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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.

New Year’s Hangover…From All Those Solicitations?

January 1st, 2016

Richard Marker

Happy New Year. Some frolicked with throngs until the wee hours; others had a quiet evening. And most did something somewhere in between. The New Year has begun.

If you are like most of us, the new year greets us with melancholy and ambivalences: wishes and optimism for new opportunities and reminders of missed opportunities and personal losses in the one just concluded. Under the pressure of those ambivalences, we make all sorts of well-intentioned resolutions. And for many of us, most of them are “decisions and revisions which a minute will reverse.” [t. s. eliot]

The political and non-profit fundraising industry counts on that to raise lots of end of year funds. Were any of us immune to the incredible onslaught of solicitations – reminding us that we have only 2 days, or 2 hours, remaining to make that gift before the year ends.

You cannot blame them. All of these non-profits and political candidates count on voluntary discretionary support, and why not do everything possible to get you to make a gift? I am not a fund-raiser and don’t know much about fundraising, but I have to assume that these last minute solicitations must actually work or they wouldn’t do it.

I am, though, an educator of and advisor to those who give. And for most of us, last minute reactive giving leads to very non-strategic and too often mindless philanthropy.

That doesn’t mean that the 11th hour contribution is necessarily money wasted. There are many legitimate and worthy causes and candidates and it isn’t always irresponsible to give to the ones who make the strongest case or play on your emotions at those pre-midnight moments when one wants to close our metaphoric and financial books on the year.

But it certainly doesn’t represent the best of strategic and intentional philanthropy for most of us. Why?

• The reminders that most organizations give about in-time tax deductions is accurate but not particularly relevant for most. Most US citizens don’t itemize their charitable deductions, or if they do, don’t give so much that it makes much of a difference in taxable income. Those who do itemize and give at sufficient levels that it does make a difference have probably already planned their giving well before December 31.
• Only a small percentage of earners don’t know how much they will have earned for the year until December. Most of us make roughly the same amount of money each month throughout the year. Therefore giving throughout the year allows for our philanthropy to be part of more careful financial planning for us, and, no less important, is more beneficial to recipient organizations so they don’t rely on a frantic end of year campaign. Perhaps if more people gave this way, fewer organizations would indulge in end-of-year frenzy.
• Giving under psychological or social pressure means that you may be less informed in your choices. There are so many sources of accurate and useful information available to everyone these days so a giving strategy should not be a discipline only of the wealthy. All of us make decisions every single day: what do we say no to, even if only by ignoring requests that come by phone or in the mail. And most of us do give something – whether in a pew collection plate, or to a sidewalk Santa, or through a payroll deduction, or by a neighbor’s girl scout cookie request, or at the supermarket register asking us to round-up for the hungry. How much money one has needn’t matter, but if we are going to give something, shouldn’t that giving reflect personal or family values? There are many very valid and legitimate giving approaches one can make. Once we have thought about it and discussed it with other family members, it is much easier to decide ahead of time what we are going to say yes and no to.

There should always be space for compassion in our giving. No one can anticipate every flood, tornado, or human-caused tragedy; a giving strategy should certainly leave room for the unanticipated. It is fully human and humane to be spontaneous when faced with suffering and need. But we do our philanthropy better, and are less befuddled by all of those solicitations, when we do our planning in January, on our own time, and not in the last week of December, on someone else’s schedule.

Happy New Year.

The Right Question: The Wrong Solution

December 29th, 2015

Richard Marker

In a recent op-ed [“It’s Time to Tax Harvard”, Chronicle of Philanthropy, December 2015], Professor Michael Ryan Fricke addresses a legitimate quirk in American philanthropy law. Public charities are permitted to accumulate funds without any spending requirements or tax obligations. He proposes some interesting solutions to an inequity many of us have identified. I applaud his thoughtful suggestions to move the discussions onto the public policy stage.

His example of Harvard is both on target and also a problematic straw-person. It is easy to suggest that the holder of the largest endowment should have both spending and tax obligations. After all, the endowment is built on tax-deductible gifts and the earnings are themselves [on the whole] tax exempt. It is reasonable indeed to posit that there is something wrong with the picture if there is no legal obligation to spend one penny of their earnings on behalf of students or faculty or anything other than making more money.

And if this is true of Harvard or Yale, it is even truer of the massive amounts of money in donor advised funds accumulated and managed by tax-exempt entities established by investment companies such as Fidelity, Vanguard, Schwab, and more. After all, these entities don’t even have the façade of education, health, culture, or social service.

We also need to be fair. Almost all of these universities and museums do spend a respectable percentage of their endowment earnings, and, taken as a whole, the donor advised fund field does spend a respectable portion of their accumulated earnings [even if not every fund does.]

The issue, though, as correctly pointed out, is that they don’t have to. They can accumulate an unlimited amount of earnings tax-free. And all under the guise of “public good.”

Professor Fricke proposes a complex set of conditions, formulas, and ground rules to both encourage spending and to tax excess unspent earnings. In my view, his carefully articulated proposal is too complex and would apply an unfortunate administrative burden on both public charities and the IRS. Rather than examine each one of his suggestions, I would like to propose a much simpler solution: Apply the spending and tax rules of private foundations to endowments of public charities.

These rules are quite well developed and understood, and pending the long expected adjustment to simplify the calculation of the excise tax rate, pretty straightforward to administer. Simply put [and in non-legalese]: A minimum of 5% of the corpus must be spent for the purposes of the foundation. The process of how and when the amount of that corpus is determined must be pre-declared. Certain operating expenses may be applied to that 5%. An excise tax is levied on the earnings of the endowment but not to new contributions or additions to the endowment. [There is more, but this summary should suffice.]

The more consistently we treat monies accumulated for pubic good, the easier and better for all. If one wants to argue that there should be a minimum exemption for smaller endowments for public charities – perhaps – just to pick a number – under $10m, let it apply to private foundations as well as public charities.

Similarly, if it is viewed as a public good to reward spending a higher percentage, let the excise tax be dropped completely at, say, 10% for both private foundations and public charity endowments.

I am not hereby suggesting that private foundations now be treated like public charity endowments and that all of the other unique restrictions on private foundations be dropped. There are good public policy arguments for most of them and they serve to hold these privately controlled funds accountable in ways that the public should care about.

I am though suggesting a new discipline for public charity endowments. If monies are raised and invested for the public good, and tax favored because of that, there should be good reason to know that a defined amount of that money will be spent each year for the public good.

I am sure that one can argue that there might be some remaining inequitability in this simple solution, but I believe that it would be easier to apply, administer, and legislate than the well meaning but needlessly complex approach of Professor Fricke.

College Plus 50 – Some Thoughts on a Personal Milestone

December 28th, 2015

Richard Marker

Alert: Every once in a while, I post some thoughts of a personal nature, unrelated to philanthropy. If you read my posts only for the philanthropy insights and commentary, you may want to skip this one.

As December draws to a close, so does the 50th anniversary of the conclusion of my undergraduate experience. True, the actual reunion of my ’66 classmates isn’t until May, but since, for reasons not relevant to this post, I chose to finish a semester early, my 50th came now.

A 50th anniversary of any sort is worth noting, but not because of any particular accomplishment other than longevity. Nevertheless, the older one gets, the less dismissive of longevity one gets. Even at the age of 70, my list of those no longer among the living grows. So thanks for the congratulations and good wishes.

This post, though, is not about my personal numbers, but some thoughts on how different the world is today from the one I graduated from. They were stimulated by a straightforward question by a colleague who, when I mentioned this milestone year, asked why I haven’t been an involved alumnus at my alma mater over the years.

It made me realize how much I, and the world, have changed.

When I was an undergraduate at Penn from ’62-’65, it was not yet the “60’s”. They had begun a couple of years earlier on the West Coast, but as a movement, it took until 1966 for the “60’s” to take hold on the East Coast. Our undergraduate lives were more like the 50’s: we regularly wore ties and jackets to classes and university events [required at dinner]. Our typical aspirations were to enter the world of our generic fathers [only some mothers were career driven at that time]. Culturally we were all WASPs or WASP aspirants. There was cultural homogeneity – it didn’t matter whether we were Catholic or Jewish or Black or Asian, our desired model was an upper class White Anglo-Saxon Protestant male. Cultural difference wasn’t encouraged or even socially accepted. We went to, or at least belonged to, the Church of our choice, even if that church was a Parish, Meeting House, or Synagogue. Mosques or the Temples of eastern religions weren’t even on the checklists. Cultural differences were tolerated, perhaps, as a curiosity, but surely that would limit one’s admission to certain clubs, and employment at some banks and law firms.

Many of my fellow graduates married shortly after graduation. And a very high percentage of the graduates of the class of ’66 entered the careers that they had all the way until retirement. We were the very youngest of the pre-Baby Boomer cohort. Born in 1945, my birth age always put me as the youngest of “the greatest generation”.

Or perhaps, despite the arbitrary cut-off age ascribed by the demographers, the oldest of the Boomers. Everything changed, and changed rapidly, over the next couple of years after my graduation. By 1968, the political and social upheavals [and, make no mistake, they were two separate if overlapping movements] we call the “60’s” were the norm. Young people no longer dressed like or behaved like their parents – just the opposite, parents wanted to be like their young adult kids. People made choices based on their current interests, not a lifetime commitment. Careers, spouses, locales and even identities were transient and temporary. Cultural pluralism replaced the homogeneity mentioned above. Those of us who had not begun our adult lives by the mid-60’s were living very differently than our already ensconced peers. Our social lives, political behaviors, and aspirations were very, very different than the lives we lived as undergraduates only 2 or 3 years earlier.

The cataclysmic changes didn’t end when the putative ‘60’s did. The changes we are living through in this century are even more transformative, far-reaching, and, in some ways, even more frightening. The very technology that has changed everything from epistemology to concepts of community to definitions of identity to challenges to the very definitions of what it means to be a person have made it possible – if elusive – for a much greater percentage of mankind to benefit from the promise of “progress.” These changes go way beyond whether we can wear jeans, or even how to get out of Vietnam. As knowledge, communication, and everything else transcends our previous boundaries and borders, and as we come to grips with our voracious indulgence with the earth’s limited resources, we see that no one and no place is immune. The fragility of the social compact which holds societies together has never been more evident; even the earth itself is now more fragile than it has ever been.

About those undergraduate years…occasionally I will recall an incident or two from my undergraduate days, or even a class I took. But the subsequent years have informed my adult life in ways that make me a very different person than I was then.

For me, these 50 years have been very far from a single continuous career, community, or life style. Reinvention has followed me along the way: I have had 5 successful careers, lived in 5 different places, had 2 marriages [the second of which is a wonderfully happy one], and constantly evolving volunteer and leadership commitments over that time. My work and volunteer leadership have taken me around the world and introduced me to many boldface names. Very little of that would have been predictable in December 1965 when I graduated. And even less of it was part of a plan. Serendipity and opportunity played as significant a role in that progression as evolving passions and interests. When I meet people my age, they look upon my life’s perambulations with surprise and fascination. Younger people find my personal journey instructive and interesting, but not so surprising. They take these life transiencies for granted.

I doubt there will be 6th career, but one never knows. Only now do I see the full flowering of skills cultivated over the years. Far from being ready to move on, I enjoy my current professional work as much as ever, am continually energized by it, and would gladly do even more. And there seems to be evidence that I am better at it than ever. Perhaps you are wondering: ”what took you so long?”

At the same time I am not so naïve. I can see that I am treated like an “elder” in many settings. Hey, it’s better than “has-been!” “Emerging” is no longer the description of my extracurricular leadership roles. I am fully aware that there are contracts or speaking gigs or board roles given to younger folk for no other reason than they are younger. It is only fair, though. In looking back, I can see that others, maybe more suited, were frequently passed over when I was a wunderkind.

As I get to this stage of life, I cannot but wonder if I will have the wisdom to get out of the way, or to move on while I still have the energy and good health to do so on my own terms and with my dignity intact.

These are surely age-appropriate meanderings of one 50 years out.

To return to the pointed question about my non-involvement as an alumnus: My journeys have taken me very far from the person I was as an undergraduate. I don’t have much nostalgia for my undergraduate years so I am not drawn to the reunion – and besides, I have a prior commitment that weekend.

Having said all of this, my guess is that the next years will be more in line with my contemporaries: grandparenting, bucket list, sun-setting my career, staying healthy, indulging new avocations…

I do hope my mind and body will stay fully alert and spry so that I can still ask age appropriate questions and have gratifying and coherent reflections when our 75th comes around. If so, I plan to be an enthusiastic participant

Words Do Matter #3 – Let’s Call Hatred What It Is… And Why This Matters to the Philanthropy Sector

December 15th, 2015

Richard Marker

Islamophobia, the word, bothers me. The word doesn’t bother me as much as the reality it attempts to describe. But it doesn’t seem the right word to describe what we are seeing.

Similarly, the word Xenophobia doesn’t seem to capture what current political vitriol is espousing.

Racism and Anti-Semitism might come closer but are still inadequate.

What is it that bothers me? A phobia is a fear. Islamophobia means fear of Muslims or of the religion Islam. But what we see in the streets, in the desecration of mosques, in political discourse, is not fear of Muslims but hatred of Muslims.

Xenophobia means fear of the other. It too understates what is emerging in the public square – the “other”, whoever the “other” is, is not simply someone to be feared, bad enough of course, but someone to be hated. If one is different, by whatever definition, they are worthy of being detested, whether that “other” is a Mexican or a Syrian or someone providing health care to women.

Racism and Anti-Semitism are interesting words deeply embedded into our cultural understanding. They imply an “ism” – an underlying belief that Jews or Blacks [typically] are inherently unworthy. If they are unworthy, they are indeed hate-worthy. The leap from belief to behavior is a too well-known narrative – a crucial cautionary tale for our times.

You may be saying, “Does it really matter what we call it”? After all, misbehavior toward Jews or Blacks or Sikhs or Muslims or Mexicans or women or the infirm is never acceptable. And from an ethical sense that is absolutely correct.

But from the approach of prevention and intervention, it matters a good deal. After all, a phobia is a malady. Someone with a phobia has an illness to be understood and accommodated. Someone with the fear of heights or darkness is someone we feel sorry for; we may help them seek constructive interventions, but until then we accommodate whenever possible, even in public settings.

But one whose motivation is hatred is not to be accommodated. Even if we choose to “understand” the putative source of that hatred, it is not something to be tolerated or accepted – certainly not in public. Except, perhaps, in one’s psychiatrist’s office, it isn’t tolerable to be a hater, and there is no ethical mandate that public behavior accommodate hatred. Indeed just the opposite, civil society demands that no one should be permitted to impose his, her, or their hatred on another – and that is true even if the hater emerges from beleaguered victimhood, and it is even more true if the hatred comes from those in power. When hatred is the motive, assertive restrictions are the only moral and ethical responses. And, dare I say, the only long term practical ones as well.

I am sure any reader of this screed in late 2015 is well aware of the surge of hate-motivated behavior in the world. The litany is far too long, and, sadly, unnecessary to recount. And equally sadly, no US based reader is unaware of the tendency of some political leaders to play the hate card in the long, extended, counterproductive campaigns to control our national offices.

But familiarity should not allow euphemism to mask what is really being said and done. Nor does it exempt us from demanding that there be limits to what should be tolerated in the public square. It is bad enough that hatred of those of different races or religions or alternative political visions has emerged from shadowy parlors into polite company. It would be destructive of all we hold dear if that hate-speech becomes the new normal.

Those of us in the philanthropy world have a lot at stake in this.

As most readers know, the very word philanthropy implies a rejection of hatred: the Greek roots of the word are “the love of humankind”. But more important, we invest billions of dollars in trying to make civil society a bit better behaved, or more humane, or healthier, or better educated. The overwhelming majority of those of us in this sector spend our time and resources trying to make good decisions about how that time and money can accomplish those goals with greater impact or wisdom or efficiency or creativity. In the context of chaos, anarchy, and the erosion of civic stability, our work becomes almost impossible.

Words matter. Words are tools to influence and educate…or misinform. Words can be weapons to transform…or destroy. Those of us in the philanthropy world should shudder at the prospect of the rapid erosion of our good work by the spewing of words of hatred, and dismantling the very basis of a healthy civil society for which we have worked so diligently.

Legally and ethically we represent moral suasion, a commitment to do something for “the public good.” There are times when the public good requires a loud clarion call to cease and desist, and demands a pronounced and coordinated advocacy to reestablish confidence in the public weal. Hatred in word and deed must stop! In those times, ours should be among the loudest voices.

This is one of those times.

Civil Discourse…Did I Go Too Far?

December 10th, 2015

Richard Marker

This post is not about Donald Trump, but please bear with me for a few sentences so I can get to what it is about.

Much of the oxygen in America this week was been absorbed responding to Mr. Trump’s demand to ban all Muslims from the United States. – or as the week progressed, some variations on that theme. I have not been above the fray and posted a number of tweets on the topic. One of my tweets, then auto-copied to Facebook, said this:

“Let us not ignore that the demagogue Trump has followers who agree with his hate speech. The danger is not out there but right here.”

Not surprisingly, if you know my friends and the world in which I live, most of the comments were supportive. But one, by a colleague whom I respect, challenged this post, saying that people are entitled to different opinions, and name-calling rarely persuades your opponent of the rightness of your position.

I don’t think I was indulging in name-calling. By any definition, Mr. Trump is the very definition of demagoguery, and many, perhaps most, would concur that his statements during his campaign have been textbook examples of hate speech. Public personae deserve the same respect we should extend to everyone, but they are not exempt from being called out when what they say is, or should be, beyond the legitimacy of public discourse. Readers can weigh in on this if you wish, but, as I said above, this post is not about that.

It is about the remainder of the post. I find myself frightened by the popularity of the statements when they malign whole groups – Muslims, Mexicans… It seems that the more hate filled the oratory, the higher the poll.

Now, I recognize that those polls may or may not tell us anything about who will be the Republican nominee or how people will actually vole when they get into the booth. And I recognize that, even with poll numbers that lead the field, they don’t approach an absolute majority of even the GOP. Lots of people are publicly repudiating the most outrageous statements [although, sadly, some are only condemning the most outrageous – as if the others are more or less legitimate public discourse.]

More frightening than the hate speech has been the outright dismissal of the legitimacy or authority of the Constitution, or that we should no longer be a country of law and civility for all citizens, or that due process counts less than a wild-west gunslinger ethos. Playing into mob mentality is not simply irresponsible on the part of any leaders, it is unconscionable and destructive.

How did we get here?

It shouldn’t surprise. After more than a generation when many elected officials preach anti-government policies and don’t believe in governing, after years of an education system that doesn’t teach that the bill of rights is American law and an expression of our values, after 7 years when the most fictitious and racist canards about the current President still are espoused in public – no evidence is sufficient to quell the nonsense, at a time when some politicians advocate that private religious belief should have an equal claim to scientific consensus in setting public policy toward the environment or in our educational system, at a time when civic behavior is understood as a resume filler more than a character builder, at a time when it takes only one or two exchanges on social networking sites before deteriorating into defamation and extremist position, at a time when conspiracy, racist, Islamophobic, anti-Semitic and xenophobic theories once relegated to embarrassed whispers are now considered part of legitimate public discourse …. Does it surprise?

The response of my friend above shows how complicated it has become. Her position implies that ”tolerance” demands that we should tolerate diverse positions no matter how extreme. After all, she said, everyone should be entitled to his or her own position. That sounds reasonable, and civility demands that her position should be the norm. But sometimes positions are not worthy of tolerance. One can privately indulge in any nonsense thinking one may wish, but stating it publicly doesn’t make it legitimate. The 20th Century has taught us all too well how easy words become actions, how opinions become policy, how wholesale labeling can become genocide. Silence may be read as assent. Sometimes repudiation is the only credible and justifiable response.

As I see it, the challenge is not only to rebut or condemn hate speech from putative political leaders, but to change deep underlying attitudes toward what counts as civic virtue, public discourse, apt public policy, and national identity. What is at stake is not simply who will be elected as leaders, but what we are becoming as an American nation.

We have less than a year to get this right.