Transparency Talk

Category: "Tips & Tricks" (33 posts)

Open Access to Foundation Knowledge
October 25, 2017

This post is part of the Glasspockets #OpenForGood series in partnership with the Fund for Shared Insight. This post also appears in Medium. 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.

Lisa Brooks Photo
Lisa Brooks

Foundations have a lot of reasons to share knowledge. They produce knowledge themselves. They hire others to research and author works that help with internal strategy development and evaluation of internal strategies, programs, and projects. And they make grants that assist others in gaining insight into social issues — be it through original research, evaluation work, or other work aimed at creating a better understanding of issues so that we can all pursue better solutions to social problems. In almost all aspects of foundation work, knowledge is an outcome.

While openly sharing this knowledge is uneven across the social sector, we do see more and more foundations starting to explore open access to the knowledge assets they make possible. Many foundations are sharing more intentionally through their websites, external clearinghouses, and other online destinations. And more foundations are suggesting — sometimes requiring — that their grantees openly share knowledge that was produced with grant dollars.

Lacey Althouse Photo
Lacey Althouse

Some foundations are even becoming open access champions. For example, the Hewlett Foundation has authored a terrifically helpful free toolkit that provides an in-depth how-to aimed at moving foundation and grantee intellectual property licensing practices away from “all rights reserved” copyrights and toward “some rights reserved” open licenses. (Full disclosure: IssueLab is included in the toolkit as one solution for long term knowledge preservation and sharing.) (“Hewlett Foundation Open Licensing Toolkit for Staff”)

For those who are already 100% open it’s easy to forget that, when first starting out, learning about open access can be daunting. For those who are trying to open up, like most things, getting there is a series of steps. One step is understanding how licensing can work for, or against, openness. Hewlett’s toolkit is a wonderful primer for understanding this. IssueLab also offers some ways to dig into other areas of openness. Check out Share the Wealth for tips.

Hawaii

 

However it is that foundations find their way to providing open access to the knowledge they make possible, we applaud and support it! In the spirit of International Open Access Week’s theme, “Open in order to….,” here’s what a few leading foundations have to say about the topic of openness in the social sector.

James Irvine Foundation 
Find on IssueLab.

“We have a responsibility to share our knowledge. There’s been a lot of money that gets put into capturing and generating knowledge and we shouldn’t keep it to ourselves.”

-Kim Ammann Howard, Director of Impact Assessment and Learning

Hewlett Foundation
Find on IssueLab.

“Our purpose for existing is to help make the world a better place. One way we can do that is to try things, learn, and then share what we have learned. That seems obvious. What is not obvious is the opposite: not sharing. So the question shouldn’t be why share; it should be why not share.”

-Larry Kramer, President

Hawaii Community Foundation
Find on IssueLab.

“Openness and transparency is one element of holding ourselves accountable to the public — to the communities we’re either in or serving. To me, it’s a necessary part of our accountability and I don’t think it should necessarily be an option.

-Tom Kelly, Vice President of Knowledge, Evaluation and Learning

The David and Lucile Packard Foundation
Find on IssueLab.

“Why do we want to share these things? …One, because it’s great to share what we’re learning, what’s worked, what hasn’t, what impact has been made so that others can learn from the work that our grantees are doing so that they can either not reinvent the wheel, gain insights from it or learn from where we’ve gone wrong… I think it helps to build the field overall since we’re sharing what we’re learning.”

-Bernadette Sangalang, Program Officer

The Rockefeller Foundation
Find on IssueLab

“To ensure that we hold ourselves to this high bar, The Rockefeller Foundation pre-commits itself to sharing the results of its evaluations — well before the results are even known.”

-Veronica Olazabal, Shawna Hoffman, and Nadia Asgaraly
(Read more on why the Rockefeller Foundation is open for good.)

If you are a foundation ready to make open access the norm as part of your impact operations, here’s how you can become an open knowledge organization today.

IssueLab believes that social sector knowledge is a public good that is meant to be freely accessible to all. We collect and share the sector’s knowledge assets and we support the social sector’s adoption of open knowledge practices. Visit our collection of ~23,000 open access resources. While you’re there, add your knowledge — it takes minutes and costs nothing. Find out what we’re open in order to do here. IssueLab is a service of Foundation Center.

--Lisa Brooks and Lacey Althouse

No Moat Philanthropy Part 5: The Downsides & Why It’s Worth It
October 6, 2017

Jen Ford Reedy is President of the Bush Foundation. On the occasion of her fifth anniversary leading the foundation, she reflects on efforts undertaken to make the Bush Foundation more permeable. Because the strategies and tactics she shares can be inspiring and helpful for any grantmaker exploring ways to open up their grantmaking, we have devoted this blog space all week to the series. This is the final post in the five-part series.

Reedyjenniferford-croppedEverything we do is a trade-off. Spending time and money on the activities described in this No Moat Philanthropy series means time and money not invested in something else. Here are some of the downsides of the trade-offs we have made:

It takes some operating expense.  It requires real staff time for us to do office hours in western North Dakota and to reformat grant reports to be shared online and to do every other activity described in these posts. We believe there is lots of opportunity to advance our mission in the “how” of grantmaking and weigh that as an investment alongside others. In our case, we did not have an increase in staff costs or operating expenses as we made this shift. We just reprioritized.

It can be bureaucratic.  Having open programs and having community members involved in processes requires some structure and rules and standardization in a way that can feel stifling. Philanthropy feels more artful and inspired when you can be creative and move quickly. To be equitably accessible and to improve the chance we are funding the best idea, we are committed to making this trade-off. (While, of course, being as artful and creative as possible within the structures we set!)

“We believe our effectiveness is fundamentally tied to our ability to influence and be influenced by others.”

Lots of applications means lots of turndowns.  Conventional wisdom in philanthropy is to try to limit unsuccessful applications – reducing the amount of effort nonprofits invest with no return. This is an important consideration and it is why many foundations have very narrow guidelines and/or don’t accept unsolicited proposals. The flip side, however, is that the more we all narrow our funding apertures, the harder it is for organizations to get great ideas funded. We’ve decided to run counter to conventional wisdom and give lots of organizations a shot at funding. Of course, we don’t want to waste their time. We have three strategies to try to mitigate this waste: (1) through our hotlines we try to coach unlikely grantees out of the process. (In our experience, nonprofits will often apply anyway – which suggests to us that they value having a shot – even if the odds are long.); (2) we try to make the process worth it. Our surveys suggest that applicants who do the programs with the biggest pools get something out of the process – (and we learn from the applicants even if they are not funded.); and (3) we try to make the first stage of our processes as simple as possible so folks are not wasting too much effort.

Relationships are hard!  Thinking of ourselves as being in relationship with people in the region is not simple. There are lots of them! And it can be super frustrating if a Bush staff member gives advice on a hotline that seems to be contradicted by the feedback when an application is declined. We’ve had to invest money and time in developing our CRM capacity and habits. We have a lot more work to do on this front. We will never not have a lot more work to do on our intercultural competence and our efforts to practice inclusion. Truly including people with different perspectives can make decisions harder as it makes decisions better.  The early returns on our efforts have been encouraging and we are committed to continuing the work to be more fully in relationship with more people in the communities we serve.

Conclusion

Overall, we believe a No Moat Philanthropy approach has made us more effective. When we are intentional about having impact through how we do our work — building relationships, inspiring action, spreading optimism — then we increase the positive impact we have in the region.

We believe our effectiveness is fundamentally tied to our ability to influence and be influenced by others, which demands trust, reciprocity and a genuine openness to the ideas of others. It requires understanding perspectives other than our own. It requires permeability.

While we arrived at this approach largely because of our place-based sensibility and strategic orientation toward people (see learning paper: “The Bush Approach”), the same principles can apply to a national or international foundation focused on particular issues. The definition of community is different, but the potential value of permeability within that community is the same.

--Jen Ford Reedy

Opening Up the Good and Bad Leads to Stronger Communities and Better Grantmaking
September 28, 2017

Hanh Cao Yu is Chief Learning Officer at The California Endowment.  She has been researcher and evaluator of equity and philanthropy for more than two decades. 

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.

Hanh-Cao-Yu-photoMore than a year ago when I began my tenure at The California Endowment (TCE), I reflected deeply about the opportunities and challenges ahead as the new Chief Learning Officer.  We were six years into a complex, 10-year policy/systems change initiative called Building Healthy Communities (BHC).  This initiative was launched in 2010 to advance statewide policy, change the narrative, and transform 14 of California’s communities most devastated by health inequities into places where all people—particular our youth—have an opportunity to thrive.  This is the boldest bet in the foundation’s history at $1 billion and the stakes are high.  It is not surprising, then, that despite the emphasis on learning, the evaluation of BHC is seen as a winning or losing proposition. 

“By acknowledging our mistakes, our focus has sharpened and our dual roles as changemakers and grantmakers have continued to evolve.”

As I thought about the role of learning and evaluation in deepening BHC’s impact, I became inspired by the words of Nelson Mandela: “I never lose.  I either win or I learn.”  His encouragement to shift our mindset from “Win/Lose” to “Win/Learn” is crucial to continuous improvement and success.  

I also drew from the insights of Amy Edmondson who reminds us that if we experience failure, not all failures are bad.  According to Edmondson, mistakes can be preventable, unavoidable due to complexity, or even intelligent failures.  So, despite careful planning and learning from decades of research on comprehensive community initiatives and bold systems change efforts, in an initiative as complex as BHC, mistakes can and will occur. By spurring change at community, regional and state levels, and linking community mobilization with sophisticated policy advocacy, TCE was truly venturing into new territory when we launched BHC.

BHC's Big Wins and Lessons 

At the mid-point of BHC, TCE staff and Board paused to assess where we have been successful and where we could do better in improving the conditions under which young people could be healthy and thrive in our underserved communities.  The results were widely shared in the 2016 report, A New Power Grid:  Building Healthy Communities at Year 5.

As a result of taking the time to assess overall progress, we identified some of BHC's biggest impacts to date. In the first five years, TCE and partners contributed to significant policy/system wins:

  • Improved health coverage for the underserved;
  • Strengthened health coverage policy for the undocumented;
  • Improved school climate, wellness and equity;
  • Prevention and reform within the justice system;
  • Public-private investment and policy changes on behalf of boys and young men of color; and
  • Local & regional progress in adoption of “Health In All Policies,” a collaborative approach incorporating health considerations into decision-making across all policy areas

Our Board and team are very pleased with the results and impact of BHC to date, but we have been committed to learning from our share of mistakes. 

Along with the victories, we acknowledged in the report some hard lessons.  Most notable among our mistakes were more attention to:

  • Putting Community in “Community-Driven” Change.  Armed with lessons on having clarity about results to achieve results, we over thought the early process.  This resulted in prescriptiveness in the planning phase that was not only unnecessary, but also harmful. We entered the community planning process with multiple outcomes frameworks and a planning process that struck many partners as philanthropic arrogance. The smarter move was to engage community leaders with the clarity of a shared vision and operating principles, and create the space for community leaders and residents to incubate goals, results, and strategy. Fortunately, we course corrected, and our partners were patient while we did so.
  • Revisiting assumptions about local realities and systems dynamics.  In the report, we discussed our assumption about creating a single locus of inside-out, outside-in activity where community residents, leaders and systems leaders could collaborate on defined goals. It was readily apparent that community leaders distrusted many “systems” insiders, and systems leaders viewed outsider/activists as unreasonable. We underestimated the importance of the roles of historical structural inequalities, context, and dynamics of relationships at the local level.  Local collaboratives or “hubs” were reorganized and customized to meet local realities, and we threw the concept of a single model of collaboration across all the sites out the window.

Some course corrections we made included adjusting and sharpening our underlying assumptions and theory of change and taking on new community-driven priorities that we never anticipated early on; examples include school discipline reform, dismantling the prison pipeline in communities of color through prevention, and work that is taking place in TCE’s Boys & Young Men of Color portfolio.  By acknowledging our mistakes, our focus has sharpened and our dual roles as changemakers and grantmakers have continued to evolve. 

“Some partner feedback was difficult to hear, but all of it was useful and is making our work with partners stronger.”

Further, significant developments have occurred since the report:

Positioning “Power Building” as central to improving complex systems and policies.  In defining key performance indicators, we know the policy milestones achieved thus far represent only surface manifestations of the ultimate success we are seeking.  We had a breakthrough when we positioned “building the power and voice” of the adults and youth in our communities and “health equity” at the center of our BHC North Star Goals and Indicators.  Ultimately, we’ll know we are successful when the power dynamics in our partner communities have shifted so that adult and youth residents know how to hold local officials accountable for full, ongoing implementation of these policies.

Continuing to listen to our partners.  In addition to clarifying our North Stars, we sought further mid-point advice from our partners, reaching out to 175 stakeholders, including 68 youth and adult residents of BHC communities, for feedback to shape the remainder of BHC’s implementation and to inform our transition planning for the next decade.  Some of what our partners told us was difficult to hear, but all of it was useful and is making our work with partners stronger.    

From these lessons, I challenge our philanthropic colleagues to consider:

  • How can we learn to detect complex failures early to help us go beyond lessons that are superficial? As Amy Edmonson states, “The job of leaders is to see that their organizations don’t just move on after a failure but stop to dig in and discover the wisdom contained in it.”
  • In complex initiatives and complex organizations, what does it take to design a learning culture to capitalize successfully on mistakes? How do we truly engage in “trial and error” and stay open to experimentation and midcourse corrections?  How can we focus internally on our own operations and ways of work, as well as being willing to change our strategies and relationships with external partners?  Further, how do we, as grantmakers responsible for serving the public good, take responsibility for making these lessons #OpenForGood so others can learn from them as well?

It is worth noting that a key action that TCE took at the board level as we embarked on BHC was to dissolve the Board Program Committee and replace it with Learning and Performance Committee.  This set-up offered consistent opportunity for learning from evaluation reports between the Board, the CEO, and the management team and for sharing our learnings publicly to build the philanthropic field.  Now, even as we enter the final phase of BHC, we continue to look for ways to structure opportunities to learn, and I can say, “We are well into a journey to learn intelligently from our successes as well as our mistakes to make meaningful, positive impacts.”

--Hanh Cao Yu

Championing Transparency: The Rockefeller Foundation Is First to Share All Evaluations As Part of #OpenForGood
September 26, 2017

The Rockefeller Foundation staff who authored this post are Veronica Olazabal, Director of Measurement, Evaluation, and Organizational Performance; Shawna Hoffman, Measurement, Evaluation, and Organizational Performance Specialist; and Nadia Asgaraly, Measurement and Evaluation Intern.

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.

Veronica Olazabal
Veronica Olazabal
Shawna Hoffman
Shawna Hoffman
Nadia Asgaraly
Nadia Asgaraly

TRF Color LogoToday, aligned with The Rockefeller Foundation's commitments to sharing and accountability, we are proud to be the first foundation to accept the challenge and proactively make all of our evaluation reports publicly available as part of Foundation Center's #OpenForGood campaign.

A History of Transparency and Sharing

Since its founding more than 100 years ago, The Rockefeller Foundation's mission has remained unchanged: to promote the well-being of humanity throughout the world. To this end, the Foundation seeks to catalyze and scale transformative innovation across sectors and geographies, and take risks where others cannot, or will not. While working in innovative spaces, the Foundation has always recognized that the full impact of its programs and investments can only be realized if it measures - and shares - what it is learning. Knowledge and evidence sharing is core to the organization's DNA dating back to its founder John D. Rockefeller Sr., who espoused the virtues of learning from and with others—positing that this was the key to "enlarging the boundaries of human knowledge."

“To ensure that we hold ourselves to this high bar, The Rockefeller Foundation pre-commits itself to sharing the results of its evaluations - well before the results are even known.”

Evaluation for the Public Good

Building the evidence base for the areas in which we work is the cornerstone of The Rockefeller Foundation's approach to measurement and evaluation. By systematically tracking progress toward implementation and outcomes of our programs, and by testing, validating, and assessing our assumptions and hypotheses, we believe that we can manage and optimize our impact. Through the documentation of what works, for who, and how/under what conditions, there is potential to amplify our impact, by crowding-in other funders to promising solutions, and diverting resources from being wasted on approaches that prove ineffectual.

But living out transparency as a core value is not without its challenges. A commitment to the principle of transparency alone is insufficient; organizations, especially foundations, must walk the talk. Sharing evidence requires the political will and human resources to do so, and more importantly, getting comfortable communicating not only one's successes, but also one's challenges and failures. For this reason, to ensure that we hold ourselves to this high bar, The Rockefeller Foundation pre-commits itself to sharing the results of its evaluations - well before the results are even known. Then, once evaluation reports are finalized, they are posted to the Foundation website, available to the public free of charge.

#OpenForGood Project

The Foundation Center's #OpenForGood project, and IssueLab's related Results platform, help take the Foundation's commitment to sharing and strengthening the evidence base to the next level. By building a repository where everyone can identify others working on similar topics, search for answers to specific questions, and quickly identify where knowledge gaps exists, they are leading the charge on knowledge sharing.

The Rockefeller Foundation is proud to support this significant effort by being the first to contribute its evaluation evidence base to IssueLab: Results as part of the #OpenForGood movement, with the hope of encouraging others to do the same.

-- Veronica Olazabal, Shawna Hoffman, and Nadia Asgaraly

Trend to Watch: Using SDGs to Improve Foundation Transparency
September 19, 2017

(Janet Camarena is director of transparency initiatives at Foundation Center. )

Janet Camarena PhotoAs Foundation Center's director of transparency initiatives, one of the most interesting parts of my job is having the opportunity to play "transparency scout," regularly reviewing foundation websites for signs of openness in what is too often a closed universe. Some of this scouting leads to lifting up practices that can be examples for others on our Transparency Talk blog, sometimes it leads to a new transparency indicator on our assessment framework, and sometimes we just file it internally as a "trend to watch. "

Today, it's a combination of all three; we are using this blog post to announce the launch of a new, "Trend to Watch" indicator that signals an emerging practice: the use of the Sustainable Development Goals to improve how foundations open up their work to the world.

Sustainable Development GoalsThe United Nations' Sustainable Development Goals (SDGs), otherwise known as the Global Goals, are a universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. There are a total of 17 goals, such as ending poverty, zero hunger, reduced inequalities, and climate action. Written deliberately broad to serve as a collective playbook that governments and private sector alike can use, they can also serve as a much needed shared language across philanthropy and across sectors to signal areas of common interest, and measure shared progress.

And let's face it, as foundation strategies become increasingly specialized and strategic, explaining the objectives and the nuances can become a jargon-laden minefield that can make it difficult and time consuming for those on the outside to fully understand the intended goal of a new program or initiative. The simplicity of the SDG iconography cuts through the jargon so foundation website visitors can quickly identify alignment with the goals or not, and then more easily determine whether they should devote time to reading further. The SDG framework also provides a clear visual framework to display grants and outcomes data in a way that is meaningful beyond the four walls of the foundation.

Let's take a look at how some foundation websites are using the SDGs to more clearly explain their work:

Silicon Valley Community Foundation (SVCF)

One of my favorite examples is from a simple chart the Silicon Valley Community Foundation shared on its blog, because it specifically opens up the work of its donor-advised funds using the SDGs. Donor-advised funds are typically not the most transparent vehicles, so using the SDGs as a framework to tally how SVCF's donor-advised funds are making an impact is particularly clever, refreshing, and offers a new window into a fast-growth area of philanthropy.

A quick glance at the chart reveals that quality education, good health and well-being, and sustainable cities and communities are the most common priorities among Silicon Valley donors.

GHR Foundation

A good example of how the SDGs can be used as a shared language to explain the intended impact of a grant portfolio is from GHR Foundation in Minnesota. I also like this example because it shows how the SDGs can be effectively used in both global and domestic grant portfolios. GHR uses the SDG iconography across all of its portfolios, as sidebars on the pages that describe foundation strategies. GHR's "Children in Families" is a core foundation grantmaking strategy that addresses children and families in need on a global scale. The portfolio name is a broad one, but by including the SDG iconography, web visitors can quickly understand that GHR is using this program area to address poverty, hunger, as well as lead to outcomes tied to health and well-being:

GHR is also able to use the SDG framework to create similar understanding of its domestic work. Below is an example from its Catholic Schools program serving the Twin Cities:

Through the visual cues the icons provide, I can quickly determine that in addition to aligning with the quality education goal, that this part of GHR's portfolio also addresses hunger and economically disadvantaged populations through its education grantmaking. This could also signal that the grantmaker interprets education broadly and supports the provision of wrap-around services to address the needs of low-income children as a holistic way of addressing the achievement gap. That's a lot of information conveyed with three small icons!

Tableau Foundation

The most sophisticated example comes to us from the tech and corporate grantmaking worlds--the Tableau Foundation. Tableau makes data visualization software, so using technology as a means to improve transparency is a core approach, and they are using their own grantmaking as an example of how you can use data to tell a compelling visual story. Through the interactive "Living Annual Report" on its website, Tableau regularly updates its grantmaking tallies and grantee data so web visitors have near real-time information. One of the tabs on the report reveals the SDG indicators, providing a quick snapshot of how Tableau's grantmaking, software donations, and corporate volunteering align with the SDGs.

As you mouse over any bar on the left, near real-time data appears, tallying how much of Tableau's funding has gone to support each goal. The interactive bar chart on the right lists Tableau's grantees, and visitors can quickly see the grantee list in the context of the SDGs as well as know the specific scale of its grantmaking to each recipient.

If you're inspired by these examples, but aren't sure how to begin connecting your portfolio to the Global Goals, you can use the SDG Indicator Wizard to help you get started. All you need to do is copy and paste your program descriptions or the descriptive language of a sample grant into the Wizard and its machine-learning tools let you know where your grantmaking lands on the SDG matrix. It's a lot of fun – and great place to start learning about the SDGs. And, because it transforms your program language into the relevant SDG goals, indicator, and targets, it may just provide a shortcut to that new strategy you were thinking of developing!

What more examples? The good news is we're also tracking SDGs as a transparency indicator at "Who Has Glasspockets?" You can view them all here. Is your foundation using the SDGs to help tell the story of your work? We're always on the lookout for new examples, so let us know and your foundation can be the next trend setter in our new Trend to Watch.

-- Janet Camarena

Is Your 990-PF Working Against You?
September 12, 2017

Lauren Haverlock has practiced public accounting since 2004. As a senior manager at Moss Adams LLP, she provides compliance and consulting services to all types of exempt organizations, including public charities and private foundations.

This post is part of a Transparency Talk series, presented in partnership with the Conrad N. Hilton Foundation, examining the importance of the 990-PF, the informational tax form that foundations must annually file. The series will explore the implications of the open 990; how journalists and researchers use the 990-PF to understand philanthropy; and its role, limitations, and potential as a communications tool.

Join us at a session about the Open 990PF in partnership with Grantmakers of Oregon and Southwest Washington. Learn more or register here.

Lauren HaverlockAs a CPA specializing in tax exempt organizations, the annual 990-PF form that private foundations must file with the Internal Revenue Service (IRS) is the source of many questions I receive. And now that this data is not just publicly available, but open, it is wise for us all to take a closer look at whether your 990-PF may unintentionally be working against you.

Of course, the IRS has been gathering data on 990-PF filers for years. It has used this data to better identify and investigate anomalous and non-compliant private foundations. But now, all electronically filed Form 990-PF data is available to the general public in machine readable formats opening up the investments, portfolio performance, grant recipients, expenses, and transactions of foundations like never before.

Now that this information is publicly available in machine readable format, it can be easily aggregated to provide valuable insight into the industry as a whole. It can also highlight outliers. Ultimately, the availability of this data provides a window into private foundations, many of which were previously used to operating outside the public eye. As Glasspockets has reported, currently only 10% of U.S. foundations even have a website, so if your foundation is among the 90% that do not, that means that your 990-PF is the only source of intelligence about your organization. 

In the new world of readily available machine-readable Form 990s, private foundations will want to verify their tax filings—the source of their data—are prepared completely and accurately. Common mistakes to watch out for when filing the Form 990-PF are detailed in this article.

Transactions

Private foundations face more burdensome regulations on investments and expenses than 501(c)(3) public charities:

  • Restrictions on how money is spent
  • Requirements as to how much money is used for charitable purposes
  • Rules regarding how endowments can be invested

The consequences for noncompliance in regards to the above transactions can range from excise-tax penalties assessed on the foundation or its managers to revocation of exempt status.

Specific items to be aware of include the following:

  • Prohibited transactions with a disqualified person, including trustees, directors, and foundation managers as well as certain family members and businesses of the aforementioned.
  • Failure to meet the minimum distribution requirement in a previous year
  • Excess business holdings of an active trade or business
  • Risky asset investments that could jeopardize a foundation’s charitable purpose (for example, not having a diversified portfolio of investments)
  • Certain types of expenditures, such as foreign grants, grants to for-profit entities, unapproved scholarships, or lobbying and political activities, are either prohibited outright or require extra diligence to be permissible. 

For example, foundations are permitted to reasonably compensate a disqualified person for personal services. And an organization can grant funds to foreign or for-profit organizations if expenditure responsibility is exercised. And more details about what is permissible in regards to political funding appears below. But the main point here is just the affirmation of these closely scrutinized transactions could raise the risk profile of a private foundation.

Net Investment Income

Although considered tax-exempt, private foundations are still required to pay an excise tax at a rate of 1% or 2% of the income they generate. As such, investment income is of intense focus when foundations file their tax returns. Foundations should remember that the calculation of taxable income should be undertaken with the same tax-reduction mindset that for profit entities and individuals undertake.   

“Ultimately, the availability of this data provides a window into private foundations, many of which were previously used to operating outside the public eye.”

The Form 990-PF reports income both on a book and on a tax basis on Page one. A foundation should ensure that it is properly capturing all taxable income from all sources and not simply assuming that taxable income is the amount reported on their financial statements. For example, private foundations with “alternative investments,” including private equity, hedge funds, managed futures, real estate, commodities and derivatives contracts, could receive a Schedule K-1 from their investments. Flow-through income from that Schedule K-1 should be reported in the foundation’s tax-basis income statement. 

Additionally, any excise tax a foundation pays could bring negative attention. If an entity consistently pays the higher excise tax of 2%, it could lead donors to question why the foundation is giving money to the IRS in the form of taxes rather than providing grants.  

 

Balance-Sheet Investments

Private foundations are required to report the details of their investments, including the number of shares and types of publicly traded stock held. Reporting this can often be burdensome and feel invasive, but failure to include this information could result in an incomplete Form 990-PF. An incomplete Form 990-PF is deemed to have never been filed in the first place, which could result in late-filing penalties or revocation of exemption if it occurs three years in a row.

Lobbying and Political Activities

Private foundations are prohibited from undertaking any lobbying or political activities, unlike 501(c)(3) public charities, which are permitted to undertake limited lobbying activities. However, not all actions related to politics are prohibited—private foundations can undertake certain bipartisan educational activities or support charities that undertake lobbying if they follow certain guidelines. For example, the specific project grant rule, when followed, could allow a private foundation to fund a project that explicitly has lobbying activities.

Grant Reporting

The grant reporting schedule seems innocuous, but it can weave a story of relationships that extend beyond grantor and grantee. The grant recipients of private foundations are public, which means the public can gather data regarding which organizations a foundation supports by using data-mining tools.

Open-990-borderAlthough this information can be valuable to fundraisers and your grantmaking peers, it can also reveal an informal or unclear grantmaking process and serve as an inadvertent disclosure of taxable expenditures. As such, a foundation should ensure that there is a due diligence process related to grant recipients that verifies if a recipient is a qualified 501(c)(3) public charity, and use the space provided in the 990-PF (Part XV) to explain its grantmaking process, deadlines, and eligibility requirements.

While grants to other types of entities are permitted, if certain expenditure responsibility procedures are not followed, this type of granting could possibly raise a red flag. Any grantee that reports a foreign address, appears to be a corporation, or otherwise stands out could still garner a foundation unwanted attention from the general public and IRS. Grantmakers making grants to foreign organizations also have the option of using a process called equivalency determination to demonstrate how they determined that a foreign organization is equivalent to a U.S. charity. The grantmaker is required to collect a specific set of data, as outlined in IRS Revenue Procedure 92-94, that provides details about the grantee’s operations and finances.

Private foundation contributor schedules are public, which means anyone can pull these donor lists. With open-source data, foundation support can be easily compiled and aggregated to better understand an ecosystem of donors and support—keeping a private foundation accountable to the community it serves.

Even though the Form 990-PF is a government filing, its public nature and the increased openness of its data may lead to both greater interest and scrutiny in the private foundations filing it. Take control of your financial story by filing timely, complete, and accurate Form 990 returns, paying special attention to the areas noted above, and ultimately what increases may be a greater understanding of the field itself.

--Lauren Haverlock

How to Make Grantee Reports #OpenForGood
July 20, 2017

Mandy Ellerton and Molly Matheson Gruen joined the [Archibald] Bush Foundation in 2011, where they created and now direct the Foundation's Community Innovation programs. The programs allow communities to develop and test new solutions to community challenges, using approaches that are collaborative and inclusive of people who are most directly affected by the problem. This post is part of the Glasspockets’ #OpenForGood series in partnership with the Fund for Shared Insight. The series explores new 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.

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Mandy Ellerton

When we started working at the Bush Foundation in 2011, we encountered a machine we’d never seen before: the Lektriever. It’s a giant machine that moves files around, kind of like a dry cleaner’s clothes rack, and allows you to seriously pack in the paper. As a responsible grantmaker, it’s how the Bush Foundation had meticulously tracked and stored its files for posterity - in particular, grantee reports - for decades.

In 2013, the Bush Foundation had the privilege of moving to a new office. Mere days before we were to move into the new space, we got a frantic call from the new building’s management. It turned out that the Lektrievers (we actually had multiple giant filing machines!) were too heavy for the floor of the new building, which had to be reinforced with a number of steel plates to sustain their weight.

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Molly Matheson Gruen

The Lektrievers symbolized our opportunity to become more transparent and move beyond simply preserving our records, instead seeing them as relevant learning tools for current audiences. It was time to lighten the load and share this valuable information with the world.

Even with all this extra engineering, we would still have to say goodbye to one of the machines altogether for the entire system to be structurally sound. We had decades of grantee stories, experiences and learning trapped in a huge machine in the inner sanctum of our office, up on the 25th floor. 

Learning Logs Emerge

We developed our grantee learning log concept in the Community Innovation Programs as one way to increase the Foundation’s transparency. At the heart of it, our learning logs are a very simple concept: they are grantee reports, shared online. But, like many things that appear simple, once you pull on the string of change – the complexity reveals itself.

“Every Community Innovation project is an opportunity for others to learn and the learning logs are a platform to share this learning.”

Before we could save the reports from a life of oblivion in the Lektriever, build out the technology and slap the reports online, we needed to entirely rethink our approach to grantee reporting to create a process that was more mutually beneficial. First, we streamlined our grant accountability measures (assessing whether the grantees did what they said they’d do) by structuring them into a conversation with grantees, rather than as a part of the written reports. We’ve found that conducting these assessments in a conversation takes the pressure off and creates a space where grantees can be more candid, leading to increased trust and a stronger partnership.

Second, our grantee reports now focus on what grantees are learning in their grant-funded project. What’s working? What’s not? What would you do differently if you had it to do all over again? This new process resulted in reports that were more concise and to the point.

Finally, we redesigned our website to create a searchable mechanism for sharing these reports online. This involved linking our grant management system directly with our website so that when a grantee submits a report, we do a quick review and then the report automatically populates our website. We’ve also designed a way for grantees to be able to designate select answers as private when they want to share sensitive information with us, yet not make it entirely public. We leave it up grantee discretion and those selected answers do not appear on the website. Grantees designate their answers to be private for a number of reasons, most often because they discuss sensitive situations having to do with specific people or partners – like when someone drops out of the project or when a disagreement with a partner holds up progress. And while we’ve been pleased at the candor of most of our grantees, some are still understandably reluctant to be publicly candid about failures or mistakes.

But why does this new approach to grantee reporting matter, besides making sure the floor doesn’t collapse beneath our Lektrievers?

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The Lektriever is a giant machine that moves files around, kind of like a dry cleaner’s clothes rack. The Bush Foundation had meticulously tracked and stored its files for posterity - in particular, grantee reports - for decades. Credit: Bush Foundation

Learning Sees the Light of Day

Learning logs help bring grantee learning into the light of day, instead of hiding in the Lektrievers, so that more people can learn about what it really takes to solve problems. Our Community Innovation programs at the Bush Foundation fund and reward the process of innovation–the process of solving problems. Our grantees are addressing wildly different issues: from water quality to historical trauma, from economic development to prison reform. But, when you talk to our grantees, you see that they actually have a lot in common and a lot to learn from one another about effective problem-solving. And beyond our grantee pool, there are countless other organizations that want to engage their communities and work collaboratively to solve problems.  Every Community Innovation project is an opportunity for others to learn and the learning logs are a platform to share this learning, making it #OpenForGood.

We also want to honor our grantees’ time. Grantees spend a lot of time preparing grant reports for funders. And, in a best case scenario, a program officer reads the report and sends the grantee a response of some kind before the report is filed away. But, let’s be honest – sometimes even that doesn’t happen. The report process can be a burden on nonprofits and the only party to benefit is the funder. We hope that the learning logs help affirm to our grantees that they’re part of something bigger than themselves - that what they share matters to others who are doing similar work.

We also hear from our grantees that the reports provide a helpful, reflective process, especially when they fill it out together with collaborating partners. One grantee even said she’d like to fill out the report more often than we require to have regular reflection moments with her team!

Learning from the Learning Logs

We only launched the learning logs last year, but we’ve already received some positive feedback. We’ve heard from both funded and non-funded organizations that the learning logs provide inspiration and practical advice so that they can pursue similar projects. A grantee recently shared a current challenge in their work. It directly connected to some work we knew another grantee had done and had written about in their learning log. So, since this knowledge was now out in the open, we were able to direct them to the learning log as a way to expand our grantee’s impact, even beyond their local community, and use it to help advance another grantee’s work.

Take, for example, some of the following quotes from some of our grantee reports:

  • The Minnesot Brain Injury Alliance's project worked on finding ways to better serve homeless people with brain injuries.  They reflected that, "Taking the opportunity for reflection at various points in the process was very important in working toward innovation.  Without reflection, we might not have been open to revising our plan and implementing new possibilities."
  • GROW South Dakota addressed a number of challenges facing rural South Dakota communities. They shared that, “Getting to conversations that matter requires careful preparation in terms of finding good questions and setting good ground rules for how the conversations will take place—making sure all voices are heard, and that people are listening for understanding and not involved in a debate.”
  •  The People's Press Project engaged communities of color and disenfranchised communities to create a non-commercial, community-owned, low-powered radio station serving the Fargo-Moorhead area of North Dakota. They learned “quickly that simply inviting community members to a meeting or a training was not a type of outreach that was effective.”

Like many foundations, we decline far more applications than what we fund, and our limited funding can only help communities tackle so many problems. Our learning logs are one way to try and squeeze out more impact from those direct investments. By reading grantee learning logs, hopefully more people will be inspired to effectively solve problems in their communities.

We’re not planning to get rid of the Lektrievers anytime soon – they’re pretty retro cool and efficient. They contain important historical records and are incredibly useful for other kinds of record keeping, beyond grantee documentation. Plus, the floor hasn’t fallen in yet. But, as Bush Foundation Communications Director Dominick Washington put it, now we’re unleashing the knowledge, “getting it out of those cabinets, and to people who can use it.”

--Mandy Ellerton and Molly Matheson Gruen

What Will You #OpenForGood?
July 13, 2017

Janet Camarena is director of transparency initiatives at Foundation Center.  This post is part of the Glasspockets’ #OpenForGood series in partnership with the Fund for Shared Insight. The series explores new 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.

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This week, Foundation Center is launching our new #OpenForGood campaign, designed to encourage better knowledge sharing practices among foundations.  Three Foundation Center services—Glasspockets, IssueLab, and GrantCraft are leveraging their platforms to advance the idea that philanthropy can best live up to its promise of serving the public good by openly and consistently sharing what it’s learning from its work.  Glasspockets is featuring advice and insights from “knowledge sharing champions” in philanthropy on an ongoing #OpenForGood blog series; IssueLab has launched a special Results platform allowing users to learn from a collective knowledge base of foundation evaluations; and a forthcoming GrantCraft Guide on open knowledge practices is in development.

Although this campaign is focused on helping and inspiring foundations to use new and emerging technologies to better collectively learn, it is also in some ways rooted in the history that is Foundation Center’s origin story.

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A Short History

Sixty years ago, Foundation Center was established to provide transparency for a field in jeopardy of losing its philanthropic freedom due to McCarthy Era accusations that gained traction in the absence of any openness whatsoever about foundation priorities, activities, or processes.  Not one, but two congressional commissions were formed to investigate foundations committing alleged “un-American activities.”  As a result of these congressional inquiries, which spanned several years during the 1950s, Foundation Center was established to provide transparency in a field that had nearly lost everything due to its opacity. 

“The solution and call to action here is actually a simple one – if you learn something, share something.”

I know our Transparency Talk audience is most likely familiar with this story since the Glasspockets name stems from this history when Carnegie Corporation Chair Russell Leffingwell said, “The foundation should have glass pockets…” during his congressional testimony, describing a vision for a field that would be so open as to allow anyone to have a look inside the workings and activities of philanthropy.  But it seems important to repeat that story now in the context of new technologies that can facilitate greater openness.

Working Collectively Smarter

Now that we live in a time when most of us walk around with literal glass in our pockets, and use these devices to connect us to the outside world, it is surprising that only 10% of foundations have a website, which means 90% of the field is missing discovery from the outside world.  But having websites would really just bring foundations into the latter days of the 20th century--#OpenForGood aims to bring them into the present day by encouraging foundations to openly share their knowledge in the name of working collectively smarter.

What if you could know what others know, rather than constantly replicating experiments and pilots that have already been tried and tested elsewhere?  Sadly, the common practice of foundations keeping knowledge in large file cabinets or hard drives only a few can access means that there are no such shortcuts. The solution and call to action here is actually a simple one—if you learn something, share something

In foundations, learning typically takes the form of evaluation and monitoring, so we are specifically asking foundations to upload all of your published reports from 2015 and 2016 to the new IssueLab: Results platform, so that anyone can build on the lessons you’ve learned, whether inside or outside of your networks. Foundations that upload their published evaluations will receive an #OpenForGood badge to demonstrate their commitment to creating a community of shared learning.

Calls to Action

But #OpenForGood foundations don’t just share evaluations, they also:

  • Open themselves to ideas and lessons learned by others by searching shared repositories, like those at IssueLab as part of their own research process;
  • They use Glasspockets to compare their foundation's transparency practices to their peers, add their profile, and help encourage openness by sharing their experiences and experiments with transparency here on Transparency Talk;
  • They use GrantCraft to hear what their colleagues have to say, then add their voice to the conversation. If they have an insight, they share it!

Share Your Photos

“#OpenForGood foundations share their images with us so we can show the collective power of philanthropic openness, not just in words, but images. ”

And finally, #OpenForGood foundations share their images with us so we can show the collective power of philanthropic openness, not just in words, but images.  We would like to evolve the #OpenForGood campaign over time to become a powerful and meaningful way for foundations to open up your work and impact a broader audience than you could reach on your own. Any campaign about openness and transparency should, after all, use real images rather than staged or stock photography. 

So, we invite you to share any high resolution photographs that feature the various dimensions of your foundation's work.  Ideally, we would like to capture images of the good you are doing out in the world, outside of the four walls of your foundation, and of course, we would give appropriate credit to participating foundations and your photographers.  The kinds of images we are seeking include people collaborating in teams, open landscapes, and images that convey the story of your work and who benefits. Let us know if you have images to share that may now benefit from this extended reach and openness framing by contacting openforgood@foundationcenter.org.

What will you #OpenForGood?

--Janet Camarena

Open Yourself Up to New Solutions
April 5, 2017

SAVE THE DATE: April 13, 1:30-3:00 p.m. EST.  Like this blog series?  Attend our Inside Innovation Funding event in person in San Francisco, or virtually via livestream in San Francisco.

(Christie George is the director of New Media Ventures, a mission-driven venture firm and donor collaborative supporting progressive startups.  New Media Ventures supports companies and organizations that – through the use of new media and technology – build advocacy movements, tell new stories and drive civic engagement.)

This post is part of the Funding Innovation series, produced by Foundation Center's Glasspockets and GrantCraft, and underwritten by the Vodafone Foundation.  The series explores funding practices and trends at the intersection of problem-solving, technology, and design. Please contribute your comments on each post and share the series using #fundinginnovation. View more posts in the series.

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If you’ve been following the headlines since the 2016 election, you’ve probably thought about the growing polarization in our country. You may share my worry about filter bubbles and political echo chambers, or you might have recommitted to sparking conversations with friends across the aisle. At New Media Ventures (NMV), we see the same need in the funding world. From our perspective, most people fund people and organizations they already know, moving money through referrals and established networks. But if we’re going to solve the big problems facing our world, we need to move beyond our personal echo chambers.

As a mission-driven venture fund that invests in both for-profit and nonprofit startups, NMV stands with one foot in the venture capital world and one foot in philanthropy – driving change at the intersection of technology, media, and civic engagement. When we first got started, we found ourselves sourcing opportunities in all the traditional ways – using our personal networks and attending conferences – but we quickly realized that we needed to try something different to ensure that we were actually identifying new approaches to the problems we wanted to solve. In 2014, we launched the NMV Innovation Fund with two main goals: 1) increase the number of investable projects crossing our desks (our deal flow); and 2) break through the bias for “the usual suspects” to fund more diverse entrepreneurs.

In the simplest terms, the Innovation Fund is an open call for world-changing innovations. Twice a year, we ask our network, and our network’s network, and their networks (you get the idea: we cast a wide net) to send us the best opportunities they’ve seen for how technology can catalyze progressive change. This year, in response to our “Resist and Rebuild” Open Call, we received nearly 500 applications – a new record – and we are blown away by the creativity of the applicants.

“...If you haven’t tried an open call, you might be missing out on amazing solutions beyond the usual suspects.”

While it may sound overwhelming to sort through hundreds of applications, we have developed a methodology for doing this work efficiently.  This process includes recruiting a volunteer screening committee of funding peers, simplifying our application as much as possible, asking more detailed questions only to the applicants who rise to the top, and using a technology platform to easily manage all of the applications in one batch. Ultimately, New Media Ventures makes the final funding decision, but the screening committee is one of the most powerful aspects of the process – many heads are better than one – and working collaboratively with other funders allows us to leverage different domain expertise in evaluating opportunities. 

Here are two takeaways from our experience opening ourselves up to open calls, and the reasons why we hope other funders will consider similar approaches:

1) Big problems require new solutions (and diversity is not a “nice to have”). Funding exclusively through referrals can limit what funders see and increase the risk of confirmation bias – one of the reasons white men are so much more likely to get venture capital funding in Silicon Valley. By having an open and transparent application process, heavily marketed to ensure we’re getting outside our own bubbles, we’ve made a tremendous
impact on the diversity of our portfolio. Our website, blog, social media platforms, and partners broadcast details about the open call, allowing us to
reach new audiences who may be deterred by less transparent philanthropic opportunities. We’re proud that 65% of Innovation Fund applicants have New Media Ventures logoat least one female and/or trans founder, and 30% have at least one person of color on the founding team. We still have a long way to go, but by comparison 8% of venture capital goes to women founders and 13% to founders of color.

However, focusing on diversity is not a “nice to have” and it’s not just about the numbers – it’s a core part of our strategy. Our societies and systems are facing entrenched problems, and solving them will require new and bold solutions. We need all hands on deck. Women, trans people, and leaders of color have much-needed perspectives and expertise, but often lack access to capital, networks, and traditional philanthropy. For example, news platform Blavity, founded by a young black woman, has grown to reach 7 million readers by creatively combining pop culture content with thoughtful coverage of race and gender issues. We might never have identified this opportunity were it not for our open call.

2) Less control over outcomes leads to more welcome surprises. When funders issue a request for proposals (RFP), we essentially define the terms of the discussion: we’ve often developed a strategy, and we’re looking for organizations to execute that strategy. Unlike a traditional RFP, the Innovation Fund Open Call process has very broad parameters by design. We’ve found this requires us to be comfortable with uncertainty and develop the humility to stay in a learning mindset. The approach isn’t without risks. What if you open the gates for a broad range of applicants, and don’t find anything you want to fund? What if you keep your parameters flexible and only get applications that aren’t in your wheelhouse? But with careful planning and a good process, we have developed strategies to mitigate the risks, and find we gain real value from being able to scan the field and identify gaps as well as opportunities. It has paid off in delightful and unexpected ways.

For many of our portfolio organizations, NMV is their first institutional funder, and our early investment gives our grantees the validation and runway they need to go on to great things: CoWorker.org hosted the Summit on Worker Voice with President Obama; Blavity went on to participate in 500 Startups; Vote.org got into Y Combinator and scaled up quickly to send SMS voting reminder messages to more than 1 million people in swing states leading up to the election. And that’s just a few examples.

To sum it up, if you haven’t tried an open call, you might be missing out on amazing solutions beyond the usual suspects. If boosting innovation is one of your goals, we recommend starting small and collaborating with others to share the work. Consider carving out a portion of your grantmaking budget to fund projects selected through an open process, and remember that you don’t have to reinvent the wheel. NMV and other similar groups have developed deep expertise around open calls and we’re excited to partner with other funders. In fact, we did just that when we worked with the Pluribus Project on a democracy-focused open call last year.

So go ahead, open up and let yourself be surprised. It worked for us.

--Christie George

 

Transparency Talk Welcomes Arcus Foundation to Glasspockets
March 29, 2017

(Melissa Moy is special projects associate for Glasspockets.) 

Arcus foundation logoWe are pleased to welcome Arcus Foundation to our community of foundations that have publicly commited to working transparently. By taking and sharing the “Who Has Glass Pockets?” (WHGP) self-assessment, Arcus is contributing to a growing collection of profiles that serve as a knowledge bank and transparency benchmarking mechanism.

Arcus, with its offices in New York and Cambridge, United Kingdom, advocates for global human rights and conservation movements: “Together, we learn from each other and take bold risks on groundbreaking ideas that drive progress toward a future of respect and dignity for all.”

“We strive to apply a high level of transparency in our operations and in our relationships with grantees, partners and other stakeholders.’”

This month, Arcus became the 87th foundation to join WHGP.  As a way of welcoming Arcus to the Glasspockets community, we’d like to highlight some of the ways in which this foundation openly shares its environmental and social justice work.

First, Arcus has pledged a rare commitment to openness in its transparency statement that is part of the website’s introduction to Arcus’ work.

The foundation uses its website to explain its grantmaking process,  shares expectations for grantees, and offers a searchable grantee map and database.  A short video invites and informs prospective grant applicants.

Other ways that Arcus lives up to its transparency statement is by opening up its knowledge via  grantee impact stories, reports, and a foundation blog.  Additionally, the foundation discloses more than a decade of its financial information

Enjoy exploring the work that Arcus is doing for social justice and the environment.  Perhaps it will inspire your foundation to become #88!  Does your foundation have glass pockets?  Find out

 --Melissa Moy

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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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