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Funder Blind Spots – Lessons from the Other Side

July 7th, 2014

Richard Marker

Every so often, I am asked to speak to fundraisers about the view of the funder. One such place, in response to “popular demand” [or so they tell me], once each year, I teach a full day seminar for fundraisers on this topic at NYU. This year’s seminar was held just a few days ago.

There is no doubt that many development and fundraising professionals are often surprised with some of the perspectives offered. There are “orthodoxies” which seem to be taught to many fundraisers that simply are either out of date or too simplistic to describe the current dynamics in the philanthropy world. In fairness to those who actually paid for this, I am not going to give a précis of my otherwise priceless presentation.

I do, though, need to honor some troubling issues regarding our side, funders, which arise again and again – and that do deserve attention.

When asked about what troubles them in their dealings with funders, fundraisers and non profit executives articulate two overriding concerns: inadequate transparency about process and priorities, and shortsighted grantmaking behavior.

1. Inadequate transparency about process.

I would have hoped that we were well beyond this one. In this day of easily developed websites and other affordable media, there really is no excuse for any foundation’s grants policies to be inscrutable. Even if a foundation does not accept unsolicited proposals, or has other very strict closed-door policies, people should know that. After all, if the 990PF is a public document, anyone at all can check out all sorts of things about the governance, finances, and grantmaking about any foundation. It is only reasonable, ethical, and good practice that a potential grantseeker should know if, how, and when they might explore becoming a grantee.

There isn’t that much about which people disagree on this very basic grade 1 level of funder transparency. If it is lacking, it is usually because of carelessness. As I have written in a piece on glass pockets some time ago, other elements of the question of foundation transparency are more disputed and negotiable, but not this one. If there are errors of omission, they can and should be corrected.

2. . Shortsighted Grantmaking:

Here, however, the plot thickens and the topic deserves some further comments – and judgments. A few examples:

a. Too little information on expectations.

When funders are either clients or take seminars with me, I underscore and emphasize how important it is to clarify expectations along with any grant or contract. If a funder expects an evaluation process or publishable findings or regular site visits or certain kinds of documentation or recognition, make that clear at the very beginning. It isn’t good practice, nor is it useful to assume that the grantee can intuit what you want. Sometimes our expectations are unreasonable, for all sorts of reasons, and it is better for a funder and grantee to have that straightened out immediately. In my experience, though, too often an issue manifests itself later on – when a funder has a vague sense of dissatisfaction with the experience only incidentally related to the performance of the grantee. Typically, it turns out that the funder was very unspecific about the kind of relationship they wanted to have with the grantee, the grantee never asked, and at the end there was unnecessary disappointment.

b. Unclear or delayed exit strategy

The best time to establish an exit strategy for any grant, investment, or contract is the moment one has decided to grant, invest, or contract. The very worst time is toward the end. Sadly, though, it seems that funders violate this all the time. In fact, it is probably the single complaint I hear more than any other. A few examples: “we were funded for three years and were never advised that they [the funder] expected us to replace their funding in whole immediately afterwards”, or “we created a new program at the request of a funder, invested heavily in it, demonstrated its success and yet the funding simply stopped,” or “we discovered only at the end that they wanted to compare the program they funded with us with similar programs they funded elsewhere, but never told us what kind of documentation they would want us to produce.” Sound familiar? In each of these cases, a funder expected or wanted something when the funding was over, and yet never adequately conveyed those expectations nor worked with the grantee to fulfill them.

In fairness to funders, we also are all too aware of grantees who act surprised when the writing was on the wall. Or who act as if once funded, they are entitled to it in perpetuity. However, I have seen too many funders who are guilty of the kinds of shortsightedness in their funding practice and communication that I suspect that there is real fire in this smoke.

c. Giving too little for a program to succeed

Funding for success is not the same as only funding successful programs. We all know that seemingly well-conceived and adequately funded programs fail or fall short for many reasons. That is to be expected, and any honest funder acknowledges that is the nature of our business.

However, there are too many times when funders are far too arbitrary about how much or how little they choose to grant. Instead of asking themselves whether the project they are funding can indeed succeed with the available resources, they use unrelated criteria to determine amounts. [“They asked for $x, we should therefore give less than $x” or “We gave a similar organization $y; we need to maintain parity”; or “last year we gave $z, we should simply adjust that proportionally to our grants budget.” Etc.]

In grantmaking, the challenge is not to see how little one can give but rather what is the right amount to invest for potential success. The overwhelming majority of place-based non-profits/ngo’s are not flush with extra resources and funds; if a funder knowingly gives an amount which allows a fragile program to be even more fragile, the funder is not doing much of a favor to the grantee, and as important, isn’t helping fulfill its own funding mission.

Many of my funder colleagues will rebut this, arguing that most proposal requests are padded, with the nfp’s expectation that, even if funded, it will be for less than the amount requested. This may be true a lot of the time, but if our own funding practices don’t align our funding with real costs, we run the risk of funders and applicants playing a less than productive game of poker. When we funders model that our grantmaking is based on best estimate of real cost analysis for likely success, we can and should insist on the same from potential grantees.

d. Abuse or misuse of implied power

Of course, ethics and best practices suggest that funders need to exercise due caution with their implied power. Hopefully every funder is well aware of self-dealing, and conflict of interest restrictions. However, the most typical “abuses” are inadvertent and well intentioned. I will give just one example: site visits.

Many funders, staff and trustees, love site visits. After all it gives one a direct experience with a grantee, or potential grantee. It adds vitality to the words of a proposal and can certainly be more dynamic than sitting in a plushy foundation office. There is good reason that a well-considered site visit can add significant information to a funding decision.

That last line, though, “funding decision”, is the key. If a site visit is going to make a difference to a funder’s decision, or gives a deeper understanding of what is actually happening with grant money, then, of course it is a constructive tool. [And there is substantial literature on how to make it productive.] However, if that site visit isn’t connected to decision making or monitoring, one should think carefully. Most funders neglect how disruptive a site visit can be to a non-profit. Desks are cleaned, attire is upgraded, work is interrupted in anticipation of these visits. Instead of delivering service, there will be talk about the delivery of service. You get the picture. But the implied power of the funder makes the majority of nfp’s immediately responsive to a simple request to visit even when it doesn’t make sense. Very experienced funders may, without meaning to, cause this disruption by the simple request to visit.

None of the issues discussed in this post are new or cutting edge. Nor is this an exhaustive list. Nor should any of this surprise. Yet, when one hears the same concern voiced by executive and development officers of large and small non-profits, over and over again, it is clear that we in the funding world still have work to do. As in so much of life, it is our blind spots that do us in more than our sins of commission.

All Grantmaking is Advocacy Funding

June 24th, 2014

Richard Marker

“What?” you say. “We don’t touch advocacy funding. We aren’t interested in having our foundation get involved in political issues. “

Sound familiar? Perhaps this one does:

“We only want to fund organizations and projects where we can follow our dollars. It appears virtually impossible to see the cause and effect of advocacy funding. Not where we want to be.”

Or perhaps this:

“We do care about public policy in the areas we fund, but it is so hard to know where permissible advocacy ends and forbidden lobbying begins that we stay as far away as possible. We don’t want to jeopardize our legal status.”

If any of these ring a bell, you are hardly alone. The vast majority of funders will give similar answers if asked about their feelings about advocacy funding.

This post does not attempt to rebut these objections. There is already a growing literature on how to measure the effectiveness of advocacy efforts; there is ample material on how to engage in perfectly legal and non jeopardizing advocacy funding; and we are fully understanding of a foundation board or an individual funder whose skepticism of the political process leads them to choose to fund outside of it.

What this post does address, though, is that it doesn’t matter what causes or institutions or projects you choose to fund; every one of those grants represents a kind of implicit advocacy.

Let’s be clear: the non-profit, public benefit sector is extensive. It includes huge museums, hospitals, and universities – and tiny start-ups, religious groups, and soup kitchens. Within the USA [not quite the same in other places in the world], our legal and tax system makes no distinction. Harvard may have an endowment in the $40B range, but a contribution to Harvard has the same tax status as a gift to a food pantry for the homeless. Legislators have tried to address this seeming imbalance, but they have found it impossible to determine consistent and credible distinctions. Harvard is clearly different than a food pantry. But what about a community college which serves a disadvantaged communiy? Is that more like Harvard – as an institution of higher education or more like a food pantry which serves the same neighborhood? What about a large multi-million dollar agency which happens to have a food pantry as one of its many offerings? There is much to be said about the legal issues here, an instructive literature which tries to consider ways to make useful distinctions and priorities in a radically revised tax system, and no shortage of affinity groups within our sector which have very strong opinions on this.

But what is less evident for funders is that each of our grants is a reflection of something beyond the law. Since no one – I repeat, no one – has enough money to solve every problem, every grant is a choice. Typically, for us as individuals as well as for grantmaking entities, our choices are informed by a wide variety of objective and subjective variables. What all too few funders consider is that one of those variables is an implicit decision about which sector should have responsibility for what.

Food Insecurity

An easy case is food insecurity/hunger in the United States: it is pretty demonstrable that there are more efficiencies in reducing food insecurity through SNAP type funding than supporting individual food pantries. But many place-based funders find it easier or more comfortable to support local food pantries than advocate for increased SNAP funding. At present, sadly, there is a need for both, but reliable and adequate SNAP funding might reduce the need for pantries, might allow redirecting voluntary grantmaking to other issues of poverty, education, or inequity. Funders who concentrate in this area understand the relative value of advocacy funding in this. Most advocate for increased public support for both practical and ideological reasons. Not surprisingly, there are those who on ideological grounds disagree with any pubic support addressing food insecurity.

Education

One needs to step back a bit to contemplate the larger public policy issues of who should pay for education in the United States? Is it good public policy that the average middle class student must incur huge debt to get a college or post-college degree even from a so-called public university? Most other countries assume a very different stance on this question. In the USA, we might be bemused by protests in France or Germany about raising student fees by a couple of hundred dollars, but we make implicit public policy decisions when we choose to send money to our alma mater instead of to groups which might redirect public funding to make education more affordable. [And let us be clear: virtually every American university is funded through a mixture of public and private funds; the significant difference between public and private universities is governance.]

The development of the Charter School movement has exacerbated this policy debate. The creation of this hybrid model has moved the policy debate of who should be paying for what to the El-Hi realm when before it had been primarily a debate restricted to post-secondary education. Every decision about where to send one’s child or who should pay is an implicit advocacy position.

What about cultural institutions?

Are museums luxuries or an indispensible and integral necessity for the public weal? Many nations view cultural intuitions as a benefit owned by citizens for the benefit of citizens. And even in the United States we have such examples: the Smithsonian Institutions are open and free to all. Yet most metropolitan based museums are not. Some argue that such institutions, or public media such as PBS, should depend solely on private support. If they cannot appeal to users to pay user fees or funders to open their wallets, well – too bad for the public. Here too, whether a funder makes a purposeful advocacy decision or not, grants to such institutions make an implicit statement about who should pay for what.

Even religious institutions?

In the USA, there is a church – State distinction mandated by the Constitution. What it does or should mean continues to be an active debate but the basic public policy concept is well established: religion based entities, in general, are not eligible for public funding, but they, nevertheless, have an unusual and unique favored legal status: Unlike any other non profit, religious institutions are beneficiaries of a triple tax benefit. 1. They do not have to pay taxes on income. 2. They can offer a tax deduction for contributions. 3. And unlike any other, they do not even have to file a 990 tax return – thereby avoiding even minimum public transparency. [As I have written elsewhere, I for one believe that #3 should be changed.] It is useful to understand that it need not be that way. Many other countries have very different models, reflecting a very different perspective of the role of religion in the public sphere. Some actually allocate money to religious entities proportional to voluntary taxpayer self identification. Other countries offer no favored tax treatment for religious institutions at all. Wherever one may be, when one makes a contribution to a church, mosque, temple, synagogue, one is in fact endorsing a particular public policy approach to the role of religion and religious institutions. Here again, we are implicitly advocating a specific public policy even if all we intend to do is to make sure that our own religious institution can open its doors.

Taxes, anti-taxes, and private philanthropy

In recent years, this discussion has moved from the realm of interesting dialectic to pronounced policy. Many of us have written about the perverse attitude that any taxation is bad and that holding the line or reducing taxes is, by definition, good. Surely, no one wants to pay extra tax for corruption or inefficiencies. But most citizens rebel if the snow isn’t plowed or the garbage isn’t collected or the streets aren’t safe. All too many politicians decry “entitlements” such as social security or Medicare [immorally and disgracefully ignoring that those “entitlements” are contracts that millions of citizens have – and have had for years - with their government to guarantee their basic retirement security]. Instead of asking the question: What do we want our society to provide for its citizens, which is what taxes are for, all too many ask how little our society can provide.

The prevailing anti-tax sentiment creates an undue expectation and burden on private philanthropy. If there is not enough SNAP funding, non-profit giving is expected to make up the difference. If we choose not to provide an education system affordable to most, universities are expected to raise monies to provide scholarships or facilitate lending practices to make up the difference. Even El-Hi schools now must raise private funds for activities, supplies, and outings. And even if there were to be enough voluntary support to make up the difference, is it the role of private philanthropy to cover what some decide government no longer wants to do?

There is much more to be said, but the bottom line is this: every voluntary contribution one makes is a choice. Most of us make those choices weighing one worthy claim against another. We know that we are making implicit judgments of what matters more to us in the competition for our discretionary charitable dollars. It is crucial, as well, that we not forget that we are making another, although often unarticulated, choice as well. What do we believe is our responsibility and what is society’s writ large– i.e., the government’s? Those choices, and the choices of others, imply an advocacy for a set of values and priorities by which we all will live.

Panhandlers – What Should One Do?

June 22nd, 2014

Richard Marker

25 years ago or so, when I was still living in Chicago, I was approached near my office in the Loop by a man asking for money to go to the hospital. I immediately hailed a taxi, gave the driver some money, and asked him to take the man to the closest emergency room. Not even 2 minutes later, the driver came back to say that the man didn’t really want to go to the hospital but wanted to share the money I gave the taxi driver. I gave the driver a tip and he drove off, the man went on his way – presumably to try that ploy again, and I continued about my business.

Yesterday, one of the most prolific bloggers in the philanthropy space, a colleague and friend, Dr. Gray Keller, published a challenging piece on how one should – or perhaps, should not – respond to the abundance of panhandlers prevalent on the streets of Manhattan. He argues, legitimately, that there is simply no way to know which of them are in authentic need and which are charlatans and cheats. He went on to suggest that those in need had viable options for care and thus he felt no remorse in holding his head high and walking past them.

I confess that my own behavior is the same as Dr. Keller’s but I am not as guilt free as he. I surely have no disagreement with his assessment that there are cheats and swindlers. And it is virtually impossible to know for sure who is and who isn’t. But I also know that our safety net has become far too porous. Job retraining, safe shelters for the homeless, support systems for those with deep-seated emotional disorders and secure places for the abandoned are all harder and harder to come by. And, if we are being honest, let’s face it, even those who are using subterfuge to panhandle from strangers are hardly living an enviable life.

Traveling on the subway and walking down the street does create a dilemma. Can we give to one and not another? How much is the right amount? If one doesn’t give, what should one do? Advocacy? Volunteer? Contribute to organizations which deal with the street population? Care more?

This morning, on an errand, I stopped by one of the Starbucks in my neighborhood. When I walked in, the barista immediately asked if I want my usual. It made me realize that it may be Manhattan, but it is my Upper East Side Lenox Hill Manhattan – a small slice of a very big place. The dry cleaner knows me, the doormen on the way to the gym always say hello, the check-out people at Citarella know me well enough to ask about my menu for the evening, our barber is on the corner, my tie and pocket square boutique is just next to the barber, even the bankers at our local Citibank branch know me. The anonymous big city? Hardly.

Yet everyday, I walk past the same homeless people blanket-clad in the doorways of the shops closed for the night, or huddling behind the pillars of St. Jean’s Church, or sprawled on the subway platforms. Those people don’t know my name, nor I theirs.

Now, though, as I think about it, all of the excuses for not dong something melt away. Clearly these folks are not running off to some secret penthouse with hard-won subway begging strategies; they may be nameless but they are not strangers, they are in residence in one of the most exclusive zip-codes in the country without bothering people except for their disheveled appearance. What excuses do I really have for averting my eyes and walking past?

I spend my life in this philanthropy space. I am paid to address major trends and to help folks develop more effective decision-making giving strategies. And I try to back up this with thoughtful philanthropic giving and volunteer involvement of my own. No doubt I am doing my part on the big picture; the question remains, though, am I ignoring the everyday philanthropy that can improve some people’s lives – some very real people – in an instant? I have to admit, I am hardly guilt free in my own philanthropic behavior.

Innovation Funding IS Strategic Grantmaking – Some Responses

June 18th, 2014

Richard Marker

It is always gratifying when one of these posts inspires reactions, challenges, and rebuttals. The post of several weeks ago on innovation funding seems to be one of those. This follow up piece addresses some of the reactions I have received.

Evidence based grantmaking: Some have read my earlier piece as a wholesale dismissal of the value of evidence-based grantmaking. That is not what I meant to imply. There are, indeed, many cases where there is significant documentation that one intervention is more effective than others. In addition, many funders and foundations don’t have the internal resources to do independent research or assessment of complex approaches. They are “mission aligned” with a much larger foundation which has done that work. Why not follow their lead? This can be a very efficient funding approach and can have a legitimate place in a grantmaking portfolio.

Moreover, even though not every evidence-based approach would withstand a longitudinal review, it does not mean that every unproven or untested program or intervention is equally worth funding. It does not exempt a grantee organization from an articulation of what success should look like, what an evaluation could examine, and what they would do if their assumptions prove false. All of us have met organizations – new and not so new – that have tried to dismiss accountability. “We are different” or “we have wonderful anecdotes” or any of a variety of other rebuttals. Those responses are simply not credible. Innovation funding requires openness to uncertainty, high tolerance of failure [see below], and acceptance of early stage indicators rather than clear evidence of success. But innovation funding does not dismiss accountability, knowledge of the field, or acceptance of the legitimacy of the early-stage indicators.

Replication: Another area which only makes sense if there is demonstrated effectiveness is the area commonly referred to as replication. Replication is NOT simply copying something tried in one place and plopping it down somewhere else. That is in itself a recipe for failure. How often have we seen that? But a program, approach, or project which has been tested, and, crucially, there is appropriate documentation about what made it successful, is a good candidate for “replication.” Here is another example where evidence matters.

Finally some words about success and failure. Recently, a lot has been written about failure in our field. It is hard to imagine any funders who are honest with themselves who can look at their portfolio over time and not find some flops. And that is as it should be. After all, virtually all funding is for something that did not yet happen. Nothing in the future is or can be guaranteed.

But failure should never be because a funder got in the way: created undoable conditions, knowingly underfunded, forced an organization to go beyond their reasonable competencies, overlooked organizational weaknesses which needed to be addressed…

I continue to be an unrepentant advocate for the importance of innovation funding. Funding innovation requires a high tolerance of failure. Sometimes a huge tolerance. But that failure should be for the right reasons and not because of funder myopia. And this is where strategy enters: asking the right questions, articulating what change might be possible, being courageous in helping those changes happen, and being responsible in your relationship with those who are implementing those noble efforts. What can be more strategic than that?

Life is an Art Form – and so is Philanthropy

May 28th, 2014

Richard Marker

My good friend and fellow faculty member of the NYU Academy for Grantmaking and Funder Education, Stan Baumblatt, has a mantra: “good grantmaking is both an art and a science.” Teaching the “science “ is a whole lot easier than teaching the “art” just as every funder and philanthropist knows how elusive that artistry is. I see it in my work with clients, the courses we teach, and in our own family philanthropy. To be fair, though, the pursuit of artistry in philanthropy is no different than the pursuit of artistry in the rest of one’s life.

Which brings me to the following post originally published in 2008 on the now defunct “Marker Musings” site. Given current debates in the philanthropy world, it seems apt to republish it now. It may serve as a useful metaphor for the work we all do.

……………………………………………..

I suspect that if you are a sometime reader of this site, you are one of the many hundreds of people who have visited our home. You know how much both Mirele and I love having guests – whether for receptions, dinners, or simply to stop by.

Most guests can tell, upon entering, that our home has a style all its own. Much of that, of course, is because so much of what we have has been designed by us. And it is a constantly unfolding stage as we add new pieces to the set. As any home [or in our case, apartment] owner knows, it is never a finished work – there is always something to improve, correct, repair, replace, modify, update. And as much as that can be a challenge, it is also part of the dynamic of how we live.

Our home is ours but we are the beneficiaries of the craft and artistry of others whom we admire: Nakashima, Buechley, Swarte, Apsrik, Arp, Lowitz, Rosenthal, Gropius, Whitlow, and many others whose names appear in signatures on their art or others whose names we may have forgotten. Surely though, put together it reflects a very real and evident aesthetic.

There are those who want a “guided tour” – and we love showing some of the not so obvious design elements that are in conversation with each other. A designer, architect, craftsperson may see them immediately, others may just sense them, knowing that there is a perceptible warmth just in sitting in our living or dining rooms.

Often we are asked “are you artists?” My answer is always the same: I view life as an art form and once one accepts that, then all of one’s behaviors and surroundings are manifestations of that aesthetic. The very awareness of one’s own sense of place makes it impossible not to give attention to that place.

For many years, I have been a cook. Sometimes I am really good, others only fair. As an autodidact [thanks largely to Julia Child in the 70’s], I have mastered techniques, but rarely follow recipes; the results therefore are as varied as my inclination. But the reason I like to cook is not because I want to be a chef who competes on the Food Channel. The reason is because it is the only art form which uses every one of the senses. When it comes together, the creative process becomes artistry. Here too, the very act of eating, a most necessary act of being alive, becomes infused with the possibility of an aesthetic joy – which brings pleasure to those who partake.

If design elevates the experience of space, and cooking elevates the experience of sustenance, what about the human interactions which occur around and within? This is the greatest challenge of all. For it is those interactions which define one’s experience over time. Those interactions depend on others, on moods, on circumstances, on others who may not share your values or priorities or aesthetics.

One of the many things that Mirele has influenced in our lives is that within our home, we try to foster a tone of warmth, where all are welcome, where everyone is valued and none is excluded. People know of, and often tease us about, our “house policy” – that one must sign our guest book – with its pages upon pages of those who have been in our home. We value those books because it is the narrative of our interactions with so many – each of whom shared some time with us and in so doing both honored us and gratified us. The list of guests includes some whose names would be well known and those not likely to be. Some are extraordinarily wealthy, others of at best modest means. Some with great international or professional achievement, others early in their careers or more limited in their attainments.

Once upon a time, we would try to contemplate which guests should be invited with which others. We learned, over time, that it was a fool’s mission. We learned that everyone is interesting if given a chance to tell his or her own story, and it has been a rare occasion indeed when we haven’t been gratified by interesting narratives heard and told. The artistry, we learned, was not our matchmaking but in our valuing the uniqueness all who join us. Our guest books symbolize our attempt to bring that art form into our experience of time with others.

I wish it were that simple in all of ones dealings. I wish I knew how to reliably, consistently, persuasively, honorably take that sense and apply it to every interaction. I like to think that I try in my professional work, my teaching, my lecturing, my board involvements, and my other social interactions to do just that, but I know how often I fail to achieve artistry in those interactions, how often the easy warmth which defines us at home is not quite achieved in other settings. I am quite sure I am not unique in these shortcomings.

Which brings me back to the beginning: if life is an art form, then as long as one is alive it is unfolding, developing, emerging, not yet completed. There is no perfect design, there is no perfect meal, and there is no guarantee that all human interactions will succeed. The artistry of life, it seems, is not in showing the beauty in what one has achieved in life to date, but in what artistry is still to be created in all of our endeavors yet to be.

Why Do We Give? Does It Matter?

May 23rd, 2014

Richard Marker

It is not uncommon to receive calls from journalists writing articles about philanthropy, but not so typical to receive those calls from undergraduates writing for school newspapers. Yet yesterday I received such a call from, shall I say, a fairly well-known school in the Boston area. The question, paraphrased, was “why would a philanthropist choose to give money to our already wealthy and prestigious university when there are so many other needs in the world?”

I recently gave a talk to the leadership team of a large international institution about philanthropy trends. During the question and answer period, the same question was asked: what do we know about donor motivation? [In this case, the questioner’s own motivation was pretty obvious!]

At an invitational gathering on philanthropic giving convened by a couple of prominent wealth managers, their question was a variation on the theme: what might wealth managers do to encourage more giving by their clients? Should they appeal to underlying altruism, ego, guilt assuaging, public recognition, prestige, tax benefits, legacy, prudent use of personal assets….?

A recent set of research studies is also noteworthy. These field studies examine the impact of philanthropic giving on the person who gives. A colleague friend, for example, is soon to publish her book on the happiness which accrues to altruists. Sometimes even in the face of personal tragedy, the act of giving can bring joy and renewed meaning. Other studies have demonstrated that personal well-being, good health, and social adjustment are all connected with philanthropic behavior. It is an intriguing range of thought.

As you realize, these are not questions I have to deal with in my work. People I work with or teach are already givers. They – or their parents/grandparents/great grandparents/employers – already made that decision. I come into the picture to help people do their giving more effectively or wisely. Motivation is only relevant to help them make decisions that will be gratifying and consistent with their goals and values.

However, I am always concerned when a questioner tries to reduce charitable behavior to a single motivation or benefit. Such reductionism may be appealing to those trying to decode the secret to encourage giving, raise money, or invest strategically, but I have never met a single individual whose own behavior can be reduced to a single motivation or benefit. Tax concerns may provide a structure, but philanthropy is not the only way to limit taxes. Public recognition may appeal to some, but there are plenty of other ways to receive public recognition. Legacy or family involvement may play a role but there are lots of ways to engage a family and to solidify a legacy. Each of these may play a role in why someone may choose but none is either predictive or singular.

People are complex. Relationships are complex. Cultures are complex. Motivations are often inscrutable. What matters much more than why is generosity itself. I often wonder: if one were to find that ego or hubris or guilt were proven to be a motivator for a particular philanthropist, would that make his or her generosity less useful or constructive? For those who want me to be precise: No, I am not arguing that green-washing forgives or exempts abuse, crime, or ethics violations. Philanthropy cannot buy exoneration. But beyond that, people’s behavior matters more than their intentions.

And that is as it should be. There are many matters of concern to philanthropy that merit public discourse – among them: the relative roles of private philanthropy and public policy; whether certain philanthropy is more admirable or just or responsive than others; what accountability should funders and grantees have to each other and to the public; and more. These discussions can really make a difference. But the discussion of motivation is better suited to the research realm than the value of philanthropy.

Fortunately, most people choose to give, many quite generously, without having to declare their underlying motivation or intention, or for us having to understand them. And that, I believe, is as it should be.

Philanthropy as Voyeurism

May 20th, 2014

Richard Marker

Each year, the Chronicle of Philanthropy publishes a list of the largest gifts of that year. Just this morning I received an infographic from a group which showed the philanthropic behavior of many of America’s richest. It has become a normal event to see lead articles, even in the Gray Lady, about 9 or 10 figure charitable gifts. [Notably, business activity of that level may hardly warrant coverage in the business section.]

Books about the history of philanthropy often focus on the lives of the big names – Astor, Carnegie, Rockefeller… When I speak or teach in other countries, even in places as disparate as China, emerging philanthropists will often ask about the philanthropy of Bill Gates and John D. Rockefeller as possible models for their own.

There is nothing inherently wrong about this fascination with those who transformed their reputation as highly successful business leaders into those primarily identified by their altruism. Some look at these stories with cynicism about motivations – viewing mega philanthropy as an attempt to clean up problematic reputations earned while amassing their riches. Others look at them as models of their own philanthropy. Still others are simply fascinated by the lives of the Rich and Famous.

But in reality, on the whole, there isn’t that much new about the fact that mega rich people do philanthropic things. Royals in the Palace, Aristocrats in the Mansion, Nobles in the Castle, Oligarchs wherever they may be – have always played an important role in health care, education, social wellbeing of those in their purview. Some of these philanthropic players may have been enlightened, some may have been greedy, but that the super-wealthy and powerful provided something for those less so is neither new nor unique. It may make for good reading or PBS docudrama, but it only incidentally tells us about everyday philanthropy.

Indeed, to my mind, the real story of how philanthropy plays a role in any community or society is not how the mega wealthy do it but how everyone else does it. After all, as far as I can tell, there is no society on earth that doesn’t have some form of philanthropy, however structured and by whatever name. Those in the castle on the hill may have the resources to buy [or mandate] whatever they want or need, but the rest of us, including the simply rich, need structures, systems, and experts to function. Education and health care are classic examples. Long before there were tax deductions or legal status for hospitals, they existed. Long before there were development offices, people supported educational institutions of various sorts [often under religious auspices]. To this day, in many places in the world, if someone is in your personal employ, you assume responsibility for the housing, healthcare and welfare of their entire family.

What makes philanthropy in the modern nation state and, now, the postmodern international arena, noteworthy is the interrelationship of philanthropic practice with public policy. Philanthropy is intentional and, by definition even when not always consciously so, is a commentary on the role of the state in people’s lives.

Philanthropy is choice. Choices about to whom to say yes or no. In the US and in many other countries, all of us participate. From the church collection plate to the daily solicitations by snail-mail, email, phone, or on the streets and subways, philanthropy is a contact sport [pun intended]. None of us is a spectator, even those who may choose not to give.

If all of us are in this, what is wrong with being fascinated by the giving of the mega rich? Nothing per se – except: for most of us, when we make a choice to give somewhere, it means something else doesn’t get funded, indulged, or saved. When the mega give, even for those who signed the Giving Pledge, it has no meaningful difference on their life style or life choices. [It may on future generations, but not on theirs.]

By focusing on the boldface names in giving, it may well make the vast majority of funders feel inadequate, or worse, insignificant. Nothing could be further from the truth. Mega gifts have a tendency to go to a very limited group of recipients: foundations, educational and health care institutions, very large museums and cultural centers. [I am not here discussing the obscene amounts given by some for political manipulation; those are part of a different accounting – and discussion.] For most people, gifts to the opera or one’s alma mater or the local hospital are welcomed and acknowledged but are incremental at best. Nevertheless, if all of those gifts were meaningless, why would large institutions run annual campaigns, holiday campaigns, workplace campaigns? And for smaller institutions, the huge number of institutions never big enough to entice a mega gift, every one of those gifts is essential – the very lifeblood of the non-profit.

How Bill and Melinda Gates or Andrew Carnegie or Julius Rosenwald have chosen to give their money can be interesting. They are/were all thoughtful philanthropists. And even they have made mistakes from which we can learn. Watching the mega do philanthropy may be fascinating – very fascinating. But for the vast majority of those who wish to make a difference with much more limited funds, viewing the altruism of Gates, Carnegie, or Rosenwald is akin to voyeurism. Something better watched than done. For most, though, learning how to make wise and intelligent and meaningful choices in the context of our lives and characterized by more limited means, matters more.

Make no mistake: the participatory philanthropy of the 99% can and does accomplish quite a lot.

Partnerships and Collaborations – A New Paradigm

May 18th, 2014

Richard Marker

Long time readers will recall that a checklist for effective funding partnerships was, by far, the most requested practicum piece I have ever published. Based on my extensive experience participating in, chairing, helping to found, and teaching about these partnerships, it provided funders considering participating in funder collaboratives with very specific advice on the conditions for success, red-flags to avoid, and, very important, a way to determine if you were suited to be a collaborator. For several years, barely a week went by without a request for a copy.

That piece focused exclusively on what I call “horizontal” partnerships: Funders joining with other funders to create a new entity, support an existing non-profit in tandem, or address an agreed upon societal ill in unison. Negotiating appropriate roles, expectations, operations, procedures, and exit strategies make all the difference in their success or failure.

In a horizontal partnership, though, there is no question on which side of the table the funders sit. They are funders: even if they create their own entity to deliver the service or address a particular question, they all start from the same side.

However, there is another kind of partnership, a “vertical partnership”. In this context, a funder and an organization with the capacity to deliver services agree on something. This is hardly a new phenomenon: very often a directive foundation will approach a non-profit institution with an idea or a challenge or a very specific project. Their roles are clear: a funder funds, the non-profit implements. What makes this a partnership as apposed to a traditional funder-grantee relationship is the joint planning on the goals, the path forward, the methodology, the exit strategy, and what will count as success. [It has become pc. for many foundations to refer to all of their grantees as “partners” but in truth most of those “partners” are treated like traditional grantees.] Typically, but not always, in a vertical partnership the initiative will come from the funder, but the funder recognizes that the imitative can only succeed in collaboration with the grantee.

Some funders go so far as to bypass the grantee relationship altogether. So that there is no uncertainly about whose project this will be, a funder will contract with the non-profit. They are no longer grantees, independent organizations with primary ownership and responsibility, but rather contractors who are delivering the service to and for the funder. [While beyond the scope of this post, there are important legal implications to these distinctions, often not fully understood by either side.]

As suggested above, vertical partnerships are hardly new. Why then has there been such a preoccupation with partnerships and collaborations in the recent philanthropy literature?

The reason is that we are seeing a proliferation of a newer and more complex kind of vertical partnership. In this case, there are multiple sides and multiple players. Typically they are inter-sector [some combination of government, private philanthropy, private sector, ngo/nfp’s]. They utilize a wider variety of tools and investment strategies and can be initiated by any of the participating sectors. They are most often convened to address issues that transcend any one sector: human trafficking, food insecurity, economic disparity, global warming, preventable diseases, homelessness and poverty, etc. Each of these represents systemic issues that cross all sorts of political and intervention boundaries and borders. And none of these issues can be solved by a single entity or single sector alone.

But if normal horizontal and vertical partnerships are hard, requiring finesse and skill to succeed, these new and increasingly popular collaborations represent exponentially greater challenges. Of course there are organizational cultures, policies, and expectations to address, but in addition there are differing and sometimes competing laws, accountability, decision-making, and bottom lines. Yet they are worth the challenge if we are to seriously address those “big” items.

Some have begun writing of how to create these successful collaborations, but, in truth, we are still at the early stages. When do we use which vehicle? For example, preliminary evidence is that Social Impact Bonds will probably work in certain very specific contexts but some have begun suggesting that they will be the silver bullet for all large-scale quantifiable social challenges. I doubt it! Others have argued that the B-Corp has the ability to raise significant capital that non-profits cannot. Maybe – but not every social problem can be formulated with a profit motive, even under B-corp rules. In addition, it is not clear who sets the agenda? Some have voiced concern that an agglomeration of money coming from government and big business could force non-profits to adapt to priorities with which they may not concur. Yet the great demand for sustainable funding models may make it hard to resist.

There are only a few, a very few of the issues which surface in the new cross-sector collaborations. Yes, caution is called for and care must be applied before fully jumping in. But players in this realm are to be applauded for the courage to address the biggest issues of our time. We must indeed learn how to update our checklist for successful participation, but we must also recognize that we have now entered the time of a new paradigm for solving the world’s largest problems. It matters.

Innovation Funding IS Strategic Philanthropy

May 16th, 2014

Richard Marker

I don’t know about you but I seem to have a perpetual stack of professionally related paper to read. Yes, even in this age. Long air trips are the times I make a dent in this stack. A series of recent trips have done wonders to lighten the load– but much more remains. Perhaps I need to travel even more.

The advantage of reading so much in such a short time is that it becomes quite clear what trends or issues seem to be on everyone’s mind in the philanthropy world. Some of these are old issues that resurface every few years. It is as if a new group of grantmakers and philanthropy commentators reinvent the grantmaking wheel and share those insights as if they are new. In fairness, they are new to them. They have never heard these insights before, even if it is true that many have written or spoken or advised about all of this for years.

Other times, it is clear that there are evolving trends and attitudes. Ideas and approaches, once fresh, mature. Funders learn what works best, where, and why – and as important, when they don’t. Or they discover that approaches developed in one context may be worth considering in another. And, to be sure, new contexts, challenges, and technologies challenge and revise established norms and orthodoxies.

Beginning with this post, I will be commenting on some of the issues that surfaced, by various authors in a many different publications ,which raised meaningful issues for those of us in the funder realm to consider. This is #1.

………….

12 years ago, when I was conceptualizing what become the NYU Academy for Grantmaking and Funder Education, the issue of Strategic Grantmaking surfaced in conversations with every organization with which I consulted and collaborated: [E.g., COF, ASF, NCFP, Forum of Regional Associations, etc.] At the time, there was a major push to help experienced funders and those new to the field to transition from “checkbook” or “feel good” or “noblesse oblige” philanthropy to more systematic decision-making. “Strategic” in this context meant helping funders align their values and priorities to their funding practice in plan-ful ways. Learning how to use available data and resources to make judgments on effectiveness, transparency, responsibility, and even efficiency of those non-profits being considered made a huge difference. Indeed, it was hardly surprising that the 2nd level course in the then new NYU Academy was called “Strategic Grantmaking” for the first several years of the program.

After a while, though, that proved to be much too limited a description. Over time, in our field, “strategic grantmaking” morphed into “strategic philanthropy”, and began to reflect a very particular approach to grantmaking. “Evidence based”, “metrics” “demonstrated outcomes” and a variety of other terms suggested that there is a better or right way to do grantmaking. Good grantmaking, in this approach, is to identify proven outcomes and fund accordingly.

This is an eminently reasonable adjustment to an older form of grantmaking focused more on the giving than the outcomes. United Way, among many others, was indispensible in developing a methodology focused on logic modeling or theories of change based on evidence. Faced with so many n-f-p’s claiming to address the same constituencies in the same ways for many years, this approach helped impose new discipline on the non-profit sector as well as grantmakers.

Alas, this discipline became a straitjacket for [too?] many funders. New or innovative approaches and projects were suspect because, of course, there couldn’t be evidence – otherwise it would not really be new. New organizations were not likely to have a record of 990’s or a sophisticated board or meet the arbitrary if well-meaning benchmarks for infrastructure/program expenses. As enticing as many of these projects may appear, when funders matched them against more experienced organizations with “data” on their side; it was no match at all. [In a variety of case study exercises I have done with many groups in many settings, invariably the “safe” grantees win. Surprisingly, when I recently did such an exercise with a group of social entrepreneurs, they too endorsed a safe established organization over an innovative one!]

Moreover, those who fund artists or provide fellowships or sponsor leadership programs could hardly use some of these systematic methods. Many of you, I am sure, have participated in attempts to rank applicants using a comparative numerical ranking system. We all are aware that this is hardly “scientific” but simply numbers, subjectively arrived at, to compare potential grantees. As long as we don’t assume that this is any more “objective” or scientific than any other ranking system it is fine.

After all, we all realize, or should, that even the most “objectively” derived data are subject to subjective interpretation and judgment. To get back to the NYU course, in order to reflect what we really were teaching and wanted to convey, we changed the name from “Strategic Grantmaking” to “Grantmaking Strategies.”

But there are more significant issues at stake than the title of a course. Who is to say that evidence based grantmaking is better? It assumes that the evidence is built on answering the right questions. All too often, though, time reveals a divide between what the data shows and the intended impact of all that funding. Following the evidence based funding herd might yield demonstrable results, just possibly the wrong ones.

Moreover, evidence-based grantmaking works against risk and innovation. Often the only way to make a difference is to do something different. Change involves risk – and risk might be informed by evidence but isn’t limited by it. Solving problems requires seeing beyond previous orthodoxies and common wisdom. Thus, a mandate for innovation.

It is a great irony: some view strategic philanthropy as diametrically opposed to innovation funding. Nothing could be more wrong. It is impossible to imagine fulfilling any funding strategy, with a commitment to addressing a problem, without including innovation funding.

Experienced funders and foundations realize this dilemma. Very few funders are prepared to devote all of their funds to startups and high-risk projects. Yet very few thoughtful and strategic funders want to preclude risk and innovation. Most of us advocate that funders should consciously set aside some portion of their grantmaking portfolio for innovation, use a different and discreet decision-making process, and admit to a higher risk tolerance in our innovation investments.

The lesson: it is an unfortunate characterization and problematic practice of “strategic philanthropy” if it leaves no space for risk and innovation. On the contrary, I would posit that authentic strategic philanthropy requires it.

This is harder than I thought

April 17th, 2014

Richard Marker

There are two predictable comments or questions I hear from almost every potential new client.

The first: “How much money does one have to have to afford you?” is the easy one. That tells me that they have been talking to other philanthropy advisors and firms, many of whom have a business model based on the asset or giving size. In my case, since I don’t accept management or retainer contracts, I only charge on a project basis – what needs to be done, who has to be involved, how much time will it take. It doesn’t matter how much you have, only how much time we think will be called for. And everyone is billed on the same rate basis. I am happy to discuss what all of this means in another context, but that isn’t the subject of this post.

The second comment is: “this is harder than we thought it would be.” It doesn’t matter whether the client is the founder or the 4th generation, whether they are doing it alone or through a foundation, whether they have articulated priorities or are “feel good” funders, whether their asset base is in the $billions or many fewer zeroes, giving money away is never as easy as it looks from the outside, or at the beginning.

When beginning ones philanthropic journey, at least on the funder side, it seems to be an ideal position to be in: one can make a difference, make people happy, and satisfy one’s charitable interests, all at the same time. But…

Who would have imagined that you suddenly have so many friends – all of whom just happen to have a project which needs funding? Or that so many people would be concerned that you can no longer afford to eat. Otherwise, how to explain all of those offers to buy you breakfast, lunch, coffee, drinks…? And it is so thoughtful for folks to offer to distract you from TV, Netflix, or other home based distractions like your family. Surely you want to attend a dinner/concert/show/lecture/parlor meeting/… every evening.

That may indeed be an adjustment, but you learn how to deal with it. That isn’t the real hard part.

The hard part is coming to grips with having to say no to so many people all the time – or deflecting them to avoid doing so. The hard part is recognizing that there really are lots of worthy and worthwhile projects – even within your areas of interest, so many more than you can or are willing to fund. The hard part is accepting that, since you are always funding the future, nothing is guaranteed. The hard part is deciding what will persuade you that a grant or investment has done enough of what it was supposed to do that you feel gratified with the result. The hard part is deciding how involved you should – or shouldn’t – be with organizations you fund. The hard part is realizing that your spouse, kids, parents, siblings may see all of this very differently than you – and may take those differences personally. The hard part is choosing between being a responsible steward of philanthropic funds you or someone else set aside to do good or with being a change agent to do even better. The hard part is that doing all of this, deciding all of this, balancing all of this, caring about all of this takes a lot more time, energy, and commitment than you imagined. The hard part is accepting how much you care.

The amazing part, though, is that there are ways of figuring all of this out, and when you start getting it right, it is worth all the hard work. And indeed, all of that work on behalf of philanthropic involvement does make a difference – because it really matters.