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The Purpose of Philanthropy is Not to Avoid Taxes

November 7th, 2016

Richard Marker

At two unrelated events last week, both sponsored by prominent wealth management firms, presenters talked about the tax benefits of being philanthropic. That is not new, nor particularly worth a comment.

What is worth these comments is the underlying theme of both – that the reason to be philanthropic is to avoid giving money to the government. In one example, a trust and estate attorney proudly talked about how she fulfilled the desires of a very wealthy client to make sure that not one dollar of her estate went to the government. Not one dollar!

Let me be very clear: in the USA, we live in a society that depends on a wide variety of sources to provide for basic human services like health care, education, and more. Americans, more than almost any other industrialized country, rely on voluntary support of time and money for items that elsewhere would be understood as a social imperative and therefore paid for by the state – i.e., taxes. It is inconceivable that in any short term future the essence of this reality will change and thus the imperative for a vibrant nfp/ngo sector. Indeed, it Is the space I have spent much of my professional and volunteer life.

In theory, I would welcome a serious discussion about what it means for so many to depend on voluntarism for so much. Our social service and educational systems are far too dependent on the good will of others, I believe, but I simply don’t see major changes in much of this on the horizon.

However, even if there is an indispensability to our voluntarism, it doesn’t mean that there is no role for government. Quite the contrary, antinomianism and anarchy, the prevailing anti-government positions of too many in the US, are dysfunctional, counterproductive, and lead to radical inequities. Having a vibrant voluntary sector does not exempt one from having a commitment to a functioning, humane, and responsible public sector. The very scope of need far exceeds the ability of the voluntary sector, even the very largest private foundations, to solve abiding social problems. [In other posts, I have given examples of this, and if you wish, I can post a follow up with evidence.] Without the public sector, it just cannot happen.

One can have valid and legitimate discussion about what should be included in the public sector, what kind of equitable tax system should replace our currently unconscionable one, and much more. What has no legitimacy or validity is to say that the public sector should not receive one dollar!

Most of the VHNW and UHNW people I know acknowledge that they could easily afford to pay more taxes and not feel a thing. And most, although, of course not all, feel that it would be the right thing to do. This post is not an indictment of wealthy people.
It is, though, an indictment of those who see philanthropy as simply a tax avoidance scheme and not something to reflect a vision of society. If you despise government and you use philanthropy as a way to dis the public sector, your philanthropy is simply another financial vehicle and not an affirmative statement of values.

Those wealth advisors who use tax avoidance as a planning vehicle would do well to look at the studies of why people give. For most, taxes are a 3rd, 4th, or 5th reason to give. Most philanthropists are committed to giving, to doing good, and will consider appropriate vehicles only after they have decided to give. I understand why wealth advisors do this. They can be great technicians of philanthropic investment vehicles, and some of those techniques enhance money under management even if they are philanthropic vehicles.

But maximizing value is not the same as maximizing values. And philanthropy is all about values. Philanthropy is a reflection of how we can enhance the human condition and the society in which we live. It does not, cannot, and should not replace the public sector. And that sector also needs support – we call that support taxes. No one likes paying taxes, but any thoughtful person likes anarchy even less.

In the United States, our field has been outspoken, sometimes overly so, on advocating and lobbying for no changes in the tax deduction rates as integral to the maintenance of a viable non-profit sector. I, for one, would rather see that advocacy be for the centrality of a healthy, properly funded, and trusted public sector within which the charitable deduction would make sense.

The “Words Matter” Series: What is Said is Not Always What is Heard”

November 2nd, 2016

Richard Marker

Over the last year or so, the power of words has been a recurring theme in these posts. Underlying it all has been the profound responsibility we all have in how we speak – and how words really do matter.

First this: Needless to say, the irresponsibility of too many during this distressing and destructive election cannot be overstated. The critique applies to many, but any honest reviewer, whatever your political leanings, must acknowledge that the extremist and divisive words of one candidate exceed any ethical standards: to espouse misogyny or nativism or anti-Islamism from the podium is unconscionable. To mock those with disabilities or victims of wars is beneath contempt. To turn the other way as racists and anti-Semites and hooligans feel empowered is despicable. The USA will be paying the price of this abuse of the power of words for a very long time.

OK – I got that out of the way, but the rest of this post is really about a more nuanced set of issues related to how words are said and what is heard. It happened to me again last week.

Last week, we attended a great art walk in Newark, NJ, and one of the exhibits used extreme white paint of many objects as a commentary on Black Lives Matter. I made a comment that standing in front of this exhibit shows that no one is pure white – we all are people of color. My intention was to see this as a pedagogic tool to show those who see themselves as white, and therefore inherently superior, might rethink their positions if they stand in front of the art piece and reflected on themselves.

But what was heard was something that I neither intended nor believed. The artist likened my comments to those who dismiss “Black Lives Matter” with what they believe to be the more inclusive “All Lives Matter.” Of course all lives should matter, but in the USA, it is more important than ever to affirm – and espouse – Black Lives Matter! Whether it is the needless murders of black men by uniformed police in far too many communities or the bizarre acquittal of anarchistic White vigilantes in Washington State, uneven justice is all too evident in our country. Still. One cannot solve a societal ill if one is not willing to call it what it is. Black Lives Matter is as good a way to name it as any.

Over the course of my adult life, I like to think I have been consistent in this point of view and have acted accordingly. When I look back at boards, task forces, actions and positions I have taken, it looks that way to me. But not everyone knows that history; all people know is what they see or hear – now. So, while I like to think that my comments on the exhibit were consistent with the long term context of where I stand on matters of racism and xenophobia, our friend, the artist who heard me, knew nothing of the context and heard my words as dismissive and not an endorsement.

What was said – or at least intended – was not what was heard.

I probably shouldn’t have been that surprised. It isn’t the first time when people have come to wrong conclusions – not based only on my words but also my affect. Those of you who know me are aware that I am known as the “bow tie” guy and someone who dresses in a certain style. Because of that, I have learned over the years, many make the wrong assumptions about my political convictions and even my involvements. A few years ago, at an event I attended very much aligned with my commitment to community activism, the organizer/chairperson told me that someone asked him what I was doing there! Fortunately, the chair was well aware of where I stood and set the record straight – much to the surprise of the one who asked the question. It was not the only time something like that happened.

What was seen was not an accurate reflection of what I believe.

The other side of this coin is seen in this recent anecdote. At a national philanthropy conference, I gave a talk on the interrelationship between public policy and private philanthropy. It is a talk I have given in many places over the years and it is, I am happy to say, usually very well received. Every once in a while, though, in the midst of mostly complimentary reviews, someone complains about my “lefty” views. In fact, if one carefully reviews what I actually said, it was simply a reporting of how the policies of recent administrations had an impact on the philanthropy sector. Depending on one’s personal perspective, one may agree or disagree with those policies. I surely don’t deny that I have a point of view and try to be honest about it but the facts that were presented in this presentation could not be in dispute. Yet…

What was heard got in the way of the message.

When I teach philanthropists and foundation professionals, in an interactive presentation on philanthro-ethics, a few of the cases ask these funders to focus on how their behavior, no matter how intended, can be misunderstood. The structural imbalance of power between a funder and the ngo/npo’s needing funds means that all funder behavior is laden with implied meaning. The bottom line is that a funder has an abiding responsibility to exercise the “conscious use of self” in these relationships. Only then can a funder convey what is truly intended and not what a grantee may see or hear or wish. Most funders don’t violate this willfully, but the result is the same.

What is said or done may not be what is heard or seen.

In all of these examples, the issues are the impact and affect of words said and unsaid. They are not examples of overt slander or dishonesty or attempts to mislead, but they all speak to the power of what we say and do. All of us, each of us, has a responsibility not only to what we say, and how we say it, but to speak with a consciousness of how we want to be heard and understood.

Yes, words do matter.

In Innovation Funding, the Second Funder Makes All the Difference

October 26th, 2016

Richard Marker

Venture capitalists and innovation funders share a motivation: to discover and cultivate a successful startup that makes a big difference. In VC, the payoff is a big payday. In philanthropy innovation, the payoff is a big “impact”, however elusive the definition of impact may be.

Those of us who have been on the funder side of innovation know that it is high risk. Evidence is always derivative since the idea or project has yet to be proven. There is always the challenge to distinguish what is enthusiastic hype by a budding charismatic personality from an authentically new idea. Or, perhaps, personality matters more than the idea. Guessing wrong about either or both can lead to money down the drain, a dashed dream, and another notch on the failure post.

Yet, truth be told, funding innovation can be fun as well. One meets lots of really high energy people, hears lots of interesting takes on the world, engages lots of new ideas, and feels derivative excitement from the enthusiasm of highly charged, [usually] young entrepreneurs. From a funder perspective, if we are willing to live with the risk, it is not a bad way to spend our time.

And, also typically, to be an early stage funder, especially in the not for profit sector, is not a very expensive investment. One can be a budding hero for a relatively modest amount of money.

But, what happens next? The challenge for us as funders is not so much when a project doesn’t make it. We did a good thing, we gave the project a shot, but we guessed wrong. Some money may be lost but we did give someone or something an honest shot.

However, it is when a project shows promise that the challenges for us as responsible funders grow. If we are the exclusive funder, are we doing this entrepreneur a favor by continuing to be the sole backer? Has our early stage investment implicitly obligated us to invest even more to allow the project to grow? On the other hand, as the primary funder, are we taking the risk that the project will be identified as “ours” – and only as ours? If we then decide to stop funding, have we been unfair with the hopes, dreams, ambitions of someone we have anointed with our start-up funds?

Here is where a second funder becomes crucial. A second funder gives the project legitimacy for others. It makes it clear that this is not simply a pet project of the first investor. It reflects an endorsement that the idea or funder has passed the first hurdle of credibility and fund-ability. It allows the first funder to develop a healthy and less burdensome relationship with the project. And the innovator begins the necessary process of developing a more stable income stream.

Being a second funder has another advantage. Few funders are interested in or have the capacity to invest in every interesting new idea. A second funder is still funding at the enthusiastic early, high-risk stage, but it is a project that has begun to show promise. At this point, risk is shared, and there is already a sense of what the needs and potential are, and what kind of resources should be applied.

When I was CEO of a foundation, we valued being the second funder. Our endorsement was often the imprimatur that quickly brought other early stage funders to the table. We valued that sweat equity and first funding had yielded sufficient results so that our investment could begin the move toward something sustainable. Our endorsement showed that the idea was not simply a single funder project. Often, it allowed us to bring different expertise to the table than the first funder did in ways that had exponential impact in the effectiveness of the project. Looking back over time, it is fair to say that many projects where we were the second funder have lasted longer and were often more successful than those where we were the only funder, and even when we were the first funder among many. And as I peruse the innovation ecosystem, it appears that our experience was not unique.

So that there is no misunderstanding, this post is not addressing the totality of funding needs. This early stage of funding, even when thoughtfully provided, is not a guarantee of sustainability and rarely is it sufficient for scalability. That is a topic for a different discussion. Further, I know that not every innovation funder likes being the second funder – after all, the first funder took the first risk and deserves the first bow. It requires a good deal of ego strength and willingness to be a responsible funding collaborator to be second.

But to those who are committed to innovation funding, I encourage you to take this role seriously. In many, many cases, a second funder is the one who can make a project, a program, or an idea viable.

And isn’t that why we are innovation funders in the first place?

Philanthro-ethics in Practice: Equality is not always Equitable [Re-posted]

October 4th, 2016

Richard Marker

I have been told that, due to some sort of technical glitch, this post was not disseminated to all of you who subscribe, and through you, to those who read your re-posts and syndication. This was originally posted on 4 October 2016.]

The last two weeks have been filled with a wonderful variety of thoughtful funders, both at Penn’s CHIP new education program for philanthropists and at the Exponent Philanthropy national conference. Even after all these years of advising and teaching funders from around the world, it is inspiring and invigorating to share knowledge and also to learn from so many wanting to do good and achieve impact with their resources.

Over the years, certain inquiries arise all the time, especially from newer foundations and other funders trying to wrestle down the messy business of wise grantmaking. Very frequent among the questions are;

Can’t we: [choose one or more]

• Have one set of standards/metrics by which we judge the impact of all of our grants?

• Have one reporting system applicable to all of our grantees?

• Expect all of our grantees to have a formal evaluation of any grant that we give?

• Be open to a site visit whenever we wish?

• Have an objective way to compare our proposals so that we can easily know which is best?

• And more….

Certainly seems reasonable. Shouldn’t we treat all of our potential and actual grantees the same way? Isn’t that the most fair way to go about our business? And isn’t that most efficient for us as funders – that way we don’t have to negotiate conditions, deliverables, or any other special considerations with each grantee. If we treat everyone the same, none should have a complaint, and we, in turn, will gather all of the information we need to do our business as grant makers in a consistent and predictable way.

For a long time, the vast majority of funders, including most foundations, did little more than monitor the finances and self-reports of our grantees. But as foundations began to demand more proven results from our grantees, the trend to collecting more data, and expecting more accountability has been a concomitant desideratum. And that, in turn, has led us to look at our own practice: shouldn’t we also have standards, metrics, data that inform how we make our decisions? If we could only standardize the ways we review all of our proposals so that we can compare them one to another… thus, the appeal of equality of procedures and expectations.

1. Some highly sophisticated funder analysts have come up with detailed cost per unit systems. On the surface that seems to be a good approach, especially to those who believe that efficiency of philanthropic dollars should carry a lot of weight. But, and this is a very big but, apples may be pretty much like other apples, and grapes may be pretty much like other grapes, and squash may be pretty much like other squash, but apples and grapes and squash aren’t exactly like each other, and don’t even get us started on heirloom tomatoes. [Hey, It’s Autumn; indulge a timely metaphor.] Even if one could demonstrate that growing one fruit is more financially beneficial than another, that doesn’t mean that a diet of only apples or grapes or squash or tomatoes is good for us, or can be grown in the same places. So, if our funding strategy is to only fund in one field of service, financial and cost per unit of service comparisons can be very meaningful. But if we are committed to funding across a wider range of services, to differing populations, to differing kinds of organizations, those bottom line numbers can be quite elusive and very misleading. And even if and when they do apply, there is a need for a pretty significant investment of staff and expertise to garner sufficient data to do that comparison well. Therefore, financial bottom line comparisons, while instructive, can only take us so far.

2. Might there be other measures then? Looking at the maturity of a program is a useful barometer. It hardly makes sense to expect that a startup will have the same evidence that a seasoned non-profit institution with a well-developed program should have. There is a life cycle to organizations and programs. It doesn’t allow comparisons across all grantees, but it does allow meaningful comparisons among projects of a comparable maturity.

But this still doesn’t answer the apples to squash challenge. Might there be other metrics or data that would allow us to compare projects at various stages of maturity even if their programs differ widely? Some, such as Penn’s CHIP program, have developed such a methodology that can provide very useful comparisons.

3. Another useful tool is looking at the size of an organization. If one were to receive a grant proposal from a university or a major museum or teaching hospital, one would be quite shocked if it were not professionally prepared, with all sorts of supporting information [hopefully, though, only that which we requested]. These institutors have teams of professionals whose job it is to do exactly that. What about a neighborhood based pantry or a start-up arts program? If their proposals were less sophisticated and professionally produced, should you cut them some slack? [Right answer: in most cases, yes]. Their 2.5 f.t.e. staff are doing everything. Of course they have a responsibility to produce proposals, but the ED who is doing that is also developing the program, overseeing marketing, supervising staff, trying to balance a budget, and creating a board.

The same should be true of reporting after a grant is given. That same university with full time development staff should be able to produce credible quarterly reports for us to monitor, or arrange a site visit to give us a closer look at what our grant is doing. But those small and young groups are unlikely to have the same support systems in place to produce the information we want to see. Is it fair to expect it? They shouldn’t be exempt from giving us what we need, but are there ways to make their lives easier in how we request it? And do we really need exactly the same information in the same depth that we want from that famous museum?

Moreover, as we have written about in previous posts, a site visit to a smaller organization can be disruptive. What seems like good fact finding to us can interfere with their ability to do their work. It may be exactly the right monitoring and learning tool for them and us, or it may be extraneous. We should always think carefully about its efficacy for our decision making.

As we look closely, we come to realize that demanding equality of information and reporting may not lead to equitable treatment at all. If we ask too little of everyone, we end up with too little information needed for responsible evidence-based grantmaking or analysis of that we have given. But if we ask too much of everyone, we may find that small organizations or new projects never have a chance.

As with all grantmaking, the challenge is to right-size. And to right-size means that we make sure that our grantmaking processes give us the information we really need to make decisions without unduly burdening those who must prepare proposals and those who are implementing programs. To do that means that we funders need to recognize that equality is not the same as equitability – in the way we consider our proposals and the way we oversee them. Recognizing this distinction is both fair and just. And makes us more effective funders.

A Philanthro-Ethics Inquiry: Should Funders Withdraw Our Funds From Wells Fargo?

September 30th, 2016

Richard Marker

I am quite sure that there is no reason that this readership needs me to rehearse the legal and ethical disgrace that occurred at Wells Fargo Bank. It hasn’t fully played out – and the full consequences are, as of this writing, not yet determined. It appears that there is a growing consensus that just to blame the front line workers is hardly fair. Were they fired unfairly? Should the board, or CEO, or senior staff, or auditors all be liable for claw back? Should there be draconian penalties such as we saw implemented by the State of California? Did they go far enough? Some really bad stuff happened, sadly impacting many least able to absorb a financial shock. What are appropriate penalties and who should pay them? For now, we’ll let those questions play out elsewhere.

The question I received was a very specific one: should foundations and other non-profits withdraw our funds from Wells Fargo and any of its related subsidiaries? Should we advocate for any other particular action – in our role as advocates for the social good?

Trust in a financial system is one of the essential underpinnings of any society. Historically, we have seen what the collapse of such trust can lead to here in the USA and elsewhere in the world: runs on banks, the fall of governments, an alternative and unregulated gray market, hoarding of cash – especially and ironically, safe cash such as the dollar! When an individual is found guilty of abusing that trust, it is bad enough but that is just one bad apple and an embarrassment, but it need not be an indictment of the system. What about when a bank’s practices abuse that trust as a matter of practice? And what about when that abuse is on the retail side, impacting the users who have the greatest need to trust banking institutions for daily transactions and charges and credit cards and mortgages?

What happened at Wells Fargo is so challenging to faith in the banking system precisely because it was so purposeful, so widespread, and impacted so many “retail” users.

We know all of that. Our question as foundations and funders is: what should we in the philanthropy world do about this?

1. Some argue that we should be putting our money where are values are and move our cash resources to entities that are more community based and committed to demonstrable values. There are many who already do so; perhaps this incident is a lesson for the foundation world that we can and should support community development banks – and this is the perfect time to do so. I doubt that there are not enough Foundation resources concentrated at Wells Fargo that a wholesale removal of our money would make much of a difference to their bottom line – but it would make a huge difference to their reputation.

2. Others might argue that we should advocate for more stringent rules for the banking industry. Yes, I know that this is not a new concept, but look how long it is taking to implement Dodd-Frank, and look how much pressure there has been to weaken even that bill. Should we be advocating that retail banks should have limits on their geographic regions again? Or that we return to the time when investment banks may not be in the retail business? Or that there be new kinds of audit and accountability systems given the size and complexity of these massive essential institutions?

3. Under the pressure of ethical and legal challenges, Enron and Arthur Anderson and Lehman Brothers were forced to close or reinvent themselves. In retrospect, were those closings effective deterrents or might there have been other shocks to the financial system that might have accomplished as much or more? Should our moral suasion empower the foundation and philanthropy world to be more assertive in helping to learn from these and other lessons? Since the private foundation world, in theory, can ask these questions with impunity and without political pressure, does that make us the right folks to be asking the lessons from history to prevent the sins of future financiers? Or are we so identified with wealth that our advocacy and lessons will be discounted?

I confess that I am not sure how to answer the question I was asked this week. However, my uncertainly doesn’t exempt us from publicly and courageously asking these questions. Philanthropic foundations need to be strong moral voices for addressing the systemic underpinnings of any society in which we are. Our long term raison d’etre is to use our resources to make the world, or at least some part of it, a little more just and a little more fair than we found it. It is why we exist. This may be one of those moments when our voices, raised strategically, can matter and make a difference.

Is Non-Profit Impermanence A Synonym for Failure.

September 11th, 2016

Richard Marker

A few years ago, a noted professor of History of Education invited me to speak to a graduate class about my role over the course of my career in the creation of a number of interesting and cutting edge non-profit organizations. With the vantage of a rear view mirror, he noted, whether by serendipity or opportunity, I had been involved at an early stage with a surprising number of well-known and often honored ones. In inviting me, his goal was to give his students a kind of inside look at the dynamics of organizational creativity. And, to be sure, I was proud of these involvements.

The response of the graduate students surprised us both. What the professor considered a litany of cutting edge creativity was not how the students responded at all. They felt that I had told a tale of one failure after another. Why? Because only a very few of these organizations are still around. That alone was proof that they hadn’t succeeded. The fact of their impermanence, whatever transformational changes they may have enabled, was all the evidence they needed.

Most of the organizations of which I spoke lasted 15, 20, 25 or more years. They weren’t brief novae invisible to no one. Some were world renowned, others had a national presence; a few were only local. Each was worth talking about because it represented innovation and change in some element of education, identity formation, or organizational design. These stories are never the work of one individual – I may have intervened at a key moment, or played a role along with others at an early stage. Often, I was a crucial behind-the-scenes player, my role evident to only a few insiders. But involved I was.

Yet these graduate students, millennials all, a generation whose lives and careers are a veritable paradigm of transiency, did not hear my presentation as a celebration of the possibility of creative change but of the inevitability of the failure of innovation. The host professor was astounded, and I was crestfallen. What the students heard was not the story their professor wanted heard, nor the theme of the book he had been urging me to write [still unwritten], nor the message he thought his students needed to hear.
I am currently very involved in the closing of two visible organizations: one is a public charity and the other a private foundation. The response to their closings has been markedly different. The closing of the public charity which has been around for about 50 years is one of anger, disillusionment, and failure. The closing of the private foundation has included some disappointment, but is characterized mostly by a celebration of what it has accomplished over its much more limited life.

The difference in response to the two closings is quite remarkable.

Why does impermanence for the nonprofit/ngo sector so often imply failure? Is it the angst and disappointment of non-profit sector leaders who watch demographic changes and cultural shifts shake their organizations’ historic raison d’etre? If they advocate closing or merging, are they besmirching a proud legacy and belittling the contributions of so many who have come before? Are they embarrassed that they may have been too slow to re-invent themselves – perhaps into something unrecognizable to their founders – just so that their organizations might continue to exist? Should they? Have they miscalculated that the loyalty of past donors will pass, as if genetically, into new generations? Has the nature of organizational life been so transformed that they no longer have the agility or the access to funds that will guarantee their relevance going forward?

Or perhaps they have made the choice willingly: they have become self-reflective and they have decided that their expertise is best managed by another organization? Their original purpose has been usurped by a changed world and they honor their past best by closing or merging? Is their long standing way of operating too inefficient for this age and they are either too small or too undercapitalized to change that? Has their funding business-model imploded? Have they acknowledged that their volunteer and professional leadership pipeline has dried up? Are their funders impatiently urging changes that can no longer be ignored?
Why is it that so many consider it failure if an organization faced with this range of challenges decides that it is time to close or merge? Why do we imagine that a nonprofit should have a claim to perpetuity simply because it has lived for one or two or three generations, and anything less is an embarrassment? So much for the legacy organizations.

But, in fairness, that wasn’t what upset the graduate students. They were presented a narrative about innovation and heard failure. Here the plot thickens. Did they fail, if fail they did, because legacy organizations overwhelmed them? Or because they never had access to mezzanine and 2nd stage funding that would be accessible in the for profit sector? Do funders talk a good game about innovation but are perfectly willing to starve it along the way? Are lean and mean start-ups asked to do more than they have bench-strength to accomplish? Is a high risk of failure the price of entry into a very fragile and tenuous market? Is failure of an organization the same as failure of an idea? Is it even fair that we ask our most creative thinkers to become organization builders?

Perhaps the question needs to be asked a very different way. Why should an organization, any organization, expect to last more than a few years, or more than a generation? A century? Don’t organizations come into existence to solve a problem? If they do so well, they have a respectable chance of being around for a while. When the problem goes away or a different problem surfaces, why even turn to these organizations? Sometimes what was once new becomes so normal that a separate organization is no longer needed. Of course, some organizations learn to “recycle” or re-invent themselves. But if an organization chooses not to, has it failed or simply recognized that its very valid and worthy contribution was of a different time or place?

Now here is the kicker: On the private foundation side, impermanence has become celebrated. There are numerous highly visible private foundations and philanthropists who have announced that they will spend their money during their lifetimes or within a defined period of time. Indeed, in my work, the choice of perpetuity vs limited lifetime is a core question, either answer to which is considered valid. The question is not new at all – Andrew Carnegie and Julius Rosenwald answered this question very differently from one another a few decades ago.

It isn’t an easy choice: every funder and foundation makes a calculated, even when well-informed, bet about the best use of limited resources. And make no mistake, even the very largest foundations have limited resources compared to government coffers and the scope of human need. Is it smarter to make “big bets” on solving one problem now, or is it more valuable to assure that there will always be an independent source of “risk capital” to experiment and respond to new and unanticipated needs as they arise?
In the world of funders, there is no unanimity at all on how to answer this question. It is a dynamic and vital discussion for every philanthropy strategy plan.

But, I have never heard a foundation that chooses to spend-out called a failure. Nor are funders who choose to give all of their philanthropy resources during their lifetime condemned. Why is it legitimate and honored for funders to make this choice but not so for public charities? Why is it a source of hand-wringing and even shame when a non-profit chooses impermanence, by its own volition or otherwise but a source of hand-clapping when a funder makes the same decision?

Over the course of my professional career and as an active volunteer board member, I have been involved in a good number of decisions about mergers, closures, and attempted reinventions. These discussions and the surrounding processes are never easy. Human beings have deep emotional commitments and investments in the answers. It matters to us and it should.
Yet the divide between how we feel about and respond to the impermanence of public charities and private philanthropy is very large. Perhaps our sector would do well to recognize that impermanence of institutions and organizations need not be synonymous with failure, and, instead, to celebrate existential life cycle decisions, including closure, as a sign of a robust and healthy sector.

A Little Mission Creep Can Be a Good Thing

August 17th, 2016

Richard Marker

That is a surprise, you say. Don’t you usually help funders develop a focus for their funding? Don’t you assist them to understand how a good strategy shows philanthropists and foundations know when to say “no”, and when to say “yes”? Doesn’t a funding mission determine whether we are achieving the impact we want our funding investments to achieve? Wouldn’t you advise that “mission creep” dilutes focus and impact, and ultimately limits one’s effectiveness as a funder?

In general, the more focused, the more likely we feel in control of our funding, we feel that we know why we are doing so, we know what to expect from our funding. And the more focused, the more likely that we trust the data and evidence we gather from our monitoring reports, site visits, and systematic evaluations.

The strength of this becomes evident when external factors force hard decisions. The Great Recession forced lots of us to take a good hard look at all those grantees. How did they get there? Our so called priorities had become a very porous barrier to funding entry. Of course, during the go-go years when our assets were growing at a fast clip, what did we have to lose? Sure those projects didn’t fit exactly, but our regular grantees didn’t suffer. But, suddenly the money wasn’t there. Suddenly all those mission and priority statements and guidelines came into play. As the money started coming back, many of us, burned, worked hard at maintaining the discipline.

At the same time, impact philanthropy, a very broad agenda discussed in more depth elsewhere, became the abiding mantra of the moment. If it means anything, it means bang for the philanthropic buck. Evidence, data, systematic review all are essential tools in the impact toolbox. Once we see our decisions being driven by impact outcomes, it is hard to ignore the significance of this information in decision making. And many funders pride themselves on their strict evidence-based approach.

Even if these factors are not the driving force in our decision making, having a clearly articulated set of guidelines certainly makes our work a lot easier. If we are only reactive to any and all requests, it is very frustrating to have to say no to the many valid requests without second guessing ourselves. Or have contentious board and family constantly lobbying for personal priorities. Getting all that out of the way before the inevitable flood of requests makes sorting through the docket go a lot easier.

There are lots of practical and conceptual reasons to resist mission creep. Why then do I say that it sometimes is a smart thing to do?

1. Evidence-based grantmaking ultimately works against innovation. After all, by definition innovation means “new” and evidence means that there is history. There are too many examples of some of the most interesting problem solving coming from risk tolerant grantmaking that would never have made the cut if evidence was an absolute condition.

2. Evidence based grantmaking can lead to a tendency to believe that we know everything that is happening. But sometimes some out of the box thinking comes from surprising and unexpected places. If we are too rigid in defining what fits, we may be missing really interesting things.

3. All funders and foundations need to leave space for change and growth. Even highly sophisticated and experienced funders can get in a rut. By leaving space for the periodic “mission creep”, funders can test out whether our well-trodden path has become too worn, too passé, too easy. By going outside of our comfort zone, we may find that it is time to adjust, rethink, re-direct, …or stay the course.

4. Sometimes there really are exigencies that deserve an “exception.” For some, it may be keeping fragile nonprofits afloat as government funding dries up. For others, it may be a natural or human caused disaster. For still others, it may be a funder collaborative with real up-side potential. And I am sure that you can add to this list.

Now, I know that you realize I am not advocating that we adapt a new anarchic approach, throwing our carefully honed priorities and guidelines away. I am advocating that we be careful about the apparent wisdom of pure evidence-based grant making and of too rigid a long term strategy of our approach to our decision making. Properly used, it may keep us more agile and responsive without jeopardizing our hard won discipline.

We’ve Only Just Begun – To Re-establish Civil Society

August 9th, 2016

Richard Marker

Except for a veiled reference to a recent ad by the Council on Foundations calling for HOPE, this post is another statement on the current civic reality and not primarily about philanthropy.

For those of us who believe that there is only one sane and reasonable choice for the next president of the United States, it has been a reassuring week. All of the polls are showing that, finally, American voters are consistently expressing their horror and trepidation of the election of Donald Trump, even if they are not all enthusiastic about Hillary Clinton. It continues to astound me that people challenge her credibility when she has been vindicated in almost all cases, and when Mr. Trump is caught in outright prevarications on almost a daily basis. Not to belittle sins of email commission, but how can you compare that to business fraud, tax evasion, enrollment scams, and spewing of hatred of all sorts?

But even if Hillary Clinton continues on this path and wins decisively, and even if she carries the Senate along with her, we will still be far from national civic weal and populist equilibrium. The last few years of obstructionism and divisiveness have taken their toll. Voices long considered below the surface and beneath contempt have been heard in too many places – with impunity. Overt racism, anti-Semitism, anti-immigrant, xenophobia, anti-Islamism are expressed openly, publicly, vitriolicly, and dangerously at rallies and on line. Individuals are attacked verbally and physically. A decisive win will show that the populace doesn’t approve, but it won’t make all of this go away.

This is a time when “why can’t we all just get along?” won’t suffice. The divide is too wide and the chasm too deep. Trust of institutions, all institutions, is at an abysmal low. There is plenty of guilt to be spread around on why. Why should someone trust an employer that expects 24-7 loyalty with an insistence on at-will employment? Why should someone trust that higher education really is worth it when it comes with a non-negotiable long term debt at the end? Why should someone trust governments that have cut education and human service funding for years – and threaten to reduce social security and Medicare?

Reasonable people will, hopefully, continue to reject the sick and bizarre Trump candidacy but there are people who still believe what he says or that his rants represent them even when they see through his scam. I know some of these people, some of whom still intend to vote for him. The ones I know are not the uneducated, disempowered, disenfranchised left-behinds. Yet they somehow resonate with the anti-establishment rant. And while most thoughtful Bernie supporters affirm that Sanders is not just another name for Trump, they echo a profound disillusionment with the established order as not being consistent with their personal needs and destinies.

This erosion will not be corrected in the short term with policy fixes, although that will help. This deterioration of belief in government will not be quickly reversed even if the proverbial aisle that divides becomes bridged. This frightening explosion of hate – of publicly expressed hate – will not easily go back underground, or be expunged from public squares and private chat rooms with the wave of a hand or the development of a slogan of “hope”.

There are profound and abiding changes that are far more far reaching than any of the political types are addressing. Most of the political discourse addresses economics and the nature of international influence/terror/encroachment. At a time when the economy and employment is way up by any objective measure, one party runs as if we are still in recession, and many seem to agree. Why? Most murders in the US involve guns and are by citizens without a political agenda, and most of those that do have a political or ideological agenda are homegrown. Yet the fear of “the other” [read: Mexican, Muslim, African-American, Jew, Asian…] is all too real for too many. Why?

On a macro level, the indisputable reality is that the world has changed and it is not going back. There is no country that can return to economic or cultural isolation, no matter what the Brexits thought or no matter what the American nativists romanticize about. There is no way that technology that transformed manufacturing everywhere is going to return to a post WWII reality no matter what a rust belt victim may wish. There is no way that communication, social media, and news access is going to revert to the same mediated systems that existed from Gutenberg through the last century. There is no way [barring the unthinkable] that migrations of millions will somehow easily be reversed. There is no way that the world can fully mitigate the impact of climate change that our behavior has wrought without a radical commitment that so far has eluded many in the United States and China.

Yes, the world has changed and it isn’t easy to live through a time of radical transformation. For some of us, it is merely a challenge of learning to use apps so that we understand our children, grandchildren, or younger employees. For others, these changes represent a world gone unrecognizable, with no certainties, no guarantees, and no light at the end of the proverbial tunnel. It is unsettling and that anomie cannot simply be ignored, even if it has been maliciously coopted by many politicians over the last few years.

The solution, I reiterate, is not yielding to the basest instincts of those fears, but it is also not helped by thinking theirs is only a naïve and ill-informed political preference. Those who are opinion makers, multipliers, thought leaders, and influencers… and that is a lot of us… have to accept an extra burden beyond simply guaranteeing a Clinton win this November. We need to find ways to reintegrate those who feel disenfranchised back into normal society –not by overlooking their hateful rhetoric but by demonstrating its fallacy. We need to develop educational methodologies recognizing the altered epistemology of how most people now receive and absorb information. We need to change our formulations of how the world is now organized to recognize the porosity of our economic and cultural borders. We need to reject the destructive power of the anarchy of political obstructionism and unfettered weapon ownership. And, finally, we need to work hard, very hard, very very hard, to make sure that governments and other institutions that define contemporary life re-develop a true and authentic loyalty to our citizenry.

Our challenge is not the rhetoric of “hope, not fear”. It is the creation of a nation and people who demonstrate, authentically, at every level of civic life, that “we care.”

Everything else is simply politics – and we know where that has gotten us.

Funder Collaboratives and Exit Strategies – A periodic offering exclusively to funders

August 1st, 2016

Richard Marker

Periodically, colleagues and publications in the philanthropy field publish articles on important areas of interest to funders. We are happy to remind philanthropists, foundations, and other funders that we have practica in many areas that we share with our philanthropy advisory clients. The two listed below are available at no cost to eligible readers.

FUNDER COLLABORATIVES For the past 9 years, one of our most requested best-practice pieces has been a “how to” on funder collaboratives. It continues to be available

EXIT STRATEGIES In addition, for the first time, a PowerPoint on successful and best practices for exit strategies is being made available.

If you are a funder, please contact us directly for either or both of these documents. A reminder that both of these documents are under copyright, and may not be disseminated or used for commercial purposes by anyone without explicit permission.

Thanks for your continuing interest.

Speaking up. Speaking out.

July 21st, 2016

Richard Marker

[Those of you who read my posts for my thoughts on philanthropy may choose to take a pass on this one; it reflects continuing personal thoughts on our responsibilities in the current destructive political atmosphere.]
As this is published, many of my colleagues in the professional speaking profession are meeting at the annual conference of the National Speakers Association. I am otherwise committed these days, so I will have to rely on contemporaneous social media and retrospective reportage to get a flavor of the days. [One thing I know for sure: a meeting in Phoenix in July virtually guarantees that few will play hooky in the Arizona sun]

After last year’s conference, I chose to speak up – in writing – in response to some negative scuttlebutt about a presenter who had a clear [but non-partisan] political perspective. I thought it was great but others felt that such political positioning was an intrusion on the plenum.

My own view, as long time readers know, is that those of us who earn our livelihood by words have a special responsibility to use words carefully and also to serve as models of how one can articulate particular and challenging points of view respectfully and constructively. Not so easy, I can attest, since I have had conflicting reactions to some of my own public presentations: while some challenged me for espousing my views so readily, my favorite response was from someone who reported in his/her review: “I don’t agree with his politics, but I could listen to him all day long.”

The posts I wrote after last year’s NSA conference and in a subsequent post expanding on the topic were considered too political for NSA Facebook pages and I was asked not to post them there. They are still available on this blog.

It raises the question, though, about when should one, anyone, choose to speak up and when must one speak out.

Speaking up:

For almost 4 decades, racist, anti-Semitic, and sexist speech was eschewed in polite company. None of us is so naïve to imagine that no one harbored those thoughts, but American society had a standard of public right and wrong whatever may be harbored in the deepest private recesses of ones heart or mind. Knowing that racism is wrong didn’t eradicate it, we certainly know all too well; nor, sadly, has it eradicated anti-Semitism or misogyny, or nativism, or xenophobia – as we have learned all too vividly during this frightening election cycle, but most knew better than to indulge those private thoughts in public or social settings.

In some ways, though, because people behaved properly in polite company, for a long time, few were challenged with the dilemma I mentioned above, of deciding to or not to speak up. That choice is far more present today. To take an example:

A couple of years ago, when sitting in a hot tub while on vacation in Florida, two others in the large spa began bad-mouthing President Obama. While I completely disagreed with their politics, and was prepared to dispute the putative facts of their rants, I only chose to speak up when their rants deteriorated into overt racism. I chose to call them on it. After realizing I wouldn’t back down in my rebuke, they chose to leave. Others in the hot-tub were uncomfortable. Some agreed with their politics and some with mine but all had heard the overt racism and felt it was wrong. None of them was prepared to confront the two aforementioned gentlemen. [I never saw either of the two again; it is possible that they saw me and chose to go another direction.]

The question here: was this a correct place to speak up or did I violate social norms and etiquette that should take precedence?

Speaking out:

Obama’s election seemed to mark a change. Strange, sick, dishonest sentiments continue to arise in social media daily. The birthers, the anti-Islamists, the overt racists, the conspiricists, haters all, think nothing of saying the most outrageous things – in public. Any semblance of restraint in polite company is long gone. And they think nothing of viciously attacking the motives, sincerity, intelligence, or legitimacy of those who disagree.

Frankly, for most, including me until recently, it has been safer and easier to just dismiss them as perverse kooks. We turn them off, disconnect them, un-follow them, un-friend them. But that doesn’t make them go away and it doesn’t dissuade them. They are reinforced by their fellow extremists and bigots, not repudiated by those who ignore them.

A newspaper publisher recently wrote an op-ed with which I agreed. He challenged single-issue voters to think more broadly about the implications of ignoring all the other parts of a candidate’s and party’s agenda. I thought two and three times before writing a supportive letter to the editor since I have seen the vitriol that is regularly cast his way when he opines in ways that some consider too moderate [my word, not theirs]. Did I want to subject myself to that same vitriol and character assassination?

I chose to write it since I now feel this is not the time for reasonable people to remain silent. Allowing hate speech legitimates it. Ignoring bigotry gives it sanction. Silence in the face of extremism empowers it. If I, who can pen an opinion piece with little risk, do not express my support, then who can? If not I, then who else should?

A long, long time ago, when I was a lot younger, a lot more charismatic, and actually had groupies, I was asked to consider running for elected office. It wasn’t what I wanted to do then, but it did flatter me and it held the promise of being a change agent from the inside.

Today, sadly and tragically, it is hard to imagine wanting to do that. The public square is polluted by self-interest, and political means tests. Even if I thought I could do better, the trade-offs are simply unacceptable.

If I don’t or won’t have power or authority by an ascribed or elected role, many of us do have the possibility of earned power. The one asset that I do have is words. Words in text and words in speech.

If I am correct that the time, this moment in time, requires strength of conviction, I am left with no choice, to accept a self-imposed mandate to speak out, to call out extremism and hatred for what it is, to challenge those who would destroy values that most of us hold dear, and to actively advocate for the triumph of reason and acceptance over nativistic rejectionism.

I am quite sure that I will lose some speaking engagements and some advisory contracts, alienate some who may have illusions about my views, and put me squarely in the crosshairs of those who attack disagreement. If enough of us choose to do this, it will begin to re-create a civil society that honors responsible speech and respects all others. If enough of us choose to do this, this will indeed be a country worthy of the values we espouse and of a citizenry who aspire to the ideals we admire. This call is not restricted to my fellow professional speakers, NSA members. It is to us all.

To my mind, the times, these times, require no less.