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A Unique American Story: Public Policy and Private Philanthropy

May 12th, 2016

Richard Marker

This post was written at the request of Exponent Philanthropy as a “teaser” for my presentation at their forthcoming annual conference in Chicago in September. It is reposted here with their permission. This is also a precis of one session of courses for funders at both NYU’s Academy for Grantmaking and Funder Education and at Penn’s Center for High Impact Philanthropy.

Some years ago, when Jacques Chirac was still President of France, the US State Department asked me to meet with Chirac’s advisor on domestic affairs. She had completed a national tour of institutions of American voluntarism. I was the last stop on her tour, her opportunity to debrief.

Her leading question to me was “How can we develop a system of philanthropy and voluntarism in France like you have in the USA?”

My response: “Before sharing some ideas, I have some questions for you: Can you imagine France without a system of healthcare for all citizens? Can you imagine a French higher education system where students pay $30k or $40k or $50k per annum to attend? And so on….”

Her response “Impossible!” [The discussion ensued.]

This brief anecdote captures several important realities:

• The American philanthropy/not for profit system emerged from a very different set of political assumptions than most of the rest of the post-emancipation world. In the United States, voluntary institutions arose to meet real needs that the political system chose not to provide. Even today there are huge splits in assumptions and beliefs about whose role is what.
• Public policy and private philanthropy are inextricably interwoven. Sometimes these interconnections are unintended and sometimes quite purposeful.
• Neither a government centered system nor a voluntary system has the capacity, on its own, to provide for all needs and interests of growing, aging and diverse populations.
• The history of the institutions of the voluntary sector themselves reflect a social history fully connected to the political realities in place when they were created.

For many, the history of philanthropy is conflated with the biographies of famous philanthropists. And to be sure there are many fascinating narratives of the superrich and the lives they lived – some of them tales of atonement, others of beneficence, all ultimately of generosity. But that is neither new nor unique to any one nation or culture or era.

What is distinctive if not unique about American philanthropy is not the magnanimity of the mega-rich, but the commitment to give among those of lesser means. This tradition started with the recognition that there really was no option: orphans, widows, the infirm, the aged, the unemployed had no place to turn other than caring individuals many of whom they knew from their own neighborhood or social group.

Thus begat institutions. There are needs such as education and health care and policing and fire fighting that simply cannot be done by individuals. Organized around ethnic, religious, or national origin backgrounds, many of these institutions, or their successors, continue to be the backbone of the non-profit service delivery systems around the country to this day.

But the world changed and the intimacy between those of means and those with needs changed as well.

Industrialization required concentration of large numbers of workers at the same time in the same place. It changed the demographics of cities throughout the world. Those who could afford to do so moved away – to places with cleaner air and more space. The implications for the philanthropy field were profound. Those who moved away did not leave behind their communal commitments. But how?

Intermediaries emerged to solve the problem of how to match means with needs. United Ways, Catholic Charities, Jewish Federations, Protestant Welfare Funds, Community Foundations all developed in the late 19th and early 20th Century to facilitate this process. These intermediaries guaranteed to cover the annual deficits of their designated agencies that continued to provide vital human services. As the 20th Century progressed, these re-granting intermediaries became the central players in community planning, organizational methodologies, and allocation of resources, a role they maintained until the century’s final decade.

Another development profoundly impacting philanthropy behavior was the emergence of a government safety net. Before the national social security system, funders knew that were it not for their support, those with needs would have no place to turn. Gradually, though, societal commitment that none should fall between the web, no matter how porous it may have remained, allowed individual funders to look at their philanthropy differently. For the first time, philanthropists could respond to subjective interest rather than objective need.

And if funders are going to make subjective decisions, then the non-profit world will make emotive pleas for support. Thus began the competition we all recognize – every organization makes its best case using professional fundraisers, all accessible media, and carefully honed appeals.

And, indeed, Exponent Philanthropy readers will hardly be surprised that a parallel sub-sector for funders arose during the 20th century: organizations that evaluate the legitimacy of these organizations, affinity groups of funders to provide mutual reinforcement, and education centers to provide the methodologies for making informed decisions.

Who would have imagined that all of these developments would emerge as unintended consequences of the New Deal?

And now, the 21st Century, has given us new realities, new policies, new technologies, and new philanthropic methodologies. But we will wait until the conference to discuss those.

Would That Be Such a Bad Thing? A Philanthro-ethics Question

April 17th, 2016

Richard Marker

In retrospect, I wonder why no one ever asked me before. The question – in the context of a course on grantmaking strategies – was: what would be so terrible if a funder overfunded a non-profit?

In my advisory work and in my teaching, I spend a lot of time helping funders “right-size” their grantmaking. To take just a few examples:

1. A NFP/NGO requested $x. The funder’s immediate assumption is all grant requests are bloated and funds half the requested amount.
2. A NFP/NGO sends a project request: The funder suggests that they should do it for less – with little regard to what it might actually cost to create a successful project.
3. The funder requires that the grantee do an evaluation of their program/project. The grantee [as too often happens] plugs in a percentage figure to satisfy the grant requirement, with neither side understanding that a reasonable evaluation simply cannot be done for that amount.
4. A funder is committed to a particular field of service and funds a program at a multi-service organization. The funder refuses to provide any infrastructure support [often mislabeled as “overhead”].
5. A funder has an [often unstated] expectation of publishing the results or that the new project continue beyond the length of the grants, but doesn’t fund capacity expansion that this nfp needs to keep this data or to raise the sustainability funds.
6. A start-up or early stage project submits a proposal for a wonderfully exciting project, but naively understates the real financial needs for the project to have even a reasonable chance of success. The funder funds the request, fully aware that it is an underfunded project.

Recognize any? While not every funder is guilty of these, enough are that it warrants significant discussion in a best practices workshop.

Some best practice rebuttals, seriatim:

1. Only funders can establish an atmosphere allowing openness and honesty about real numbers and expectations. If we as funders have the reputation of always reducing a request by a certain amount, it doesn’t encourage the openness to determine what the real numbers are. [Note to grantseekers: even if the onus is on the funder to set the tone, you are not exempt. There is a radical difference between legitimate rounding up and exaggerated hyperbole in telling your story.] 2. Organizations are often so hungry for funds that they will say yes even to grants that are clearly inadequate to achieve success. Often the nfp/ngo’s are well aware that, in accepting this money, they are almost certainly guaranteeing mediocrity, but they feel, they dare not say no to a funder. Indeed, underfunding does no one a favor: as funders, don’t we want what we fund to bring us credit and to be known for excellence, not mediocrity? Of course, not every project succeeds even when it has adequate funding, but a failure shouldn’t be because our funding approach has made that inevitable.
3. Evaluation, impact measures, outcome metrics are all the rage. Not a bad thing. Sadly, though, in too many cases, neither the funder nor the nfp really understands what program evaluation means, what useful results would be, and what kind of financial and human resources are necessary to get there. I have sat in far too many foundation proposal review meetings where the evaluation requirement is clearly a plugged number. If we want reasonable evaluations, we need to learn what they are, and what they cost – and then fund them.
4. So much has been written about the overhead myth that I will simply emphasize what should now be obvious. No organization can support a quality project or program without a strong organizational infrastructure. These dollars are critical, not irrelevant. It is reasonable to discuss what infrastructure costs are applicable to a particular funded project, but not to consider any and all such costs as simply padding.
5. You are beginning to see a theme: We as funders need to clarify what our expectations are and fund accordingly and appropriately. For many very strapped organizations with limited tech support, publishable data is elusive, or beyond the capacity of an overworked staff. For a project to outlive our funding, we need to structure our grant in careful collaboration from the very beginning.
6. This situation applies across the board, but is particularly acute among early stage nfp’s. The idea is terrific [or you wouldn’t be considering funding in the first place] but you are well aware that the submitted budget is far below what is really needed. If this were a venture capital project with comparable appeal, the funder would be all-in, with insistence on involvement, and provide funds needed to get to the next stage. Unfortunately, that same perspective seems to dissipate when it is an nfp. The founder of this great idea may very well be intimidated by the fundraising and underprices his proposal simply because of naiveté. There are times like these that a funder may choose to give more than requested, with an accompanying offer to provide welcome advice on organizational growth.

The underlying principle in all of this is that philanthropic grantmaking is not a negotiation but an investment in the success of an idea, a project, a program, or an organization. There is no doubt that, given the power imbalance, most nfp/ngo’s will take whatever we offer, but that doesn’t make that a winning negotiation. Indeed if we underfund or under support, no one wins. Our role in most cases is to “right-size” our funding, to give these projects the greatest chance to succeed. [See #2 above.]

It was in the context of this discussion that a participant asked an intriguing question. Now comfortably on the funder side, she began her post PhD career in the human service sector. She recalled movingly how stressed the organization and its staff were on a daily basis with barely enough funds to keep the doors open. Would it really have been “wasted” money if a funder didn’t simply “right-size” but chose to give more? Would that be bad philanthropy? Does it reveal sloppiness on the part of the funder? Would it spoil the non-profit? Would it erode the carefully honed discipline urging genuine information sharing between funders and grantees?

Or, perhaps, it is a sign that a funder recognizes how stretched so many nfp’s/ngo’s really are and this bit of unanticipated generosity makes a huge statement about the importance of their work.

Something to think about.

Words Matter #3 – A Plea to Colleagues

March 28th, 2016

Richard Marker

“Everything that can be said has been said, but not everyone has said it” has been attributed to so many historical figures that I dare not choose which one. Properly self- chastened, I am nevertheless returning to the urgent and imperative need to plea for a restoration of civility in public discourse, civic values, and communal behavior, and, in this post, our role in that.

As America and much of the world descends into a frightening and self-destructive path, none of us is exempt from doing what we can to restore some modicum of equilibrium and humanity to the national and international weal. Lest there be any misunderstanding, let me be clear about my own political commitments: nativism, racism, anti-Semitism, demonization of Islam, misogyny, xenophobia, demagoguery, and mean spirited personal attacks are abhorrent, and have no place at all in this year’s or any other campaign, or indeed in any credible and responsible public discourse. That they have any standing at all in the public space at this time is a sign of a cancer in the body politic.

Alas, my two earlier attempts to address these matters last summer didn’t have any more impact than those of many more influential and widely recognized leaders. And since I am not so naïve to believe that this post will touch the magic button among millions who need to hear it and heed it, I am restricting my audience to three groups of which I am a part where I can speak not “to” as an outsider, but “with” as an insider. Each one of these constituencies has something distinctive to contribute to the importance and value of words. Should others find these thoughts of value, that would be a bonus.

Professional speakers:

I discovered that “speaker” was a professional designation relatively late in my career. I only learned of the National Speakers Association/Global Speakers Federation about 19 years ago – and became a professional member a year or so later. Few of my fellow NSA members around the world share an expertise in philanthropy, to be sure, but the vast majority of us take our craft and responsibility quite seriously. After all, we are paid to use our voices and our words to influence change. Most of us, I believe, accept our charge with great humility, even if our public persona is one that projects confidence and assuredness.

Some have argued that politics is not our business. And while I concur that we may not be politicians, we are people who make our living through our words and speech. And thus our responsibility in this role has never been greater. We must model how to use words, public space, and roles of influence in ways that inform and shape both the possibilities and limits of how one uses those words and speech. As so many political aspirants have abused, badly abused, this unique space – with horrendous consequences, our modeling of a different and more responsible way is a veritable mandate.

Religious Leaders:

I rarely write about this but many of you are aware that I have had the unique privilege and honor of chairing two international interreligious bodies and have had leadership roles in several others. Insofar as much political discourse and behavior has revolved about interpretations and misinterpretations of the role of religion and faith, it is striking how different the international religious leaders I know behave and believe. They model, through words and actions, how one can honor the Truth of one’s own religious faith, and respect the True in that of others.

These religious leaders are not simply outsider modernists within their traditions. These have included many worldwide leaders of all three Abrahamic religions [to the skeptics, that includes many influential Imams from around the world] and of many of the Eastern Traditions. Many of the leaders’ names are widely familiar; very few would be called liberals by their co-religionists. None of these religious leaders feels threatened in his or her own profound commitment while acknowledging that others feel as deeply and profoundly about their own. All recognize the dialectic tension within every authentic religion between the particular and the universal, and use that as the basis for dialogue that transcends simple personal acceptance. [And, let it be said, all are embarrassed and angered by the usurpation by extremists in EVERY tradition who misrepresent authenticity in pursuit of narrow political aims.]

In America, it is so jarring to hear how religion is trivialized by politicians who, while espousing unshakeable faith commitments, make a mockery of those affirmations in how they disrespect others. Would that they could hear what I hear among the world religious leaders – and learn what authentic religious affirmation really is.

My call here is not to invite religious leaders to enter the political fray, but to publicly insist that their religions, our religions, not be besmirched by those whose words and actions cheapen what our religions really mean and espouse.

The Philanthropy Field:

In many ways, no group is better positioned to assertively address the erosion of decency in the public square than our field. Of course I am well aware of the limits on lobbying that US law imposes on private foundations, but I am also well aware that there is great elasticity in permitting assertive advocacy on matters of values and public consequence. Private philanthropy can do so with impunity. Its unique autonomy can allow us to be strong and unequivocal voices for sanity and respectability.

This argument for a clarion call for better behavior goes beyond a partisan political stance. I would hope that philanthropists on the left, right, or center would agree that no long-term good comes from a country or world rent asunder by hatred and fear. I would hope that all of us are sufficient students of history to see what has happened when nations and empires became poisoned by demagogic leadership. And I would hope that all of us remember that our legal legitimacy is to enhance “public good.”

None of us on the philanthropy side need change our missions or even our grantmaking strategies to join in a demand for the restoration of a civil society based on civility.

These are dark and ominous times – not only in our United States body politic, but also around the world. My pleas to colleagues, even if heeded, will not be sufficient to cure this ill. But we, those of us in our privileged roles, are certainly not exempt from recognizing our ethical and moral responsibility to act now, while we can. While we can.

Philanthro-Ethicism and Social Justice

February 26th, 2016

Richard Marker

This post was written a while ago for and in ancticipation of the forthcoming GMN conference in New Orleans. Given the extnsive on-line conversation this week about “power imbalance”, it seems timely to publish it now, a couple of weeks earlier than intended.

Last year, I coined the term “philanthro-ethics” to describe a particular set of questions of importance to funders. The term derives from the title of the book Philanthro-Capitalism by Matthew Bishop, published a few years ago. It has been quite gratifying to see that others have begun referring to “philanthro-ethics”. There was even an on line conversation about whether people like or disapprove of the term.

This perspective evolved after many years of teaching, speaking to, and advising funders on funder ethics. I learned early in my own career as a foundation executive that I was not fully up to speed on the unique legal conditions all foundations face, nor fully cognizant of the unique ethical challenges that should inform all funders. Indeed, even knowing what is a legal matter, what is an ethical matter, and what is a best/preferred practice matter is often not such a simple distinction and rarely taught.

Over many years of presenting scenarios helping funders get at all of this, I learned that many, many funders, even very experienced ones, had naively transgressed some of these boundaries. No reader in this space will be surprised to learn that I will sometimes hear rebuttals like this one: “that can’t be against the law since that is the way our foundation has been doing it for years.” Foundations, especially family foundations, need to be reminded that our name may be on the door, but it is no longer our money. We have huge amounts of autonomy in how to spend the money for public good, or who can be on the board or who can be employed or what investment policies we choose, but the impenetrable demarcation is when we confuse our autonomy and control with the right to use that money for our own purposes.

Simply abiding by the laws of self-dealing and salary setting is only the beginning. The reason I decided to coin the distinctive term “philanthro-ethicism” was the need to underscore that so many of the laws and the ethics surrounding funders have everything to do with power, the distinct and widely acknowledged power imbalance between funders and grantees, or within the confines of the family/foundation board room. Since that power imbalance imbues relationships in so many ways, and it represents an identifiable subset of ethics and philanthropy, it seemed important to have funders understand our part. Philanthro-ethics covers everything from conflict of interest policies, board composition, site visits, how one responds to requests, the timeliness of sending grant money, how we act among those who seek or have received funds, and much more. It is my belief that when funders behave well, ethically, and with “conscious use of self”, more honest and open relations with grantees ensue, and, presumably, better-informed decisions can be made.

It was only in the last couple of years that I began to fully make the connection between philanthro-ethics and social justice. But not in the way social justice funding is often perceived and defined by the funding community. I do care deeply about issues of systemic inequities, and funding efforts to address and redress them are what social justice funding is all about. But that is not what I mean in this context. I have long felt that funders, inadvertently, permit and even encourage some deep-seated inequities in the non-profit sector. For example, when we review a budget, do we ask about worker benefits? Do we ask about the lowest paid employees or only the highest paid? When we learn about these salaries, do we ask why there are employees who are paid below the poverty line – as happens all too often in social service agencies? Do we ask about staff training and career development? How often do we look at personnel as a key single budget line and wonder why a non-profit cannot hold the line or even reduce it – as opposed to seeing it as its key investment in quality performance? Have we bought into the misperception that non-profit is a synonym for charity – assuming that those who choose to work in this sector should be expected to demonstrate personal sacrifice as the price for being in the sector?

What about expectations? Do we express dismay or disappointment or disillusionment when a non-profit is not run more like a business [we will leave that discussion to another time] while not addressing the undercapitalization that characterizes most small non-profits? Do we deplore the absence of data when we ask overworked caseworkers with inadequate hardware and software support to give what we think they should provide us? Do we act as if we are “owners” of organizations we fund, asking, nay, demanding information on our own time line or site visiting when we want to.

You get it. Is this overstated? Are most funders better behaved than this? Do most already ask the right questions?

The purpose of putting philanthro-ethics and social justice behavior on the communal agenda is that it is a discussion our funder sector must have. And continue to have. To put our grantees on the defensive by asking them to question our questions is often counterproductive for them, and, as we said above, quite problematic given the ongoing and ever present reality of the power imbalance.

The session at GMN will look at scenarios getting at these questions. Your participation will help refine best practices for the field way beyond those who attend the conference.

Starbucks’ Misstep – Why it Matters to Us

February 25th, 2016

Richard Marker

Starbuck’s created a category: the universal coffee shop… with all sorts of things going for it: the offerings were predictable anywhere in the world and on the higher end of a quality continuum; they really mean it when they say that will re-do your drink if it isn’t right; they have enlightened personnel practices; it endorses and practices environmentally responsible sourcing – certainly better than any other large chain; they had an engaging and easy loyalty program; and they offer free bathrooms. In the world of impersonal and off-putting fast food places, Starbuck’s was several cuts above. Probably more.

In fact, while there were those who hate its imperialistic aspirations and decry its occasionally over roasted beans, let’s face it: in the world of solo entrepreneurs, Starbucks has become the de facto default office for a huge number of people all over the world. It is quite common to see folks with their computers sit at the same seat for hours on end every day. It is even common to overhear job interviews at the very next table [I don’t quite get that, but it happens enough that I guess it shows how spurious claims of confidentiality must be by employers!]

Long term twitter and facebook followers know that I post my Starbucks COL index wherever I travel. Since [unlike MacD’s which used to be the index of record] Starbucks has an international standardization, the only difference in my doppio macchiato from place to place is price. Whether in Beijing or Taiwan, or London or Paris, or San Francisco or Salt Lake City, I make it a point to compare prices as an indicator of whether these places are as expensive as my hometown of New York City. Quick answer: none in the USA, but many more expensive elsewhere.

As a creature of habit, I go to the same Starbucks every morning after the gym. In fact, when I walk in the door, I don’t even need to order since my standard order is known by virtually all baristas. They start the expresso even before I get to the register. Some say that New York is impersonal. No, it is just a series of micro-neighborhoods.

Back to our point:

Starbuck’s announced a change in its loyalty plan which has gotten no end of press. Before weighing in, I wanted to let my own feelings settle. In the end, I believe that Starbuck’s has made a major misstep that calls its culture into question.

Any company has a right to rethink its loyalty program to reflect its own needs and the interests of customers. But when a loyalty program makes it much more difficult to be loyal, why bother? [Some companies learned this the hard way.]

There are many business experts in marketing and branding whose insights on loyalty programs are far better informed than mine. It does seem to me that Starbucks could easily have grandfathered [sorry about the gender…] its gold members even after the change. They could have made the new price point for a reward more incremental and less draconian – much closer to the existing one, even using a new metric. They could have been less specious in their justification – that a majority of loyalty users were requesting the change. More to the point, they could have spent much more time considering what loyalty really means to their coffee drinking public.

Which, in turn, brings me to a larger issue of interest to our readers. In the philanthropy and non-profit world, the erosion of loyalty to organizations is cataclysmic. Among the many reasons is the sense that organizations care more about financial support than individuals. Or the perception that organizations convey an assumption of your obligation to them rather than a commitment to your meaningful engagement.

The non-profit world itself too is a victim. The workplace itself has changed – at-will employment with 24-7 expectations. Reward for reduction in labor force rather than expansion. Reducing fringes as if they are simply perks to be disbursed as a favor. And even our government, sad to say, has become hardhearted and heavy handed. Dismissing entitlements as if they are simply unearned handouts [as some advocate] is disingenuous and would be grounds for breach of contract if it were the private sector. People have paid into social security and Medicare for years and should trust that they have earned their benefits. Yet these benefits are derided as too expensive. Why trust that anyone cares?

So… when one of the few private companies that has celebrated its values, its customer service, and its genuine commitment to its employees – and deserves respect for them – suddenly changes its plan in a way that the majority of loyalty users find dissatisfying, it is particularly disappointing and infuriating. As a private business, Starbucks doesn’t owe us anything. But, it would be a nice breath of fresh air if Starbucks were as true to its culture of customer responsiveness as it claims. That would truly be worthy of loyalty.

Site Visits: Good Due Diligence or Organizational Intrusion? A Philanthro-ethical Perspective

February 4th, 2016

Richard Marker

Site visits? How is that an ethical issue?

Every “how-to” manual on grantmaking due diligence talks about how useful a site visit can be. After all, 990’s, annual reports, and proposal narratives can tell us only so much – a lot, but sometimes we really want to get the full flavor of a potential grantee. Meeting with the development officer or even the executive director in our office can help elaborate on the submitted narrative, and, depending on the proposal, may give enough information for a funder to make a decision.

But sometimes we very much want to see the program or organization in situ. Is the new space really a cutting edge environment for preschoolers? Are the secondary school participants really more engaged than we have seen in comparable programs? Is the atmosphere for at-risk homeless really more conducive to more effective re-integration into the community? Are the senior citizens visibly more alert than at other drop-in centers? Is the proposed site for the relocation really going to serve their demographic better?

In these situations, and others like them, seeing is convincing – or not. Our decision probably does hinge on what we see, how we feel about it, and how the questions are answered. Our meetings with those providing the service will give us a more dynamic sense of what is actually happening, what is still aspirational, and what may be, at best, well-intentioned hype.

But what if the site visit isn’t relevant to our decision? We have already made up our mind about whether or not to fund the proposal but figure no harm in taking a look-see. Or our guidelines are very clear – this organization or project or facility will never get funded, but it looks like an interesting organization, so why not? Is that legitimate? Is there anything wrong with that?

Let’s look at this from the other side… For a non-profit organization, a visit from a potential funder gets it salivating. A dollar sign is about to walk in the door. And would they be there if they weren’t committed? That visit, though, comes at a cost. An announced site visit is an intervention. There is a good chance that someone, most likely the CEO in a smaller organization, has passed along a message to “clean your desk”, “dress up”, be on good behavior because a funder is coming! A funder is coming! That interruption may merely be a bit of a nuisance for those in offices, but can be outright disruptive for a direct service provider. Talking to the aforementioned early childhood teacher can be extraordinarily interesting, but it also means taking her [usually it is a “her”] away from her charges. If our potential decision will hinge on this visit, and if the amount of our potential grant justifies it, then that kind of interruption will be worth it for all. But if we are just there as a visitor or voyeur – for our general edification, we may want to think twice about whether it is the right time or place.

What about an unannounced visit? There are places and times where such make a lot of sense. Do we want to decide whether to support a theatre company? Buy a ticket and sit unobtrusively in the audience first. Do we want to decide if we are interested in supporting a program of a multi-service center? Stop in, as any other potential constituent might, and see how we are welcomed and what information is easily available.

In these cases, if we are positively inclined, it will make sense to follow up to schedule the “announced” site visit. But it is a bit unfair to simply show up somewhere and assume that the staff will drop everything to show us around, unless, of course, there is someone whose job it is to do exactly that for all visitors.

Some of you will say: But what if I want to consider a revised funding focus or priority? or we want to consider expanding our funding to a new community? One of the ways of helping to decide that would be to visit places even though we are nowhere near ready to consider funding any of them.

The key phrase in the question is “helping to decide.” There is indeed a decision to be made and there could be a strong case that a series of site visits can bring us up to speed. To be completely fair to the sites, though, articulate in writing why we are coming, that we are not currently – and may never be – open to a proposal, but that they represent a field of service or expertise of importance to us, the funder. Discuss ahead of time who should be visited, and ask when is the least disruptive time. And perhaps it would be useful to send along a series of bullet point questions so it is clear what we want to discuss. [My experience is that, if we don’t do that, an organization assumes that we are interested in them as an entire organization and they will be prepared with their best sales pitches; if we only care about their after school activities, our advance questions will make it clear that their senior citizen center is not on our agenda.]

Why is this discussion a philanthro-ethical one? A site visit is an example where the power imbalance can come into play too easily. How many organizations will have the courage to say to funders, potential or existing, that it is really a bad time? Or that we are abusing our assumed access for no value to the organization when we expect them to mobilize all staff to be available to talk to us? Any time that the power imbalance can influence behavior, it is a philanthro-ethical issue, and all funders need to be sensitive to whether that particular fact finding process is the correct one.

In the case of a site visit, when a decision genuinely depends on it, it can add great value. Other times, think about it carefully.

Exit Strategies: Why, When, How

January 27th, 2016

Richard Marker

It is only coincidental that this post is being published during the current international financial whirlwind, but I suspect that some of the suggestions will prove useful to funders this year. In fact, though, as any who have taken our seminars in grantmaking strategies over the past years can attest, it is my view that every grant should have an exit strategy from the very beginning. This short piece will outline only a few guidelines for how to think about exit strategies. At the conclusion, you will see a reference to a more expanded piece that funders may request.

The essential principle is that one should think about the end of a grant or contract at the time one decides to make the grant. When expectations are articulated properly, it helps define what will determine if you deem it successful and if the experience is gratifying for you as a funder. More, an exit strategy stated upfront will help grantees know what your expectations for the project are, and what their relationship with you as funder should be going forward.

Articulating these expectations along with the decision allows for a very constructive discussion with a grantee at an early enough stage that record keeping, modifications, deliverables are built into their accepting the grant – or, perhaps, rejecting or renegotiating it.

When I first started teaching about exit strategies in 2002 I was guilty of a common error that many of us on the funding side make. We have a tendency to think about exit strategies only at the time we decide to discontinue funding – for whatever reason. The issue was particularly acute in 2001 and then again in 2008 as funders were faced with very difficult choices as the economy – and shifting priorities – forced some challenging funding choices. My earliest presentations focused almost exclusively on best practices and ethical principles of discontinuing funding for long time grantees. Those principles are still useful guidelines in those circumstances.

It didn’t take me long to realize that I wasn’t adequately addressing the underlying and essential principle of exit strategies: every single grant has an end. That doesn’t necessarily mean that a funder will no longer provide that grantee additional funds. Indeed, often the end of one grant can lead to new or renewed funding, It does mean, though, that, at least implicitly, there are some assumptions about what would be required for additional funding. Thinking about exit strategies from the beginning can help formulate and make explicit what those requirements should be.

Another area where an exit strategy is indispensible to effective grantmaking has to do with deliverables. If one wants publishable results, or a robust evaluation of the project or process, or replicability of some sort, or insistence that there must be sustaining support beyond your own, waiting until the end of a grant to articulate these expectations is a very counterproductive approach…for everyone concerned. Thinking through, articulating, and agreeing upon these matters at the very beginning of the grant will radically increase the probability of mutual satisfaction and a successful experience.

Many funders, sadly, find that their experience with their grantees leaves them less than gratified. Sometimes it is because a project didn’t meet the desired expectations of both the funder and the grantee. Nothing wrong with that – failure happens. Sometimes it is because, in retrospect, it wasn’t a grant or project that fit well in a funder’s portfolio. It wasn’t the grantee’s fault that your own decision making process was a bit off base. Sometimes, disappointingly, grantees don’t do what they say they will do, and that needs to be addressed or redressed.

But sometimes it seems that you and the grantee are just out of sync. There doesn’t seem to be anything wrong with the project, or even the behavior of the grantee, yet you don’t feel good about it. In these cases, there is a pretty strong likelihood that you didn’t formulate your expectations in a coherent or actionable way, or more likely, think through and pre-determine what relationship would make you happy. If a grantee has to guess what you want, that is your fault and your responsibility. [Note to grantees: if a funder doesn’t tell you, ask! Not every funder will have read this or taken our courses.]

Exit strategies are always the responsibility of the funder as are setting expectations. The earlier a funder does so, the easier it will be for a grantee to respond appropriately and effectively. In the end, figuratively and literally, it makes for more successful grantmaking on all sides.

[For those who are interested in a PowerPoint on “exit strategies” for a variety of different circumstances, please send a request via email or through our website. That presentation expands on many of the items in this post.]

Philanthro-ethics for Philanthropy Advisors: Transparency or Confidentiality

January 20th, 2016

Richard Marker

In previous posts, I have addressed the complex and often contentious issue of the extent of funder transparency. Even those foundations espousing a “glass pockets” approach don’t necessarily agree to what extent their decision-making should be made known to the public. While US based foundations must publish every single grant in a publicly accessible 990PF, there is no field-wide consensus on what else should be revealed. In prior articles, we reviewed the variety of approaches and the principles underlying them. This post, though, discusses a different element of transparency – that of and by philanthropy advisors.

Every once in a while, a juxtaposition of seemingly unrelated incidents gets one to thinking. A participant in a recent course for funders at the NYU Academy underscored the inviolable commitment of his/her advisory firm to the anonymity of their clients. As everyone in the class shared their own stories, dilemmas, and challenges, this participant often demurred under the ground rules set by her/his firm.

During that same week, a very respected colleague in the philanthropy advisory field published another in a regular series of thoughtful blog pieces filled with references to his/her clients – all identified by name. This person has a most impressive list of clients, and the references certainly gave vibrancy to the illustrations.

These two highly successful and legitimately respected philanthropy advisors clearly have diametrically opposite approaches to one very key element of their own practice.

As suggested in the first paragraph, in the world of philanthropy, there is no consensus on the issue of best practice toward transparency, confidentiality, and anonymity in general. But for US foundations, there are at least explicit minima. [In most other nations, there is a very different legal process for and role of foundations.] But for those of us on the philanthropy advisory side, there are no such explicit ground rules. Yes, attorneys and money managers have legally defined proscriptions, but philanthropy advisors are a different profession, related – but different.

There are many clients who expect or demand confidentiality and I am sure that even the colleague who publicly celebrates her/his clients fully respects this request.

And there are many funders who are perfectly happy to have the world know that they have chosen to take advantage of outside expertise, and readily give permission to have their name used as case examples or even as references in marketing materials. Yet the first firm’s policy explicitly rejects telling anyone who they are even in those circumstances.

My own practice is more aligned with the anonymity approach. Over the years, we have received many wonderful letters of thanks and praise for our advisory and educational work with funders, and many others for our public presentations in the philanthropy field. We have erred on the side of confidentiality. While many have told us, explicitly, that we can use their names, our concern has been that a funder who demands confidentiality might be reluctant to call if they see that others’ names are used in a public fashion. [When asked for references, we only share relevant contacts that would not violate our confidentiality commitments.]

Occasionally, clients announce our role. One very prominent foundation celebrated us on social networks the minute we walked out the door. Who are we to protest? Yet, while we are happy to tell folks of our experience with them, we wouldn’t put their name in this article, or on our website.

Another very prominent foundation client’s policy is that consultants/advisors may verbally tell people that they were clients, but not put it in writing. They found that their original policy of absolute confidentiality was breached so often that they came up with a compromise they could live with… and enforce.

We have had the pleasure of working with funders in many parts of the world. In the USA, decisions about recognition vs. anonymity are typically quite subjective, extensions of personal or organizational preference. Elsewhere, though, confidentiality is a virtual mandate. To take just two examples:

In some parts of Latin America, discretion and confidentiality are issues of safety and security. Those of wealth are constantly aware of their existential vulnerability, literally, and organize their lives and their philanthropy around that reality. It would be the height of folly, and professional suicide, for an advisor to violate the expectations of secrecy and confidentiality.

Interestingly, in Scandinavia, we have also been sworn to secrecy by clients and even by attendees at education programs – but for very different reasons. In nations where the society is committed to egalitarian access for all, including human services, education, and culture, publicly celebrated private philanthropy is viewed with skepticism. To visibly celebrate one’s wealth is an expression of déclassé egotism. Our clients, some of whom would be well known in their countries and even elsewhere in the world, are absolute in their insistence on confidentiality. [Interestingly, corporate philanthropy is a notable exception to this regional cultural inhibition.]

On one level, this discussion is about an important but limited matter of best professional practices. All of us have to balance our commitment to professional standards and the needs for effective marketing. Both of the colleagues mentioned earlier are representative of thoughtful interpretations of the need to honor and respect their clients, even if they come down on different sides of how public to be.

On a larger level, though, this represents a much more challenging realm and one I have addressed many times previously: the field of philanthropy advising has no barrier to entry and no common standards. Philanthropy advisors are entrusted with consulting on billions of dollars of decisions, matters of profoundly important public policy, delicate matters of family priorities, and the shape of the ngo/nfp sector. Yet, there are no national standards, no field accepted accreditation, no registration, no accountability. Yes, there are many wonderful, responsible, educated, ethical and experienced advisors; but sadly there are many whose only credential is that they have managed to have clients.

From a philanthro-ethics perspective, the issues raised in this piece, about confidentiality of clients, are simply the tip of the iceberg. Knowing where best practice ethics and philanthropy law diverge, understanding differing cultural mandates, aligning funding priorities with conflict of interest policies, respecting the legitimate needs and space of grantees, learning how to recognize and rein in the implicit power that funders bring to every funding relationship are just some of the more evident areas that are addressed in good educational programs and should inform a code of ethics and a widely accepted credential. I would hope that such a code and credential will someday become the norm.

A Postscript:

For the last 14 years, as most readers know, I have been committed to helping to provide an appropriate educational response to this lacuna, through the NYU Academy for Grantmaking and Funder Education, the Wise Philanthropy Institute, and as a guest presenter elsewhere. Many hundreds of philanthropists and foundation professionals from around the world have availed themselves of these courses or contracted with us to provide education at their sites. And there are a few other quite respectable centers of philanthropy education. Nevertheless, I would be the first to acknowledge that all of these have merely scratched the surface of the need, and there is still no consensus on a professional level credential. Furthermore, as a cohort, far too few philanthropy advisors have taken these courses or those offered by other accredited institutions.

As before, I invite others to join in helping to develop appropriate standards and professional level certification requirements. Every other profession has such standards. The funder part of the philanthropy world deserves and should require no less.

A Post Reprise: The Market Ride – Implications for Funders and their Grantees

January 19th, 2016

Richard Marker

This was published previously. As you will see, it has references to a different season. But the wild finanancial markets of this January make it timely nonetheless.

We’ve been here before. It wasn’t fun then and it isn’t fun now. No one and no foundation likes to see 10 or 20% of net worth or net assets disappear in the blink of an eye – or in our era, before our eyes on screens both large and small. Certainly doesn’t make me happy. Wiser folks than I can comment on the causes and what you should and shouldn’t do as an investor. I will restrict these comments to the sector I know best. For those in the funding world, there are some useful lessons from past wild swings.

1. If you are a foundation, you should be celebrating your decision to do 3 year averaging for determining your asset base and grantmaking budgets. Whatever happens during the remaining 4 months of this year, your grantmaking planning will have the cushion of time to do whatever longer term re-thinking may be necessary.
2. This has a great advantage for those of your grantees who receive a substantial amount of their gifts from funders whose decisions are more checkbook sensitive. Unless there is a significant rebound by December, they will all see reductions this year in their end of year giving but know that your prior commitments are reliable.
3. History has shown that there can be various grantmaking approaches depending where things end up after the market settles down. It has also shown the fallacy of funders responding too quickly and precipitously. We know that recipient organizations will have differing needs: some will need to account for cash flow challenges of slower government reimbursables; some will feel that their own destiny lies in consideration of a merger that they had resisted previously; those that receive the majority of their support from major gifts and foundation grants will probably see a deferred response [see #1], but may have a slower recovery for the same reason; some, having 2008 fresh in their memory might be panicking and asking their funders for emergency support – at a time when funders are psychologically spooked. Your own support – or non-support – should weigh how those needs align with your own giving strategy.
4. Remember, we have an advantage this time around because of 2008. Many funders were forced to rethink our own priorities, values, and strategies. The market may have done very well these past few years, but not for such a long time that thoughtful funders ignored our own strategies carefully honed in 2009 and 2010.
5. If you do find that your funding capacity becomes significantly reduced when you do need to make decisions, we can be helpful with ethical and productive approaches to think through your own situation. If and when that happens, be in touch directly for some proven guidelines that I will be happy to share.
6. Those of you on the non-profit side seeking funds should also take a deep breath. Thoughtful funders are waiting this out. Stressed investors are not in the mood to hear from panicked non-profits. Hopefully you too learned the lessons of 2008-2009 and have deeper reserves, are more ready for uncertainties, and have an informed governance and leadership team able to steady your ship. If you are a start-up, you are forgiven if you don’t. If you have been around for a while, shame on you if you don’t.

As I said above, we’ve been here before. Anyone who says that we are in a cataclysmic time is probably needlessly histrionic. Anyone who said it wouldn’t happen again has refused to learn from history. And for the rest of us, take a nap; turn off the TV, and take that end of summer vacation you need more than ever.

Collaboration is [usually] good; but, are you a good collaborator?

January 5th, 2016

Richard Marker

Long time readers are aware that a checklist on funder collaboratives and partnerships, written over 10 years ago and updated regularly since, is the most frequently requested “how-to” piece in my oeuvre. The philanthropy field has bought into the value of both funder collaborations and funder-grantee partnerships. Every couple of years a slew of articles are published advocating the importance of collaborations, partnerships, and collective impact. The piece I wrote, used by many funders [I am gratified to report] and still available upon request, helps determine how suited your organization or foundation may be to be a collaborator, and what should be thought through before actually entering into such a relationship.

Funder collaboratives are all about leverage. The leveraging power of collaborations is undeniable: Sometimes it is to leverage more money, sometimes to leverage more expertise, sometimes to leverage more influence, and sometimes to mitigate risk. As funders recognize that most of the systemic problems we face confound the capabilities of any given funder or sector, it seems a no-brainer.

Yet we all know that mergers, collaborations, and partnerships fail. A lot. If they are so beneficial why is that?

From an organizational or foundation perspective, the answer is simple – even if the details are complex. Simply put, collaboration requires that some degree of autonomy be surrendered. Group decision-making takes time, energy, willingness, and no small dose of courage and humility. It is much more efficient to do things on your own, at your own pace, with your own ground rules. It is only worth it if you believe the long-term gains outweigh the short-term tradeoffs. The above mentioned checklist can help you decide.

Sometimes, though, even when all of these things are resolved, and the partner organizations achieve genuine consensus on all the elements, things go askew.

Well, believe it or not, organizations are comprised of people, individuals with their own quirks, personalities, insecurities, competitiveness, ambitions, and style. Just as not every foundation is suited to be a good partner, not every foundation professional or organizational executive is temperamentally suited to be a good partner. And just as it doesn’t necessarily make you a “bad” funder if you choose to go it alone, it doesn’t necessarily make you a bad person or bad professional if you aren’t in sync with others at the table.

If, though, everything else seems aligned and you are the one whose discomfort is the stumbling block, or if you find that others in the partnership regularly consult with each other and you aren’t included, or if you aren’t even invited to the planning table, some self-reflection may be in order. You may not be aware of your own mixed signals, or that your careful diligence may come across as negativity, or that your personal agenda keeps getting put on the table. Yes, it is always possible that there are other things going on that have nothing to do with you. They may or may not be correctible, perhaps not by you. But sometimes it really does come down to you.

How important is it to you or your organization or foundation that you become a player in the collaboration sphere? Maybe it is perfectly fine if you choose not to play. But if you or others who count decide it really does matter, here are some corrective steps to take that might help:

1. When the time is right, acknowledge that you realize that you might have been perceived to be in the way. This is not a suggestion for a public and passionate mea culpa but a quiet admission to the functional chair of the group of your new self-awareness. Sometimes this will work, sometimes not, but you might be surprised by the new openness toward you. After all, collaborations are hard work and knowing that you are newly committed to the “team” may be eagerly received.
2. When you are already in an ongoing collaboration, bend over backwards to be publicly supportive, positive, say, “yes” more than you might otherwise, and model that you get it. Studies have shown that if you start with “yes”, there is openness to disagreement, but if you start with “no”, even agreement is suspect.
3. If you feel that you aren’t being included, you may need to proactively show that you do get it. Look for new opportunities, offer to take on a project, initiate a new collaboration, look for allies – not against others but with those who don’t find your style problematic.
4. Ask one or two, but not everyone, if there was an incident that turned people off. You may not be able to retract it, or even change people’s minds, but it is a lot easier for you to adjust your affect if you know from where others’ opinions are coming.
5. I suspect that many of you have other ideas as well. Please share them.

6. An additional word about the unique challenge of funder-grantee partnerships: the implicit power imbalance makes these even more delicate for funders than collaborations among funders. They require a special level of mutuality to work. And while grantees are always aware of the imbalance, funders are often less self-aware. Recently, I had occasion to observe such a situation: the funder, a highly regarded, experienced, and well-intentioned professional, was absolutely convinced that s/he had a very open and trusting relationship with the foundation’s grantees. S/he was sure that some continuing obfuscation and delaying was not a tactic related to the foundation but rather the result of extraneous circumstances. It became obvious to an outsider, i.e., me, that the grantees felt in a bind: they did not want to say no to such an important and reliable funder, but the conditions the foundation applied to certain grants were simply unattainable. Frankly the professional was shocked – s/he was caught by surprise to learn how intimidating s/he appears.

A funder must work very hard to make it safe for a grantee or potential grantee to be fully open and completely honest. This blind spot on the part of that particular funder got in the way of moving a worthy project along for a long time – and jeopardized long cultivated relationships with at least two grantees.

A reassuring last word: Foundations and organizations rarely restrict themselves to a single collaboration. Any given attempt may not be salvageable, but the next one may be a winner. Make sure that you enter the new one with an engaging collegial approach. Who knows? You may become the “go-to” partner of choice.