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December 2011 (4 posts)

Glasspockets Find: Better transparency for community foundations’ donor-advised funds
December 20, 2011

The Community Foundation of Middle TennesseeDonor-advised funds (DAFs) are an increasingly popular vehicle for philanthropic donors. DAFs are often administered by community foundations and comprise a significant and growing portion of their management portfolios. Grantseekers who visit the Foundation Center often ask about how to learn more about the specifics of securing support from this below-the-radar source of funding, and the truth is many individuals like the privacy aspects a donor-advised fund can provide since little disclosure is required.

A colleague recently shared the 2010 report to the community of The Community Foundation of Middle Tennessee. We both agreed that it did a nice job of providing, in a brief paragraph, some transparency for many of the foundations' DAFs. Here's a sample narrative for the Lady Bird Charitable Advised Fund, established in 2005:

"Lady Bird has been an involved civic leader in this community for decades. Most recently, "President Lady" led the Nashville Rotary Club through a campaign to double its endowment, while serving the Bredesen Administration as President of the Governor's Books from Birth Foundation, which has built on the Imagination Library Program created by Dolly Parton and currently provides free books to more than 170,000 children under age five in Tennessee."

Are there examples of donor-advised funds' transparency to which you would like to draw attention?

-- Mark Foley

What is Effectiveness in Foundation Work?
December 14, 2011

(Bill Somerville is Executive Director of the Philanthropic Ventures Foundation. This post is a response to a session on Foundation Transparency and Effectiveness, held in San Francisco, December 6, 2011, by the Center for Effective Philanthropy and the Foundation Center.)

Bill SomervilleFoundation critics say it isn't enough to have passion and caring about your work. You need to be effective. Maybe the retort is you can't be effective unless you have passion and caring in your work. Nonetheless, what does effectiveness mean?

At PVF effective means getting out of the office and finding people doing outstanding work -- and funding them. It means trusting these people and giving them money to spend at their discretion without requiring them to spend 25+ hours applying for funds, regardless if there is a common application form, as was advocated. It means not holding foundation processes sacred and getting money to people when they need it and not having them wait months for a decision.

Does transparency and glass pockets help effectiveness?Does transparency and glass pockets help effectiveness? I don't know. What difference does it make for people to know foundation salaries? If it does make a difference, then we are talking about accountability not effectiveness. Is the foundation accountable in being efficient, frugal, responsible, responsive and productive?

Foundations have a special place in the community in that they are answerable to themselves. They are independent and have maximum latitude to do their work. They have a unique asset in that their money is not political, not in competition with anything or anyone, and they have no ax to grind. So, what are the factors of excellence in the exercise of philanthropy? A question foundation personnel should ask themselves every day.

One is leadership. Foundations should exercise leadership in their willingness to venture where others haven't gone, to take risks, to think into the future rather than indulge themselves in endless paper. A leader is one who brings out the best in others. Isn't this what foundations should be doing?

Another factor of excellence is modesty. Money is the tool of philanthropy and money is power. Foundation personnel must understand that it is not their money nor is it their power. Foundations are investing funds in people and programs worthy of the investment. They are not "giving money away."

This commentary is meant to create a dialogue and stimulate other people to add their thoughts on what makes for effectiveness.

-- Bill Somerville

Why Not Transparency?
December 9, 2011

(Janet Camarena is the director of the Foundation Center's San Francisco office and leads the Center's Glasspockets effort.)

Janet CamarenaThis week we had the opportunity to host the discussion "Power and Light: Transparency and Effectiveness" in partnership with the Center for Effective Philanthropy in San Francisco. CEP has been a Glasspockets partner since the beginning stages of this project and I want to begin by thanking CEP for inviting us to serve as a presenting partner and for giving the subject of transparency a headlining role.

When it comes to the issue of transparency, we find lots of fans and advocates among our philanthropy colleagues--but only, it seems, when the transparency demands are being applied to grantees. I was once again reminded of this tendency as I heard some of the excuses and doubts from some of the participants at this week's "Power and Light" program. So, I'd like to use this blog post as an opportunity to highlight some of the many benefits of transparency that Foundation Center president, Brad Smith, outlined at the top of the program, as well as make some reflections from our Glasspockets experience:

  • If you don't take charge of your narrative, others will create the narrative for you. History reminds us that the Foundation Center was founded as a result of congressional scrutiny arising from a dearth of information about philanthropic activities. In the absence of such information, Congress accused foundation leaders of committing "un-American acts" and congressional hearings began. The foundation leaders who had to defend philanthropy in the face of such accusations realized the field itself was to blame since up to that point there was no resource where anyone could learn about foundation activities. This led to the founding of the Foundation Center, and to this day one of the roles we take most seriously is that of providing transparency for the field.
  • When we talk to only ourselves, we can convince ourselves of anything, whether or not there is faulty logic. By opening up our thinking, strategies, goals, and methodologies to public view, it can only serve to strengthen our work because the flaws in the logic are exposed to the light of day and we can benefit from the experience and lessons of others.
  • One of the benefits of transparency is that it serves to communicate the value and relevance of philanthropy to causes and issues people care about.

This point about helping foundations better communicate their story and value is an important one that bears emphasizing. When the Foundation Center started to move its work online in 1995 with our first web site, there were only a handful of foundations adopting this new trend. Many foundations waited on the sidelines to see if this was relevant to the philanthropic field because they were concerned with the time, staffing and costs required. Over the years, we have heard many times from foundation colleagues who have developed new web sites that contrary to what they had feared about the visibility a web site might bring, that they were pleasantly surprised at the benefits of receiving a greater quantity of proposals that aligned with their work, and at the time saver it created to have answers to frequently asked questions readily available for potential grantees. This is a testament to transparency leading to greater effectiveness.

As we see the field embracing the use of the web to communicate its work, Glasspockets serves as a reference so that foundations can more easily make thoughtful and deliberate decisions about online transparency practices. Grants information is sometimes a cause for hesitation when it comes to foundation transparency. A good chunk of the discussion at this week's program focused on the reasons why foundations may not want to disclose grants data. Some participants discussed occasions when transparency might be counter-productive, such as when foundations are supporting initiatives that have opposition. Jacob Harold of the William and Flora Hewlett Foundation made the point that these are grants that are more likely the exception rather than the rule and that grantmaking transparency should be on an "opt-out basis, rather than opt in" so that the default is to always share the data unless there is a good reason not to. Our Glasspockets team loves this idea because it is very much in line with our aim of creating a culture of transparency within foundations. Rather than ask, "Why should we share this," the question should be, "Why not?"

"Why not?" indeed seems to be the approach foundations take when listing the data they require from potential grantees. Pamela David of the Walter and Elise Haas Fund pointed out that foundations expect a lot of information from the nonprofits they fund, yet they aren't as willing to provide their own information. This raised the point that foundations sit on a "treasure trove of information" and that they should see themselves as knowledge producers and not just grant givers.

So how about it: Why not?

-- Janet Camarena

Transparency, Trends, and Tools for Change
December 2, 2011

(Sara Gould, former president and CEO of the Ms. Foundation for Women, joined the Foundation Center in February 2011 in the role of The Atlantic Philanthropies Senior Fellow.)

Sara Gould"Unless the field sees five years of above-average investment returns, social justice grantmaking levels in 2015 will remain below 2008 levels." This key finding of Diminishing Dollars: The Impact of the 2008 Financial Crisis on the Field of Social Justice Philanthropy, a new report from the Foundation Center, may be startling, but it's hardly surprising given the slow recovery of the economy since 2008 and the recent volatility and uncertainty in financial markets. And yet, without the Cricket Island Foundation (CIF) taking the initiative to "do the math” necessary to bring greater transparency to the lingering effects of the downturn, this information – so vital to foundations, donors and advocates in the social justice arena – would not have come to light.

Diminishing Dollars: The Impact of the 2008 Financial Crisis on the Field of Social Justice PhilanthropyAmong other trends, the study illuminates both the importance, and the plight, of foundations with endowments of $50 million or less – the "small but mighty” foundations that very often form the bedrock of support for local and regional nonprofit organizations engaged in social justice work. These foundations put their money where their hearts are for social justice. In each of the years from 2005 to 2009, their social justice giving exceeded 70 percent of their total giving, rising to 80 percent immediately following the 2008 downturn. In those same years, the giving of their larger counterparts in the study hovered around 40 percent.

At the same time, small foundations are in an intense struggle to recover economically. Unlike larger foundations, their assets continued to fall from 2008-2009. Because of this, at an average (7 percent) rate of return, grantmaking levels of six small foundations in the study are projected to be 17 percent less in 2015 than in 2008. Although the number of foundations is small, the trend of diminishing dollars available for social justice work in communities across the country is real. And, smaller endowments will not be the only pressure felt by foundations in the social justice arena over the next few years. At a time when high unemployment and cutbacks in public funds mean that so many individuals and families are struggling to meet basic human needs, these foundations will face difficult decisions between funding service provision and investing in advocacy aimed at lasting policy and systems change.

Making difficult and controversial decisions requires trusted research and information, resources that are also invaluable assets in transparent communications with the wide variety of stakeholders in the philanthropic arena. The discouraging economic realities holding sway now in much of philanthropy are not going away any time soon, and they impact every major issue funders are trying to address. Let's continue to increase transparency for both grantmakers and grantseekers, by undertaking research that focuses on a wider group of foundations and making sure those findings are shared with stakeholders. With such efforts, transparency can drive strategy and, ultimately, positive social change.

What impact has the economic downturn had on your grantmaking? Has your cause or organization suffered from cutbacks in social justice grantmaking? Share your experience with us in the comments below.

-- Sara Gould

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About Transparency Talk

  • Transparency Talk, the Glasspockets blog, is a platform for candid and constructive conversation about foundation transparency and accountability. In this space, Foundation Center highlights strategies, findings, and best practices on the web and in foundations–illuminating the importance of having "glass pockets."

    The views expressed in this blog do not necessarily reflect the views of the Foundation Center.

    Questions and comments may be
    directed to:

    Janet Camarena
    Director, Transparency Initiatives
    Foundation Center

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