posted on: Thursday, August 27, 2009

By Kevin Laskowski

In a previous post, I noted the announcement of a Philanthropy Policy Project and highlighted NCRP’s potential contribution to the discussion. Our Criteria for Philanthropy at Its Best could provide an excellent starting point for the Project’s discussions of social inclusion, diversity, accountability, transparency, ethics, effectiveness, and more.

At the same time, I hope this Policy Project is a sign of a philanthropy more willing to change the rules—and not only those governing itself. As NCRP prepares to release its third Grantmaking for Community Impact report, I’ve been thinking about philanthropic involvement in public policy more broadly. I’d like to see this Policy Project set its sights high so that we don’t forget what all this policy is really about.

Because I’ve heard this before. The banking and investment sector created a number of fascinating financial vehicles that few understood or questioned. We called it financial innovation. We moved money around, and we called it profitable and productive. It made some people very rich.

Now our sector is fantasizing about the possibilities presented by its own new toys. These instruments are designed to facilitate a certain type of philanthropic activity, activity that’s already possible in a lot of ways, but we’re assured the tools will make philanthropy easier and more effective. Now the Policy Project proposes to contemplate the regulatory environment that will best facilitate and incentivize these capital flows. What prevents all this from turning out the same way? Nearly three years ago, Business Week was discussing the securitization of microloans. The Wall Street Journal reported earlier this month on the coming “bubble” in microfinance.

For all our engagement in policy, we may end up simply moving money around. The process may get a new alphanumerical designation. Intermediaries will take their cut and call it “innovation,” but that’s not change anyone believes in anymore. If philanthropists wish to dip their toes in policy discussions with real impact, there are matters that could use the Policy Project’s attention, ingenuity, and collective resources more.

If the past year has taught us anything, it’s that philanthropy is not as independent a sector as it might think. The greatest threat to philanthropic assets is not inefficient capital flows, or those who might reinterpret donor intent, or those campaigning for greater diversity on foundation boards, or a regulation-happy Congress. None of those things ever wiped out a third of our foundations’ philanthropic wealth. That took an increasingly unstable, unequal, and unsustainable world economy. Philanthropy may not seek profits or votes, but it remains at the mercy of those who do.

What policy changes would create a foundation that was, in the words of the F. B. Heron Foundation, “more than a private investment company that uses some of its excess cash flow for charitable purposes?” What policy changes would transform our sector into something more than an emergent effect of forces beyond its control? What kind of tax policy, economic policy, industrial policy, environmental policy, or health-care policy would support the stability and growth of philanthropic capital? Because these policies affect our organizations and their missions by orders of magnitude that dwarf anything that typically occupies the Taste section of the Wall Street Journal.

And philanthropy as a field is woefully unwilling to engage in these debates, ultimately to its own detriment. Our sector’s ability to weather public scrutiny hinges on how it deals with the weightiest of public concerns. What if, instead of weathering economic ups-and-downs as the inert beneficiaries of capitalist largesse, foundations stepped up as a group to influence the economic decisions being made? To make sure that, whatever changes came, they were equitable and sustainable? The public would leap to its defense should an enterprising congressperson ever seek to capitalize on scandal. As it is, even the civically engaged can’t name a foundation on their first try. And the benefits that philanthropists do create often do not trickle down to communities that may need them the most, leaving us without perhaps our best champions—the public we serve.

Are we moving toward a more prosperous, more equitable, more sustainable state of affairs, or is our greatest genius in creating “new” philanthropic instruments? A Policy Project that confined itself to narrow sector issues and the endless contemplation and reproduction of the giving tools already in use would be a recipe for irrelevance.

Bernholz says, “This is a perfect opportunity to invite nonprofit and philanthropy professionals, social entrepreneurs, social capital market makers, data wonks, think tanks and others to reimagine the regulatory and policy structures that guide and inform philanthropy.” It’s a perfect time for us all—perhaps led by philanthropy—to reimagine the regulatory and policy structures that have guided and informed our public life in general. And, thankfully, we already have a word, a true giving vehicle, for that discussion: democracy.

“What policies or regulations would improve philanthropy?” It’s a great question, but the discussion shouldn’t stop there. What policies or regulations would improve our world? And what is our field’s role in championing those changes? Philanthropists have got to start going there.

That’s not a shot on the Policy Project, just a vote for pushing the conversation through the sterile, inward-looking ground of giving vehicles and incentives to the more fertile, productive frontier of what all this philanthropic policy is for. Philanthropies can convene panels and exert collective power at the drop of a hat when it comes to things like charitable incentives or combating perceived threats to those incentives. However, when it comes to the policies that will do more to determine our shared impact and common fate than any proposed tweak to the accounting rules, we don’t have much to say, at least not together.

“What would better philanthropy look like?” For starters, better philanthropies would band together for something more than the continued comfort of their individual assets. Here’s hoping the Philanthropy Policy Project goes there.

Tell us about your own hopes for the new Philanthropy Policy Project in comments.

Kevin Laskowski is Field Associate at the National Committee for Responsive Philanthropy.