posted on: Wednesday, July 30, 2008

Below is a copy of the speech given by Christine Ahn, senior fellow at the Korea Policy Institute and member of NCRP's board, during a session on foundation giving trends at the "Raising Change: A Social Justice Conference" sponsored by the Grassroots Institute for Fundraising Training (GIFT) and the Grassroots Fundraising Journal.

Christine also wrote "Democratizing Philanthropy: Challenging Foundations and Social Justice Organizations" in the fall 2007 issue of Responsive Philanthropy, NCRP's quarterly publication.


Thank you for inviting me to be on the panel. I always feel like an imposter talking about philanthropy since I have never worked at a foundation. But as someone who has worked in the citizen sector for over 15 years, I have certainly written my fair share of grant proposals and received ample rejection letters (and the occasional acceptance letter). I have also served on the board of the National Committee for Responsive Philanthropy (NCRP) for over 4 years. But my real claim to knowing anything about philanthropy is my having been mentored by the infamous Pablo Eisenberg when I was a graduate student at Georgetown. He’s without a doubt the toughest critic of philanthropy today, and although many of you may not agree with his approach, it’s hard to dispute his unshakeable positions.

So, here we are. It’s the second GIFT biannual conference and there are more and more people interested in figuring out the 12-step plan to being free from the nonprofit industrial complex. I’m still in remission but trying to be part of the cure. And as with any search to find a cure, we need to get to the root causes and understand the landscape. With that said, let’s take a step back and put some trends in context.

• There is much grumbling among social justice activists that 501c3 nonprofit organizations are more concerned today about longevity than achieving true, systemic change.
• Many young people are leaving the nonprofit sector after working a few years due to burnout and low-pay. We as a sector are facing a crisis in leadership since many baby boomers that founded and headed nonprofit organizations must hand over the mantle of leadership, and fewer and fewer younger folks want to take over as executive directors because of the endless responsibility to raise funds.
• Most foundation dollars remain in the realm of elite institutions. Studies show that in the last 30 years, despite the doubling in the number of foundations, the quadrupling of foundation assets, and the increase in foundation grantmaking by 425%, grant support for those most in need (unemployed, homeless, low-income people) received disproportionately less than other broad program areas.
• We are in bad shape as a nation. We are in a war, in a recession, and hundreds of thousands of low and middle-income families have lost their homes to foreclosures caused by deregulation of the banking and financial services industry. The poor are poorer than they were since 1975 with over one-third of adults living in poverty among the working poor. This is against the backdrop of global warming, an energy crisis, and a global food crisis.

Given this scenario, social justice activists have been having more systematic conversations about whether 501c3 nonprofits have become a barrier or a vehicle to achieving social justice. In 2005, INCITE organized the "Revolution Will Not be Funded" conference at UC Santa Barbara, then the Raising Change conference held a debate in 2006, and then the US Social Forum held workshops by INCITE timed with the release of its book. In every setting, the room was packed and the heat on. As more and more funding goes to providing direct services as public services are slashed, there is less money to fund organizing—at a time when more civic engagement and community organizing is needed.

On the one hand, there are people who are so disgusted with the whole world of institutionalized philanthropy and the lack of accountability by foundations. They don’t see much hope for positive reform. Many of these are our friends here who espouse grassroots fundraising as the answer, and their critique is spot on that we need to think about building grassroots political power independent of tainted money. And trust me, I have experienced the difficulty of raising money for a Korea policy thinktank and running into all the challenges of trying to raise money from foundations largely run by white people who largely fund organizations largely run by white people. So I hear the grassroots fundraising people when they say enough is enough. And then on the other hand are those who say let’s take the money and run! We’re just playing the game and while we know that the game isn’t fair, we have to suck it up and play nice so that we can do the real work. The problem is that this conversation is very immobilizing. We need to do more than just walk away from foundation money, and we need to more than just take the money and run. We need to start democratizing institutionalized philanthropy through education, organizing and advocacy. And if there is resistance to accountability and transparency, then we need to reform the tax laws that gave the super-rich this public benefit in the first place.

So let’s think about the super-rich and the tax benefits they get. In 2006, Warren Buffet donated $30 million to the Bill and Melinda Gates Foundation. Three trustees—Bill, Melinda and Mr. Buffett—along with Bill Senior and now the new President of the Foundation—will decide how to allocate $3 billion-plus that the foundation is required to payout each year (Plus because Buffet mandated that his funds be spent down). Mr. Buffet gets huge tax write-offs, the Gates Foundation a huge infusion, and the public? We get to see how the Gates Foundation will invest in solving social problems.

The danger that this poses was seen in 2006 when the Gates and Rockefeller Foundations committed $150million to the Alliance for a Green Revolution in Africa (AGRA). The way that the Gates Foundation cast this biotechnology initiative as “attaining the best yields in the diverse environments of Africa and work to make sure these high-quality seeds are delivered to farmers who need them the most.” In the view of the Gates Foundation, agricultural biotechnology is the silver bullet to solve hunger and malnutrition in Africa. Just because the Gates Foundation believes the solution to problems of low agricultural productivity rests on technology doesn’t mean it’s the one shared by millions of peasant farmers whose lives and livelihoods will be affected most by the Green Revolution in Africa. At the 2007 World Social Forum in Nairobi, 70 African civil society organizations from 12 African countries issued a statement that, “AGRA is putting over $150 million towards shifting African agriculture to a system dependent on expensive, harmful chemicals, monocultures of hybrid seeds, and ultimately genetically modified organisms” and “under-represent the real achievements in productivity through traditional methods, and will fail to address the real causes of hunger in Africa.”

Even Michael Edwards from the Ford Foundation writes that philanthrocapitalism, a term coined by the Economist to describe the harnessing of business and the market to the goals of social change, is dangerous. He writes, “The increasing concentration of wealth and power among philanthrocapitalists is unhealthy for democracy. It’s time for more accountability.”

And so the Greenlining Institute’s recent push to pass California Bill AB 624 to try to push for greater transparency and information of how foundation dollars are being allocated is a prime example of how much resistance there is from foundations to being held more publicly accountable. But the fundamental problem is that these institutions see themselves as private. But are they?

According to the Joint Committee on Taxation, charitable deductions cost the Treasury Department $40 billion in lost tax revenue in 2006. In fact, it is estimated that at least 45 percent of the $550 billion dollars in assets that foundations have belong to the American public. As Akash Deep at Harvard and Peter Frumkin at University of Texas note, “When a foundation is created, the burden of lost tax revenue is borne by citizens today in the form of a tax expenditure” with the promise that it will be paid out in the future. The realization that foundations are partially public dollars is starting to raise the ire of more elected officials.

In an interview with Rick Cohen, former executive director of NCRP, California Congressman Xavier Becerra from Los Angeles and member of the House Ways and Means Committee said, “If you’re getting a tax subsidy, another taxpayer must make up for what you’re not paying. That subsidy should serve a good purpose. What are we getting for some $32 billion in lost revenues lost to the federal treasury in paid taxes? Is it serving a good public purpose? Statistics I’ve seen suggest that only 1 in every 10 dollars are serving poor people or disadvantaged people. I have to wonder where the other 9 dollars are going.”

While this signals potentially greater oversight over foundations, when push comes to shove, I don’t think Congressman Becerra or the current Congress have the courage to push for philanthropic reform. But that says less about what is the right and just course of action and more about the cozy relationship today between Washington and Wall Street.

Here in California, despite their valiant effort, AB 624 ended with a statement signed by 10 foundations promising to build the capacity and increase technical assistance support to minority-led and grassroots community based organizations that serve primarily minority and low-income communities. It was a good step, but it still leaves the monitoring to foundations. And it doesn’t resolve the issue of the government’s right to know about diversity or other matters related to the public good. Even universities are mandated to report to Congress how more diverse students are beneficiaries of these public institutions.

That’s why it’s really incumbent upon all of us, not just the Greenlining Institute, which played a catalyzing role, to challenge this lack of democratic accountability among foundations. AB 624 was a litmus test of how much resistance there is among foundations to transparency and public accountability and how far we are from being the strong, independent and courageous nonprofit sector we need to be. As we set off on the long and arduous path to rebuild all the damage that has been wreaked upon our nation and world over the last few decades, we must not look away from the essential challenge to democratize philanthropy.

Do you agree with Christine that social justice activists should engage foundations more than they are doing now? Do you agree with her assessment of the danger posed by mega-gifts? What do you think are the effective ways to address the lack of "democractic accountability" among foundations?

posted on: Wednesday, April 30, 2008

by Yna Moore

The debate over California's AB 624 legislation continues. The bill would require the state's largest foundations to disclose diversity information regarding their board, staff, grantees and vendors.

Many foundations and their trade associations have strongly opposed the bill, arguing that their decision to fund an organization is based solely on their likelihood of achieving the most impact.

However, “improving the societal impact of foundations and improving their support for diverse communities need not be mutually exclusive propositions,” said Aaron Dorfman in a recent posting on this issue. “In fact, there is growing evidence that diversity and effectiveness go hand in hand.”

In a recent commentary on the Chronicle of Philanthropy (Foundations Should Be Required to Disclose Data on Charity, May 1), Pablo Eisenberg[1] notes that despite being “poorly crafted,” the legislation’s purpose—to require foundations to disclose race and gender information of their boards and grantees—is fundamentally sound. The bill will “provide the public and the foundations, at least in California, with a more accurate picture of the extent of diversity at foundations and their grantees,” said Eisenberg. “Armed with this information, as well as their growing awareness of the problem, foundations hopefully will begin to take much more seriously their responsibility for adequately supporting what has now become the majority of Americans.”

In a separate article (California’s Legislation Won’t Achieve True Diversity At Foundations), Mark Rosenman argues for foundations to truly reflect on their missions and how they translate this into practice. Beyond the numbers, the issue of diversity is about redistribution of power among foundations and nonprofits.

In an earlier post on this blog, Pete Manzo suggests that we’ll need better information than what AB 624 mandates to improve how philanthropy responds to the needs of underserved communities. He proposes a system that allows us to view where foundation dollars are going, the demographic attributes of those places, and information on the subsets of people being served by those grants.

Do you think it’s necessary to have legislation like AB 624 requiring foundation disclosure of diversity information? Why or why not? Do you think AB 624 is an effective way to channel more foundation funding to nonprofits serving communities of color and other marginalized groups? If not, how might this legislation be improved (assuming that you think legislation is needed)? Are there other ways to go about measuring and disclosing more accurately and effectively the current state of diversity in foundation practices and grantmaking? Tell us what you think!


[1] Pablo Eisenberg is a co-founder and former board chair of the National Committee for Responsive Philanthropy.

Yna Moore is communications director at the National Committee for Responsive Philanthropy.

posted on: Thursday, April 17, 2008

A California Assembly bill is causing quite a stir in the philanthropic and nonprofit worlds. Spurred by a series of studies by the Greenlining Institute, the bill, AB 624, sponsored by 23^rd District Assembly Member Joseph Coto (D-San Jose), would require California foundations with assets over $250,000,000 to collect and make public information about:

• the ethnicity, gender and sexual orientation of foundation board and staff members;
• the number of grants and grant dollars awarded to organizations reporting that 50% or more of their board or staff members are ethnic minorities;
• “the number of grants and grant dollars awarded to “organizations specifically serving African-American, Asian-American, Pacific Islander, Caucasian, Latino, Native American, and Alaskan Native communities, lesbian, gay, bisexual, and transgender communities and other underrepresented communities”
• “the number of grants and grant dollars awarded to predominantly low-income communities"; and
  
• "the number and percentage of business contracts awarded to African-Americans, Asian-Americans, Pacific Islanders, Caucasians, Latinos, Native Americans, and Alaskan Natives."

The current draft of the bill is available here.

The problem is, if the ultimate result sponsors hope to achieve is increased benefits from philanthropy flowing to either communities of color, or low income communities[1], compliance with the bill, as written, looks very unlikely to accomplish that.

First of all, complying with the bill would not be easy, both because of the fairly vague or uncertain definitions of the information to be collected, and also because of the amount of energy that would go into collecting that information, both at the foundations and on the part of their grantees. The bill is imperfectly drafted, so much so that the Nonprofit and Unincorporated Organizations Committee of the California Bar Association’s Business Law Section, a group of attorneys expert on exempt organization law, have issued a statement of opposition raising numerous objections, and concluding that the bill is “fatally flawed.”

The problem I see in the bill is that it does not require information be collected that would establish who is served by grant dollars (more on the feasibility, and wisdom, of trying to establish that below). Rather, it simply requires foundations to tally up the numbers, grant dollars and percentages and publish those. In its current form, a foundation could simply publish the aggregate figures (e.g., “300 grants, in the amount of $400 million, to organizations specifically serving communities of color”, or “250 grants, in the amount of $300 million, predominantly low income communities.” While it would be interesting to track whether those numbers go up or down, they are practically useless, otherwise, for advocates. The data likely wouldn’t provide any evidence that philanthropic support to low income people of color living in particular regions or geographic communities is rising or falling, or how the distribution of grant funds within those communities is shifting over time. (Also, the data likely would not be aggregated somewhere, so to get the bigger picture, advocates would have to cull information from dozens of foundation sites.)

As Aaron Dorfman, NCRP’s Executive Director, has pointed out in this space, if diversity in grantmaking is important, it should be measured. Opponents of the bill actually agree on this point, but object that the challenge will be how to measure it completely, and how to measure it in ways that are most useful to advocates for more responsive grantmaking. The leaders of The California Endowment, The William & Flora Hewlett Foundation and The James Irvine Foundation all have published op-eds or letters to the editor opposing the bill. Ironically, these three foundations are among the handful of large foundations with statewide reach most prominent in pushing policy advocacy and systems change to benefit low income communities of color. The controversy over AB 624 seems to be an example of what a friend of mine calls “heated agreement,” where people who basically agree and should be pulling in the same direction instead divide and argue over minor points.

As Dr. Ross of the Endowment observes, for all the debate about transparency, “the real issues are: poverty, equity and opportunity in communities of color and other underserved communities.” If the purpose is to improve the use of philanthropy to tackle those challenges, we’ll need better information than AB 624 mandates, and advocates for more responsive grantmaking and leaders of foundations like the Endowment, Hewlett and Irvine should be able to come up with much better solutions by working together.

A better place to start would be making visible the flow of grant dollars to specific places, the demographic and other attributes of those places, and even the specific subsets of people served in those places. (Another irony: the specific reach of grants for policy advocacy or systems change will be harder to define, but this challenge can be solved, as I will explore in a future post). To do so, we’ll need to make the grants data already disclosed by foundations more accessible to advocates, and supplement that with data about the geographic and demographic reach of those grant funds. This would mean bringing the grants databases out from behind the firewalls of services like the Foundation Center or Foundation Search, or paying the costs of providing free public access to that data. It also would entail beginning to map the reach of grants. With a modest investment of time and resources, we can determine which census tracts are served by which organizations, and show the amount of grant dollars relative to the numbers of people living in an area or, more specifically, the particular characteristics of people actually served. This is not a technological pipedream, it can definitely be done[2], and likely for far less cost and effort than compliance with AB 624 would entail. The design and development of such a system, however, is something that can’t very well be done in advance through legislation.

In the end, AB 624 is unlikely to become law anytime soon (It has a rough road ahead in the California Senate, and if it passes both houses, Governor Schwarzenegger is likely to veto it.) That should give all supporters of responsive philanthropy, within foundations and the broader community, plenty of time to develop approaches more targeted to improving results for low income communities of color.

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. His opinions are his own and do not necessarily reflect those of NCRP or the Advancement Project.

[1] 1) Oddly, there is no such straightforward statement on Greenlining Institute’s Web site that this is the purpose, as opposed to more generically making foundations more “effective and efficient.”
[2] 2) HealthyCity.org, a partnership of nonprofits in Los Angeles sponsored by the Advancement Project, already has built tools and methods for making the flow of grant dollars visible, for public agencies and private funders, to help them assess their grants in Los Angeles County and throughout California. (Full disclosure: I am a proud co-founder of HealthyCity.org.).

posted on: Wednesday, April 16, 2008

by Yna Moore

Sherece West, new NCRP board member and president of the Winthrop Rockefeller Foundation, recently shared her thoughts on structural racism and inequity, and what this means for philanthropy in Diversity in Philanthropy's Executive Commentary. "An aspect of effective philanthropy is about undoing structural racism," said Ms. West.

Steve Mayer, director of Effective Communities LLC, also tackled this issue in a commentary in March.

The issue of diversity in foundations' leadership, grantmaking and business dealings has received tremendous attention during the bast few months, thanks to AB 624, a bill in the California legislation sponsored by Rep. Joe Coto. The bill, if passed, would require the state's largest foundations to disclose diversity information regarding their staff, board, grantees and vendors.

Do you think AB 624 is an effective way to channel more foundation funding to nonprofits serving communities of color and other marginalized groups? Tell us what you think!

Kristina ("Yna") Moore is communications director at NCRP.

posted on: Monday, March 17, 2008

By Aaron Dorfman

Last week, six hundred foundation leaders from across the nation were in San Francisco, Calif. for a conference on grantmaker practices that improve nonprofit results while a major controversy involving foundations continues to brew in the California Legislature.

The conference marked the tenth anniversary of Grantmakers for Effective Organizations (GEO), a coalition of funders focused on maximizing the impact of their grants. GEO is the place where foundation leaders come together to share resources and ideas that help them most effectively contribute to the success of their grantee organizations. When the grantees achieve their missions, the foundations also achieve theirs.

The legislative controversy is about AB 624, a bill that would require the largest California foundations to disclose diversity data about their boards, staffs, grantees and vendors. The bill passed the California Assembly and is making its way through the Senate. Assembly Member Joe Coto introduced the bill because he feels that foundations aren’t meeting the needs of his constituents and other communities of color in California.

With any rigorous review of the available data, it is clear that communities of color benefit from institutional philanthropy at rates far lower than one would expect. Nationally, less than nine percent of grant dollars are classified as intending to benefit racial or ethnic minorities. As a percentage of total grants, that figure has been declining over time. And while the available evidence suggests that foundations have been making real progress diversifying their staffs at the middle levels of seniority, chief executives and trustees of foundations remain overwhelmingly white.

But foundations exist for the purpose of having impact on the issues and causes they were founded to address, not to provide grants or hire staff based on race or ethnicity. Opponents of AB 624 argue that they make their funding decisions based solely on which grantees are most likely to achieve maximum impact and that race shouldn’t enter into the equation.

So are we at an impasse? Must grantmakers choose between being effective or embracing racial equity and diversity? Not at all.

Improving the societal impact of foundations and improving their support for diverse communities need not be mutually exclusive propositions. In fact, there is growing evidence that diversity and effectiveness go hand in hand.

A recent book, The Difference: How the Power of Diversity Creates Better Groups, Firms, Schools and Societies, by University of Michigan professor Scott E. Page shows convincingly that diverse organizations actually outperform more homogenous ones. “Diverse boards of directors make better decisions, the most innovative companies are diverse,” he states in an interview with the New York Times.

Foundation leaders who want results should consider seriously Page’s research. Grantmakers should embrace both diversity and effectiveness, and they should persistently seek to improve on both fronts. They need to go beyond race/gender/sexual orientation and should also include class to ensure that elites of different races aren’t the only voices listened to in philanthropy.

For the past decade, foundations have been advancing their ability to measure the impact of their work and that of their grantees. They’re getting better at knowing whether or not they’re making a difference. They should continue their efforts on this front.

But we also need better data on diversity in philanthropy. Improving diversity will help foundations increase their impact, but we won’t be able to tell if they’re making progress if they don’t measure and report on key diversity metrics. When the only diversity data that is available clearly shows that communities of color are getting shortchanged, elected officials can and should start raising questions. After all, foundations’ tax exempt status means these grantmakers are spending quasi-public dollars.

There are flaws with AB 624, but there is no question that foundations should embrace both diversity and effectiveness to ensure maximum public benefit from the valuable and limited resources that are entrusted to them.

Aaron Dorfman is the executive director of the National Committee for Responsive Philanthropy.