Transparency Talk

Category: "Risk" (12 posts)

How "Going Public" Improves Evaluations
October 17, 2017

Edward Pauly is director of research and evaluation at The Wallace Foundation. This post is part of the Glasspockets #OpenForGood series in partnership with the Fund for Shared Insight. The series explores new research and tools, promising practices, and inspiring examples showing how some foundations are opening up the knowledge that they are learning for the benefit of the larger philanthropic sector. Contribute your comments on each post and share the series using #OpenForGood.

ED_finalAs foundations strive to be #OpenForGood and share key lessons from their grantees' work, a frequent question that arises is how foundations can balance the value of openness with concerns about potential risks.

Concerns about risk are particularly charged when it comes to evaluations. Those concerns include: possible reputational damage to grantees from a critical or less-than-positive evaluation; internal foundation staff disagreements with evaluators about the accomplishments and challenges of grantees they know well; and evaluators’ delays and complicated interpretations.

It therefore may seem counterintuitive to embrace – as The Wallace Foundation has – the idea of making evaluations public and distributing them widely. And one of the key reasons may be surprising: To get better and more useful evaluations.

The Wallace Foundation has found that high-quality evaluations – by which we mean independent, commissioned research that tackles questions that are important to the field – are often a powerful tool for improving policy and practice. We have also found that evaluations are notably improved in quality and utility by being publicly distributed.

Incentives for High Quality

A key reason is that the incentives of a public report for the author are aligned with quality in several ways:

  • Evaluation research teams know that when their reports are public and widely distributed, they will be closely scrutinized and their reputation is on the line. Therefore, they do their highest quality work when it’s public.  In our experience, non-public reports are more likely than public reports to be weak in data use, loose in their analysis, and even a bit sloppy in their writing.  It is also noteworthy that some of the best evaluation teams insist on publishing their reports.
  • Evaluators also recognize that they benefit from the visibility of their public reports because visibility brings them more research opportunities – but only if their work is excellent, accessible and useful.
  • We see evaluators perk up when they focus on the audience their reports will reach. Gathering data and writing for a broad audience of practitioners and policymakers incentivizes evaluators to seek out and carefully consider the concerns of the audience: What information does the audience need in order to judge the value of the project being evaluated? What evidence will the intended audience find useful? How should the evaluation report be written so it will be accessible to the audience?

Making evaluations public is a classic case of a virtuous circle: public scrutiny creates incentives for high quality, accessibility and utility; high quality reports lead to expanded, engaged audiences – and the circle turns again, as large audiences use evaluation lessons to strengthen their own work, and demand more high-quality evaluations. To achieve these benefits, it’s obviously essential for grantmakers to communicate upfront and thoroughly with grantees about the goals of a public evaluation report -- goals of sharing lessons that can benefit the entire field, presented in a way that avoids any hint of punitive or harsh messaging.

“What is it that you don’t know, that if you knew it, would enable you to make important progress in your own work?”

Asking the Right Questions

A key difference between evaluations commissioned for internal use and evaluations designed to produce public reports for a broad audience lies in the questions they ask. Of course, for any evaluation or applied research project, a crucial precursor to success is getting the questions right. In many cases, internally-focused evaluations quite reasonably ask questions about the lessons for the foundation as a grantmaker. Evaluations for a broad audience of practitioners and policymakers, including the grantees themselves, typically ask a broader set of questions, often emphasizing lessons for the field on how an innovative program can be successfully implemented, what outcomes are likely, and what policies are likely to be supportive.

In shaping these efforts at Wallace as part of the overall design of initiatives, we have found that one of the most valuable initial steps is to ask field leaders: What is it that you don’t know, that if you knew it, would enable you to make important progress in your own work? This kind of listening can help a foundation get the questions right for an evaluation whose findings will be valued, and used, by field leaders and practitioners.

Knowledge at Work

For example, school district leaders interested in Wallace-supported “principal pipelines” that could help ensure a reliable supply of effective principals, wanted to know the costs of starting such pipelines and maintaining them over time. The result was a widely-used RAND report that we commissioned, “What It Takes to Operate and Maintain Principal Pipelines: Costs and Other Resources.” RAND found that costs are less than one half of 1% of districts’ expenditures; the report also explained what drives costs, and provided a very practical checklist of the components of a pipeline that readers can customize and adapt to meet their local needs.

Other examples that show how high-quality public evaluations can help grantees and the field include:

Being #OpenForGood does not happen overnight, and managing an evaluation planned for wide public distribution isn’t easy. The challenges start with getting the question right – and then selecting a high-performing evaluation team; allocating adequate resources for the evaluation; connecting the evaluators with grantees and obtaining relevant data; managing the inevitable and unpredictable bumps in the road; reviewing the draft report for accuracy and tone; allowing time for grantees to fact-check it; and preparing with grantees and the research team for the public release. Difficulties, like rocks on a path, crop up in each stage in the journey. Wallace has encountered all of these difficulties, and we don’t always navigate them successfully. (Delays are a persistent issue for us.)

Since we believe that the knowledge we produce is a public good, it follows that the payoff of publishing useful evaluation reports is worth it. Interest from the field is evidenced by 750,000 downloads last year from www.wallacefoundation.org, and a highly engaged public discourse about what works, what doesn’t, why, and how – rather than the silence that often greets many internally-focused evaluations.

--Edward Pauly

Free Webinar: What Story Does Your 990 Tell About Your Foundation?
September 22, 2016

What does your foundation’s 990 say about the organization? 

Now that the IRS has started releasing e-filed Forms 990 and 990-PF as machine-readable, open data is available to the public. While this move will spur transparency and openness in the philanthropy field, foundation leaders may be uncertain of how open data and potential public scrutiny of philanthropy may impact foundation programs, staffing and investment management. 

Glasspockets recently partnered with the Communications Network to offer an insightful webinar on the Form 990’s potential risks and vulnerabilities, as well as how to use Form 990 to share the work of your organization. 

The webinar highlights the types of information included on the 990-PF, how the 990-PF data is being used now and in the future, and recommendations on how to communicate your foundation’s work through the 990-PF.

Check out this great webinar!

#FailEpic Continued
August 19, 2015

(Chris Cardona is program officer for philanthropy at the Ford Foundation. This post first ran in The Blog Briefly Known as "Democratizing Philanthropy.”

I appreciate the lively response to my last post asking why it’s so difficult to talk about failure in philanthropy. Commenters brought up important points, including that it can be difficult to decide when failure has actually happened – when do you know to throw in the towel? – and that it’s not just admitting failure but learning from it that generates insight and improvement.

Chris CardonaI would also note an incisive piece in Nonprofit Quarterly assessing the failure of the social impact bond designed to reduce juvenile recidivism on Rikers Island. Cohen and Zelnick rightly point out that what is being hailed as a partial success – that because the program did not hit its targets, taxpayers did not have to pay for it – masks a more complex reality. Recidivism was not reduced (no upside there), and taxpayer dollars were tapped in the form of in-kind time by city officials. This example reinforces one of the points made by a commenter on my original post: what counts as failure depends on who’s doing the telling, and when.

I see two strands of conversation worth pursuing, given the interest my original post has generated as part of an overall mini-trend toward more reckoning with failure in philanthropy.

One is to explore what it looks like to have candid conversations between funders and nonprofits about real issues of execution and responsibility (on all sides!) in a context beyond the one-on-one grant relationship. I come to this with an instinct that a more public version of such conversations would be salutary, but also deep wariness about doing it in a way that’s constructive instead of harmful.

  • Are there stages by which such conversations evolve? Do you need to start with self-reflection, then within your own organization, then within a trusted network of peers, then more publicly? That’s an awful lot of steps.
  • Perhaps the best starting place is not talking about failure within a particular grant relationship, but in the context of a topic of shared interest in which the participants don’t have a direct stake. One can imagine a study group dedicated to reviewing examples of initiatives that have failed, and seeking to generate and apply insight from them – with an audience of funders and nonprofits who aren’t part of that field. Might that be a less threatening way to get started?
  • Because trying to have a conversation within a field about what worked and what didn’t is incredibly difficult. I think about the “four pillars” strategy in the immigration reform movement, which national funders and nonprofits developed together after a failed attempt to pass comprehensive immigration reform in 2006-07. They analyzed why they lost and how they could overcome those disadvantages, and then moved resources and effort toward filling those gaps. What makes cases like that possible? Where else does this happen?

The other strand of conversation worth pursuing is to ask what it looks like within an organization, and specifically a foundation, to be open to acknowledging, learning from, and acting on failure. What values and motivations need to be in place? Who are the change agents and culture bearers? How do incentives need to change? Are there particular structures or systems that make it easier to learn from and act on failure? What do a higher risk tolerance and a culture of inquiry look like in practice? I feel like we know a lot about this in the field, but the threads of conversation aren’t necessarily organized.

  • Part of the challenge is, who owns failure within the institution? In other words, who’s responsible for identifying it, naming it, lifting it up, creating a safe space in which to discuss it, making sure meaning is derived, and then following through on application of that insight? Those responsibilities fall across a number of function – evaluation, HR, programs, senior leadership, board. What role should be the steward or the shepherd ensuring that those functions are integrated in pursuit of mining improvement from failure, and what resources or tools does that person or team need?

Thanks again to all have engaged on this topic, and to the organizations that have begun hosting conversations among funders about being more open about failure. Do the strands of conversation I suggest above seem relevant, and worth pursuing? What kinds of spaces could we create for more authentic funder-nonprofit dialogue? And how can we get clearer about the organizational culture needed to support openness about failure?

--Chris Cardona

#FailEpic
July 28, 2015

(Chris Cardona is program officer for philanthropy at the Ford Foundation. This post first ran in The Blog Briefly Known as "Democratizing Philanthropy.”)

CCardonaAt three recent philanthropy gatherings*, I’ve heard open discussions of failure in grantmaking strategy and execution. The plural of “anecdote” is not “data,” but I’m heartened by this mini-trend.

Why is it still so hard to talk about failure in philanthropy?

  • There’s no incentive. Under what circumstances is one encouraged to fail? Working out, playing sports, rehearsing for a performance – these are all activities where you’re meant to try something new, see how it goes, fix what didn’t work, and try again. You get immediate signals that tell you what’s not working, and often someone is there to tell you what to do instead, or how to do better. What’s crucial in those cases is that you’re not alone, and that there is someone in the role of spotter – observing your performance with a frame of reference of how to do it better, giving you timely feedback on how to improve. And you can see the results of your improved performance. Signals about performance in philanthropy travel much more slowly, if at all, and the roles are not nearly as clear. As discussed in a prior post, most foundations are minimally staffed, so there’s not a lot of space for an HR function. And most program staff are recruited for their content expertise, not because they’re good managers. So you can’t count on there being a spotter for you within your foundation. Don’t get me wrong, people within the foundation do pay attention to what you’re doing, and you are called to account if you don’t follow the rules. But those rules aren’t necessarily set up to support performance or performance improvement. Which brings up another point…
  • There are disincentives, real and imagined. Boards are often risk-averse. (But what exactly are they worried about?) Senior leadership may be launching a new initiative that they’ve had to persuade the board or outside stakeholders is worth taking on, and they don’t want to give ammunition to their critics. (But is anyone actually paying attention?) There are internal cultures of perfectionism. (But what are the actual consequences of imperfection?) The audience with whom you’re sharing may not understand what it takes to make a good grant, and will take your failure out of context. (But what’s so bad about having to explain yourself?)
  • There’s not enough context. Foundations are not good about telling the story of their work. On the one hand, you don’t want to brag, when it’s really the nonprofits to whom you provide support that are doing the hard work. On the other hand, if no one ever has any understanding of where you’re coming from, and why you operate the way you do, then it becomes especially hard to talk about when things don’t go right. If the first time people are hearing about you is when something goes wrong, you’re going to get an unsympathetic reading, and you’ll be on the defensive from the get-go.
  • It’s not easy for anyone. Let’s not underestimate the fragility of the human ego: it stings when something doesn’t work out, especially when, like a lot of foundation folks I’ve met (and am), you’re a high achiever with a passion for this work who feels lucky and privileged to play this kind of role.
  • The stakes are comparatively high. I owe this insight to Phil Buchanan from CEP: failure in philanthropy is not the same as failure in a commercial enterprise, the kind where “fail fast” is a popular mantra. If the newest tech product launch fails, the consequences are not the same as if a social-impact bond working on recidivism among juvenile offenders fails. There’s actually an interesting discussion to be had about the loss of jobs if a business effort fails vs. the failure to receive services if a nonprofit effort fails (how well do we know the service works, etc.), but some other time.

What other reasons are there for why it’s hard to talk about failure in philanthropy? How can we overcome them?

*I note that all three discussions happened in grantmaker-only spaces. There’s value in a trusted network of peers, as my colleague Brian Walsh calls it, that provides a space in which to be more open. I look forward to the day when such conversations can happen in broader public networks.

What would it take to promote a more open discussion of failure in philanthropy? What benefits would that provide?

--Chris Cardona

The Clinton Foundation Reveals Its Donors: Should You?
June 1, 2015

(Steven Lawrence is the director of research at Foundation Center.)

[Steven Lawrence]A fundraising foundation has two world famous founders, a global network of generous donors, and a track record of grantmaking success. One of the founders plans to run for higher office, and the foundation makes the decision to be highly transparent about its donor base to ensure that there can be no suspicion of undue influence on the potential candidate. End of story.

Unless your founders happen to be Bill and Hillary Clinton.

In this marketplace, an organization’s major donors and the amounts they’ve contributed may be considered akin to a “trade secret.”

Over the past several weeks, Foundation Center has been approached by numerous reporters asking—in some cases literally—“There’s smoke, right? What about a fire?” Our response has been an immediate “No” followed by an explanation as to why the Bill, Hillary & Chelsea Clinton Foundation in fact represents a model of transparency when compared to other grantmaking public charities. (Unlike private foundations endowed by a single donor or donor family—think Ford Foundation—grantmaking public charities like the Clinton Foundation sustain their work by raising funds from a variety of donors.)

So, let’s start with why a fundraising organization might not want to share information on its donors—especially its largest donors. The answer: competition. While public benefit organizations are focused on serving the needs of their constituents, they need to raise money to do so and indirectly compete with one another for support. In this marketplace, an organization’s major donors and the amounts they’ve contributed may be considered akin to a “trade secret.”

Of course, organizations lacking former President Clinton as chief fundraiser may feel less confident about the impact of making this type of information public. But the Clinton Foundation should be commended for its donor transparency, particularly in a field in which anonymous giving is often the norm.

Does it have to be this way? Clearly, the Clinton Foundation believes that its work will not come to a halt because its donors have been voluntarily made public. And the high profile of some of these donors may well encourage their well-heeled peers to also consider supporting the foundation. Of course, organizations lacking former President Clinton as chief fundraiser may feel less confident about the impact of making this type of information public. But the Clinton Foundation should be commended for its donor transparency, particularly in a field in which anonymous giving is often the norm.

And this leads to another question: why do some donors choose anonymity? It’s important to consider in any discussion of disclosing donors that not every donor wants to be recognized for their generosity. Some donors may have personal or religious beliefs that announcing their gifts is a form of unseemly self-aggrandizement. Others may come from cultural contexts where announcing donations is considered distasteful. And some donors live in countries where any show of wealth, including their generosity to others, could increase the threat of kidnapping and harm for themselves and their families.

These valid concerns notwithstanding, the digital age is bringing ever more voluntary and involuntary transparency to all aspects of our lives. Public benefit organizations and their donors would be well served by considering how they can be models of transparency who take the lead in telling their own stories, rather than having them told by others. The Clinton Foundation may be on to something. 

--Steven Lawrence

Managing Impact for the Long Term: A View of the Next 100 Years, from the SOCAP Conference
September 11, 2013

(Rebecca Herman is Special Projects Associate for Glasspockets at the Foundation Center-San Francisco.)

Last week in San Francisco was the SOCAP conference, which is dedicated to increasing the flow of capital to social good by bringing together investors, philanthropists, foundations and social entrepreneurs. If you didn’t make it to the sold-out conference, SOCAP shared videos of the events via YouTube.

 

"Make sure that that those around you learn from your failure."
On the first day of the conference, the panel discussion on “Managing Impact for the Long Term” included Case Foundation CEO Jean Case, who emphasized the importance of starting with a big idea, taking risks, and accepting that failure might be an option. She commented, “If you fail, fail fast and fail forward. Make sure that those around you learn from your failure. As you’re talking about it, you’re transparent. Particularly in the philanthropic and public sector, this is much, much needed.”

 

 

Watch the video»

As part of the same discussion, Daryn Dodson of Ben and Jerry’s spoke about the importance of sharing best practices and failures: “I think that is 100 years of hard, hard work of sharing across generations.” He also noted that he would like to see more representation at the conference from those under 20 and those over 60, “with as diverse balance sheets as possible… I think the intergenerational conversation may bring about the solutions to a lot of the problems that we’re really struggling with.”

It’s great to hear people talk openly about this challenging work, so let’s continue to share ideas, success and failures to increase impact over the long haul.

-- Rebecca Herman

What Can Philanthropy Learn from Corporate Responsibility Rankings?
December 13, 2012

(Emily Keller is an editorial associate in the Corporate Philanthropy department at the Foundation Center. A version of this post originally ran on the Foundation Center’s PhilanTopic blog.)

CSR-globeAs philanthropy looks for examples outside of its own field for how to be more transparent and accountable to its stakeholders, it might benefit from seeing how the corporate social responsibility (CSR) movement has measured best practices and facilitated disclosure for companies. Corporations have long collected data generated by and/or relevant to their operations – everything from sales figures, to permit applications, to industry trends and customer behavior. Increasingly, however, regulatory and watchdog groups are demanding that companies provide information about the impact of their activities on society and the environment.

Many corporations, here in the U.S. and around the globe, are disclosing a wide range of activities to ratings groups that are tracking a multitude of topics. But from climate change to human rights to corruption, we -- and they -- still have a long ways to go.

As the CSR movement has gained traction, indices and lists that seek to quantify and rank company activities according to sustainability principles have proliferated. Financial analysts, media groups, and independent consultancies today produce annual assessments of everything from the amount of carbon companies put into the atmosphere to the sustainability of their supply chain management and the diversity of their boards. Many consider transparency and disclosure in addition to performance. Their metrics, in turn, are often used by customers, investors, and prospective job candidates to determine their level of engagement with a particular company.

Earlier this year, the Foundation Center added a CSR tab to the company profiles in Foundation Directory Online that highlights nearly two dozen of these corporate sustainability ratings lists and presents basic information from them in a user-friendly format. The consolidation of ratings provides an additional level of visibility to corporate data.

But in an emerging field characterized by a multiplicity of definitions and standards, even simple numbers can be hard to make sense of. Using hundreds of data points and a unique methodology, SustainAbility, an independent think tank and strategy consultancy, has taken it upon itself to "rate the raters" in order "to better understand the universe of external sustainability ratings and to influence and improve the quality and transparency of such ratings." As the firm is quick to note, many of these lists have been introduced within the last five years and there's plenty of room for improvement.

With that in mind, here are a few of the more prominent ratings lists/indices:

Dow Jones Sustainability Indexes. The Dow Jones Sustainability Indexes, which are offered cooperatively by SAM Indexes and S&P Dow Jones Indices, were launched in 1999 to track the stock performance of the world's leading companies in terms of economic, environmental and social criteria. DJSI World tracks the top 10 percent of the 2,500 largest companies in the Dow Jones Global Total Stock Market Index, while DJSI North America tracks the top 20 percent of the 600 largest U.S. and Canadian companies. The evaluation process includes a survey customized for fifty-eight industry sectors covering disclosure of compensation, governance, workforce diversity, risk and crisis management, greenhouse gas emissions, waste generation, branding strategies and metrics, data privacy, talent attraction and retention, and other areas. According to the DJ Sustainability site, "The indexes serve as benchmarks for investors who integrate sustainability considerations into their portfolios, and provide an effective engagement platform for companies who want to adopt sustainable best practices."

Carbon Disclosure Project. Every year, the London-based Carbon Disclosure Project (CDP), in partnership with PricewaterhouseCoopers, produces a dense, chart-filled report detailing the progress of S&P 500 companies toward their greenhouse gas emission goals. Based on a detailed questionnaire (the data collection process is so complex that CDP runs a series of workshops around the world to help companies answer it), the 2012 report offers a three-tiered breakdown of GHG emissions totals by sector; a performance band from A to E assessing actions to promote climate change mitigation, adaptation, and transparency; and a disclosure score from 0 to 100 for the provision of data. Multiyear leaders in the rankings include Bank of America and Lockheed Martin in the performance category, and Cisco Systems, Gilead Sciences, and Spectra Energy in the disclosure category.

Newsweek Green Rankings. In contrast to DJSI's rankings of only the most sustainable companies, Newsweek ranks the five hundred largest publicly traded companies in the U.S. as well as the five hundred largest in the world, regardless of their sustainability record. And unlike the Carbon Disclosure Project's rankings, only 10 percent of the scores are based on disclosure, with the remainder split between environmental impact and management (a category that takes public controversies into account). The magazine (which recently was purchased by The Daily Beast site and is transitioning to an online-only format) includes more than seven hundred data elements in its survey of companies, including greenhouse gas emissions, solid waste disposal, water use, equity investment (companies are responsible for the impact of the companies they own), hazardous waste reduction, biodiversity protection, company operations, contractors and suppliers, and products and services. Based on a scale of 0 to 100, IBM (82.9) and Santander Brasil (85.7) topped the 2012 rankings.

The DiversityInc Top 50 Companies for Diversity. Consulting firm and magazine publisher DiversityInc, which launched its diversity rankings in 2001, bases its ratings on the responses it receives to a 300-question survey. As the organization explains in the methodology section of its site: "Ratios between key factors in diversity management, such as demographics of managers compared with managers who received promotions and demographics of the workforce compared with people promoted into their first management positions, play a significant factor in determining point scores." Companies are rated by industry, and the rankings include thirteen different top-five and top-ten lists. Topping the list in 2012 were PricewaterhouseCoopers, Sodexo, Kaiser Permanente, AT&T, and Procter & Gamble.

Corporate Responsibility Magazine's 100 Best Corporate Citizens. Corporate Responsibility Magazine and the Corporate Responsibility Officer Association (CROA) began publishing their list, which is 100 percent based on verifiable publicly available information, in 2009. The rankings are driven by companies' performance in seven broad CSR categories -- environment, climate change, human rights, employee relations, corporate governance, philanthropy, and finance -- with some three hundred and eighteen data points tracked across those categories. Carbon Disclosure Project and Foundation Center data are incorporated into the assessments.

And that's just a sampling. Indeed, the diversity and number of CSR ratings lists now available can be overwhelming at times -- for consumers and investors, as well as for companies, which receive a plethora of detailed surveys and questionnaires from dozens of groups seeking to track their activities and do not always understand the reasons they are selected or omitted from a given list.

In an effort to standardize the ratings process, Ceres and the Tellus Institute, founders of the Global Reporting Institute (GRI), recently launched the Global Initiative for Sustainability Ratings (GISR), which aims to establish best practices in the sustainability ratings field, with a focus on transparency of methodology, performance-based results, forward-looking indicators, relevance to market forces, integration of sustainability criteria into investment decisions, independence of raters, and an expansion in the scope of participating companies. The initiative hopes to release the initial draft of its standards in 2013.

In the meantime, the number and scope of CSR ratings lists continue to grow. Last year, the Center for Corporate Citizenship at Boston College, in partnership with the Reputation Institute, released its fourth annual list of the top fifty companies in the U.S. based on the public's perception of their corporate citizenship, governance, and workplace practices. And earlier this year, Bloomberg New Energy Finance and Vestas released their third annual Global Corporate Renewable Energy Index (CREX) report, which tracks voluntary demand for renewable energy among the world's largest companies.

Other entrants in the field include the UN Global Compact, which asks companies around the globe to embrace universal principles and partner with the United Nations in the areas of human rights, labor, environment, and anti-corruption issues, and A Billion + Change, which seeks to mobilize billions of dollars of pro bono work and skill-based volunteerism by the end of 2013.

Is any of this work making a difference? I believe it is and, having compared some of the largest lists against our corporate FDO profiles, can see that many corporations, here in the U.S. and around the globe, are disclosing a wide range of activities to ratings groups that are tracking a multitude of topics. But from climate change to human rights to corruption, we -- and they -- still have a long ways to go.

What do you think? Is CSR a movement whose time has arrived? What can philanthropy learn from the CSR field? Are CSR ratings a useful tool for consumers, investors, and transparency advocates? And if not, how can they be improved? Share your thoughts in the comments section below.

--Emily Keller

Gorillas in the Midst: Foundation Accountability in a Networked Age
February 21, 2012

Jacob Harold

(Jacob Harold is philanthropy program officer at the William and Flora Hewlett Foundation. This post appears courtesy of Alliance magazine.)

Gorillas – whether or not of the 800-pound variety – are powerful creatures. The presence of a gorilla on the cover of the [September 2011] issue of Alliance was a winking reference to the sheer size of the Bill and Melinda Gates Foundation. Indeed, foundations have a bit in common with gorillas: powerful, independent and rather unaccountable.

By sharing basic information with stakeholders, organizations can avoid accusations of opacity, head off false rumours, and prevent the suddenness of a Wikileaks-style exposure. More positively, transparency allows stakeholders to feel included in an organization's work, enables benchmarking, and supports collaboration and learning.Just as a zoo designer must balance safety and freedom when creating a gorilla exhibit, so must society balance accountability and freedom when considering the role of foundations. The flexibility of the foundation structure offers space for the creativity, risk tolerance and long-term time horizons necessary to tackle society's toughest challenges. But foundations' lack of direct accountability – whether to voters, investors or customers – brings with it moral and strategic challenges that have often been discussed in these pages and in many a conference hall.

As fiscal crises cause governments to pull back funding to services and research, the demands on foundations are likely to increase. While the Gates Foundation's size presents unique challenges and opportunities, it is just one of tens of thousands of foundations – including about a hundred with more than a billion dollars in assets. As a class of organizations with masses of free capital in constrained times, foundations are certain to find themselves under the sceptical gaze of the media, policymakers, academics and the general public.

A shifting accountability context

Indeed, all organizations face a shifting accountability context. Businesses regularly encounter new expectations from consumers and investors about the social and environmental consequences of their operations. Government agencies face evolving demands for openness, citizen voice, and evidence of results. Non-profits are constantly asked for greater detail on programmes, financials and operations.

Technology has supercharged the voice of the many – enabling new forms of communication and collaborative action. The Arab Spring and Occupy Wall Street are not mere Twitter revolutions, but the fluent use of social media from Tahrir Square to Zuccotti Park more than hints at new possibilities in collective action.

Both the sources and targets of accountability are multiplying. There are simply a lot of institutions now: the US alone has 30 million businesses, 1.2 million non-profits and 80,000 government agencies. Such scale changes strategy: more actors means more variables; more variables means more factors to consider; more factors means less certainty.

Add in the upheavals brought by globalization, terrorism, demographic shifts and climate change and we must ask if the top-down regulatory structures that defined governance in the 20th century will prove sufficient. Centralized government action is surely as important as ever; regulation is here to stay. No organization should use this flux as an excuse to abdicate its fundamental responsibilities. But these changes have resulted in great confusion. How should organizations respond? How do we integrate formal, top-down regulation with distributed, bottom-up accountability?

Luckily our governance mechanisms are catching up with our changing world. We are still early in this transition, but I argue there are four behaviours that are proving necessary for any business, government agency or non-profit to maintain a social licence in this dynamic environment. Together, these behaviours form what University of California political scientist Lee Drutman and I have called the 'new governance bargain'. By fulfilling their part in this new, implicit arrangement, organizations can retain permission from society to operate without excessive regulatory constraints. What is more, these behaviours can fuel increased effectiveness by enabling organizations to learn better, react faster, and better understand their context. Each of the four behaviours is directly applicable to the unique context of foundations.

Transparency

The first behaviour is transparency. By sharing basic information with stakeholders, organizations can avoid accusations of opacity, head off false rumours, and prevent the suddenness of a Wikileaks-style exposure. More positively, transparency allows stakeholders to feel included in an organization's work, enables benchmarking, and supports collaboration and learning. For foundations, the practices outlined in the Foundation Center's Glasspockets.org site offer a start towards systematic transparency. Tools like Creative Commons licensing and standardized metadata promise new forms of open productivity. At times, of course, foundations must exercise discretion – especially if transparency compromises a strategy, as can be the case when your grantees face an active opponent. But in general foundations can and should move from a stance of opting into transparency when convenient towards a stance of opting out when necessary.

Measurement of multiple bottom lines

The next behaviour is the measurement of multiple bottom lines. We see the emergence of non-financial measures across society: corporations sharing carbon emissions data, countries dropping GDP in favour of 'Gross National Happiness', and non-profits proclaiming that the administrative cost ratio tells nothing of their impact. Foundations with rigorous strategies and evaluation systems can easily do the same. Their measurement systems can and should go beyond endowment size and payout ratio to systematic tracking of the quantity and nature of the work done by foundations and their grantees. As the work of the Robert Wood Johnson Foundation and the Edna McConnell Clark Foundation has shown, a good measurement system can help offer both grantmakers and grantees clarity, insight, and – ultimately – greater effectiveness.

Proactive engagement with stakeholders

The third behaviour is proactive engagement with stakeholders. Decisions made without reference to stakeholders often elicit fury– and, if one isn't careful, a boycott, recall election, protest or lawsuit. But stakeholder engagement offers far more than a mechanism for avoiding angry response. Consider the extensive use of focus groups in consumer product development, the role of polling in politics, or the ways that non-profits use social media to engage their communities. Foundations can and must engage with their stakeholders; as the title of a recent Grantmakers for Effective Organizations report put it, 'Do Nothing About Me Without Me'.

Given foundations' independent structures, such constituent engagement requires proactive efforts. The Center for Effective Philanthropy's Grantee Perception Report offers a simple, powerful tool to elicit stakeholder feedback. Innovations like the Peery Foundation's live Twitter broadcast of a board meeting or the Packard Foundation's use of a public wiki for strategy development around agricultural pollution promise new ways to learn from our communities.

Collaboration

The final behaviour is collaboration. In a complex, interconnected world, it is a rare organization that can hope to solve a problem in isolation. Complex problems often require the specialization made possible by division of labour and the reach made possible by cross-organizational economies of scale. Collaboratives like the Climate Works Foundation, STRIVE and the True North Fund offer new models of aligned strategy powered by common goals, pooled capital and shared measurement systems. Foundations' unique perspective on a field and ability to convene key players enable them not just to participate in collaborations but to catalyse them. And their privileged position is much more likely to yield results if grantmakers apply it humbly, fully aware of the power dynamics inherent in any funding relationship.

Together, these four behaviours offer a framework for foundations to be more effective while avoiding unproductive government intervention. They are not simple boxes to be checked: each is an attitude that must be embedded across foundation activities and constantly refreshed. You cannot dial in to a new social contract.

Over the next few years, we will start to learn whether these behaviours are enough. We may well discover they are not and we will have to reconsider the top-down regulation of foundations. But for now, instead of caging our gorillas, let's set them free – under the watchful eye of us all.

-- Jacob Harold

Glasspockets Find: Beyond the Grant Dollars, Hewlett Foundation Explains Tools Available to Support Grantees
January 17, 2012

William and Flora Hewlett Foundation

As we continue to showcase examples of foundations' transparency, Paul Brest, retiring president of the William and Flora Hewlett Foundation, provides a nice window into the thinking behind the foundation's work. Grants aren't the only way the foundation seeks to solve social and environmental problems. In Beyond the Grant Dollars, his opening essay of the recently released 2010 Annual Report, Brest pulls back the curtain to explain the added value of the program staff in magnifying and maximizing impact.

He writes, "The Beyond the Grant Dollars project has two primary objectives:

  • To improve the Foundation staff's and Board's decisions about the mix of strategies and the allocation of financial and human resources that can best achieve our goals.
  • To determine the skills, experience, and other qualities we should look for in new staff members and ways to improve the development of Foundation program staff."

Brest does a fine job detailing a number of ways that funders like the Hewlett Foundation employ staff to get the biggest bang for the buck, all the while trying to keep their eyes on the prize. With solid examples from the foundation's own experience as a highly engaged philanthropist, he thoughtfully presents the rationale for the various tactics mobilized for mission achievement. And, as in the best instances of lessons learned, he does not only discuss successes. In his own words, "potentially high returns also involves a significant risk of failure."

Finally, Brest mentions the desire to capture the substantive knowledge that program staff acquire in their fields and in their various activities and disseminate it for internal use as well as externally "when it has the potential to inform nonprofit organizations, foundations, and others."

View the President's Statement and the full Annual Report, or see past Annual Reports dating back to 1966.

-- Mark Foley

Communications Network Survey Provides Some Transparency Benchmarks
June 21, 2011

Michael Remaley is the director of Public Policy Communicators NYC and president of HAMILL REMALEY breakthrough communications.

Michael Remaley

Back in January, I wrote a commentary for Transparency Talk titled "Foundations Fail at Failing," which produced a robust conversation among colleagues both online and off. The post restated the case made by many philanthropy experts about the importance of transparency, talking openly about foundation initiatives that don’t produce expected results, and allowing others to learn from one’s failures. It also reported on my investigation into the transparency and frankness of 21 major foundations, the web sites of which I had explored and assessed in terms of their openness and self-evaluation.

45% of foundations view themselves as fully transparent or more transparent than most, while only 30% of foundations acknowledge program failure and publicly discuss it in those terms.

At the time I was conducting research for that piece, I was also working with the Communications Network on the design of its 2011 Survey of Foundation Communications Professionals, the report for which is aptly titled "Foundation Communications Today" and was released just last week. We surveyed a national sample of Communications Network members and a larger list of philanthropic communicators who were not members, yielding 155 responses for a 40% response rate (see full methodology section in the report). The survey included a set of questions meant to help the field better understand communications practices among foundations. We also thought it would be helpful to probe for information related to topics that Transparency Talk readers would find useful. Overall, the report includes some very interesting revelations about foundation communicators’ attitudes toward transparency and willingness of their foundations to talk about failure.

Failure PDFWhen your organization's work does not produce expected results, how do you address the failure publicly?

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Nearly a third (31%) of foundation communicators told us that neither evaluations nor anecdotal evidence had ever shown that their organization’s work had been anything less than successful. The larger group, however, was able to identify instances where their organization had, realistically, not made the impact it had planned. The majority of foundation communicators (69%) acknowledged that some of their organizations’ work had not produced successful outcomes.

Of those who admitted their organizations had experienced failures, the greatest number (44%) said that their organization had spoken publicly and forthrightly about those results. But most had not. Nearly a third (30%) of those who acknowledged foundation failure said that they had publicly discussed what they considered failures, but talked about them publicly in other terms. Another 15 percent said they had debated internally whether or not to publicly discuss failures but decided it might be harmful to others and therefore did not discuss them externally, and 12 percent said their foundation had never even considered talking publicly about failures.

In an open-ended question, we asked respondents to share any thoughts they had on foundations talking about failures. Respondents most commonly said it was the reluctance of trustees that held them back from being more open about unmet expectations. Said one, "Board members want to know, most of the time, about failures and encourage risk taking. But many don't see the wisdom in discussing it publicly." Another said, "There is a transparency issue and power dynamic issues with foundations. Many simply will not discuss their internal workings good or bad. Many are not embracing social media and new tech within the foundation themselves, but they expect their grantees to be using it. In general, one foundation will not comment on the work of another. In general, few will admit failure outside of affinity group meetings. It is also rare there."

But others said they thought concerns among foundations about talking publicly on failure are overblown. One said, "I think there is a fear of discussing failure, but that fear isn't warranted by our experience. When we publicly discussed our failure, we received nothing but praise. It enhanced our brand, rather than damaging it." And another said, "Once you share a failure it gets easier."

This last sentiment was, however, not shared by the respondent who said, "With two concrete examples, we can check the box saying we've publicly acknowledged our failures... But with many others, we have debated internally how/if to discuss these publicly and most often decide against doing so."

Transparency PDFIn terms of transparency, how would you describe your organization?

View PDF»

Clearly, even those who have experimented with communicating about unmet expectations and failures continue to struggle with how and when to make the best use of valuable information that doesn’t necessarily shed the best light on people and organizations working with good intentions. Organizational ambivalence toward openness also came through in the responses to the survey questions about transparency.

The responses to the question on perceptions of transparency were fairly evenly distributed across the spectrum of choices offered to respondents. We provided respondents detailed descriptions of different levels of transparency based largely on the criteria used by Glasspockets. Given that our sample is drawn from foundations with communications staff, it is not surprising that only 2% said their organization was less transparent than most. Next along the spectrum of transparency, 16% said their organization is moderately transparent, 37% said it has an average degree of transparency, 35% said it is more transparent than most, and 10% said their foundation is fully transparent.

"Foundation Communications Today" contains many revelations and insights on topics such as philanthropic use of technology and social media, communications departments’ relationships with other parts of the foundation, and how creating a written communications plan relates to transparency. If you are curious about how your organization’s communications compare, check it out.

Ultimately, I find the responses of foundation communicators about failure and transparency to be very encouraging. While we do not have longitudinal data on these topics, the quantitative and qualitative responses seemed to indicate a trend toward greater openness and increasing awareness of the value of foundation self-evaluation. I'm hopeful that next time we survey foundations, we’ll see findings a great leap closer to 100% "Fully Transparent."

— Michael Remaley

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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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