DIALOGUES ON CIVIC PHILANTHROPY

DIALOGUES ON CIVIC PHILANTHROPY P E R F E C T I N G O U R G R A N T S a project of: HUDSON INSTITUTE‟S BRADLEY CENTER FOR PHILANTHROPY AND CIVIC RENEWAL THE COUNCIL ON FOUNDATIONS THE PETTUS-CROWE FOUNDATION THE ASSOCIATION OF SMALL FOUNDATIONS online at www.civicphilanthropy.net Goals and Intentions: What Should Today‟s Philanthropy Aim to Do? March 17, 2005 1:30 to 4:30 p.m. Council on Foundations Washington, DC OPINION PIECES: 1. “What Can and Should Philanthropy Do in the Future” by Rick Cohen 2. “The pH Factor: philanthropic Humility” by Marvin Olasky 3. “Foundations and the Founding” by William Schambra 4. “Money Talks—But What Do We Want It to Say?” By Karl Stauber What Can and Should Philanthropy Do in the Future? by Rick Cohen Populated by philanthropic institutions of multiple shapes and purposes, institutional philanthropy almost defies singular characterization much less prescription. Even the focus of these comments, on the institutional forms of philanthropy, intentionally sidesteps the variety of mechanisms for individual giving. For the sake of writing less than a tome, let‟s then imagine that the multihued potpourri of philanthropic forms is somewhat simpler, a bit more uniform, to imagine what philanthropy should aim to do. Arguments over philanthropy impale themselves over who has more direct understanding of and linkage to Andrew Carnegie, Alexis de Tocqueville, and the U.S. Constitution, a grand rugby scrum of looking backward for sources of legitimacy to explain philanthropic policies and behavior today. 1 One reference point for looking backward takes us well forward. The Filer Commission (in the early 70s) called on philanthropy to be critically focused on the major social issues of the nation today and tomorrow. To focus philanthropy on urgent public needs becomes a test of the relevance of philanthropic expenditures, a test of whether and how well philanthropic institutions measure up against the nation‟s trust of tax exempt resources to private individuals to allocate in the interest of the Commons. Is philanthropy earning its stripes? Do all that many program officers and foundation executives ask themselves whether their grantmaking and their overall programs and policies measure up to the trust and faith the public has invested in them through the tax exemption? Answering what philanthropy can and should do in the future begins with the proposition that foundations exist and function based on a license granted by the public. They are not wholly private instruments of individual eleemosynary inclinations. Foundation executives and foundation trustees—from small family foundations to institutional behemoths—need all too frequently to be reminded, even, sadly, in philanthropic gatherings, that “it‟s not your money.” In that vein, the lesson of the Filer Commission would be to focus on the future, not wrestle over the past, and chart out a path for philanthropy that responds to the demands of our society today, not over visions of what might have existed at some apocryphal view of philanthropic correctness in the past. The future of philanthropic activity might take us in these directions, if foundations were truly addressing the Filer challenge: Critical issues of the day: Former New York Foundation executive director Maddy Lee was asked to address the role of philanthropy in the future at a 1997 convocation of a nonprofit association. To her credit, she simply identified and counted the major issues affecting New York City and suggested that a strategic role for the nonprofit sector would entail priority attention to these concerns: national budget deficits, cutbacks in services to the poor, the inferior quality of education delivered by New York City schools, inadequate voter turn-out, and threats to nonprofit and public rights to free speech. Why do foundations admonish the nonprofit sector to wake up to the crucial issues affecting the nation when the same does not apply to foundations? It should. It should be the benchmark of what motivates philanthropy if the sector is going to warrant the public‟s trust and license. Grassroots democracy: One of the pernicious misdirections some people imbibed from research done on conservative foundations in 1997 by the National Committee for Responsive Philanthropy (NCRP) was that the broad mass of philanthropy should stop frittering its money away on lots of small organizations and focus its capital on a handful of national think tanks to frame the issues and shape the messages for the nation‟s populace. This kind of top-down arrogance, of doing the thinking for communities, of knowing the solutions for constituents‟ problems more than the constituents themselves is exactly the wrong way to go. It may not be apparent to many in philanthropy, but at the grassroots level, the palpitations about fundamental survival are endemic. Some talk about a new “ice age” for grassroots nonprofits, caused partly by the propensity of foundations to funnel moneys in ever bigger chunks to big national groups rather than giving voice and power to the diversity of America‟s communities. Reviving philanthropy‟s attention to community-based nonprofits connected to if not controlled by indigenous community leaders would be a vote for philanthropy‟s role in sustaining American democracy, more so than every-four-year, election-cycle bubble strategies. Reversing debilitating funding practices: Funding and strengthening grassroots organizations is not a romantic, “let a thousand flowers bloom” into irrelevance strategy. Providing the opportunity for those most affected by the challenges of our society to weigh in on the solutions, as opposed to watching from the sidelines, is crucial to our democratic process, unless the nation chooses to simply turn the responsibility over to philanthropic philosopher kings and queens. But philanthropy debilitates the organizations it serves when it fails to provide them with flexible capital, with core operating support 2 necessary for their effective functioning and survival. After many years of completely paltry core support to the nonprofit sector, creating inherently weak organizations, foundations have begun to respond to the calls of people like Hewlett‟s Paul Brest and others to wake up to their inability to use their capital to build healthy organizations. But the increase in core-support grantmaking hides two huge flaws: that the core support is hardly reaching community-based, constituency-led organizations, flowing to foundationlike think tanks and universities instead, and that it is often tied with “strategic” restrictions that make the grantmaking nearly as inflexible as program-specific grants. Democratizing philanthropy: It‟s not their money, but foundation trustees administer the funding as if it were, for the most part ignoring societal pressures for breaking the near exclusivity of class and race control at the top echelons of foundations. The future of philanthropy ought to mean catching up with the rest of society with inroads toward opening philanthropy to voice, participation, and decision-making reflecting the interests of the nonprofits purportedly served by foundations. Strikingly, the foundations that have done the most, albeit still in baby steps, toward involving constituents in their grantmaking decisions have been, in terms of big dollars, the health conversion foundations. Why? These foundations are products of a public process, usually the intervention of constituencies whose stake in nonprofit health insurer and hospital assets would be entirely lost were it not for the intervention of community-based advocates and state attorneys general trying to save something from the conversion process. Community advisory boards and other mechanisms for substantive community input into foundation grantmaking priorities have had their positive effects on conversion foundations. Going forward, foundations can do much better than an occasional community advisory board process, certainly better than using grantee satisfaction surveys as substitutes for real input into grantmaking. Ultimately, the answer has to be in democratizing foundation governance, breaking the near monopoly of people of wealth and privilege in controlling philanthropic resources, else institutional philanthropy becomes increasingly anachronistic. Advocacy and organizing: Foundation grantmaking is a relatively small part of nonprofit finances compared to government funding and individual giving. Foundations typically cite their 10 percent or so slice of nonprofit revenues as a defense against too much scrutiny and criticism. But foundation resources are distinctively different, both as philanthropic rather than charitable dollars, and as funding potentially more flexible and more risk-oriented ventures than what a government agency will support or an individual donor will contemplate. The unparalleled opportunity for foundation grantmaking is to ratchet up support for community-based groups to organize and advocate for attention to and change in government and corporate policy and behavior. Without philanthropic support in an era of high-priced lobbying for political effectiveness, community voices to speak up for their interests will be hard to discern. One need only look at the amounts spent by some philanthropic leaders for their own selfinterest in recruiting top-flight lobbyists, devoting hundreds of thousands of dollars to lobby against changes in the composition of foundations‟ qualifying distributions, to realize that foundation money for organizing and advocacy is quite distinctive and irreplaceable. If philanthropy were to recommit itself to supporting the democratic instincts of community-based and constituency-responsive and -led organizations, arming them with the capital to bring community perspectives to the institutions and into the halls of power has to be part of the future course for the sector. The business of philanthropy: Foundations have hardly begun to leverage the bulk of their resources to propel the nonprofit sector toward greater effectiveness. While the justifications of foundations for protecting their 5 percent spending floor that functions as a spending ceiling garner support throughout the foundation world and among cowering nonprofits, for many the 5 percent defense rings hollow. It sounds like philanthropy, or at least the foundation part of it, behaving like a self-indulgent, selfprotective sector, fighting like any other sector to protect itself from demands that it do more and accomplish more and feather its own nest less. Nonprofits on the front-lines of addressing the nation‟s most urgent needs are struggling for survival, many teetering before their own financial apocalypses, but foundations are ensuring their own interests. A future philanthropy would be one that stops sitting on its 3 assets, one that mobilizes its capital more effectively and aggressively on behalf of the nonprofit delivery system in this nation, one that even uses its tax-exempt, balance-sheet wealth in addition to its grantmaking to address the urgent public needs of this nation. These guideposts of what today‟s—or tomorrow‟s—philanthropy should aim to do appear unlikely to emerge from within the sector. Like any sector of our economy or society, change occurs when it is penetrated by constituents, consumers, citizens asking for something better than the deal they are being dealt. Philanthropy can aim to do much better on these items, but it won‟t unless the nonprofit sector— the delivery system without which the tax-exempt value of philanthropy could not and would not be realized—realizes that it is their right and responsibility to demand a different kind of philanthropy from the nation‟s foundations. Rick Cohen is the executive director of the National Committee for Responsive Philanthropy. The pH factor: philanthropic Humility by Marvin Olasky Since it‟s spring training time, I‟ll start with baseball metaphors: Many philanthropists in recent decades have aspired to be the table-setters, getting on base with singles or doubles so that the pumped-up sluggeron-steroids, government, can come to bat and drive in everyone with a grand slam. Many philanthropists have also ignored inner-city community organizations already in existence—most frequently, churches— and sent up pinch-hitters, new organizations that can purportedly out-slug the old. Philanthropists who become aware of a problem typically shout out the cliché, “Don‟t just sit there, do something!” It would be much better to say, “Don‟t just do something, watch what the community is doing.” Program officers, instead of selecting someone to do a hard job, should see who is already doing it, probably in a part-time and under-equipped way, and should then help that person to do more. Most organizations should be pro-active, but foundations should deliberately be reactive, responding to and helping good community initiatives rather than creating new ones. Watching and waiting requires philanthropic humility. It‟s ego gratifying for philanthropists to be the producers of American Idol or Star Search, jump-starting the careers of winners. It‟s harder to wait and let a community select its own leaders, but foundations instead of making selections should concentrate on certifying and helping those who are already doing the job. This is similar to the way a good church selects elders: find out who already is a leader, counselor, and dispenser of wisdom, and certify that person. A group that comes to a foundation as the Scarecrow or Tin Woodsman approach the Wizard of Oz, asking for a brain or a heart, is not a group worth supporting. A group that already has a brain and a heart can benefit from the Wizard‟s endorsement. A foundation can add to what‟s already there, perhaps oiling tin joints, but it cannot give anything new. It especially cannot give courage, which is probably the quality most needed for effective poverty-fighting. Reversing the pattern of foundation activism and teaching philanthropists to aspire to at most an Oscar for best supporting actor, is a huge task. Finding recipients who have already embarked on jobs that need doing, and have the potential to do even more, takes a lot of scouting and listening. And that‟s only the first step: the next one is to find out how and what to give in a way that doesn‟t leave a community group undersupplied but also doesn‟t give it more money than it can handle. Call it the pH factor, for 4 philanthropic humility: Too much money given to a worthy recipient can be acidic, but too little can be alkaline. Off-the-charts acidity often results when government starts dropping dollars on a project. Two decades of site visits have shown me that governmental bureaucracy is hazardous to community health, and that churches can build bonds of attachment far stronger than the gossamer chords cut from parachutes of dropped-off activists. Sadly, American philanthropy over the past fifty years has often been progovernment and, in practice if not necessarily in philosophy, anti-church (unless the churches have become government look-alikes). Would my prescription leave foundation program officers straining at the leash? Perhaps, but they will still have plenty to do, in part because it‟s more time-consuming to hand out many small grants rather than a few big ones. Furthermore, if their attitude is supportive rather than condescending—I hope not to see signs in foundation offices stating, “We pride ourselves on our humility”—the broad experience they bring can help the mom-and-pop outfits and church groups in many ways. For example, a former professional baseball player in Houston with little education but a big heart had a recreation-and-mentoring program to which kids flocked, but what could be generously described as his “business plan” consisted of chicken tracks on a roll of paper—until a foundation person helped him to communicate in a way that could attract other donors. Leaders at a soup kitchen in New York that fed thousands were frustrated about seeing the same people month after month, because they realized they were enabling people to stay in poverty rather than challenging them to climb out of it—and an outside expert was able to connect them with other groups that had admitted to the same problem and were finding ways to change. The Presbyterian Church has a poor nomenclature for its non-pastoral church leaders: “ruling elder.” The title leads some elders to think kingly thoughts, but those who do the job well see themselves as “serving elders.” What should today‟s philanthropy aim to do? To serve the real lovers of mankind, those who are on the streets everyday and not in the suites. The lives of those in the front lines of charity will never be air conditioned, but bringing a cup of cold water and a fan can make a huge difference. Marvin Olasky is a professor of journalism at the University of Texas at Austin and the editor-in-chief of World, the national weekly news magazine from a biblical perspective. Foundations and the Founding By William Schambra The American Founders left their work, in a decisive sense, incomplete. They erected the constitutional framework for a large, commercial republic, not only for the sake of prosperity, but also to cultivate certain habits and practices within the new democracy. A people engaged in commerce, the Founders understood, would be too sober and moderate—too busy—to succumb to the political passions that had torn apart all previous democracies. But as the Founders knew, and as Alexis de Tocqueville reminded us, commerce, while salutary against zealotry, also brings with it the danger of individualist isolation—an absorption in narrow, materialistic interests to the exclusion of citizenly, moral, and spiritual concerns. Radically self-absorbed individuals all too willingly turn their affairs over to governing elites, who happily meet the material needs of the population, so long as their managerial prerogatives are not challenged. Democracy‟s proud self-governance might yield to what Tocqueville described as a soft, narcotized tyranny. 5 Yet the Founders and Tocqueville were persuaded that Americans could avoid this trap. For beyond and beneath the constitutional superstructure lay a vast multiplicity of local communities, townships, religious institutions, neighborhoods, fraternal and sororal orders, and voluntary associations. These small, local associations molded individuals into citizens, calling them out of their private, commercial interests into larger, public concerns, and immersing them in moral and spiritual communities that lifted their vision beyond mere material gain. Citizens thus taught to be vigilant, vigorous, and personally responsible were unlikely to succumb to egoistic isolation and materialism—to become merely passive, self-indulgent clients of elites. The Founders were so confident of the durability of this undergirding of local civic and moral agencies (and so averse to nationalized “soulcraft”) that they left that part of the constitutional design unspoken, unwritten, incomplete. Completing this important part of the Founders‟ project is today largely in the hands of America‟s foundations and nonprofits—the modern descendants of Tocqueville‟s voluntary associations. But we certainly don‟t usually think of foundations and their grantees in that way. We don‟t often consider the impact a grant may have on the habits and habituators of self-governance, regarded by the Founders as essential to the survival of a healthy democracy. We have been led away from such considerations in part by philanthropy itself. America‟s first large foundations—Carnegie, Rockefeller, and Russell Sage—arose at the same time as and were heavily influenced by the last century‟s progressive movement. Progressivism‟s intellectuals dismissed America‟s small, local civic associations as petty, parochial, outdated relics of the past, doomed by vast, new, community-shattering social forces like urbanization and industrialization. Happily, new social sciences like economics, sociology, psychology, and political science had emerged, capable of analyzing and understanding distant, overweening social forces. Political elites steeped in social science expertise would be able to harness and direct those forces for the good, once political authority had been taken away from the chaotic jumble of local communities, and centralized in their capable hands. The 20th century‟s new, “scientific” philanthropy understood itself to be very much in progressivism‟s avant garde. The major new foundations aimed to underwrite the development and public application of the social sciences through support for research universities, policy research institutes, and professional associations. As the federal government grew, foundations experimented with various approaches to social problems, passing on the best for full implementation. Scientific philanthropy famously promised to get at the “root causes” of problems by tracing them back to the hidden but potent forces producing them. By contrast, Tocqueville‟s paltry local associations had only been able to cope with the effects of such causes through feeble “charity.” Today, it is still not uncommon to hear that philanthropy‟s chief contribution to public life is its support for politically insulated, objective, professional elites, experimenting with “innovative” approaches to public problem-solving. In Waldemar Nielsen‟s words, foundations are “free from constraints of politics, pressure groups, or short-term congressional thinking” and benefit from “the ideas of the best of our scholars, scientists, and social reformers,” so they are “potentially a competent, non-self-interested, uniquely American resource to draw upon” in “enabling American society to cope with, and ultimately conquer, some of its most threatening problems.” A number of concerns are raised by this view of philanthropy, not the least of which is: after billions of philanthropic dollars spent over the course of a century getting at “root causes,” has even one significant social problem been traced to its roots and “conquered” once and for all? But here we are interested in another problem: namely, that scientific philanthropy seems to be a creature right out of Tocqueville‟s worst nightmare. The gradual accumulation of authority in the hands of expert elites, happy to solve problems for people so long as they are left “free from constraints” imposed by those people, is precisely the danger he feared above all in the age of democracy. 6 Modern society is already full of messages that self-governing citizenship through vigorous, local community is a romantic atavism. Our culture, amplified by the marketplace, encourages materialistic self-indulgence and privatized pleasures. Meanwhile, professional elites in all walks of life are more than happy to relieve us of attention to public concerns, since after all credentialed expertise is required for the job. No time could be worse for our neo-Tocquevillian sector to join in the denigration of citizenship and the apotheosis of professional expertise—to treat citizens as sweet, amiable volunteers, busying themselves with quaint, charitable gestures, while the real work of public problem-solving is done by the experts back at foundation HQ. It‟s not clear what can be done about our culture‟s materialism or society‟s disenfranchising professionalism. But a more self-conscious philanthropy can readily become part of the solution, rather than the problem. Donors can learn to become more attentive to the civic health of the nation, more aware that their grants and the lessons they convey may serve either to reinforce or to undercut the civic attitudes, practices, and institutions understood by the Founders to be essential for the survival of their constitutional order. A foundation interested in cultivating civic renewal will shake itself free of the cult of expertise, and open itself to the possibility that a small, local community may already have figured out how to solve its own problems in its own way. It will actively seek out the scruffy, struggling grassroots associations that embody those solutions, with program officers who no longer lecture, but look and listen. Otherwise hidden from the view of the large, downtown social service agencies, neighborhood groups have found ways to solve social problems not once and for all, but one person at a time. It might be easy to dismiss this as mere charity, but in many cases it involves a kind of community-sustained spiritual transformation that truly does reach “root causes” deep in a person‟s heart. Funding such efforts does more than solve problems, though. It also honors and encourages the notion that democratic citizens are capable of governing themselves, inspirited by their own deepest moral and cultural beliefs. Amateur, grassroots solutions may not be the most efficient, or reflect the latest findings of social science, or provide a generalizeable “model” for any situation beyond the one immediately presented. But they emerge from civic reflection and deliberation, and so reinforce the civic virtues the Founders understood to be essential to democratic self-governance. Grant-making guided by this understanding will attend first to upbuilding the nation‟s civic infrastructure within the moral, political, cultural, and spiritual institutions of local community. Scientific philanthropy considers itself to be a detached problem solver, funding experts to track down root causes. Civic renewal philanthropy considers itself to be a catalyst of civic engagement, helping to complete the Founding by cultivating democratic self-governance and the moral and civic virtues it requires. Our times demand a philanthropy that prefers citizen over expert. William A. Schambra is director of Hudson Institute’s Bradley Center for Philanthropy and Civic Renewal. Money Talks—But What Do We Want It to Say? by Karl N. Stauber Money does talk, or at least it sends a message—especially in America‟s commercial, consumer-focused culture. But when money talks, what do we want it to say? What do we want it to do? We are struggling with our expectations of charity and philanthropy, partly because we are unclear about what we want 7 from them and how they should be judged. This brief paper explores some distinctions between philanthropy and charity and raises questions about the currency of today‟s dominant philanthropy model. I. Comparing Charity and Philanthropy In the United States, the giving of civic dollars is a governmentally sanctioned act. This act derives from two historically distinct value systems with different answers to the question, „What do we want money to say?‟ Today the two systems are often confused or mixed together. Instead, it is helpful to think of them on a continuum, with charity at one end and philanthropy at the other. Charity, with its largely palliative orientation, is rooted in many religious traditions, as are many charitable nonprofit organizations. Charity is based on the belief that suffering is an endemic human condition and that we have a moral responsibility to reduce the suffering of innocent victims. In the West, organized charity emerged in the Middle Ages, probably based on models from Islamic institutions. Charitable acts are designed to improve the condition of suffering individuals and families, such as victims of the Asian tsunami. Philanthropy is a more modern concept, emerging from the rational optimism of the eighteenth and nineteenth centuries. Philanthropy strives to be transformative in its approach. It is based on a belief in the improvability, if not the perfectibility, of the human condition through societal actions—changing social conditions that cause or allow human deprivation. While its conceptual framework is European, philanthropy has reached its fullest expression in the United States. Rockefeller‟s and Carnegie‟s efforts to reform American medical education in the late nineteenth century and Gates‟ work to transform public secondary education are examples of intentional, philanthropic efforts to improve humankind by changing social systems . Many nonprofit organizations with a philanthropy orientation emerged from earlier reform movements or contemporary social-change initiatives. In reality, many efforts include elements of both charity and philanthropy. For example, some organizations working to reduce the suffering of cancer or AIDS patients also advocate for policy changes, such as increased cigarette taxes or the promotion of safe needle-exchanges. Thus, it is important to see charity and philanthropy as different points on the same continuum rather than two separate world views. The difficulty with charity versus philanthropy arises when donors or policy makers think they are dealing with a single approach. It is hoped that future conversations within this discussion series will explore the differences in measuring or observing impact in these two traditions. II. The Currency of the Dominant Model of Philanthropy If philanthropy is about transformation, how does it accomplish its goal? It is not just a question of, „If money talks, what do we want it to say?‟ Today we must ask, „If philanthropy has something to say, how is it heard?‟ While there are many approaches to philanthropically funded transformation, this paper focuses on one. For much of the twentieth century, the theory of change that dominated professional philanthropy was to: 1. Identify social innovations the funder thinks will benefit society, 2. Invest in exploration and experimentation with the innovations, 3. Analyze the potential broader implications of the innovations, and 4. If the innovations are deemed worthy, push government, especially the federal government, to take them to scale. 8 For simplicity, let‟s call this the Rockefeller, Carnegie, Ford (RCF) model of philanthropy. The RCF model produced some significant benefits in the past century, such as Head Start, public TV, the Green Revolution, community development corporations, and gender equity in education. But from the 1930s on, it was based on one fundamental assumption—policy leadership and financial support from an activist, expanding federal government. The RCF model has been most successful in the area of domestic policy, but given the current state of the deficit, tax policies, and the imbalance between mandatory and discretionary spending, the federal government‟s domestic programs will probably contract over the next 20 years. If these budget assumptions are correct, what model will replace RCF? How will philanthropically funded initiatives get to scale during this time? Some foundations are exploring alternative models that focus on reforming rather than expanding government. Reforming requires reallocation, not expansion, of resources and control. The Gates Foundation‟s efforts to promote smaller high schools are an example. Some elements of the reform approach are designed to reduce the role of government. Conservative foundations have been partially successful in moving the public-education debate from expanded governmental support to public funding of mostly private charter schools and a greater focus on teacher and school accountability. The Annie E. Casey Foundation and programs within the Robert Wood Johnson Foundation have focused on reform elements within state and local family-support and healthcare systems. They are taking ideas about improved service and results directly to state and local governments rather than relying on federal implementation. The Northwest Area Foundation is developing an alternative approach. NWAF focuses on helping communities reduce poverty by identifying, sharing, and advocating what works—not for governments, but for the communities. NWAF no longer sees itself as a grant-maker, with nonprofits as its primary customer. Instead, it invests resources to create new knowledge that communities can apply to reducing poverty. Working with partner institutions, the Foundation is trying to stimulate, identify, share, and advocate successful poverty reduction efforts. By going directly to local communities and regions, the Foundation does not ask the federal government to “bless” or support its actions. It is too early to know whether any of these alternative approaches will succeed in creating new paths to transformative scales. But, given the likelihood of the federal government‟s declining role over the next 20 years, this should be a time of experimentation and innovation in philanthropy, rather than commitment to past models. Karl N. Stauber is president of the Northwest Area Foundation. 9