Philanthropy's Promise

Throughout the good and the bad, the lows and highs, markets bull and bear, one thing has remained the same: Charitable giving is part of the America psyche. For better or worse, it’s part of who we are. In 2014, 86,726 foundations gave a combined $60 billion and controlled assets of more than $865 billion[1].

Like the wealth inequality of individuals in America, much of this money comes from a small group of heavily funded foundations. The 50 largest foundations represent nearly 30 percent of all foundation assets and control more than $250 billion. The vast majority of these foundations are funded by ultra-wealthy families and large corporations. With the level of financial power these foundations hold, philanthropy no doubt wields a great deal of power and influence. Who they decide to grant funds to, where their money comes from and how their decisions are made affect millions of people.

Philanthropy is an essential part of the American free market economy. We tend to have a low tax rate[2], high level of inequality and business laws that allow for the amassing of enormous amounts of wealth. While the bottom 80 percent of Americans own only 7 percent of the wealth, the top 1 percent owns 34.6 percent.

Under the conservative principles that encourage an unrestricted free market is an understanding that philanthropy will step in to make things better. You might forget that the average CEO makes 204 times what their workers do[3] if they have a charitable foundation. You might forget that a company moves their plant overseas if their corporate foundation supports your alma mater. With no standard, limited rules and generous tax implications, philanthropy can become something quite different than it seems.

What is understood by most to be a tool fighting inequality can in turn become a sinister curtain, veiling the forces that cause it in the first place.

Philanthropy is tightly connected to the systems at the root of injustice issues, but it can also be a force against them. When funding goes to the right people and enables them to empower themselves to make needed changes, philanthropy becomes a force for good. For instance, imagine a $200,000 donation going to help people affected by poverty. You could potentially help dozens of people for a short amount of time and feel pretty good about yourself.

However, you are doing nothing to change the circumstances of poverty and could even be allowing for their continuation. Employers might see charity as another income for their workers and feel no obligation to raise wages. On the other hand, you could put that money into a campaign to raise the minimum wage and affect thousands of people for years.

NCRP’s Philanthropy’s Promise standard is meant to encourage just that.

Introduced a few years ago at NCRP, Philanthropy’s Promise is a commitment that a foundation will give at least 50 percent of its funding to underserved communities and at least 25 percent to social justice strategies, namely nonprofit advocacy, community organizing and civic engagement. These are two specific ways that foundations can be more strategic and intentional with their giving. These principles are meant to ensure that the root causes of social problems are addressed instead of just the symptoms. Today, Philanthropy’s Promise has 203 signatories representing all types of foundations across the country.

According to our Pennies for Progress report, in the years covering 2003-2013, only about one-third of the 1,000 largest foundations combined funding, representing $16.6 billion, went to underserved communities. Of these, 90 percent give less than half to these communities. Only 10 percent of foundation money went towards empowering people and addressing the root causes of inequality.

There’s work to be done. If every large foundation followed the Philanthropy’s Promise standard, billions more philanthropic dollars would go to communities of color, immigrants, children and women. Billions more would go to fighting for causes like health equity, environmental justice, human rights and campaign finance reform.

None of this is meant to say philanthropy hasn’t done enormous good. It’s simply that we cannot assume that because something might seem obvious, popular or the right thing to do that it will happen. We have a responsibility to see that philanthropy helps those that need it most. We have a responsibility to understand that philanthropy needs to fight the systemic issues that put us here in the first place.

Henry Lagrimini is NCRP’s membership intern. Follow @NCRP on Twitter.

[1] http://data.foundationcenter.org/

[2] Out of the 35 countries making up the OECD, a group more-or-less representing developed economies, the U.S. has the third-lowest tax rate, followed only by Mexico and Chile.

[3] https://www.glassdoor.com/research/ceo-pay-ratio/

Yesterday the Arcus Foundation, a leader in social justice philanthropy, announced that in 2016 it would begin making historic investments in issues that affect transgender people – especially inclusion and violence prevention – here in the U.S. and abroad. Joined by the NoVo Foundation and a handful of others, Arcus’s announcement of the $20 million Global Trans Initiative places the funder at the forefront of the movement for transgender rights, and indicates the foundation has a vision for transgender safety and equity that is in keeping with the rapidly changing LGBTQ rights movement. NCRP applauds this news, and urges other foundations interested in equity and justice to follow Arcus and NoVo’s lead.

Last year saw the culmination of decades of work by foundations and grantees to achieve national marriage equality, and although anti-discrimination statutes aren’t universal, gays and lesbians are much closer to full inclusion in society today than they have ever been before. The same cannot be said, unfortunately, for transgender people. Violence against trans women, especially women of color, has reached “epidemic” levels according to the Human Rights Campaign, and trans people are increasingly being used as scapegoats for regressive, reactionary social policy by conservative politicians nationwide. According to the Williams Institute, transgender people have four times the poverty rate of the general population, and transgender women experience, by some measures, the worst wage discrimination of any marginalized group. The biggest, most pressing front in the battle for LGBTQ equality in the U.S. is undoubtedly transgender safety and inclusion.

But funding for organizations whose focus is transgender equity has been hard to come by. According to NCRP’s analysis of Foundation Center data, just $18 million has been granted by foundations since 2003 to organizations with a trans equity focus. When you consider, for example, that over $140 million was awarded in the same time period for veterinary medicine, the plight of trans organizations and their constituents comes into sharp focus. Funding for trans equity has been, with the exception of a few leading foundations, ignored by the philanthropic sector.

Arcus’s Trans Global Initiative will hopefully contribute to changing that, both by the numbers and by the message it sends to transgender people, their advocates and other foundations. The Arcus Foundation has been leading on the issue of LGBTQ, and especially trans, rights work for years. Since 2003, Arcus has been one of 87 foundations to fund transgender-focused organizations, but it has been responsible for 14 percent of the total grant dollars dispersed.

With the Trans Global Initiative, Arcus and its partners will explode the heretofore small pool of money available for trans organizations. According to the same NCRP analysis, between 2003 and 2005, the sector average amount granted per year to trans-focused organizations was about $600,000. In 2006-2008 it was $1.4 million and in 2009-2012 it was $2.4 million. Clearly, the foundations working in the trans equity space have been shifting more funds toward these issues over the last decade. But an average of $5 million more a year from the Trans Global Initiative will likely double existing grantmaking for transgender organizations, resulting in stronger organizations, better networked advocates, more robust services for transgender people and, generally speaking, a stronger presence for transgender organizations in the LGBTQ rights ecosystem.

Arcus’s stated goal to concentrate the initiative’s efforts on transgender-focused and transgender-led organizations shows they understand the potential for impact. And the foundation’s priorities for the Trans Global Initiative – to focus on transgender people of color in the U.S., in the Global South and especially on poor transgender people– indicates they are intentionally targeting their grantmaking in communities with the most need. This equitable targeting strategy isn’t surprising when one considers Arcus prioritized the needs and voices of trans advocates in deliberations about their new efforts. And both are in keeping with NCRP’s vision for a philanthropic sector that empowers marginalized communities and contributes to a more just society.

We hope other foundations join the initiative, lending not just their dollars but their public leadership to this important cause. Those foundations who have historically funded LGBTQ equality issues, but whose focus has until now been mostly on gays and lesbians, are particularly well positioned to shift their priorities in the current political and social environment. The dire circumstances transgender people experience in their daily lives, and the precedent set by Arcus and Novo’s leadership demands other funders step up.

“The Arcus Foundation has always been a leader in funding that empowers marginalized communities, so this announcement is par for the course for them. But it has the potential to revolutionize grantmaking that benefits transgender people, and I hope other foundations are paying close attention,” said NCRP Executive Director Aaron Dorfman.

NCRP is proud to claim both the Arcus Foundation and the NoVo Foundation as supporters and as signatories to our Philanthropy’s Promise initiative. Their leadership on the Trans Global Initiative ought to be an example to other foundations who value social justice. It is our hope the $20 million committed today by Arcus, NoVo and their partners is just the beginning of an increased philanthropic commitment to transgender people, their families and their communities.

Ryan Schlegel is research and policy associate at the National Committee for Responsive Philanthropy (NCRP). Follow @NCRP on Twitter.

Graph by Ryan Schlegel.

If you’re a coffee lover, you’ve likely enjoyed beans cultivated by farmers from a fair trade worker cooperative. If you haven’t yet, sip a delicious brew of fair trade coffee in the spirit of this past Saturday’s World Fair Trade Day, which celebrates fair trade as a “tangible contribution to the fight against poverty and exploitation, climate change and the economic crisis that has the greatest impact on the world’s most vulnerable populations.”

When fair trade comes to my mind, instead of coffee and other ethically-sourced products, the first thing I associate it with is worker cooperatives – defined by the U.S. Federation of Worker Cooperatives as “business entities that are owned and controlled by their members.” Whether rural or urban, philanthropy can look to worker cooperatives as a way to reduce poverty and inequality, empower workers and anchor jobs and wealth in a community.

Here are six reasons why foundations need to consider investing in worker cooperatives as a way to ensure that their grantmaking and investment dollars benefit underserved communities:

1. Worker cooperatives help build resilient local communities. The Democracy at Work Institute writes that worker cooperatives are “an effective tool for creating and maintaining sustainable, dignified jobs; generating wealth; improving the quality of life of workers; and promoting community and local economic development, particularly for people who lack access to business ownership or even sustainable work options.” With the cooperative model, women, immigrants, economically disadvantaged and historically marginalized racial communities have the potential to overcome barriers that limit their economic opportunities. In March, Truthout reported on the benefits of worker cooperatives for low-income women.

2. Cooperatives are found in practically every industry. The Democracy at Work Institute recently conducted an analysis of the field and found cooperatives in nearly every sector of the economy, concentrated in manufacturing, retail, food, administration/waste management and professional services. This past week Grist reported on the growth of agriculture cooperatives in the U.S., including well-known companies such as Ocean Spray, Organic Valley and Sunkist. As a local example, Takoma Park, MD is home to a food co-op and a cooperative nursery school. There are likely democratically-run businesses in your community, including credit unions!

3. There is potential to scale. Last year, the Democracy Collaborative – whose executive director, Ted Howard, helped launch the Evergreen Cooperatives and the Metropolitan Washington Community Wealth Building Initiative – released Worker Cooperatives: Pathways to Scale. The report shares how allies such as foundations can help grow worker-owned business in the U.S. by catalyzing more investment to build infrastructure and capacity, developing a friendlier ecosystem for cooperatives and increasing available capital through grants, loans and equity.

4. Investment in worker cooperatives amplifies impact beyond grantmaking. Foundations make mission (or impact) investments to achieve their philanthropic goals and generate both a social and a financial return. Mission Investors Exchange writes that “foundations of all types and sizes make mission investments in order to make capital more available to initiatives and enterprises that will create positive benefits for the communities they serve.” A worker cooperative is a clear example of an impactful investment that enables local workers to access the wealth they create.

5. Cities are already doing this work. Last summer, New York City allotted $1.2 million for the development of worker-owned cooperative businesses in 2015. Inspired by New York City, the city of Madison, Wisconsin will invest $5 million in worker cooperatives over the next five years. Foundations can partner with cities and local governments to provide funding, resources and policy advocacy.

6. Foundations are already doing this work. Most notably, the Cleveland Foundation, an NCRP Philanthropy’s Promise signatory, partnered with local grantmakers, banks and the municipal government to seed a revolving loan fund for Evergreen Cooperatives, a coordinated network of employee-owned enterprises that launched in 2008. Evergreen Cooperatives has been so successful that it is now referred to as the Cleveland Model. The Surdna Foundation, through its Strong Local Economies program, supports alternative business models such as employee-owned cooperatives to benefit “communities that have been most impacted by inequitable economic policy,” such as people of color, women and immigrants. In addition, in 2011 the Washington Regional Association of Grantmakers convened local foundations and supported a feasibility study for an initiative similar to the Cleveland Model. They were instrumental in founding the Metropolitan Washington Community Wealth Building Initiative, which incorporated its first worker-owned business last year.

The Washington Regional Association of Grantmakers will be holding a briefing about the impact and vision of the Community Wealth Building Initiative on May 18 – register here to learn more. While you’re at it, sign up for a webinar on May 20 to learn more about the Next System Project and join a broader conversation on new economic institutions and approaches for systemic change.

Foundations can bring new resources, expertise and business opportunities to this burgeoning field. What are other success stories and reasons to support worker cooperatives? How does your foundation leverage its philanthropic capital?

Caitlin Duffy is the project associate for Philamplify at the National Committee for Responsive Philanthropy (NCRP). Follow @NCRP and @DuffyInDC on Twitter and join the #Philamplify conversation.

We all recognize the importance of knowing whether or not what we do in our day-to-day work actually has any impact. In 2010, NCRP worked with TCC Group to conduct our first-ever organizational evaluation. It demonstrated that our work was influencing how philanthropy is practiced in our country and it also showed us how much more we needed to do. I am pleased to share with you the results of our second impact evaluation completed by TCC Group in March 2014.

Here is a copy of the executive summary of the report.

Some of the highlights include:

There has been a notable increase in the number of philanthropies and nonprofits using NCRP publications. In 2014, rates for grantmakers increased by 19 percentage points from a baseline of 32 percent, and among nonprofits by six percentage points from a baseline of 44 percent.
Funders rank NCRP’s value to the field alongside other infrastructure groups. 58 percent of nonprofits agreed or strongly agreed that NCRP has raised the level of robust debate in the sector.
NCRP is viewed as a constructive provocateur for the sector by a majority of philanthropies (66 percent) and nonprofits (65 percent).
More than half of nonprofits feel that they are part of a movement to transform philanthropy.
Funders are having more conversations about good grantmaking practices recommended by NCRP. Close to 50 percent of surveyed philanthropies advocate for adoption of the criterion to provide 50 percent of grant dollars for the benefit of underserved communities.

Our work is helping make philanthropy more responsive to those with the least wealth, opportunity and power. NCRP’s Philanthropy’s Promise initiative is a solid indicator of our reach; we now have over 175 signatories and that number is growing. Our publications are reaching more people in the sector and are being used by nonprofits to advocate for the kinds of funding that will help them achieve their missions. Funders, too, are using our materials to engage in discussions about how to change strategy to bolster impact.

But as we celebrate our successes, we are reminded of how much work remains to be done. Social justice work needs more funding. Some underserved communities remain a low priority for the sector writ large. As NCRP uses the findings of this evaluation to see where and how we can help improve philanthropy, we are mindful that the changes we hope for will not occur overnight. Structural disparities are long-standing and rigid. We will continue to advocate for a more responsive philanthropic sector that will transform our society to one that is more just, inclusive and equitable.

Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy (NCRP). Follow NCRP on Twitter (@ncrp).

This post was originally published on the Southern California Grantmakers Blog.

The program description for the 2014 GEO National Conference session “Would Gandhi, Chavez or King Receive a Grant Today? Benefits and Limits of Measuring Philanthropic Impact” reads: “Imagine Dr. King completing a 17-page grant proposal, or Gandhi and Chavez hosting foundation site visits.” The teaser then asks what kind of relationship these leaders of momentous change would have wanted with foundations, and how they would have liked foundations to champion leaders.

Although evaluation of grantees is necessary and useful, evaluation is not a goal but rather another way in which funders can help grantees and communities progress and develop leaders for the next great social movements.

How can funders be sure we are investing in the development of the next Gandhi, Chavez or King? And how can funders and their program officers create an environment in which grantees give honest feedback (without fear of losing their funding) and be true partners with their funders in creating change?

During the session, two of the possible responses to those questions were:

1) Consider movement building as a grantmaking strategy.

2) Create a trusting partnership between the grantee and the funder’s representative, the program officer.

Movement Building as a Grantmaking Strategy

Since its inception, Marguerite Casey Foundation has employed grantmaking (through multi-year general operating support and support for grantee networks) and non-grantmaking strategies (regional and national convenings) to support movement building as a social change vehicle. The foundation’s commitment to supporting movement building is underscored by the fact that the foundation measures its grantees’ progress in terms of movement building parameters.

To mitigate the risks inherent in its approach to grantmaking, Marguerite Casey Foundation does not accept unsolicited proposals. Instead, the foundation invites applications from potential grantees after careful vetting. In the first point of contact with a potential grantee, the program officer asks the organization for four to five movement-building objectives it hopes to achieve over the proposed grant period. The program officer then works with the organization to refine those goals and to make sure they are actionable.

Through annual grantee surveys, a grantee’s progress is measured using five indicators of movement building: organizational capacity, leadership development, network development, policy impact and family engagement. The foundation also provides a report of policy wins to the board of directors each quarter – proof that its investments are making change possible.

Relationship Building for Impact

Marguerite Casey Foundation believes in the power of strong relationships to effect community change, so it strives to develop a long-term relationship with its grantees, both in vision and in funding.

Because the foundation does not focus on specific programmatic areas, the long-term funder-grantee relationship is built on a shared commitment to family-led movement building rather than on a shared issue. That approach to grantmaking assumes and requires a level of mutual trust between the grantee and the foundation, and the program officer is the direct link in establishing that trust.

The program officer is seen as a resource person, valued in ways well beyond grant funding, and is viewed as someone who is helpful in achieving better outcomes with grantee partners and within the broader social justice movement.

At Marguerite Casey Foundation, a great deal of a program officer’s time and energy is spent communicating the foundation’s priorities and learning from the experiences of low-income families and communities in his or her region. The program officer strives to develop trusting relationships with current and prospective grantees, community leaders and vital partners to actualize the foundation’s mission of strengthening the voice of low-income families so that they can mobilize their communities to advocate on their own behalf.

The program officer’s assessment of a grantee’s progress in movement building is grantee-friendly, with goals and the evaluation process created in collaboration with the grantee. Consider the intent of evaluations and the language used in asking for information. An effective program officer, for example, avoids “policing” grantees and is aware of power dynamics. When grantees spend less time “jumping through hoops,” they have more time to do what they do best – engage their communities, develop community leaders and network with like-minded organizations to influence local, state and national policy.

Now, more than ever, foundations – regardless of size, focus and approach – need to maximize the impact of their grant dollars by supporting movement building and investing in helping communities develop dynamic social movement leaders. For example, Marguerite Casey Foundation joined the National Committee for Responsive Philanthropy’s “Philanthropy’s Promise” initiative, which commits its grant dollars to underserved populations and to systemic change efforts through advocacy, community involvement and civic engagement, because it wants to know that the foundation’s grants and non-grantmaking efforts are making a difference in people’s lives and in communities and shaping a more equitable, just and democratic world.

Although change in philanthropy practices may seem daunting, the road is made by walking it. Like Gandhi, Chavez and King, funders must set out into new territory and take risks. We can’t be stopped by fear; or by self-imposed restrictions or lack of urgency; or by being out of touch with what’s really happening in underserved communities. Foundations and their program officers must know the communities, recognize the communities and the organizations that serve those communities as the experts on what support is needed, and see themselves as partners with their grantees.

It is hoped that 2014 GEO National Conference inspired attendees to return to their organizations and communities and make sustainable change possible by investing in movement building and connecting authentically with grantees.

What inspiration did you take home to your organization?

Thanks to my GEO session co-panelists, Christine Reeves and the Rev. Zachary Hoover, and to Marguerite Casey Foundation colleague Will Cordery for contributing to this post.

Edgar Villanueva is a program officer at Marguerite Casey Foundation.

Recently, the news arm of a conservative trade association of grantmakers asked this question on Twitter: ” What’s more important in #philanthropy: #freedom or govt mandates,” posing it as a challenge to NCRP.

I’d like to push back and ask: Why is the mere act of asking what can be done better so threatening? What’s most important in philanthropy is impact and results that lead to stronger and more vibrant communities. And these “communities” are the communities we’re all a part of and care about, especially those that have been marginalized and underserved.

Perhaps I am too much of a perfectionist, but I believe that there’s always something we can do better, especially when being better could mean better quality of education for our children, more equitable opportunities for women and girls, more access to job opportunities and other improvements in the quality of life for many who are struggling. I also believe that you can’t get to “better” without being open to critical questions.

Below is the full introduction of the presentation given by Aaron Dorfman at a webinar hosted by the Southeastern Council on Foundations in December 2013. During the webinar, Aaron discussed how foundation leaders are increasingly facing tough questions – from themselves, from grantees and from lawmakers – about the good they are doing in society. He also offered suggestions for ways that foundations can practice high-impact philanthropy that maximizes the results from philanthropic dollars.

“Thank you, Dwayne, for that kind introduction. And thank you to Southeastern Council on Foundations for inviting me to present this webinar. It’s great to be here with you.

It’s no secret to anyone on this webinar that private philanthropy isn’t all that private anymore. To the extent that not in our sector think about foundations at all, many feel as though foundations are just a bunch of rich folks with special tax privileges who don’t want to help people who need it most.

Members of Congress are paying attention to foundations, and asking more questions than they used to.
The Senate Finance Committee is considering fundamental tax reform and is asking every industry that gets preferential tax treatment to justify itself.
State legislatures and attorneys general in Oregon, New York, Massachusetts, Minnesota and other states are looking more closely at charities and foundations.
Communities of color around the nation are asking why they receive such a small share of philanthropic dollars.
Newspapers are looking for sensational stories, and they’re including nonprofits and foundations as possible subjects.

The public and many lawmakers want to have a say in private philanthropy. They think they have an interest in how foundations and charities operate. Now some of you on the webinar today probably think that’s a good thing, and some of you probably think it’s a bad thing. But it’s undeniable that foundations are being asked to justify themselves more now than ever before.

Part of the way we can respond to this new reality is that we can learn to tell better stories about how foundations are benefitting society. There are many great things happening in the world in part because of the important work of many of you on this webinar, and your colleagues at other foundations around the nation. We can certainly do a better job telling those stories, and I know your grantmaker association is committed to helping you do that. But we’re not going to focus on that today.

Instead, we’re going to focus on another important way we can respond to the new reality. We’re going to explore today what foundations can do to improve how they operate and how they help those who need it most. Research has shown that certain practices actually help foundations do more good with the resources they have. Certain approaches to grantmaking produce better results than other approaches. And so in addition to focusing on telling better stories, we also need to improve foundation practices so that we all have better stories to tell.”

There might be those who feel threatened by the mere act of being critical and asking what can be done better. But with such high stakes on the line, I am hopeful that we can get past the knee-jerk reaction and ask ourselves and each other: Is the philanthropic sector the best that it can be? What can we do better (and perhaps differently) as a community that will maximize the impact of our grantmaking, which will ultimately help foundations achieve their missions?

Want to learn more about grantmaking that produces better results? Here are some resources:

Yna C. Moore is communications director at the National Committee for Responsive Philanthropy (NCRP). Follow NCRP on Twitter (@ncrp).

Image by freedigitalphotos.net/Stuart Miles

Philanthropy needs to have standards