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The Market Ride: Implications for Funders – and Their Grantees

August 25th, 2015

Richard Marker

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. Panicked 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.

Physician, Heal Thyself: Tear Down That Silo! [A crowdsource inquiry]

August 19th, 2015

Richard Marker

With apologies for the mixed metaphor of the title, this post is about deconstructing self constructed silos.

There is a “rule of three” in the assessment and strategy world: one or two responses not in keeping with a consensus should probably be dismissed as idiosyncratic, but when three or more similar concerns arise, even if they are not precisely identical, it is worth looking further.

On a recent cross-country flight, I found myself sitting next to the president of a national cable network. As we discussed each other’s work and careers, he suggested that my approach to philanthropy strategy could easily apply in the corporate world, and wondered if I had ever thought about sharing my approach with other constituencies. It was about the 10th suggestion of a similar nature I had received in the last few months. If the rule of 3 is sufficient to look further, presumably 10 is enough to hit one over the head with a 2 x 4.

Over the last 17 years or so, I have been committed to cultivating an “expertise” approach to my work. My feeling has been that if someone is hiring me to speak, or advise, or teach, I should be as much of an expert in my field as anyone. No one has the right to claim to be “the best” in anything, but a foundation or funder should be able to look at me and feel that I am as expert as anyone else they might want to hear or work with. And, perhaps immodestly, I am confident that it is, on the whole, a fair assessment.

The field of my expertise has been philanthropy, not just philanthropy in general, but more specifically the funder side. It means that I have carefully and purposely deflected non-philanthropy work or even philanthropy work, such as fundraising, which is way beyond my competence. I don’t consult on topics about which I don’t feel that I am an expert [even if in the past I might have]. Nor have I been actively seeking to speak to non-funder audiences.

All of these practices have been emphatically challenged in recent months by a variety of people. Their arguments:

1. “What you have to say about philanthropy is applicable to everyone. In the USA in particular, philanthropy is an everyday issue, and increasingly a topic in the press. Shouldn’t your expertise be made more widely available? Why restrict your speaking about philanthropy to philanthropy audiences?” [These folks then go on to list a variety of potential audiences who would benefit if they only knew…] 2. “There are related professional groups that should benefit from your expertise. Philanthropy and charitable giving mean very different things depending on whether one is a wealth advisor, a trust and estate attorney, a CPA, a planned giving officer, or [like me] a philanthropy advisor. These silos really should be destroyed since each group maintains its own narrow understanding of how its expertise applies, not always to the benefit of clients who are funders. You should be more assertive in challenging this professional insularity.”
3. “You have insights and experiences which apply derivatively in all sorts of other contexts – e.g., Work-place practices, strategy approaches, organizational development, leadership, aligning strategy and culture, mentoring, pedagogy [to list only the subjects explicitly proposed by others.], and are an accomplished public speaker. Why are you so reluctant to speak to or take contracts in some of those other settings?”
4. “You have a shortsighted business model – focus/expertise is one thing but that shouldn’t eliminate legitimate and credible ‘brand extension.’ Even if your primary audience is the funder community, the broader your reach, the more likely that they will hear of you.”

Hmmm… All of these critiques are more or less on target.

It is true that I have often posited, and written, that philanthropy is not just for the very deep pocketed, and that 21st century technology empowers much more decentralized and democratized philanthropy practices.

It is true that I have often railed against the counter-productive nature of the silos in which we operate, especially within the philanthropy sector itself.

It is true that my own expertise is built upon a robust professional history of multiple careers which bridge sectors. Yet, I have developed a professional practice which is singular in its target market.

It is true that I have focused all of my energy in our sector, limited though it may seem to others – because I so value the importance of thoughtful, ethical, and wise philanthropy. Even so, the underlying approaches need not be so limited. There really is no reason that others cannot benefit from those approaches and methodologies.

….

So, I decided to take these thoughts seriously and convened a couple of informal groups of trusted professional advisors on all of this. These are their suggestions:

A. More public offerings on philanthropy and giving: Offer seminars and presentations on how anyone and everyone can be a philanthropist. Experiment small-scale to see which ones are most well received before going prime time.
B. Consider additional audiences to share insights on organizational design, career pathing, and professional development.
a. My untypical professional narrative and inter-sector experience can be played out for the benefit of other sectors, especially as it pre-dates and predicts the real-life experience of millenials in having multiple self directed careers.
b. Some of the leadership models I developed in the years when I was a ceo or senior executive in the nfp field are still perceived by many to be cutting edge. Yet, in recent years I have restricted my conversations about them to advising funders on how to make good choices about recipient organizations. Perhaps groups such as YNPN or the Support Center or Talent Philanthropy would be interested so their members can learn from those experiences, and build on them.
C. Consider translating and adapting the now proven distinctive strategy model into a tool useable by others outside the grantmaking field; be open to accepting some contracts outside the funder sector. The strategy model I use was developed while doing private sector consulting about 25 years ago; I have since fine-tuned it exclusively for foundation and funder planning. But as my above mentioned travel companion reminded me, the underlying concepts are not exclusive to funders; they apply equally well in any business or organization concerned about developing an implementable strategy plan. Unlike many strategy plans, it is not likely to sit gathering dust on a shelf.
D. Consolidate the numerous articles and posts I have written on management and organizational leadership [see #3 above] into a booklet or manual for wider circulation.

Crowd-sourced query: The abiding wake-up message for me in all of their suggestions is to get out of my own self-constructed silo. Do you agree? Would you add to their list? Or do you recommend that I stick to my carefully honed expertise and maintain that laser focus on philanthropy for funders? Interesting crossroads.

Lest you think this post is only about me: I wonder if our philanthropy field as a whole might also benefit from the same advice – to deconstruct our self-limiting silos.

Grantmaking and Fundraising – No, They are not the same thing

August 13th, 2015

Richard Marker

It seems as if I have been spending a good deal of time recently addressing those on the fundraising side of the sector. This post adds to my previous posts on this topic – based on a number of recent conversations and presentations.

This recent spate began when a very respected and experienced professional wrote to say that she had just finished earning a credential in fundraising and concluded her enthusiastic comments saying “Now that we are in the same field, it would be great to get together to talk about it.” I responded with congratulations and a willingness to get together, but with a demurral. I clarified that I am not in the fundraising field at all; I only work with and teach those who give; her response was “Isn’t it really the same thing?”

In fairness to her, it is a comment I hear quite regularly from development professionals and fundraising folks, but never from those of us on the funder side. Indeed I heard it again just 2 days ago when someone wishing to make a career change into grantmaking explained to me that, as a fundraiser, she deals with foundations all the time so, of course, she insisted, she understands what it would be like to work in a foundation.

Just today, I received a referral from a well-known fundraising professional who is well aware of what I do. The introduction to me was that a prominent volunteer had a need for some foundation support. When I followed up, this prominent volunteer was looking for someone to do foundation research for fundraising purposes and had explained that to the fundraiser to whom, evidently, it is the same thing.

It is sort of understandable why a fundraiser might think so. After all, grantmakers must give money and development professionals seek money. There is indeed an interface.

But what differs is what happens surrounding that interface, and that makes all the difference. As I have written in previous posts over the years, how one spends ones time, what counts, what considerations come into play, indeed the very nature of the relationship to the funding process are not analogous at all. Some years ago, I developed a couple of interactive case studies I use to illustrate this in workshops. Development professionals are invariably quite surprised.

As if to demonstrate how even vocabulary means different things, a recent presentation is suggestive. When discussing trends in grantmaking, I used the term “capacity building”. When I asked this group of 20 fundraising students what that meant to them, they all immediately confirmed that it has to do with determining the capacity of an organization to raise money for a capital campaign. Well, it is true that some funders do provide support for a development professional as a part of a capacity building effort, but I have yet to meet a funder who doesn’t understand the term “capacity building” to mean something quite different: to strengthen the organization itself – utilizing a variety of intervention methods, which may or may not include strengthening its development abilities. Similar words; dissimilar meaning.

Another indicative case is how fundraisers and grantmakers describe the much heralded and celebrated Robin Hood Foundation in New York. When I ask what makes it distinctive, development folks all point to the wildly successful fundraising gala Robin Hood holds each year and the commitment of their very well-healed board to cover all overhead and infrastructure costs. Impressive indeed. But for funders, the Robin Hood Foundation is distinctive because of its approach to their grantees – their insistence on assessment, continual improvement, long-term commitments, and a singular focus to addressing poverty related issues in New York City.

Most funders know about the Robin Hood Foundation’s society page worthy fundraising event, but almost no fundraiser knows what they do with their funds once they raise them. Had this anecdote happened only once or twice, one might discount it. But it such a consistent response that one may safely generalize how different our perspectives are.

Even LinkedIn seems to elide the two roles. While I am certainly not looking for a job, thank you very much, LinkedIn seems to think that the word philanthropy in my profile means fundraising. Sure enough, I regularly get suggestions for jobs I might be interested in, or groups I might want to join, the majority of which are for fundraisers. I cannot speak to their algorithm but clearly folks like me don’t seem to represent an identifiable pool.

And, lest this set of observations give the misimpression that I am only critical of others, my own elevator speech doesn’t seem to make it clear to people either, no matter how many iterations I have tried. When folks hear the world philanthropy, they seem not to hear the rest and assume that I am a fundraiser. It usually takes a bit of back and forth before they get that I do something totally different.

Why is it so difficult? One reason, of course, is that there are many more non-profit organizational fundraisers than highly accomplished professional grantmakers. Statistically, once one is outside of narrow settings in our grantmaking and foundation world, we are quite a minority. After all, in the USA, there are at least 15 times as many non-profits hoping to raise money as there are private foundations which grant money, and the majority of those private foundations don’t have any staff at all.

More to the point, our field, foundation professionals and advisors to funders, continues to be an amalgam of folks with diverse credentials, or none at all. Fundraisers, as most professionals in every field, have earned-certification requirements or credentials. [Full disclosure: While I am very proud of the professional level certification in grantmaking available through the NYU Academy for the last 14 years, it is still a drop in the bucket about which most in our field are unaware.] On our side, the funding side, there are no formal barriers to entry. Anyone can hang up a shingle as a “Philanthropy Advisor” or be hired by a foundation. Knowledge of the law, ethics, power, best practices, grantmaking strategies, policies, and so much more are rarely expected, to say nothing of required. That doesn’t mean that there are not many wonderfully competent and capable people in our field but far too many are not – even if they have jobs or clients. The long out of date concept that one can only learn grantmaking on the job makes it much to easy to dismiss that this is a field and, ultimately, a profession.

This is not simply a plea for a socially easier way to self identify. As long time readers know, I believe it is a lacuna in our field itself: Funders, foundations, and those who advise or work for them are responsible for billions of dollars, influence public policy and the entire ngo/nfp sector, and can do so with little oversight or accountability beyond the most marginal legal requirements.

No wonder the average person doesn’t immediately get it; and no wonder that fundraisers, who have earned a CFRE, think we do the same things. We don’t. But until we accept that we need credentials, training, and professional standards, we will continue to need very long elevator rides to explain ourselves. Maybe, then, people, including development pro’s, will see how different our work really is.

[I will soon be posting a follow up to this piece that will propose some paths forward for the sector as a whole – including those of us fully ensconced on the funder side.]

Words Really Do Matter – Use Them Wisely and Ethically

August 11th, 2015

Richard Marker

Well, I hadn’t planned to add to the noise surrounding the unconscionable pre-presidential campaign – in the United States. I really hadn’t.

But….

Many of you know that I am a proud member of the National Speakers Association, and by extension of the Global Speakers Federation, a professional affiliation of those around the USA and elsewhere in the world who earn a significant part of our livelihood as paid speakers. Public Speaking is a competence that has given me great gratification, and enabled me to give presentations in 39 countries on 5 continents over my career. [Australia, what are you waiting for?]

At the recent annual convention, one of the morning plenary sessions was devoted to guest presenters who had lived through or witnessed horrific experiences, were changed by them, and who had deep and abiding messages based on them. I don’t exactly know what process was used to decide whom to invite or which messages were best to convey to a group of 1700 professional speakers, but I, for one, found the morning to be thought-provoking even if I myself might have chosen some other, equally challenging, topics.

At the luncheon that followed, however, a surprising number of folks sitting around the tables complained. “We didn’t come here to be depressed or to engage in political discourse; we came to be uplifted and to enhance our skills.”

I confess that I was surprised. After all, we make our living through words and ideas. To be sure, some of our colleagues are wonderful entertainers, musicians, or comedians. But most of us, including humorists and musicians, are purveyors of ideas. And we use words, in speech and in writing, to convey those ideas. Words matter. How we say things matters.

What we say matters as well. We should weigh not simply how to get applause, or a chuckle, or a return engagement, but also the value of those words, the ethics of those words, the power of those words to change experiences and lives. What was important to me, as a member of NSA/GSF that morning of the recent conference was that we were being reminded of how important and powerful and influential words can be, even if they leave us a bit uncomfortable and uneasy. I was disappointed in the segment of our professional group that so easily dismissed the value of being discomfited – if for no other reason than they so easily dismissed exactly one of the reasons for such a professional association to exist. Our association spends a good deal of time addressing the ethics of stories, quotations, and competition. We should spend an equal amount of time remembering that we must model the responsibility that accrues when we have a mastery of the spoken word, and the ethical mandate of truth when we have the command of the stage. These are not little things.

Which, unfortunately, brings me to what passes for political discourse these days. Leaving aside the frightening spectacle of Trump-ed up demagoguery on the world stage, what are we to make of the anti-scientific, anti-educational, implicitly racist and explicitly nativist comments of many other candidates? No matter how much one repeats a false mantra does not make it true, even if it may make it popular. Willful ignorance, no matter how cleverly stated or clothed in populist garb, must not be allowed to rise to legitimacy. The 20th Century, more than any other in world history, taught us the destructive nature of this kind of malignant discourse. The world, our world, the world in which we live, and the world we hope for our children, dare not risk a repetition in the 21st.

Those of us who earn our livelihood through words know more than most how powerful, transcendent, and transformative words can be. We owe it to ourselves, our audiences, and the public polity to insist that others are held to the ethical standards we must demand of ourselves. We, all of us, need no less.

What’s With the Recent Attention to Collaboration among Funders? And, by the way, Whatever Happened to “Collective Impact.”

June 25th, 2015

Richard Marker

Collaborations are hot! It was a running topic at the Council on Foundations annual meeting in San Francisco. There were many sessions on all sorts of effective and successful collaborations, mergers, partnerships; Collaboration was the theme of the recent national “Summit on Family Philanthropy”. Collaboration was the subject a recent workshop at the Foundation Center, which taught methods for encouraging organizational collaborations of all sorts. Even while about to publish this piece I received notice of 2 upcoming national meetings focused exclusively on Collaboration.

And this says nothing about the number of organizations, consultants, and affinity groups issuing reports, white papers, and anecdotal evidence of the importance of partnerships and collaborations of all sorts. [I guess I am not exempt – witness this posting!]

As I attended all of these meetings, and read even more, I rarely heard the words “collective impact”.

That was a bit of a surprise. For the previous 2 or 3 years, it was hard to attend any philanthropy meeting or conference without hearing “collective impact” around every turn. It was as if any conversation of the value of collaboration had morphed into this articulation. It is a phrase laden with aspiration, and more important, acknowledges that most of the problems worth solving require inter-sector collaboration, on the local, regional, national, or international level. Filled with promise…and perhaps faddishness? We’ll return to this a little later.

Long time readers and clients are well aware of my work in advising funders in implementing partnerships and collaborations. My knowledge was earned over almost a 20-year period: I have chaired several funding collaboratives and have participated in several others. A practicum I wrote a number of years ago, providing a detailed checklist for effective collaboration, updated regularly, has been requested more than any single practicum piece I have written. [As I said in another recent post, it is available upon request.] Yet on those occasions when I was asked to speak about “collective impact” I demurred since I wasn’t convinced that I fully understood the difference between this term and many other successful but more modestly labeled collaborations and partnerships.

Let’s be clear: “alone” is the default funding behavior. No funders collaborate except for the purpose of leveraging their partnership to accomplish greater impact, to do what they don’t feel they can accomplish alone. Many collaborations are for the clear purpose of leveraging money, either by expanding the funding pool or by achieving better efficiencies. But many others are created to leverage influence or to access greater expertise. As we’ll discuss below, a growing number of funders are committed to address and redress deeply persistent systemic issues; even the richest funders recognize that many of society’s ills and woes simply cannot be solved by throwing money alone, that they require multi-sector coordination, and demand public policy advocacy.

“Horizontal partnerships”, a way of defining funding collaboratives, are based on all of the collaborators being on the same side of the table. Even if not everyone brings an equal amount of money, influence, or expertise to that table, the collective is there to have an impact on an external project, program, or organization.

There are also “vertical partnerships”, when a funder or funders and an organization or organizations work together on a project. This is not the same as the currently common euphemism that many funders use to say that all of their grantees are partners. No, a vertical partnership is when there is joint planning on outcome expectations, on funding needs, on long-term exit strategies, and on decision-making. While many funder-grantee arrangements have many or most of these characteristics, what distinguishes a vertical partnership is the collaboration from the very beginning of the planning and carries all the way through implementation.

In recent years, there has been a rapid growth in “inter-sector collaborations.” Cooperation between the private sector, the philanthropy sector, the non-profit/ngo sector and the government sector are exponentially more complex. Each has a different accountability, a set of legitimate but not always overlapping stakeholders, different bottom line measures, and even divergent operating ethics. In a funding partnership among foundations, the foundations can voluntarily agree to limit their prerogatives; some inter-sector partners don’t even have the legal right to make those concessions. Yet solving the systemic challenges of our time requires no less.

Many of the largest and far reaching inter-sector collaborations are at the very beginnings, or only now beginning to yield reportable and measurable results. And it still remains to be seen how widely replicable some are.

One fascinating example is “Pay For Success” or “Social Impact Bonds.” They are intriguing and seem to suggest some real applicability for public sector financial benefit and societal benefit at the same time – but it is by no means clear how widely applicable they realistically are. Very telling about some of the early models is that the participation of many well-healed wealth companies has been conditioned on guarantees by the philanthropy sector!!! [There is a very large literature on this to which I refer you if you want more in-depth discussion of this topic than this post allows.]

In general, for all of their challenges, though, such collaborations must be a sine-qua-non for systemic problem solving. Take any issue: public health, poverty, homelessness, human trafficking, refugees, education, to list a few “simple” ones. No one sector can ever solve these issues alone, and none can be adequately redressed without governments, social service, private sector, and philanthropic involvement working hand in hand. So even if some of the models have yet to be fully proven, any funder committed to systemic issues must consider inter-sector collaborations as a part of their philanthropic toolbox.

But, let’s be clear, especially with the onslaught of attention to collaborations in every corner of the philanthropy field: partnerships are not for the faint of heart, or for the impatient. They are time consuming; they introduce a variety of complexities to the funding process that individual funders need not face; successful collaborations require that participants surrender some of their autonomy. Upfront agreements on process, decision-making, management, desired outcomes, longevity, and exit strategies all require a seriousness of purpose and clarity. And those are only what must be decided before beginning.

And once begun, any collaboration demands continued commitment. Unlike a grant from a single funder that may simply require oversight, monitoring, or evaluation, collaboration works only when the partners continue to invest their time, energy, and wisdom. And since there are more players in a collaborative, and any projects worth collaborating on require in-depth attention, collaborations are rarely simple and will call for for regular redirection, modification, and reinvention.

If collaborations and partnerships are intriguing but new for you, I recommend starting by going slow and small. Make sure you have the stomach and energy, and if you are a foundation, that the culture of your foundation is sufficiently compatible with your new partners. You may find that you are NOT a great collaborator. Despite what some in our field may intimate, that is perfectly legitimate. There is still great and important philanthropy that yields meaningful impact when done alone.

If, though, you discover that this is your métier, it is always possible to expand your reach as time goes on. And you may find that you are engaged in a level of challenging and sophisticated funding which truly does hold the promise of impact collectively way beyond that which you could have accomplished alone. In other words, some may say: “collective impact.”

Relationships Do Matter

June 22nd, 2015

Richard Marker

In a recent post, we discussed the preconditions for “relationship” in the funder-grantee continuum. My main point was a cautionary message to grantseekers that simply trying to develop a relationship, by whatever means, is highly unlikely to yield funding if there is no shared funding interest with the potential funder. It does, though, matter once both sides determine that there are shared interests. This post expands on the importance of relationships after that.

Recently, I have had a number of reasons to affirm the centrality of good and trusting personal relationships in all of our work: in collaborations, in partnerships, and, most important, good professional connections of all sorts. Indeed, this post acknowledges a lacuna – both in my teaching of funders and in my own professional initiatives. In fact, I have, perhaps very late in the day, come to accept that interpersonal relationships are indispensable for these important collaborations, joint efforts, and initiatives to succeed, and require as much expertise and attention as the work itself. In reviewing with fresh eyes my very popular checklist on how to develop effective collaborations I have made widely available for several years, I see that it outlines the necessary structures and preconditions for success, but virtually nothing on the human dimensions.

A surprising source, Newt Gingrich, whose politics rarely align with my own, was a speaker at the recent annual conference of the Council on Foundations. In talking about his own unlikely ongoing collaboration with those far to his left, he mentioned that none of that could happen were it not for real trust which had long been cultivated and husbanded between himself and his team with their counterparts. He averred, unequivocally, that without that personal relationship, it simply couldn’t and wouldn’t have happened.

13 years ago, when I was in the process of gathering insights from the philanthropy field in preparation for being a philanthropy educator, there was a remarkable convergence on topics and consensus on the competences a good funder should have. One of those was “interpersonal communication.” Over the years, my seminars and teaching have had a heavy emphasis on ethics, best practices, power. I have urged funders to be very self aware as funders, the “conscious use of self” of a funder’s role, and how we behave, intentionally or unintentionally, to those who want funds. It is well documented how easy for funders to not fully perceive how we come across, how our very presence can imply power, and how easily our role allows us to receive highly filtered information. What I now realize is that I have overlooked one very important implicit component of effective funder-grantee relations: I have always focused on the roles and not the relationships, yet it has become clear to me that a relationship is the authentic implementation of the roles.

This past week, I had the pleasure of attending the National Summit on Family Philanthropy. The theme was effective collaborations. Some of the sessions focused on very successful ones; others on flawed ones; most were filled with challenges. Given my new attentiveness to the role of relationships, I was struck that every successful partnership or collaboration, whether among funders, among grantees, or in vertical combination of both, emphasized how important the development of a trusting relationship was to its success. I particularly appreciated those presenters who discussed how they had successfully facilitated those relationships, or conversely, how they had undermined their own best efforts by not anticipating them sufficiently.

There is much to be said about “relationships” and even a cursory perusal of business, human development, networking, and social bookshelves reveal that there are many experts who can teach relationship as a learned skill. I am not one of those experts and suspect that relationships are as much a cultivated art form as a technology. Yet without doubt, those who have mastered them have an enviable history of successful and gratifying collaborations in many facets of their professional lives. Some of us are still learning.

A few lessons:

1. It is hard to fake a relationship. Short-term courtesies and niceties can ease cooperation, but won’t sustain a relationship.
2. Are there commonalities underlying the professional relationship? Does your professional life, or organizational life, or foundation have defined values and programs that align with your collaborator? If not, a personal relationship might allow a joint project, but a longer time institutional relationship much harder.
3. When differences arise, have you honestly tried to determine how much of it is personal and how much of it is organizational? Not every difference of opinion is personal, and not every alignment is organizational.
4. Relationships, of any sort, require investments of listening, time, and care – over time.
5. Personal professional relationships often transcend organizational boundaries, but in the absence of the personal component, organizational partnerships rarely last beyond a project.
6. Broken relationships can be fixed, but it is very very very hard to do so and require a willingness on both sides.

What would you add to this list?

Two “No’s” and a “Maybe” – Some Thoughts for the NFP Sector

May 18th, 2015

Richard Marker

Most Wise Philanthropy postings are targeted to those of us on the funder side of the table. This one is quite explicitly targeted to those of you who seek money, not give it. Hopefully these observations from this side will be helpful to you. Funders are invited to eavesdrop.

1. No #1: When Funders Say NO.

“No” really does mean “No.” I have heard many fundraising experts lead workshops for those anxious to learn how to be better and more effective development professionals. There seems to be a mantra among such experts: tell those newbies: “No is not no,” they say; “it is only the beginning of a conversation.”

I cannot know for sure what they all mean by that advice, but it is really bad advice. Funders, especially foundation funders, are not engaging in a game. Funders today are sophisticated and make decisions based on a whole range of considerations. There is neither time nor inclination to say no as a teaser, or as a way to see if the fundraiser comes back with a better offer. By the time a decision is rendered, it reflects all sorts of reviews of data, other information, balancing of requests, and best judgment. It may not be the judgment or decision an organization wants to hear, but it is a real decision.

It is fair, of course, to ask a funder if there is anything to learn or even if there is interest in follow up in the future. A foundation or individual funder may very well choose to give very useful information about the possibility of future connections. [You will notice I am not using the word “relationship” – another word which often misleads those seeking funds; see below for more on that.]

More often than those seeking funds would like to believe, there really isn’t anything more to know beyond a “no.” There might have been so many legitimately compelling proposals that a board or staff did a virtual coin toss. There may have been a number of grants already made to your region, state, city, organization, field had yours been higher in the docket, you might have been chosen, but that region, state, city, organization, field is filled. There may have been a contentious discussion about the proposal just before yours leaving the decision makers in a crabby mood. Who knows? A program officer or a family member may or may not choose to share that with you – it is a level of transparency about which there is not yet consensus in our field.

Moreover, how one asks if there is something more to discuss can make all the difference. I am sure none of you readers would ever do what some actually did when I was heading a foundation – couple of examples: some would not ask for more information but angrily demand to meet directly with the board to plead for a review of their case. It is impossible, they argued, that the board would reject them if they really understood their proposal. That demand surely endeared them to everyone on the funder side. [Not!]

Or, to take another real case: after repeated ‘no’s, the chief development officer of an organization asked to meet with me. He said that he certainly understood that we were not funding what they had asked for but he still wanted to meet. When he came to the office, I repeated what I had told him in writing and verbally: that his organization seemed perfectly fine but way outside the priorities and funding parameters of the foundation. It turned out, after repeating this a dozen times, he explicitly said, “I came here so that I can learn from you how we can get funding from this foundation. Why won’t you help me?”

Now, to be sure, in some cases a funder will indeed encourage further discussion. If so, go for it [asking, of course, how and when the funder recommends doing so.] But, in general, those seeking funds should assume that a funder means what he or she says. And if it is NO, please take our word for it.

2. No #2: When You should say NO.

The funder-grantee relationship is a power imbalance. Despite the current popularity of the word “partner”, most of those are not partnerships at all. As we discussed above, a funder says “yes” or “no” to a request for funds. Only sometimes is there a shared planning process between them that rises to the level of partnership.

Not infrequently, though, a funder’s priorities are not fully aligned with those of an organization. That misalignment might be quite reasonably based on carefully honed priorities and interests of a funder, or simply based on a funder following a fad. Sometimes an organization does many things but a funder is only interested in supporting one. Some funders act as if the grantmaking process is a negotiation – you ask for $X, that request must be inflated so we’ll offer $Y. Sometimes a funder has his/her/its own idea of what an organization should do which doesn’t align with what the organization itself thinks is ideal/a priority/ in its own best interest.

It is at this moment when the balancing begins. If a multi-service organization already serves both early childhood and senior adults, the organization may prefer to receive money for early childhood, but isn’t compromising its values by accepting a grant for senior adults. If it doesn’t already serve senior adults or have a well developed plan to do so, a grant in that area is way off the mark. Just because it is offered doesn’t mean you should say yes; in fact you probably should say no.

If a program or facility or project is really going to cost the $X dollars you asked for, and anything less compromises the program, guarantees a lower quality outcome, or will have an impact on other things you do, say “no.” Funders don’t want to fund failure or mediocrity if they can help it. Make that clear. Just because a funder offers it doesn’t mean you have to accept it. If a lower amount won’t jeopardize the quality of a program, just its scale, it makes sense to accept what is offered and not to begin an unhelpful negotiation. Just make sure that you and the funder have a mutual understanding of the likely outcome when the funds are accepted.

Accepting funds for a facility is a special challenge. So many non-profit facilities were built over the last 60 years with no deferred maintenance funds, with horrendous long-term results, that it should be a mandate that nothing gets built without accompanying funds for upkeep – or a credible plan for those funds that doesn’t jeopardize the core work of the organization. No funders who think about it want a facility bearing their name to look shoddy 5 years down the road. Organizations hungry for capital funds do themselves a long-term favor saying no to any major gift which will prove onerous years hence.

Funders want their money to accomplish something, to receive deserved recognition for their funding priorities, and to bask in the success of the organizations they fund. If those organizations are not willing to articulate what will allow them to accomplish something, truly honor the intent of the funder’s funding priority, and to be successful in their efforts, funders will make mistakes, organizations will resent them, and mediocrity will be the result.

The overwhelming majority of funders will welcome this discussion. The worst – and I am not belittling this outcome – is that the funder doesn’t change the priority, condition, or amount. In the short run, it may be a big price to pay to say “no”; in the long run, the “no” will almost certainly strengthen respect for your organization and sharpen its focus to do what you wish to do.

3. The Maybe: Do Relationships Matter?

“It’s all about relationships.” You have heard this one, too, I am sure. And it is sort of true, but…. A funding relationship isn’t about having someone buy us a cup of coffee or lunch. It isn’t about getting to know us for the sake of getting to know us. Believe it or not, most funders can afford their own lunch and already have plenty of friends to hang out with. No, a funding relationship starts with shared funding interests. If there are no shared funding interests, move on. Let me repeat that: If there is no shared funding interest, move on. Nothing annoys funders more than those hoping or trying to insinuate themselves into their schedule – for the purpose of cultivating a relationship, with the hope that someday that relationship will yield a gift.

If there is a shared interest, then building a relationship does matter. Then the tricky part: with whom? If a funder is interested in the totality of an organization, he or she may wish to deal directly with the CEO, or if the gift is sufficiently large, the Board Chair. Or a funder with an interest in a particular project or field of interest may wish to develop a relationship with the staff specialist working on that project or in that field of interest. Even if a development professional has been the one to make a successful pitch, it doesn’t mean that a funder is interested in being continually cultivated or managed by the fundraising pro. Or maybe it does. It is these fine tunings that can make or break the “relationship.”

This is especially true after a grant or gift has been made. Often a development pro is charged with being the relationship officer. But if a funder wants the primary relationship to be with a department chair or field expert, the smartest thing the development officer can do is facilitate that connection and get out of the way.

Over the years, I have been rebuked by chief development officers on this. They tell me that it is their job, or that program staff don’t know how to talk to funders, or that I might misunderstand the data as presented by direct service workers who don’t have the full institutional picture. I guess that they perceive that I am not smart enough to know what to listen for or how to understand what people are telling me. Guess what? In those situations there was no relationship – and no continuing funding.

The smartest thing an organization receiving funds can do is to ask what a funder expects, how they want things to move forward, and with whom. If the funder’s desire isn’t reasonable [e.g., a $500 gift to a university doesn’t typically qualify one for board consideration; a $1,000 contribution is not likely to warrant a building naming or a press conference], as stated in #2 above, an organization should say no. But if it is a matter of managing the relationship such as whom to talk to, how often there should be site visits, if there should be deliverables at the end or along the way, the lead should be taken by a funder, and modified, as necessary by the recipient. That is a funding relationship that makes sense.

A word to funder eavesdroppers: This doesn’t exempt those of us on the funder side from good practice in a relationship. In fact, when we conceptualized the NYU Academy 13 years ago, one of the competences identified by the field was good interpersonal relations. Good organizational and funding relationships take two sides. There needs to be appropriate responsiveness on the side of the grantee and appropriate expectation and expression on the side of the funder. A difficult or unreasonable or power-driven funder is likely to get highly filtered reports, carefully scripted interactions, and kept away from staff who would feel intruded upon. It is important to remember that even a very generous gift does not transform us into owners or supervisors, or give us unfettered access to anyone and everyone whenever we want. Non-profits have a valid interest in drawing appropriate boundaries, and we have an ethical responsibility to be responsible funders in making sure the relationship is healthy and constructive.

At the end of the day, people make relationships and not organizations. If built on appropriate shared interests, openness and mutual understanding of risks, potential, and culture, a funder-grantee relationship can make a tremendous difference – to both.

Everyone can be a Philanthropist – and it is Easier than Ever

April 9th, 2015

Richard Marker

When Saying ‘Yes’ Wisely [BloomingTwig Books, 2009, 2011] was first published in 2009, the chapter that received the greatest number of comments was “How to be a philanthropist on $5/week.” Many people were surprised, and felt empowered, by the very idea. After all, our mental image, and the image captured in the media, of a philanthropist is of a mega-wealthy [UHNW] individual who has given or pledged an unimaginable amount of money to a project, cause, building, or foundation. Not only do such people get recognition when they announce their gifts, but we are reminded of them every time we walk past a university building, library, opera house, symphony hall, or community center. When we actually enter those buildings, we see rooms and halls with other names and encounter plaques and signs of magnanimity, albeit of a marginally less jaw dropping amount.

Lest it be lost on anyone, for both those on the plaques and those not, donors are invariably listed in an unequivocal hierarchy – the larger the gift, the larger the print. In the customary order of philanthropic recognition, it is clear who counts the most, and by implication, who counts less, and who doesn’t count at all. This well trodden landscape lends itself to great social voyeurism, but doesn’t reinforce the value of philanthropy for the rest of us. It is hardly surprising that the vast majority cannot imagine that they could be called a philanthropist.

Almost everyone gives some charity somewhere. It might be a moment of compassion for a homeless person, work-place based withholding for United Way, the purchase of Girl Scout cookies from your next door neighbor, a church collection plate, a response to a particularly moving TV commercial, an annual gift to the university which gave you a degree, a gut response to a human or natural disaster. And this charitable behavior is pretty universal. Defined broadly, there is no known culture, religion, ethnic group, nation that does not have some form of charity deeply and historically ingrained. [Or, to be completely accurate, I have never heard of one.].

But being charitable, a worthy, noble, and humane act, does not make one a philanthropist. Nor does having and giving a lot of money. Lots of those very wealthy people who give very generously are very charitable, but their giving does not make them philanthropists.

To be a philanthropist, one needs a strategy – a way to make decisions, an understanding of why you are saying “yes” or “no” to a particular request or cause, a conscious and purposeful choice about what matters and why. There is no right answer to these questions, only that one has thought about and acted on them.

You may argue that this is only a fine point. You may think that $5 or $50 or even $500 is hardly going to make a difference to an organization or to a cause. You may have a strategy and therefore have priorities where money goes, but you may feel that your small gift is simply a token that cannot accomplish anything real.

In 2009, my article demonstrated that it was not hard to use small gifts to make a difference. Today it is easier than ever before for anyone to be a philanthropist and to do so in a way that makes a difference. Much of this is technology.

We all know that a $5 or $50 or even a $500 gift to the Metropolitan Museum or your university alma mater is not going to make a difference to their priorities, their bottom line, or how seriously they take you as a donor. But all one has to do is open the Donors Choose website to know that there are lots of places in the educational world where $250 – about $5/week – can make the difference in whether or not a classroom gets instruments or art supplies or takes a field trip.

Many have come to appreciate that in the developing world, undercapitalized entrepreneurs can rarely qualify for commercial loans to get a home-based business going. In many cases, the cost of such an “investment” is quite modest. Few of us have the resources or legal acumen to make sure that our well-intentioned international philanthropy gets there. But organizations like Kiva will help even very shallow pocketed funders do exactly that.

Donors Choose and Kiva are proven and well developed. Perhaps you like the idea of supporting creative start-up organizations in the arts. Crowdfunding sites like Indiegogo [to mention only one] can help you give a boost to someone or a new project at the very early stages. A few hundred dollars can easily make all the difference in getting those projects going. Quite a bit riskier than Kiva and Donors Choose, and a lot riskier than a gift to your university or United Way, sure, but there is no doubt that a funder has the opportunity to make a difference with a very modest financial contribution.

The technology is there, but how does one learn how to make these decisions? How does one determine one’s priorities and align them with places that will use your funds effectively and consistent with your carefully honed personal strategy?

Here too much has changed since 2009. Since then Doris Buffett has produced an online course teaching anyone – anyone – her approach to giving thoughtfully. Since 2009, Giving Circles, which have been around for decades, have exploded as a vehicle to help groups get together to make informed funding decisions about their pooled funds. Since 2009 teen philanthropy has emerged as one of the fastest growing eleemosynary initiatives all over the United States. Since 2009 many universities have been offering courses teaching undergraduates about philanthropy and giving them real life experience in allocating real funds.

Of course there are many other programs teaching funders as well: many national organizations in our field have committed themselves to teaching millennials; many affinity groups have enhanced their own educational efforts or established formal collaborations with places with well developed methodologies for teaching funders and philanthropists of all ages such as the NYU Academy for Grantmaking and Funder Education.

Moreover, even developed funding groups like private and community foundations have begun recognizing that their trustees and staff need to have a more sophisticated understanding of how to be better funders. [I have had the distinct pleasure of providing such education for both large and small foundations in many places in the USA and elsewhere in the world; needless to say, I am not the only one.]

This is not a complete list of technological or educational options. Yet it is evident that becoming a philanthropist who can make a difference is within the grasp of all. The overwhelming majority of us are already charitable. It is now easier than ever for every one of us to become a philanthropist who can choose to make a difference with our charitable generosity – no matter how much or how little we may have.

“You’ve Met One Foundation…”

March 31st, 2015

Richard Marker

Any veteran in our sector is familiar with the old bon mot “You’ve met one foundation, you’ve met one foundation.” When I entered the field a chunk of years ago, it was almost a mantra – kind of like saying that we all needed to find our own way in this ego-, money-, and power-driven field.

There was a certain logic to it: after all, those with enough wealth to establish a substantial foundation didn’t get that way by being like everyone else. It was hardly surprising that they wanted their foundations to be distinctive as well.

Moreover, they were used to having their own way –public accountability, collaboration, external reviews – were all conveniently disposable in a private foundation. Surely those who worked for them, even in powerful executive positions, quickly learned that the way to success was by channeling the personality of their founder/funder.

My then colleagues were quick to dismiss joint learning experiences, although they welcomed mutual support gatherings [We were all in this strange world together.] Gradually, as readers of previous posts know, I came to believe that this represented supreme arrogance. We were responsible for billions of dollars, had tremendous, often unfettered, influence, especially with grantees and aspirants, rarely needed to worry about finances, could establish funding priorities without any necessary regard to public priorities, and do all of this with but the most elementary transparency of a hard-copy 990-PF [hard to come by in the pre-Guidestar era] – and yet there was no bar to entry, no ethics courses, no registration, no certifications required to enter the field in a professional capacity.

The philanthropy world has changed a good deal since those days. Some of those changes were forced upon us by the aforementioned Guidestar visibility. Some of the changes were cultural – a new group of funders has entered the field, many from the venture capital, hedge fund, tech world, who had different training, worldview, and expectations for their money and influence. Some of the change was the inevitable result of political changes that put new expectations and pressures on the philanthropy world. Some of the changes were brought about within our sector itself – with groups like GEO, NCRP, etc. articulating clear mandates for funder and foundation excellence. Collaborations for systemic change, both within the philanthropy world and using intersector innovation have become an emerging norm. And some of the changes, I like to think, are because programs such as the NYU Academy for Grantmaking and Funder Education are available to teach philanthropists, trustees, and foundation professionals.

Given the changes in our sector, it had been a long time since I heard that old saw about “one foundation…” So I was quite surprised, and not a little sad, when a young professional in his first year working in a foundation, taking a course for new funders at the NYU Academy, told me proudly of his recent conversation with one of the senior professionals in the foundation world. What was his one takeaway from that meeting? “You’ve met one foundation, you’ve met one foundation.”

Clearly, we still have a long way to go.

“I Didn’t Know People Like You Existed…”

March 30th, 2015

Richard Marker

At least that was what I was told by three different wealth advisors at a recent conference committed to inter-disciplinary collaboration serving the wealthy.

Kind of surprising, I thought. After all, wealth advisors and trust and estate attorneys advise the wealthy on their estate and financial strategies. Surely charitable giving and philanthropy are not are not obscure topics in such planning. How could it be that they never knew that there are those of us with expertise in philanthropic giving?

Some of the presentations on legal developments in the trust arena went somewhat over my head, I admit. Yet, it didn’t go over my head that the keynote address on developments in the T & E field did not mention philanthropy once. Curious.

Some of the other presentations were by wealth/investment advisors [a profession which seems to have as many titles as there are firms.] They talked about how they are learning to work collaboratively with other professionals and to improve their own ability to understand their clients’ underlying values. I have had a good deal of experience working with wealth advisors and educating them on the nature of philanthropic giving. Yet, in the sessions I attended, charitable giving was mentioned only as a financial bucket, not as a discipline of its own. I guess my work has been with a different subset of the field.

During my time at the conference, there was in fact one session on philanthropy: it modeled how a planned giving officer and a wealth advisor had structured a collaboration to make philanthropic gifts possible while spending the least amount of money. It was chaired by the creator of a certification program to teach investment managers about investment vehicles for philanthropic purposes.

But none of the sessions – not the ones on inter-disciplinary collaboration, not the one on philanthropy, not the ones on estate planning, not the one on family succession, not the ones on client relations, spoke to what those of us in my world understand as philanthropy. Indeed, the almost total absence among professionals from around the country makes me think that the world in which I spend my professional time is but a blip. Is it any wonder that a US Trust study revealed so much dissatisfaction of HNW and UHNW clients with the ability of their wealth advisors to help think through their philanthropy?

When I tried to expand the collaboration discussion to include philanthropy planning among a group of wealth managers, they said “we do; we work closely with planned giving officers all the time”. For those in my field, that isn’t philanthropy advising, that is financially structuring a charitable gift! We are not fundraisers representing institutions that want clients’ money; we are advisors who help their clients make wise, thoughtful, ethical, and impactful decisions about how, when, and where to give their money.

A step back: very, very few investment banks or investment advisors have a philanthropy advisory service. And with one or two exceptions, those that do have at most a handful of people available to the firm’s clients to provide philanthropy planning and support. Sad to say, again with some few exceptions, those planning and support services are more likely to be available in any depth only to their UHNW clients.

Even within those firms, many of the philanthropy specialists have complained to me that they constantly have to sell their wealth management colleagues on the value of philanthropy advisory services. They underscore what I see all the time: wealth managers are paid and judged by how much money they have under management. They receive no financial benefit, and little professional acclaim, for helping people give money away. If their client wishes, of course they will discus charitable investment vehicles – trusts, foundations, etc. which emphasize the investment and money management, as a part of a total financial plan – but few are trained or have incentives to know what questions to ask about philanthropic priorities and giving style.

I do not believe that any wealth manager should be referring all of his or her clients to folks like me. But it is my conviction that wealth managers would serve their clients better if they knew more about philanthropy issues, questions, and approaches. And since the vast majority of their clients may never need to talk to people like me, it serves those clients well if their wealth manager understands philanthropy issues sufficiently well, and to know when the issues are beyond their own competence.

Contrary to the popular myth within their field, ours isn’t a “soft side”. There really is a discipline, a methodology, and standards to do the philanthropy advising well. Those financial management firms whose professionals attend philanthropy conferences understand this well. And those are the folks I am accustomed to seeing.

This past week taught me, though, that if one is going to enhance the engagement of wealth advisors and trust and estate attorneys in higher quality philanthropy advisory support, people like me need to go to where they are. Too many of them wouldn’t even think to look for us otherwise.

Almost all of those I spoke to about philanthropy advising at the recent conference have already been in touch and are exploring ways in which I can enhance their work and the philanthropy of their clients. They want to make their clients happy and satisfied with their work and they quickly got how enhancing their collaboration with philanthropy experts can go a long way to accomplish that. To be sure, this was a conference built on the value of inter-professional collaborations, so it may be that the attendees are more disposed than others to explore this approach. Nevertheless, the breakthroughs in understanding of our mutual potential gave me hope that the next conference of this sort will not replicate this gaping lacuna. We’ll see.