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Foundation Transparency: We Ain't Seen Nothin' Yet
March 19, 2012

Marie Deatherage

(Marie Deatherage has directed communications at Meyer Memorial Trust since 1996. She has also worked as a program officer, college professor, researcher, disability rights advocate, journalist, editor and publisher. She has degrees from the University of Chicago and University of Oregon and has never met a disruptive technology she didn't like. Her previous post on Transparency Talk reflected on the Trust's becoming transparent.)

In 1998, I had a singular point/counterpoint experience that changed the way I see the world and directly affects the way I view foundation transparency today.

Point

A few years earlier, I had been appointed by Oregon's governor to the Oregon Health Services Commission, (OHSC) the public body that created the prioritized list of medical conditions and treatments for the Oregon Health Plan (and gained national notoriety as "rationing health care.") At the time I was appointed, the Plan had just been turned down for a Medicaid waiver by the federal government because the Department of Human Services said the process that created the list violated the Americans with Disabilities Act. I was working in disability rights and was added to the Commission to ensure that views of people with disabilities were represented.

Trust is directly and immutably linked to transparency. Foundations have a more secure future if they earn the people's trust.OHSC was and is subject to Oregon's rigorous public meetings law, which requires that all decision-making be conducted in public. We were forbidden to even talk about matters as a group in private. Meetings were all open to the public, including, of course, the press.

On this life changing day, the Commission was considering whether and where to place in the prioritized list the recently voter-approved "Death with Dignity" legislation that had become law in Oregon. (In a nutshell, if you have a terminal illness with less than six months to live and meet other eligibility requirements, you can get medication to self-administer to end your life on your own terms and time.) Oregon was first in the land to pass this legislation, as it had been the first state to legislate a prioritized list. Our hearing took place not long after vigorous and sometimes acrimonious debate leading to the election, before a standing-room-only crowd, which included very vocal protesters. Print and broadcast media were out in force.

After listening to testimony and discussing and debating the issue, each of us had to declare our position and give reasons for voting the way we did. Explaining our views was awkward, even gut-wrenching. I would call it one of the hardest things I've ever had to do in public, not only because I was the only dissenting vote, for reasons that were hard to explain. Our votes were reported in the media, and I subsequently got a number calls at home from people I didn't even know.

Counterpoint

When that meeting ended, I literally walked two blocks to the foundation office where I had begun working. Another meeting was underway there, with trustees deciding whether or not to fund grant proposals that were up for review that month. But this meeting was being held behind closed doors. Often there were no specific reasons given about why some proposals were funded and others not.

The contrast stunned me. The philanthropy decisions weren't more important. They weren't more difficult. They weren't more uncomfortable. In fact, they seemed much less so on each count than what I had just experienced.

So why this difference? At one time, of course, public bodies made decisions behind closed doors too. But at some point, the Oregon public demanded accountability and transparency, pointing out that sunlight is the best disinfectant. But foundation decisions were and are, for the most part, still happening in the dark.

Taxpayer-enabled resources

Foundation assets are, of course, IRS-approved resources. For the special treatment of not paying taxes, people are permitted to direct money for the public benefit. Who decides what constitutes "public good" and/or whether resources are actually benefiting the public? Well, in the past it's pretty much been the people with the money.

The pace of the move to accountability and transparency we've seen in government settings has greatly quickened with the Internet, because above all else, the net shifts the balance of power by eliminating gatekeepers and obstacles that have restricted communication and information exchange. More and more, people take for granted they have a right to look inside institutions and organizations. See, for example, recent moves toward more accountability for the nonprofit sector through legislation and questions about exemptions from property taxes.

Lately we've seen that the public expects foundations to exercise fairness and to be able to provide rational reasons for their grantmaking decisions. See under: Susan G. Komen Foundation.

The emergence of Glass Pockets in 2010 has been a crucial part of that shift, and much openness (e.g., making public user surveys, third party evaluations, governing and tax documents, etc.) has been achieved at Meyer Memorial Trust and other Glass Pockets-participating-foundations since the meeting I described above in 1998. But I believe a whole lot more transparency - and disruption it will cause - is coming.

One reason I've heard for foundation secrecy is the same reported by Sean Stannard-Stockton in a Tactical Philanthropy blog post:

  • "...Foundations tell me that they are not transparent about their grantee analysis because they do not want to risk hurting the nonprofit."

Sean went on to show what happened when the nonprofit FORGE opened itself entirely to public scrutiny in the face of a fiscal crisis, resulting in financial solutions and pro bono donations that made the organization stronger.

Sean held its executive director up as an example of leadership because she recognized that "criticism can only make her stronger. She wants to learn and get better because she cares about her cause more than she cares about her organization...Even if that means publicly taking advice from people who might tell her she should do some things differently."

Here's the thing: no matter what reasons foundations give for secrecy, even if philanthropy finds ways to justify it internally, doesn't the secrecy itself invite the public to wonder if the real secret is that the foundations can't defend their processes? Or that it's just easier and more comfortable for them to keep it on the down low. Do foundations want to invite those suspicions?

Democracy Needs Transparency

In addition to making corruption much more difficult, one of the most valuable rewards that has come from public meetings laws is that it has shown us we are courageous enough and tough enough and collectively wise enough to go through a process that is awkward, clumsy - even painful - and emerge stronger than ever. Even though that public discussion and vote was one of the most tortured things I've ever done because it was in public, I came out of the experience with a much greater appreciation for the delicious taste of democracy. I felt it made me a better person. I felt it made Oregon a better place. It gave me more trust in humanity.

We the people can handle messiness, clumsiness, embarrassment, complications, making mistakes and some chaos now and then. Seeing inside builds trust. Trust is directly and immutably linked to transparency. Foundations have a more secure future if they earn the people's trust.

Imagining the transparent future that is now possible reminds me of the scene in Back to the Future when Marty McFly sees the audience reaction after he does an epic guitar solo on stage: "You might not be ready for this, but your kids are gonna love it." So if you doubt me, read the We, the Web Kids manifesto.

Foundations can resist these inevitable future changes or we can welcome them. I can't wait to discover which foundation will utterly embrace the future and be the first to livestream trustee meetings. In my next Transparency Talk installment, I'll share a few more dreams about how open and trustworthy foundations might become.

A foundation director once told me that grantmaking and sausage-making are two processes I didn't want to witness. Prior to his declaration, I had heard it as law-making and sausage-making.

Government down, foundations next? And I'm pretty sure it's no longer safe to bet the farm on sausage either.

-- Marie Deatherage

Comments

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I've been so thrilled to see such thoughtful responses to my blog post, I haven't wanted to come back in too soon and break the momentum.

But I can't wait any longer to continue this discussion...

First, Jean, I think your description of how you view foundations matches very closely with what I used to think before I started working at one (my first blog post in this series at http://blog.glasspockets.org/2011/11/deatherage_20111110.html). Once inside, though, I was really struck by how wrong I had been, because I saw that foundation staff really and truly wanted to support nonprofits and their work.

But even with the strong desire to help, I learned there is something at work that keeps the power mismatch in place, and keeps foundations seem removed and even aloof. At Meyer Memorial Trust, we have worked hard to change that by talking in authentic human voices on our website and other communications, sharing all materials we produce through Creative Commons, creating tools for all community members to come together to share data and knowledge. (the subject of my second post at http://blog.glasspockets.org/2012/01/deatherage_20120124.html) I think all these things matter a lot, but they aren't enough. Power is still mostly on the side of foundations.

Fortunately – from my point of view at least – there is a global movement underway that I believe is fundamentally changing pretty much everything because it moves a lot more power into a lot more hands. Having the ability to report and share one's own perspective and experience in real time, having instant access to global information and conversations, having tools that offer the power to participate to a growing number of people on the planet – these things are revolutionary. Those of us who have lived through many decades and watched this happen still marvel at it. Our grandchildren can't imagine life being any other way. They take this power of participation for granted. They are the webkids. We should expect them.

So, Jean, yes, I believe foundations are among those who should expect them. The expectation of participation will not go away. The proverbial horse has left the vintage barn. I ran out of space before I could quote the We the Web Kids manifesto I referred to in my blog post, but I was so happy that Amy offered up what I think is the key passage in her comment. And I think the key sentence within that passage is this:
"And we have learned that change is possible: that every uncomfortable system can be replaced by a new one, one that is more efficient, better suited to our needs, giving more opportunities." There is no philanthropic or charitable donation exception.

I agree with much of what Heather Higgins argues in the blog post you referred to, Brad, and can only imagine the horror of our presently constituted Congress having control of philanthropic dollars! And voluntary participation in Glass Pockets and any other transparency/accountability measure is quickest and cleanest. But the webkids have put us on notice that everything is up for reform. I think institutions with disproportionate power will be questioned and scrutinized as never before. Trust will have a lot to do with which institutions survive and in what form, as you noted.

Trust is gained by being accountable for our work, honestly measuring and showing its successes and failures, sharing what we learn, and more – and that is an important part of transparency. But trust is also gained by showing our processes, being clear about our rationale, letting people watch how we make decisions and even inviting participation. I think the webkids will expect both from us. And it will be a global conversation. (For more to think about along these lines, read "Why It's Over" at http://confusedofcalcutta.com/2012/03/25/why-its-over/)

Fortunately, new tools and technologies make it possible and much easier to do a lot of these things without huge staffs. Especially if foundations hire webkids to help them. At my age, I think a lot about passing the torch. I plan to spend the time I have left working at my foundation doing what I can to help make a world deserving of the webkids. I'd love others to join me.

This is a wonderfully personal and courageous post for someone actually working at a foundation. You make many good points about the inevitability of greater transparency in the digital age and the choices facing foundations in terms of how and when to "get with the program." This is and will continue to be a real issue for staffed foundations of enough size and impact to be noticed in their communities, around the country or around the world. The movement towards greater transparency should ideally be led by pioneers among this "minority" group of foundations (remember only 24% of America's foundations have four or more staff). And again ideally, that movement should be voluntary. There are eloquent arguments about how foundation funds are different than public (government) resources (see Heather Higgins over at the Philanthropy Roundtable: http://tinyurl.com/7hqq4vr ). But as Marie so eloquently says: "Foundations have a more secure future if they earn the people's trust."

Marie - great posting! i did communications on the original oregon health plan process in early 90's and one of the 9 founding principles was about making explicit choices - acknowledging in public that when you make one funding choice, you do not make other choices and there are consequences. Being clear and open about why leaders/citizens made the choices they did was powerful, honest, instructive - amazing what flowed from that. i believe that oregonians in general are now schooled in the explicit choices of 'health care' and the 'health' that results - it allows a more cogent and full discussion about the other factors that impact and create 'health.'

Terrific post, Marie!

I can't believe that a shift is not about to happen in philanthropy as it is going to/underway in nonprofits as Boomers are replaced in active roles by younger generations. Even though this quote is in reference to government entities, I thought of it here and wanted to share:

"We do not feel a religious respect for ‘institutions of democracy’ in their current form, we do not believe in their axiomatic role, as do those who see ‘institutions of democracy’ as a monument for and by themselves. We do not need monuments. We need a system that will live up to our expectations, a system that is transparent and proficient. And we have learned that change is possible: that every uncomfortable system can be replaced and is replaced by a new one, one that is more efficient, better suited to our needs, giving more opportunities."

It is an excerpt from "We, the Web Kids" and I think very honestly outlines differences in Millennials (or whatever you like to call this generation) that have grown up on the web and fundamentally see things very differently. Here's a link to the full piece: http://pastebin.com/0xXV8k7k

This is really exciting to read. And I think you are right. However, the foundation world is the least accountable group of organizations in US. And it is accountability that increases the pressure for transparency.

If we unlock the magic door and make it more clear the reputations that foundations have (many for slow funding, little feedback, bad process, and non-collaborative methods) it could get real messy in really wonderful ways.

Personally I have chosen to bootstrap my work because there is no way I am going through grant process time sucks having watching small nonprofit EDs give 50% of time to fundraising and grant process. Will social entrepreneurship play a role?

Foundations don't face market pressures. They don't face voter pressure. Just the IRS. Do you see some form of tension in the system that will nudge transparency and honesty in foundations?

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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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