts got caught in their misdeeds?)
· They suggested increasing reporting requirements. (Increased reporting requirements are easier for the staffs of larger organizations---the Independent Sector’s major constituent. This may strangle smaller nonprofits.)
· They asked more disclosure on travel, entertainment, gift and car expenses.
· They wanted legislation on board reform including size as well as additional requirements for board participation. (It is surprising that simple guidelines wouldn’t work in this regard.)

And, in recent testimony, the IS president and CEO Diana Aviv paved the way for the nonprofit-government relationship. She requested the creation of the equivalent of the federal Small Business Administration to implement new regulations put on the sector. In essence, the nonprofit sector leadership wants to concretize a regulatory system.

This doesn’t seem like a leadership that endorses self-reform, does it?

Judith Rodin comments regarding the role of foundations were perplexing as well. She suggests that foundations do not replace government. However, that position contradicts the practice of the current administration. The Bush administration has proposed over $200 billion dollars in federal cuts over the next four years. The money is for programs providing services in education the environment to assistance for low-income families.

Such cuts reduced capacity for general services, leaving many people to fend for themselves or turn to existing nonprofits. Many foundations step in and increase their monetary awards, effectively replacing the missing government contributions. Others take a more strategic approach to awarding grants, making more collaborative grants, and in some cases providing low-interest loans instead of grants. The foundation-government relationship has been long-standing, but as the federal funds continue to dry up, the resources of the voluntary sector are becoming overtaxed.

Those speaking on behalf of the philanthropic sector have purported to be its leaders. Independent Sector represents, at most, 30% of all of the charitable organizations. They cling to that position because of the apathy of the other seventy percent. When the vast majority wakes up to the urgent reality that they face they will find out that they were blindsided.

The nonprofit sector needs leadership that will show the mettle to address the multitude of problems that will put it on the right track and not stifle the vitality and ingenuity that it once had.

Gary Snyder is managing partner of Nonprofit Imperative. He can be reached at gary.r.snyder@gmail.com. His website is: www.garyrsnyder.com.

Free your program officer! (Or, would core support grantmaking make foundations better?)

By Pete Manzo

One of the best reasons for core operating support has nothing to do with grantees. Instead, it has to do with liberating foundation program staff. This is one of the most frequently overlooked, and oddly compelling arguments for foundations shifting more of their funding and operating support. We’ll get to the virtues of this rationale shortly, but before we do, let’s review the contours of the debate over general operating support.

General support funding has been a very hot topic recently, to tell from online discussions among philanthropoids. Recently, Paul Shoemaker of Social Venture Partners kicked off a hearty back and forth in the Stanford Social Innovation Review online, and Sean Stannard-Stockton provoked three waves of vigorous comments. Grantmakers for Effective Organizations (GEO) members apparently have spent a great deal of time on the topic this past few months, through their listserv and at meetings, and GEO recently published a General Operating Support Action Guide for grantmakers.

Many reasons are given both in support of and in opposition to giving general operating grants. In Not All Grants Are Created Equal, based on numerous interviews with foundation and nonprofit representatives, NCRP summarized the following reasons funders commonly give for preferring restricted grants: the need for evaluation, avoiding having nonprofits become dependent on their support, promoting competition among nonprofits for grant funds, and seeking to promote innovation. Nonprofit advocates have good responses to all those concerns, and in addition, make powerful arguments about how restricted grant funding hampers their ability to build their organizational capacity, exercise their best judgment about community needs, adapt to changing circumstances, and recover the true costs of their activities.

But even assuming nonprofit advocates have the better arguments about the virtues of general operating support, there are two key factors we should consider. First, in some sense it’s pointless to debate which is the better approach, project grants or core support. Both tools are needed and appropriate in different circumstances.

Second, and perhaps most important for NCRP and others who want to see foundations give more core support grants, rather than hashing out all the benefits of core support to grantees, the focus instead should be on what will lead foundations to change their behavior. I want to suggest two important factors. First, foundations are much more likely to give weight to the experience and arguments of other foundations, their peers, than those of outsiders, as I’ve argued previously. That’s why the thought leadership of funders like The California Wellness Foundation and F.B. Heron Foundation, both of which have described how expanding general operating support has improved their results, have been more valuable than any reports, books, rants and manifestos from outsiders could be.

And what about the changes that core support can make on the culture, the quality of work life and the overall effectiveness of foundations? This second factor gets back to the issue of liberating foundation staff. Motivating foundation leaders and their organizations to change their practices won’t often come about simply because it is the right thing to do. It seems much more likely that kind of change will require that they see compelling benefits to themselves in making those changes. John Stuart Mill pointed out this dynamic in his tract On the Subjugation of Women, and his arguments about why liberating women would make men better were among his most compelling points. I’m not at all comparing the plight of nonprofit grantseekers to the struggles of women or minorities for equal justice, of course. But one lesson among many of the women’s suffrage and civil rights movements is that appeals to the highest sense of self of the opponents can be more influential than abstract appeals to the right thing. This isn't because they're bad or uncaring people, but people need to want to change, and that desire usually needs to come from how they want to be.

So maybe increased attention to improving the influence of program officers, their agency within foundations, would be a good thing for both foundation and nonprofit leaders to consider. My younger nonprofit self would have dismissed this argument with an “oh, cry me a river, those poor foundation program officers, with their good salaries, nice offices, expense accounts, legions of support staff . . .” But at least from the outside, it certainly does look like being a grantmaker can be an isolating and disempowering experience, to tell from the aversion to risk, complaints about demanding boards and very heightened concern about process and documentation that we see. To give just one example, I watched with some amazement a few years ago as a program officer I consider a friend and colleague suffered through months of internal program meetings at several executive levels and wrote as many as 50 pages advocating funding of a grant for which the proposal was only five (5) pages. A fundraising consultant I know once described grantwriting as “like writing group term papers for a living,” and it seems program officers have to both read them and write them. I’m sure many of us have other stories to tell that could add pieces to the puzzle.

In the business world, giving more control to frontline workers has attracted champions as established as Toyota and Starbucks and as “insurgent” as FastCompany. Many foundations are now exhorting their program officers to think of themselves as changemakers rather than grantmakers. Against this backdrop, exploring the links between general operating support and possible changes in how program staff do their work certainly seems worth serious attention. Confident nonprofits want to have closer, more candid relationships with their funders, they want to be treated more like partners than vendors, they want to spend more time discussing how to meet their ultimate ends and less time jumping through process hoops. Their program officers may well have similar wants, and changing how program officers work may benefit workers and organizations on both sides of the foundation-nonprofit divide. And once movement in this direction starts, nonprofits may find more allies behind foundation walls.

Peter Manzo is an NCRP board member and the Director of Strategic Initiatives for the Advancement Project, a civil rights advocacy organization based in Los Angeles and Washington, D.C.

Getting everyone to the table

“Exposure and personal contacts” go far in the world of grantmaking, according to Rural Philanthropy: Building Dialogue From Within. But developing that essential cache of contacts is largely difficult without nonprofits having the opportunity to foster meaningful interactions with foundations.

That’s the kicker, though. Compared to urban nonprofits, rural nonprofits are much more isolated because of sheer geography, which in turn makes it difficult to create a philanthropic infrastructure. For example, “seldom do rural groups have the opportunities to rub elbows with granters,” and “few foundations conduct tours of rural areas,” cites NCRP’s latest report.

Although Rural Philanthropy highlights a handful of initiatives aimed toward overcoming those barriers, more needs to be done to connect rural nonprofits to major foundations. After all, without more familiarity with such groups, foundations are more likely to rely on pre-existing conceptions such as those discussed in previous postings.

What are some ways to overcome this "philanthropic divide"? How can rural groups increase access to foundations? These are difficult questions which NCRP invites readers to debate as they read Rural Philanthropy.

Download the report for free.

“American Gothic,” more like “American Relic”

America’s celebrated “small family farm” more of a rarity these days…

Grant Wood probably had no idea how ingrained into American culture his iconic painting “American Gothic” would become. But the painting’s stoic farmer standing alongside his daughter, his pitchfork gripped in hand, has signaled the self-reliance and hard work of rural America since the 1930s. In 2007, however, America’s romanticized family farm image needs a major upgrade.

Sure, agriculture continues to be an integral part of the rural economy. But only a small percentage of rural populations actually work in agriculture. According to Rural Philanthropy, “less than five percent of non-metro residents” work in agriculture-related sectors. As for small family farms, although they comprise 90 percent of the farms in America, they account for only “25 percent of farm production.”

So what does all this mean? For one, the workplace is diversifying such areas. But populations also are shifting because of increased out-migration, replaced in part by new immigrants. Consequently, rural advocates must stress to foundations, especially those located in more urban centers, to revise their preconceptions about rural America. Doing so may help grantmakers become more responsive to the evolving needs of America’s rural landscape.

What are some of the issues that rural nonprofits face with corporate farms overtaking the production capacity of family farms? How do population shifts in numbers and composition shape the needs of rural communities?

Download Rural Philanthropy: Building Dialogue From Within for free.