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#289 The “Fund for Success” Series 2: When Not Enough is Too Much

August 16th, 2017

Richard Marker

Why the “Fund for Success” Series:

To “fund success” is not the same as to “fund for success.” Many funders are very risk averse, and are only are willing to fund the most proven, evidence based projects, or the most prestigious institutions. While there is nothing necessarily wrong with that approach, that is not what is intended by “fund for success.” It means that funders should assess what would be necessary for the highest likelihood of a program or project or organization to succeed. One should look at financial and non-financial requirements, fund what is realistically adequate and not simply fits a funding formula, and create an atmosphere of openness with grantees that guarantees that realistic information is shared in a timely fashion. The purpose is not to avoid failure; that inevitably happens sometimes. But it shouldn’t happen because a funder’s funding practice makes success impossible.

In a previous post [#288], we discussed a case where a seemingly overly generous and undisciplined funder gave so much without concomitant planning that the project ultimately failed. Admittedly, that is not the typical case.

More typical is the case of funders who give too little.

There are lots of reasons for that:

1. A funder or a foundation may assume that all proposal requests are padded so giving less than what is asked for is simply “part of the game.” Regrettably it is often true. In the process of automatically discounting every request, many projects end up getting less than they realistically need to have a fighting chance to succeed. In other words, being punished for playing it straight. We have written elsewhere about this vicious cycle and that only funders can make it safe to break this counterproductive practice.

2. A funder and the foundation he/she endowed exhibit a business mindset and not a philanthropic one In business, a successful negotiation is when you can pay less than the original asking price and still get everything you want. While negotiations are sometimes called for in the philanthropy sector, that approach overlooks the tremendous power imbalance and the reticence of hard pressed non-profits to ever say “no” to a funder. To do so requires courage and conviction, and an awareness that a funder can always walk. Therefore, even when an organization is very aware that a funder is giving less than a project genuinely needs, the organization accepts it anyway. It should not be surprising when the project does not meet its potential, and the grant is money down the drain.

I know that some might take issue with my characterization of the difference between the business and the non-profit sectors. In our field, there are many who would like the non-profit sector to be more business-like in many ways. Perhaps. But here I am speaking of the power imbalance that often presents an uneven playing field and leads otherwise well-run non-profits to accept grants that may not be in their best financial interest.

3. Many funders believe that they should never be on the hook for more than a certain percentage of the cost of a program or project. There is surely some implicit prudence and wisdom in this approach. But too often they leave the grantee high and dry by not providing introductions to other funders, or without the professional capacity to do so, or by requiring restrictive conditions that make fellow funders reluctant to partner. It is one thing to impose a strategic funding model; it is quite another to impose that expectation without providing the human or financial resources to do so. Alas, too often the results are less than stellar.

4. Many experienced funders look at a proposed budget and know up front that it is not realistic. This is particularly true with young organizations or untested programs. Too often a funder will say “that is their problem; maybe they’ll figure it out.” Indeed, they know that the money requested is far too little for the project to reach its potential but since it is what was requested, it is easy to just give that amount. A funder is not doing that organization much of a favor by funding that way. Why not give more than is asked? Or at least provide a supplementary consulting grant to help the organization do more realistic budgeting and planning in the future?

5. Some funders have locked themselves into providing fixed amounts to many organizations. If it is a grant toward unrestricted support and is one of many such grants a recipient organization receives, there is nothing wrong with a fixed dollar grant that is not connected to any specific program. But a fixed grant for a specific project, without careful analysis, may guarantee its mediocrity or even failure. Funders sometimes need to be reminded to have the grantmaking discipline to distinguish between the two kinds of grants. [I am sympathetic; oft-times there are too many requests and not enough time to do due diligence on every request every year, especially among long time grantees. A seemingly good idea from a known entity can make the cut even when careful analysis might have yielded a different funding recommendation.]

6. Money can be stretched only so far. It is really hard to stop funding long time grantees so it is much easier for many funders to keep doing so even at a reduced level when the more constructive response would be to discontinue the grant. Money can be stretched only so far. Funders have a tendency to stretch their funding priorities over time, especially during flush years. But, as we saw in 2008-2009, that doesn’t always continue. Suddenly there are harder decisions. It is really emotionally hard to stop funding long time grantees so it is much easier for many funders to keep doing so even at a reduced level when a healthier response might be to discontinue the grant. [For a “how-to” on exit strategies, please be in touch directly.]

7. NPO’s/NGO’s also have priorities. They are not always the same as those of their funders. Creating a new program focus that doesn’t align with the core competencies or strengths or priorities of the NPO/NGO may satisfy the current [sometimes faddish] interest of a funder, but may be a distraction, or worse. Yes, there are indeed times when funder knows best [sorry about the pun], but insisting on funding something outside the priorities of a grantee should only happen after a serious and mutually respectful discussion. Substantial money may be provided to the new area, but, too often too little is provided for the core operating or infrastructure needs of the implementing organization. Without that infrastructure support, the money given for any new project will almost always be inadequate.

What is common about all of these is that a funder may give too little for a program to have a chance to succeed. In such a case, whatever you give may be too much – that is, insufficiently unhelpful to an organization. In such circumstances, giving too little may actually be too much.

Funding for Success is largely a matter of right-sizing our giving, a challenge for all of us on the funding side. We need to learn not to waste our well-intended and thoughtful grant funding by giving too little to accomplish what we, and our grantees, hope to do.

288 The “Fund for Success” Series 1: When Giving Too Much Isn’t Enough

August 9th, 2017

Richard Marker

Why the “Fund for Success” Series

To “fund success” is not the same as to “fund for success.” Many funders are very risk averse, and are only are willing to fund the most proven, evidence based projects, or the most prestigious institutions. While there is nothing necessarily wrong with that approach, that is not what is intended by “fund for success.” It means that funders should assess what would be necessary for the highest likelihood of a program or project or organization to succeed. One should look at financial and non-financial requirements, fund what is realistically adequate and not simply fits a funding formula, and create an atmosphere of openness with grantees that guarantees that realistic information is shared in a timely fashion. The purpose is not to avoid failure; that inevitably happens sometimes. But it shouldn’t happen because a funder’s funding practice makes it impossible to succeed.

During a recent car ride, a client recalled a project by a mutual friend, a well-known philanthropist, that had been a great success for a while but failed ignominiously. He asked what I thought about that project, why it failed, and what might have been done differently.

Enough years have passed since that happened that few readers would know of what we were speaking but since the funder hasn’t given permission to identify him/herself or the project, we’ll keep this piece as vague and general as possible. If you ask, I will neither affirm nor deny that you are correct. In any case, what will matter the most is the lessons learned and not the details.

This funder believed in funding “game changers.” Today we might call them “big bets” or “high impact”. Willing to put substantial money on ideas and see them implemented, the funder thought big, was ambitious and well meaning, and very risk tolerant.

The project in question was a rousing success and perceived by many to be a nationally replicable model. People came from other cities to observe it, it was written about in local and national periodicals, and in its time, it gave great satisfaction to the funder, the foundation, and the staff of the project.

The funder, directly and through the eponymous foundation, gave many millions of dollars to this project every year for a number of years. This was certainly not going to be a project that failed because of a financial shortfall.

Or so it seemed.

As it happened, the funder got a little bored – and was ready to move on to the next “game changer” project. The philanthropist and the foundation staff went to a group of other funders in the field who gave token amounts, largely as a courtesy. They all said, this is X’s project. If they wanted our funding or our involvement, why did they wait until he/she was bored? And besides, what kind of business model is it that it was totally dependent on the bottomless pockets of a single donor?

When it became clear that no other funder or foundation was going to step in, the program and its facility were gifted to another, much older and larger, nonprofit. They, in turn, sold the building, moved the program to a smaller site elsewhere, and radically reduced its ambition and scope. After a couple of years, it quietly and with no fanfare, closed its doors.

It is an oft quoted bon mot that says that success has many parents but failure has only orphans. Here, though, it was easy to point fingers at a very small number of parents: the funder, the funder’s foundation, and the program’s executive director. And as the program was shrinking, moving, and disappearing, there were plenty of fingers pointed at them collectively and individually. Was the funder too ego driven to recognize the need for partners? Were the funder’s foundation people so caught up in taking bows that they didn’t invest their time or resources wisely? Was the executive director blind to the reality that sustainability required a firmer and broader financial base, and actual board governance? Probably a bit of all three.

Might it have been avoided and would that entity still exist if it had followed a wiser path? Well, of course, hindsight is always 20-20 but there are lessons to be learned:

1. There is nothing wrong with being the sole or primary funder, but if one wants the program or project to outlast your funding, it isn’t a very wise or practical long-term strategy.

2. Engaging other current or potential funders late in the day hardly engages them in a commitment. They may be willing to do a favor with a token gift, but rarely a regular or meaningful one.

3. If the goal is to establish longevity for an organization or project, an organization has to plan for a sustainable future from the very beginning. It may be a rougher start, but a better chance of a smoother future. The initial or lead funder’s energy, enthusiasm, and financial willingness do matter and they should be capitalized upon: suggest matching or challenge grants, decreasing or increasing term limited grants, an endowment, capacity building support, to mention just a few examples. But resist sole funding support.

4. Do everything possible to establish a viable governance system for the project. This does not mean a group of sycophants intimidated by a deep pocketed philanthropist who are willing to sit in a token advisory role, but a small group of knowledgeable and thoughtful individuals whose judgement matters.

5. Organizations must be willing to have honest planning with a funder. Yes, that risks losing the grant or gift, but in most cases, it won’t and will likely lead to a more engaged and thoughtful set of decisions. [There is a tremendous difference between “over-reach” when an organization pushes beyond what is reasonable because of an enthusiastic donor vs “under-reach” when the organization knows, up front, that the project cannot succeed with the funds offered but is too intimidated to say “no” to the funder. This issue will be discussed in more detail in blog #289]. In the above-mentioned case, I honestly don’t know whether the professionals were too intimidated or too blinded, but the red flags were evident to anyone who was committed to longevity and sustainability. It certainly appeared from the outside that any attention to that was given much too late in the game.

6. Constant growth can be illusory. It is why metrics alone never tell the full story no matter how impressive they seem. The organization in question undoubtedly had year over year increases in every area of program, but that only represented part of the analytics that should have been on the table. If one asks the wrong questions, one gets the wrong answers – even if those answers are seductively impressive.

7. Open ended funding eliminates the need for planning and budgetary discipline. Because the funder in this case was willing to provide whatever was asked each year, neither the funder nor the relevant professionals were forced to ask the long-term questions that might have extended or saved this otherwise successful project.

Indeed, it was a time when giving too much was not enough.

287 – Should I Stay or Should I Go? When Family Philanthropy Interests Diverge

August 1st, 2017

Richard Marker

Some of you may remember the song of that title, and its refrain, from the 80’s. [Professor Google tells me that there have been numerous subsequent recordings so some readers may recall later versions.] In it, a couple faces a key moment in their relationship with the choice that will determine their future together.

I was reminded of that title when listening to a panel at last week’s Family Office Forum in Newport discussing behavior challenges within their own families, and the choices they all made.

The convener of the panel invited three speakers from very different families all of whom had confronted pivotally challenging decisions in their family businesses.

Any of us in this or a related field is well familiar with the dilemma. Some may be family therapists, others family business experts and wealth managers, still others are trust and estate lawyers, and some, like me, family philanthropy advisors. Beneath every transitional moment is the underlying question: “should we stay [together as a family] or should we go [our separate ways]?” Some, but by no means all, of these discussions are filled with distrust or accusation or long histories of dysfunction. But even those families with amicable problem-solving skills ask the question, especially when deciding what to do about subsequent generations and family growth and dispersion.

It need not be said that families are complex and relationships, between and within generations, reflect that complexity. Every decision that has to be made is loaded because every one is personal. [In my work, I try very hard to show that every philanthropy issue that some members of a family are convinced reflect character flaws of other family members is in fact a generic one that has a legitimate philanthropic basis. Doing so doesn’t dissipate years of enmity, but it does allow more reasoned decision making about where to put philanthropic dollars.

The challenge, though, is what happens when that decision-making process stalls, or descends into the morass of unresolved family feelings. Outsiders such as we can often wonder why a founder – or, often, his/her attorney – set up such a self-defeating governance or power structure. But, alas, we too often are brought in long after the foundational structure was established, and we have to help make it work. Or not.

Sometimes the choice is quite stark and the question must be asked: Do you want to stay together or go your separate ways? Asked that directly, many families get themselves together, take deep breaths, and affirm their legacy with a commitment to make it work if at all possible. When a family chooses to accept their mutual decision to remain together, often their hard -held and uncompromising positions dissipate, or at least soften. Many families are pleasantly surprised how much they really do care, how cherished their family legacy is, and how committed they are to future generations.

At such times, they are open to considering different decision-making models, broader enfranchisement, modified structures so that they can achieve, as close as possible, a win-win solution. Not everyone is thrilled, of course, because it usually means that someone or some-ones have to yield some power and give up having controlling claim on the family wealth or philanthropy. But they learn to accept it because they have chosen to stay.

Sometimes the opposite is true. When the existential question is asked directly, it becomes evident that all members of the family feel that it is time to split. Indeed, it can be liberating. They can finally make their own financial decisions, or family engagement decisions, or philanthropy decisions – without having to argue for them or justify them to other branches. It can even serve to reduce tensions and enhance relationships. [One philanthropist I met was proud that he had obviated the necessity to break his foundation up: each of his three offspring had discretionary decision making over 1/3 of the foundation. I am not sure what was gained by that other than face saving.]

The real challenge is when the family legacy is built on a long history of dysfunction or jealousy or favoritism or any number of other causes of unhappiness. [The above-mentioned panel even added a case of illegality.] There may be financial entanglements that make a split more complicated and painful than suffering through their current unhappiness. There may be a public face of the foundation in their community that the family members are unwilling to dishonor. There may be legal requirements that mandate that a foundation must stay together. There may be disagreements about what the right answer to the existential question should be and they cannot even come to a consensus on that. What then?

The short answer: that is when those of us who provide services to families really earn our fees.

The longer answer: here are a number of very practical suggestions about how to make the philanthropy questions a little more manageable, and when appropriate, make the family philanthropy work better. I will leave the financial and family systems questions to other colleagues who have more expertise in those areas.

1. Every member of the family foundation board should have a limited discretionary budget. While not everyone in our field concurs, my experience is that discretionary giving serves to remove private interests from the group decision making docket and provides an incentive to take the family foundation seriously. [Some families extend that privilege to all eligible family members, even those not currently on the foundation board.] This typically works only if the total amount of discretionary giving does not exceed 10-15% of total giving.

2. While there is a place for mission/vision statements in a foundation’s planning process, in families it is often more constructive to have the family commit to a family history, or develop an articulation of values for generations not yet at the table or not yet born. Focusing on what they want their own legacy to be beyond current decision making can create a common purpose that transcends all of the other differences. In the case of one family with which I worked, when the third generation told the spatting second generation that they valued the foundation because it brought them all together every year, the second generation refocused their energy to guarantee those annual all-inclusive gatherings and the on-boarding of that generation. It was a lot more gratifying than the dispiriting disagreements that were characterizing their meetings until then.

3. From the beginning, make sure that professional advisors such as trust and estate lawyers and wealth managers understand that they need to set up structures that work beyond the founder. It is tricky because the founder is their client and there are legal and professional obligations to her/him. But what is left after the founder’s passing is a family. Wills and trusts that don’t empower and recognize that family as an entity that needs to function are all too often counterproductive. There are legitimate desiderata that a founder may have but there are also limits in controlling from the grave. Many of us have had to spend too much time working around structures that simply handcuffed, disempowered, or didn’t adequately anticipate the realities of subsequent generations.

One very frequent, and easy, example might be a founder’s long-time commitment to a particular organization. By requiring that the foundation or donor advised fund give a substantial portion of its annual budget to that organization does not engage subsequent generations very effectively. Why even bother to meet if there are no decisions to make? If a funder is truly committed to an organization, provide an endowment independent of the foundation and let the DAF family advisory group or Foundation be empowered to make its own decisions. [Donor intent should be general enough that it can inform decision making but not overly restrict it.]

4. Recognize that not every philanthropy decision need be a precedent for future giving, and that there are valuable learning curves. Especially in the early years, don’t worry too much about making funding decisions that you come to regret and avoid making big bets too early. Learning from experience may well obviate unnecessary tensions at the grants table.

5. As mentioned above, in families, everything is personal, but not every disagreement reflects a personality flaw. In the overwhelming majority of cases, philanthropy disagreements fall within the generic issues that every funder addresses. Disagreements about risk tolerance or recognition or how involved a funder should or shouldn’t be with a grantee are only some of the valid – and generic – conversations that help fine tune all giving strategies.

6. Philanthropy does not and cannot solve unresolved family issues. I have been asked on several occasions to help families implement a foundation that a parent insisted upon with the aspiration that it would get the family to get along. As suggested above, philanthropy can indeed be a vehicle to give a common focus to family resources, but very rarely does a late-in-life foundation solve years of alienation.

7. If the decision, ultimately, is that nothing seems to work, accept that a division is may not ultimately be a failure but an opportunity for different branches of the family to achieve gratification in their giving, expand their philanthropic footprint, and engage in bettering the world in different ways.

And, who know, perhaps future generations will look at each other and say, “let’s get together.” Hey, it happens!

#285 Philanthro-ethics: Ethics is Equity

July 17th, 2017

Richard Marker

It has been a great pleasure, and very gratifying indeed, to see that a number of organizations in our field have recently embraced that ethics is a crucial underpinning to responsible grantmaking and philanthropy. Seminars I have conducted on ethics have been popular at many regional association and national conference gatherings for over a dozen years, and have been integral to our education initiatives for over 15. The question is not whether there is something to learn or embrace – that is clear, especially once it is presented. The real issue is why our field needs to be reminded that it matters.

1. Grantmaking behaviors:

Power matters. Yes, there has been a very welcome surge in developing effective and responsible relationships between funders and grantees [sometimes called partners or investments]. The very need to develop good practices, levels of shared honesty and transparency, and respectful interaction are indicators of how hard it is.

We funders have the money. Organizations want and need some of it. That very fact conveys the inherent imbalance. When one has power, it is all too easy to think we are being open, inclusive, accepting, and making it safe. But ask your grantees? [Or better yet, have someone else like CEP or NCRP or firms like ours do so]. Our words as funders may convey openness but our affect often shuts folks down.

Thus, the reason for ethics based practices for dealing with grantees. Matters such as conscious use of self, not penalizing failure, sharing processes openly, paying grantees on the promised schedule, asking for proportionally appropriate information and reporting, and not surprising grantees with new expectations or deliverables are just some of the ground rules for ethical best practices.

The ethical principles underlying this most basic of grantmaking practices is to be aware of the imbalance of power, be straightforward in your dealings, and responsible in your expectations. It is the basis on which honest information will flow to us in ways that allow us to achieve what we wish through our grants and contracts.

2. Internal practices

Abuses of foundation and philanthropic dollars and self-dealing indulgences have dropped significantly over the years. Thank goodness. But that doesn’t mean that it no longer happens. Some people still assume that if their name is on the door, the money is theirs to do with as they wish. Most of us know that it isn’t ours any longer. Oh, we can control how we invest it, where to give grants, who works there, and all sorts of other things. But once we have written that check to a DAF or to a Foundation or irrevocable trust, it isn’t ours. And there are rules and laws that govern all of this. Many funders, even long-term funders, are often surprised by what they didn’t know. That isn’t ethics – that is simply following the rules.

However, upholding the law is less of our issue than upholding its purposes and the ethics behind it. Just because it is legal to hire one’s attorney with lifetime tenure on a foundation board doesn’t make it ethical or good practice. Just because one can employ anyone wishes doesn’t mean it is always the wise or judicious choice. Just because it is legal to sit on the boards of favored grantees doesn’t mean it may not be a violation of conflict of interest best practices. Just because one can conduct a site visit whenever one wishes doesn’t mean that it isn’t an imposition and inappropriate disruption. The reason each of these examples represent an ethical matter is that they are all contextually dependent, and the why and when can make the difference about whether it is the right thing to do or not. Ethics challenges typically represent times when there are competing values that have to be weighed. Sometimes each of these situations is exactly right; other times, they may be absolutely wrong.

The reason it is so crucial for a foundation to go through the discipline of formal conflict of interest statements and practices, investment and spending policies, compensation and reimbursement systems, whistle blower protections is to protect it from itself. No written policy guarantees that everyone will behave ethically or legally. Someone committed to violating these parameters will certainly find ways to do so [and I assure readers that I can give real life examples. But written board endorsed policies make it much less likely that unethical and illegal behavior will occur, especially among those who might do so naively or inadvertently. And it is awfully difficult to insist on good governance from grantees if we aren’t modelling it.

3. Equity and Equitability

At the end of the day, we exist to make a difference. That is not a slogan, it is a mandate. Our good behaviors as discussed in #1 and #2 are important because they signal that we take our charge seriously. That charge is that we have made some part of the world better because of our resources. [Resources are usually money, but they are also influence, advice, participation, empowerment.]

If something is different, it is, by definition, a challenge to the status quo. That change may not necessarily be a challenge to values but it does mean that funders want something to have been changed because of his/her/their funding. Some funders want the change to be to living conditions, or health care, or access to education, or other basic life needs. It is a matter of building or restoring equity. One would like to think that those changes are desired by all and not a challenge to basic values, but, in many countries around the world, the pursuit of equity within a society have been perceived as a challenge to the government policies, systems, and those in power. Indeed, the pursuit of equity is often met with legal and extra-legal challenges. There are places where the third sector is outlawed or severely proscribed. Funders are severely tested when they are defined and perceived as an antagonistic presence rather than a force for good.

In the USA, inequity remains a persistent reality for too many and a national shame. Funders have devoted substantial resources to addressing and redressing that inequity with mixed results. However, in the past, on the whole, the attention to redressing inequity, devoting funds and resources to a more equitable society, has not been defined as at odds with national values. In fact, with a government all too reluctant to do what most other developed countries do, private philanthropy was encouraged to step in and do what our government wouldn’t. [That it was a naïve and impossible expectation was largely recognized by those in our field.] People were in need of housing, health, security, stability, education, food, climate… [name at least one] It was felt that together their needs would be taken care of. Private voluntary philanthropy along with public support would or could solve the problem.

Today, let it be said once again, and it has been said by many others as well, there is a deep mean-spiritedness in the public square. It is not simply about how we speak about one another, although that is shameful. It is not simply about the systematic transfer of wealth from the middle and poor to the rich, although history will surely judge us harshly. It is not simply about the enthusiasm of the ruling party and president to deny responsibility, any responsibility, for the well-being of the citizenry, although that is beneath contempt. Underlying all of this is a profound rejection of the rights and aspirations guaranteed by our Constitution and what it means to be the United States. How else to explain the unconscionable challenge to voters’ rights, the shocking attempts to limit the right of peaceful protest in many states, the overt attempts to intimidate the press, the attempted mockery of the role of law and the judicial system….?

Suddenly those in the philanthropy world are not simply put in the role of providing what government chooses not to, but rather to be a counter force to tendencies in the government to deny legitimacy to those very claims. The pursuit of equity has always been a challenge to the status quo; now the pursuit of equity can easily be understood to be a challenge to the very values that inform the governing party. Equity therefore cannot just be a program priority choice for funders who so choose; it is a mandate for the many who wish their resources to make a difference.

A slight caveat: there is great room for debate about what constitutes support for equity: Does it include the arts or not? Does it stop before the gates of richly endowed universities and museums? Is it wrong to support very local initiatives even if they are less efficient than another larger one? Should there be limits on funding advocacy? Does diversity on boards, committees, and panels constitute tokenism or breakthroughs?

For those of us on the philanthropy side, the commitment to equity and equitability is by no means simple. It requires both good behaviors and gutsy decisions. But complexity does not exempt us. Many, many of us believe that these are not normal times. If so, therefore, as the famous Talmudic dictum reminds us “…if not now, when?”

#286 Exit Strategies – 10 Strategies for Successful Leadership Change

July 11th, 2017

Richard Marker

Readers, students, and clients all know that I urge all funders to take “exit strategies” seriously as an indispensable component of effective grantmaking. A workshop on this subject is a popular unit of our courses and a frequently requested conference presentation.

An attendee of one of those conferences who did not attend my session had heard that I had spoken about exit strategies and contacted me to see if I would share the PPT. While I was open to do so, I learned that her interest was not about exit strategies for their grantmaking but her own. Approaching retirement, she was looking for guidelines to help the foundation she headed have a smooth transition to a successor.

In reviewing my funder exit strategies guidelines, it was clear that only some of those apply to personnel changes, and for those that do, it is only by extrapolation. Nevertheless, I realized, I myself have been in her position, or supervised or advised many others who were transitioning and I wondered if I had learned anything. [One of the advantages of having had 5 careers is that there is a collection of unsystematic but suggestive data worth looking at.]

Some of the following strategies are from the perspective of the one transitioning; others reflect the perspective of the organization. Together they provide a blueprint for effective leadership transitions:

1. There is no perfect time to leave. There is always more to do and something not yet done. Most in the private sector take that for granted; those in the non-for-profit sector often take leadership responsibilities so seriously that we feel a sense of guilt that we haven’t finished, or a sense of annoyance that the leader hasn’t completed some key part of the work. Gradually – probably belatedly – I came to see, if I had finished, the job wouldn’t have been big enough. Projects can finish, organizations rarely do.

2. Everyone is replaceable [with the possible exception of a brand-new startup fully dependent on the creative innovations of a single individual. Much to say about that, but not in this posting.] Those who believe that they are not replaceable are probably leaving the organizations in a needlessly fragile place. Our replacements may not look like us, sound like us, do like us, lead like us, or even dream like us, but they may be exactly the right person to take the organization to levels of accomplishment we hadn’t imagined, or, if we are honest, correct for our weaknesses that had been masked or overlooked by our hard-won successes.

3. Charisma is a Fragile Leadership Style. Therefore, our leadership style, from the very beginning, needs to be committed to building an organization stronger than the one we inherited, with viable bench strength and empowered decision making. I have told this next story previously, but in this context, it is worth re-telling.

Very early in my career, when I was still in grad school in the late 60’s, I had a part-time position on a university campus. I was charged with overseeing and developing a student/faculty group. Lo these many years later it is hard even for me to believe, but I somehow developed a guru leadership style. Groupies followed me around. Big crowds came to our events. It was a different era and I thought I was doing something new and noteworthy. While I was in no way abusive [and decades later, I feel comfortable saying that], it was a very personality centered leadership model that had no sustainability. When I completed my graduate studies and I accepted a prestigious full-time position elsewhere, everything collapsed immediately.

I was crushed. I promised myself that I would never again use a cult of personality leadership style and would always err on the side of empowerment and decentralization. I daresay that in many subsequent leadership roles, that worked.

Leadership too based on the power of one charismatic individual is the most fragile model and least adaptive to successful succession and transition. [When this does exist, and we all know that it does, it typically calls for some sort of interim or transitional system to get an organization on track.]

4. So is a Bureaucratic One. If charismatic style is not ideal, a strictly bureaucratic one isn’t either. An organization needs to be encouraged to reach beyond its grasp and dream beyond its limits. Hopefully, that ethos is ever present, but it certainly needs to be a part of any succession planning. A leader should model that visioning but may not monopolize it. Transition is an ideal time for the articulation of those visions and dreams among all levels of an organization since it can motivate and inform subsequent decision making.

It is tempting for well-run organizations to look to “stay the course” at a time of leadership transition. That sounds easy, but should be adopted with some care. Any leadership change is itself a kind of intervention even when an organization chooses not to change radically or adjust its priorities. Even a well-groomed successor is not a clone and even a successful organization needs to decide if it wants to affirm what it has done or if this is the perfect time to try one of the roads not yet taken.

5. Step Away but Don’t Disappear. This next point calls for a very tricky and delicate balance: when planning to step down, a leader needs to begin stepping away from decisions that will be implemented after the succession. That is not the same, though, as being “out of there” too quickly. Genuine discussions with top board and staff about this question can mark the difference between a smooth and honored transition and one surrounded by a sense of abandonment.

6. Be “Out-going”. Organizations often have genuine and authentic affection for the contributions of their long-time leader. Wouldn’t it be great to have her around a while longer? Maybe give him an office, and an “advisory” role? As a rule, not a great idea. There will be a new leader and that leader needs space, emotionally and physically and organizationally. One would hope that open channels will continue to exist for the times when the new leader seeks advice, but at a distance. Stakeholders at every level should know and see that a change has happened and if the optics and semiotics convey that it may not have, it is very easy to set up a counterproductive dynamic that hampers the new leader and hobbles the organization. [I know that there have been exceptions that have worked very well, but one should enter into those arrangements with great caution and care. The trade-off of the positive of institutional memory vs the negative of controlling from the metaphoric grave can be very real.]

7. Allow Time to be “New.” For all of the planning by the outgoing leader and board, a new person needs time and space to be new. My advice to new professionals, at any level, has always been “you are only new once.” There are questions one can ask, conversations that one can have, and people one can approach with a most open agenda only when one is new. After 6 months or so, it is assumed that the new person has his or her own ideas, opinions, reactions, and recommendations. Moreover, it is often awkward to reach out after 6 months or so and then say, “I have been here for 6 months; sorry we haven’t spoken yet.” Boards need to build in an acceptance of a certain amount of time for that kind of discovery. The outgoing leader needs to resist the temptation to say, “I could have told you, why didn’t you ask me first?” New people need to have their own relationships, their own opinions, and their own business model.

8. Document. Outgoing leaders owe it to their successors and to their organizations to document procedures, time lines, and any other operational matters. The likelihood is that long-time leaders have so internalized many procedures that they may not even think to commit these matters to a memo. But it is not fair to a new executive or the organization you are leaving for them to miss a filing deadline or a key communal meeting or some other “do it all the time” matter because it was so ingrained in you that you didn’t think to document it.

It is often useful for an outgoing leader to sit with a key administrative person and other executives to review the documentation and time lines. [This is not about human resource matters that, of course, need to be handled according to confidential protocols, but are about the operations of an organization.] Having overseen or supervised many transitions, I can attest that errors of omission are the norm, not the exception.

9. Board Role. The board should have a transition committee to oversee the transition. This may or may not be the selection committee or the executive committee. Since any outgoing professional had competing claims and expectations, and any new professional has even more, there needs to be a committee with authority to endorse what is to be done by whom and when, and to run interference with those who have legitimate competing preferences.

10. Public Positioning. A key part of the transition process is what is said to the public and when. Once upon a time it was possible to keep information fully quiet. Today, the number of stakeholders involved in and impacted by any not-for-profit, and the ubiquity of social networking makes such secrecy impossible. Therefore, the public stance of any transition should be planned early and information presented pro-actively. It makes it possible to respect the outgoing leader, obviate any rumors about the transition, and give helpful information about the succession and successor.

This list does not present a time line since situations can vary so widely. Moreover, there are two very specific situations that require special attention and, therefore, require more customized responses to the general recommendations listed in this post. One is when a foundation shifts from donor/family led to professionally directed. The second is when a non-profit organization shifts from being founder directed to a successor. These are rarely straightforward matters of leadership succession and require a very different, and often very sensitive planning process.

Thank you to my unmet foundation colleague for her query on leadership exit strategies. I appreciate that she encouraged me to offer these thoughts. I invite others to add to or fine tune this list of recommendations.

#284 Leadership Development Programs; Are Funders too Elitist in our Approach?

June 28th, 2017

Richard Marker

Leadership development programs abound. It is a rare week when we don’t read of another one sponsored by an impressive organization and funded by one or more foundations and philanthropists.

Why not? If we want to make change, isn’t it best to invest in leaders, either current or potential? Is there a more efficient way than to buy into the “multiplier effect”?

If we want innovation, isn’t the mantra to invest in people, not programs?

If we want to have inspired institutions, don’t we need inspired and inspiring leaders?

And more. Not everyone in our field funds this way, of course, but it is fair to say that the dominant approach to funding change is to do so around leadership models.

A closer look reveals something even more telling. Selected a.k.a. future or emerging or young leaders are very often the very same ones who were selected for the last leadership training, and very likely will be selected for the next one. Once on the inside track, it becomes a prestige express. Organizations and funders jump on the winner bandwagons.

Don’t misunderstand: I believe that there is a great need for training leaders. Indeed, two of them radically changed the trajectory of my professional life: a year-long executive management program of the Sloan Foundation in 1980-81 and a three-week program of the German government in 1989. Moreover, I have been involved in the funding of and teaching in several first-rate ones.

But, a recent conversation with the head of a successful and growing international NGO made me realize how funders too often become enamored by a single approach. This NGO, which has been around for about 40 years, prides itself on developing programs and leadership from the grass-roots up. The very decision to have a professional coordinate the international organization was controversial and culturally challenging. When s/he came to me, he/she shared a dilemma. Funders didn’t think that their leadership development program was professional enough.

It wasn’t for me to assess whether or not that perception was accurate, but it did make me wonder: is the professionalism of their leadership development program a true metric of their success? If an organization has been around for 4 decades, is expanding, and utilizes a ground up approach and not a top-down one, it seems to me that that is something to celebrate and model, not something to change and put into a pre-conceived box just because we funders buy into a preconceived concept of organizational development.

It also seems that a model of developing an educated populace may be just the model we need at this time in history. It may be that there has been too much of an erosion in the development of caring, interconnected communities, with pluralist values, and a shared commitment to an inclusive future. Ya’ think?

The above-mentioned NGO is built around educational values, multiple sources of learning, a sense that the whole can only exist when the disparate parts are in sync [but they don’t have to be in agreement.] Their paradigm is to create space for all, even when that challenges, and to recognize that leadership must be earned, not ascribed. They have expanded because these core values have been adapted to cultures in many communities and countries. Civility is mandated as a non-negotiable ethos.

Not a bad model I would say.

To be fair, not all funders have ignored the need to fund civil society from the ground up. There are a growing number of examples that surface in the news bulletins and journals from which most of us get our news. But there continue to be even more announcements of all sorts of leadership programs that are targeted to the already accomplished. [So that no one misunderstands: I am not advocating a “know-nothing” vacuous populism; I am suggesting that we need to cultivate populations that care carefully, make educated judgements, and insist on a commitment to the social weal and humaneness as guiding principles.]

There is room for us to continue to create and fund leadership programs, but perhaps it is time that our funding priorities swing to those who comprise our communities, not just those whom we fund to lead them.

#282 It doesn’t have to be that hard

June 26th, 2017

Richard Marker

[This post is third in a sequence. It follows “Everyone Can be a Philanthropist, and it is Easier Than Ever”, posted 19 April 2015, and “How to be a Philanthropist on $5/week” [Saying ‘Yes” Wisely: Insights for the Thoughtful Philanthropist, 200 2011]

Among the very welcome developments in our field is that the tools for making informed philanthropy decisions are available to those with lesser means. No longer does one need the traditional intermediaries, nor need one be at the mercy of veritable sales pitches of charities that write, call, email, or stop you on the street. In the USA, there are organizations that rate public non-profits, and others such as Guidestar and the Better Business Bureau that can show if an organization is legitimate. Add to that manuals produced by wealth management companies, community foundations, advisory firms [including ours!], and more.

Yet, the very democratization that makes it possible for all of us to make decisions the way the ultra-wealthy do has made the process of being a responsible donor seem overwhelming, complex, and judgmental. And add to that the all too frequent, and despicable, examples of scams and phony charities that are covered by the media. Is it any wonder that many people are cynical and suspicious at the same time?

Much of my professional life for the last 20 years has been teaching and advising people who want to make informed, ethical, and wise decisions about one’s [or a foundation’s] philanthropic giving. It calls for methodologies and techniques about how to do that reflecting their underlying culture, values, and purpose. It can become complicated. Indeed, the one line I hear from potential clients more than any other is “this was harder than we thought it would be.”

But it doesn’t have to be. Let’s see if we can make this easier. Before getting into some “how-to’s”, a little analysis to guide us.

i. Most of us begin our philanthropy journey at the level of human compassion. We read of an earthquake, we see homeless people, we have a family member who is ill. That human compassion is the basis of charity. It leads us to donate our money, volunteer our time, contribute our used clothing.

There is an immediacy to compassion giving. Someone who was hungry is less so. Someone who has no place to sleep or keep warm now does. To the best of my knowledge, there is no culture or religion or ethnic group anywhere without a tradition of compassion and charity. Giving to a known church, synagogue, shelter, drop in center, or community fund, or even to individuals has a place and is often the pathway to more strategic philanthropy.

ii. It doesn’t take long to realize that none of us alone can feed all the hungry or house all the homeless. As much as we care and are touched every time we walk by someone lying in a doorway or begging in the park or subway, we know that there must be a more strategic way to spend our money and to solve the problem. There is probably an organization that already knows how to leverage our charitable gift to feed more, house more, clothe more, heal more than we could ever do alone.

When we begin to think strategically and make our decisions based on that approach, we transition from being charitable to being philanthropic. It means that we develop a basis for saying yes and no to all the requests beyond who happens to knock on our door or plays on our heart strings. We want to know who is doing it well, who knows how to use my share of the solution-pie most effectively or efficiently or thoughtfully.

It is at this level that it is easy to get stuck. Making decisions means that one needs to know who the players are, what is their approach, whom should we trust, and what our own priorities are. And it means that we have to accept that we will be saying “no” on a regular basis, even to causes that touch us deeply.

This is also the level at which externals play a greater role. We not only want to choose based on our priorities but the “best” within those priorities. Whose “best?” Is second best a waste of our precious resources? And what is all this about “impact” and “metrics” and “outcomes” ….? How is a simple funder to know?

Strategy, informed strategy, helps us choose among competitive choices to be sure, but rarely gets to root causes. For that we proceed to

iii. Systemic solutions. If the level of strategy gives us tools and a methodology to choose among competing options for our attention and resources, the systemic addresses the hope to eliminate the need once and for all, or at least to address the problem at a more macro level.

Let’s look at a single example: food insecurity. We know that giving a hungry person a sandwich alleviates his or her hunger for a little while. Our compassion inspires us to do just that. We have helped feed an individual or several individuals.

We know, though, that it is hardly a way to permanently eliminate food insecurity for that individual, to say nothing of an entire community. When we think strategically, we decide to support the local pantry, soup kitchen, and others that serve an entire community. That is surely a more efficient and comprehensive way than counting on our own generosity to distribute money and food.
However, we also are forced to wonder if this is necessary. In a nation that pays farmers not to grow certain foods, where grocery stores discard still edible produce at the same time many families must choose between rent, food or medicine each month and too many children go to school unfed. There is something wrong with that picture, and pantries alone cannot right that wrong. We see that advocacy for more humane and sustainable public policies and funding is necessary, that food insecurity is directly tied to minimum wages, that equitable distribution of healthy fresh food can make a difference in at-risk communities. Systemic funding allows us to go deeper – so that hunger can be consistently addressed, and that access to food is not dependent on the whims and good will of charitable volunteers.


Now to how to make this easy for those who are overwhelmed:

1. It is ok to say “no” without feeling guilty. In general, ignore phone calls unless it is from someone you know personally. ignore television ads, be cautious of those who stop you on the street. This is not to suggest that all of these people are scam artists or that all calls, ads, or solicitors are doing something unethical. But it is quite demanding to do the analysis to know which is which. No one can do it all.

2. It is ok to give to tried and true organizations. Red Cross, Doctors without Borders, United Way, Catholic Charities, Jewish Federations, the American Cancer Society, and many more have done good work for a long time and support many worthy and urgent needs. You may or may not feel strongly about all of their causes and recipients, and maybe they are not always on the cutting edge of impact, but there is a high reliability that the money will be responsibly, ethically, and legally allocated.

3. It is also ok to choose to support something newer, riskier, or more focused. Technology allows you to do so easily. Organizations such as Donors Choose or Kiva, to take just 2 well known and credible examples, allow you to contribute very directly and single mindedly knowing that your money is going exactly where you want it to. Just be cautious that you know the legal status of your gift. [This is a good example where a call to the Better Business Bureau can give you a quick and helpful answer.]

4. It is ok to give money to a local pantry or homeless shelter that you see is doing good work. [If you aren’t sure of their legal status, you may want to ask if they can show you proof of their tax-exempt status the first time you decide to give them money. Be aware, though, that in the United States, religious organizations are not required to have obtained that legal status] These shelters and pantries are typically doing something worthwhile even if they may or may not be state of the art.

5. It is ok to be passionate about a particular cause or organization and make that your primary or exclusive recipient. Volunteering time and expertise are wonderful contributions as well.

6. As we saw in III. above, it is always important to recognize the limits of philanthropy’s capacity, especially compared to the capacity of government – even at government’s radically reduced level. That is why it is constructive to support advocacy organizations as well as those directly supporting causes and individuals. Two illustrative examples, of many, are ACLU and AARP. Their persistent and consistent pursuit of policies reinforce the work of others on behalf of the powerless and elderly respectively in ways that no individual or local charity can ever do on their own. One can choose to join or support one or more of these kinds of advocacy groups so that you can, easily, leverage your own priorities.

Many readers will say that you are ready for more than this. You have the time, energy, and commitment to go through a more strategic and plan-ful process than this. That is great, and we have much more to talk about – in other posts, courses, in person, and elsewhere. But there are too many who, faced with the abundance of articles and press about big philanthropy, and the even more abundant solicitations, are overwhelmed and feel limited or guilty. These 6 points are for you.

#283 – How to Endear Yourself to a Funder… Not!

June 15th, 2017

Richard Marker

This week alone, I attended four different events where both funders and organizational leaders were present. I report this so that no one [except, perhaps, those few about whom I am writing] will be able to figure out who this is about or even at which events what I am about to describe occurred.

Putting funders and organizational leaders in the same room has wonderful benefits. For funders to make good decisions, we need to find settings, other than grant proposals and site visits, to learn what is going on. Moreover, being in a larger setting makes it easier to get a sense of field wide developments, compare different methodologies and approaches, and contrast what are still innovations with evidence based projects, and all of this independent of the pressing need to make funding decisions.

Such settings also create the opportunity for direct communication. The very chance for informal and corridor connection can enable safe interchange and allow the development of authentic “relationships” based on common interests. When a funder/potential grantee only meet in the context of submitting or considering a grant, that is, by definition, an uneven and loaded relationship. When meetings happen outside of that lopsided interaction, it is always possible that a different kind of shared experience can emerge.

At the same time, that intimacy has a risk. It means that those who want funds feel that they now have direct access and can make their pitch without the structured gateways of a grant request. There is, alas, the potential for a trespass; for someone who wants funding, it too often unleashes the worst fundraising instincts.

These examples from this week:

• A funder spoke on a panel and, in his/her presentation spoke about how uncomfortable s/he is often made by those who want funds from the family foundation. S/he made explicitly clear that they do not accept unsolicited proposals and had trepidations about even sitting on the panel because of the experience of being overwhelmed by folks asking for money. Sure, enough, immediately afterwards, people lined up to tell their story and to give proposals as if the public words were simply teases. [The speaker told me privately afterwards that it reinforced why he/she typically turns down these kinds of requests to speak.]

• Someone whom I had never met approached me. The very first – and only -words he said “are you a funder? I only want to meet funders.” How do you think I replied?

• I was talking to an old friend who happens to be the CEO of a prominent foundation. While we were speaking, someone who heads a ngo/nfp approached, interrupted and immediately launched into a very aggressive pitch about why the foundation should be funding them. The foundation CEO kept trying to end the conversation and walked away. The petitioner didn’t stop and kept following her/him.

Those of us on the funding side are well acquainted with all of this. We know that we are walking dollar or euro signs. We know that anytime we walk into a room, someone or several someones will find an occasion to say “hmm, let me tell you about my organization/project/cause…” In my case, because I advise and teach many funders and foundations, they often go further and ask if I can give them a list of people they can approach – or to whom I can introduce them.

We are used to this and those of us who have been in this field for a long time learn different ways of dealing with it. It goes with the territory. But…

It never endears the petitioner to us. It never develops the pseudo relationship the fund-seeker desires. And the likelihood of it ever yielding funding is so minuscule that it is surely not worth the effort.

There are many, many legitimate needs in this world. And, sadly, the list grows and the needs grow. Most of those who deliver services and therefore ask for funds are working tirelessly to address those needs. Most are correct that they need more support.

For many, they look at the net worth of a funder or the corpus of a foundation and say to themselves that those funders can certainly afford to give money to their cause or organization.

Funders agree that there are many more legitimate needs than any funder can or should fund. Most, though, have given serious thought to our priorities and determined where we can use our resources most effectively, and in ways consistent with our own values and priorities. That is hard work. And it can be painful to not fund something that cries out for funding. Those seeking funds may not agree with our priorities and wish that we would change our minds. [When I was CEO of a foundation, there were many times when those who didn’t get funded would call angrily to request or even demand a meeting with the board to reconsider. They were convinced that the decision was because no one told their story properly.]

Please take funders at our words: we know our role and the vast majority of us try to play fair, are sympathetic and caring, and want to use precious resources wisely and thoughtfully. Not taking us at our word or respecting our guidelines or violating our space doesn’t help your cause, and doesn’t make us more sympathetic.

We know it is hard. But please, take a deep breath and think about how you are coming across. Those moments of possible connection that may lead to relationship don’t happen all the time; try not to blow them.

281 Why our Field Requires a Professional Credential; It is Long Overdue

June 7th, 2017

Richard Marker

This plea is not new. I have been pleading for our field to develop a professional credential for 15 years. It is time to make this plea once again.

I do so now without the risk of a perception of a conflict of interest. Previously, I know that some readers thought that I was simply hawking the NYU grantmaking certificate program in which I was a part time faculty member. However, while NYU still offers a limited number of funder education courses for foundation professionals, last year it discontinued all of its certificate programs. Similarly, I teach part time in the University of Pennsylvania’s CHIP funder executive education program, an outstanding offering primarily for principals, trustees, and foundation CEO’s. CHIP hopes to institute a high-end certificate in the future, but not yet – so in this brief window, I hope my urging won’t be dismissed as self-serving.

The request is built on a simple premise. Foundation professionals and philanthropy advisors have no professional barrier to entry – other than being hired – and that is simply wrong.

It is a bit shocking: we are responsible for making or advising decisions worth billions of dollars every year. Our cumulative decisions influence an entire sector. Our voices can have profound impact on public policy. Yet all that is necessary for us to do that is to get hired.

That is not to say that none are well equipped to do the work that we do. Quite a few are. Some are hired because of distinctive content expertise. Some are hired because they know the principals. Some are hired because they interview well. Some are hired because they are in the right place at the right time. All of these are good and representative reasons why people get hired.

But none are required to demonstrate that they have a certification or credential or a license or a degree in the grantmaking field. It is exceedingly rare that a newly employed professional is expected to fill that lacuna as a condition of employment.

Fundraisers are expected to have credentials and in some States to be registered. Lawyers, doctors, wealth advisors, psychologists, teachers, even barbers are required to get a credential – and in most cases to demonstrate that they have earned continuing education credits annually. But not foundation professionals or philanthropy advisors.

The tradition of self-authentication in our field is hardly new. When I entered the field, one regularly heard “if you’ve met one foundation, you’ve met one foundation.” There was a certain legitimacy to that description at the time: the field was far less developed than it is today; it was comprised of a much smaller number of professionals; interest in philanthropy education and articulation of best practices was still years away. Most important, foundations typically reflected the “culture” of the founder or primary funders. That doesn’t mean that they were correct in dismissing standards and credentials, only that we can understand why.

Less defensible was the more recent response of the founder of an organization of consultants and advisors in our field when I informed her that their members were eligible for a discount at the then thriving NYU Academy for Funder Education. Her exact words were “why would our members need courses? They already have clients.” I hope that I need not explain to readers why I was flabbergasted by that comment. No doubt, many of their members are well educated as well as busy, and bring very respectable, if not credentialed, knowledge to their work. But I know many of their members and, sadly, more than a few could sorely use the education a credential would represent. One would hope that the current leaders of that organization are more sympathetic to the need for an educated membership.

In 2002, when NYU gave me the pro-bono go-ahead to help conceptualize what a certificate curriculum for funders should look like, I consulted with the Council on Foundations, the National Center for Family Philanthropy, the Forum of Regional Associations, and what was then known as the Association of Small Foundations. That curriculum has served the field well for over 15 years, taught upwards of 2000 funders from 26 nations, and did produce a professional level certificate, but that certificate was neither well known, nor widely adopted. In retrospect, it needed not only the conceptualizing partnerships and the co-teaching of courses of those four organizations, but also a broader buy-in and mutual ownership. This is a call to start over.

Realistically, there are two pre-conditions to a widely-recognized credential in grantmaking:

1. Employers of professionals in the grantmaking arena would need to respect its value. It need not be a pre-requisite for employment, but a foundation or advisory firm might require that professionals earn the credential within their first 5 years.
2. There would have to be a consensus in the field about what a professional certification would mean. Today, lots of organizations give “certificates” but there is no standard. One can receive a certificate after attending a luncheon, a one-day course, a three-day course, a one-week course, or, as was the case with the defunct NYU Academy, the equivalent of 2+ weeks of course work.

In order to move this ahead, I would urge a convening of those of us interested in developing certification standards, and would be happy to play as active a role as would be helpful. My vision of the curriculum and standards for our field may not be what other foundations and other professionals ultimately decide upon. But without a commitment to compliance it will never be adopted nor taken seriously.

Or, someday, it might be imposed upon us by those with less knowledge of or commitment to our field.

It is time.

280 Diversity on Foundation Boards: If You Aren’t In the Room, You Won’t be in the Next Room

June 2nd, 2017

Richard Marker

The recent survey of the makeup of foundation boards reported in the Chronicle of Philanthropy has received a good deal of press, and a good number of comments. The study looked at many of the very largest foundations and who sits on the governing bodies of those institutions. Not so surprisingly, those boards were disproportionately comprised of alumni/ae of a limited number of universities, are disproportionally white males, and they live in a limited number of zip codes.

I doubt many were surprised by the findings. As one who sits on some foundation boards, and has advised many more, there is no question that they are comprised of those whom the leaders already knew. It is especially true among family foundations. After all, whom do you want in the room when family secrets, foibles, and relationships are on display? As we have written about in other settings, it is hard enough to get to reasonable decision making and good behavior under the best of circumstances; if one adds to that the complexity of folks whom you don’t know, or whose background doesn’t allow an easy cultural shorthand, the board room suddenly seems quite crowded.

It is true, as well, for independent foundations. Foundation boards are prestigious, usually deal with amounts of money that can intimidate those of lesser means, and have their own cultures and ethos that can be hard to penetrate for outsiders. Most board members are on multiple boards. They/we take the roles seriously, but not so much that the board interferes with lots of other valued claims on our time and social obligations.

Diversity has another challenge as well. Even when trustees acknowledge the statistical imbalance [racial, ethnic, gender, geographic] on their own board, it doesn’t mean that a board member is enthusiastic about ceding one’s own seat at the table.

So even if there is not purposeful bias or intention, the reality of foundation boards makes resolution of this quite problematic. It fits into the category of “if you are not in the room, you won’t be in the next room”.

This post is not about me, but my personal experience may be illustrative of the dynamic underlying this. For a good deal of my career, I was active and fairly visible within a particular societal subgroup. I was neither the most famous nor the most influential, but I was an insider, knew most of the decision-makers and they knew me [indeed, during the time I was CEO of an influential foundation, I guess I was a decision-maker myself]. Of course, I wasn’t on every board, or taskforce, or asked to speak at every conference nor serve as a consultant to every project. But I was in the mix, and no one had to ask, “who’s he?” when my name came up, and sure enough, I spoke widely, sat on lots of boards, and consulted extensively.

For the last 15+ years, my career has taken me far afield from that group. Every once in a while, I am at a conference or an event and see folks from that earlier part of my life. Often they will ask, “why weren’t you a speaker at such and such an event?”, or “why weren’t you the consultant for that project?”… I learned that the answer is quite simple. As time has gone by, the new decision makers don’t know me, have never heard me speak, never been the beneficiaries of my advisory/consultancy work. Whom had they worked with or invited to speak? Those whom they knew or had heard recently. I wasn’t in those rooms so I wasn’t invited to be in the next room. [So that there is no misunderstanding, my current world has many more rooms, and I am flattered to be asked to speak and advise in many other settings.]

Thus, given my experience as an insider who became an outsider quite quickly, should it be a surprise when those who have never been insiders are not on short-lists for foundation boards? When the selection committees turn to search firms, they are given prominent names – often the same names every other search yields. It may yield some tokenistic diversity, but does not address the point of the study.

This entire question raises three important points:

1. Does diversity on foundation boards really matter?
2. If yes, how does one rectify this in a sustainable, non-tokenistic way?
3. If not, how does one build authentic connections with stakeholders so that decisions are made beyond the social walls?

1. While the Chronicle article makes a compelling case, not everyone agrees. Indeed, I once had a public panel disagreement with a woman of a minority ethnic/ immigrant background who had herself transcended these boundaries and was functioning within the inner circles of a prominent foundation. She felt strongly that who was inside, and what their gilded circumstances may be are irrelevant to grantees. All that matters are that the foundation make good decisions and that recipients get their money. My own view, which I have expressed in these pages in the past, is that those of us who are funders need pay close attention to optics. It is far too easy to reinforce a patronizing classism without intending to do so.

Any of us who have sat long-term on boards of any sort can attest to how easy it is to assume a status quo ante when questions arise. The value of newcomers is that they raise good questions; a healthy organization honors those questions and is willing to rethink their facile answers. How much more so is this the case when the newcomers are not already social friends or peers with the existing board members.

In many ways, this is an extension of the transparency/glass pocket issue. How open should a private foundation’s decision process be? Once a foundation has met the philanthro-ethics standards of conflict of interest, and the legal requirements of reporting all grants, is there an ethical or moral obligation to tell more? Should there be a “best practice” that mandates more?

This is not straightforward, but I certainly believe that, minimally, every foundation owes it to itself, its stakeholders, its community, and our field to undertake a serious conversation about how it wishes to respond to these questions.

2. If the foundation decides that its governance should reflect greater diversity, how does one transcend simple tokenism? After all, to find a single qualified representative of a particular gender/racial/ethnic/national origin/sexual orientation is not so difficult. To have a sustainable system for doing so requires a very different commitment. Here are a few sample approaches:

a. Encourage foundation board members to sit on boards of other organizations serving diverse subgroups, particularly those with diverse stakeholder boards. This means that they will get to know potential board members over time, observed them in action, and learn to appreciate the larger issues that the organization addresses.
b. Have regular convenings with diverse groups, including those who may not be fully at home in these leadership settings. There are different vocabularies, priorities, leadership structures, and histories that can inform our own thinking. It is likely to lead to a respect for bringing diversity into the foundation inner circle.
c. Create social settings for more informal interactions. This is easier said than done for folks who are accustomed to socializing only with their peer groups, but is easier done than many think. [There are methods we can share if any reader is interested.] d. Develop a feeder system so that board selection and succession has a broader base.
e. [Please suggest additional methods to be added at a later updated posting.]

3. As acknowledged in #1 above, many foundations will never achieve a meaningful diversity on the board to reflect their stakeholders. That doesn’t exempt us from finding ways to reinforce our need for our grantmaking to be authentic, responsive, and transformative. How does one bridge those divides [and there are many]?

a. The proposals a, b, c in #2 above apply here as well.
b. Create grants subcommittees with seats reserved for diverse stakeholder populations. Even if they are not Trustees, their positions will be heard and felt.
c. Convene fellow funders to sponsor opportunities for stakeholder groups to speak of the issues before them. These sessions should focus on both larger policy and systemic issues as well as the day-in day-out challenges of serving at risk populations.
d. Serve as advocates and door openers with policy makers in government. Foundation leaders have access. Professionals in direct service organizations often don’t.
e. [please suggest additional methods to be added at a later updated posting.]

Private foundations are in a unique position, legally and functionally. We have philanthro-ethical obligations to set standards of behavior and sensitivity that exceed the legal requirements. Especially in this time of cynicism toward all institutions, the extreme divide between the few haves and the many haven’ts, and the need for rebuilding trust in civil society, we should do no less.