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

April 9th, 2015

Richard Marker

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

“You’ve Met One Foundation…”

March 31st, 2015

Richard Marker

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

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

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

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

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

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

Clearly, we still have a long way to go.

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

March 30th, 2015

Richard Marker

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

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

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

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

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

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

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

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

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

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

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

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

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

The ICYMI Series – Why Strategic Plans Fail

March 9th, 2015

Richard Marker

This is a continuation of a series re-posting some of the more popular articles over the years. It seems that this one really struck a nerve.


Why Strategic Plans Fail

In a word: “Implementation.”

Now, as an old-time radio personality used to say, for the rest of the story.

There have been a slew of articles and talks recently raising questions about the efficacy of strategic plans, planning, and planners. As one whose livelihood has included strategy planning in the private, non-profit, and now the foundation and philanthropy sectors, I have to say that I concur with the skepticism, but disagree that failure is inevitable.

It is not at all uncommon to be contracted to help with a strategy issue and discover that other planners have been there before. In many cases, beautifully crafted plans, filled with charts, power points, and eloquent jargon sit gathering dust in someone’s office. with nothing to show for the effort and dollars. Why? A few of the generic reasons for failure:

1. Pre-determined outcomes. The client told the strategy planner what result they expected before beginning. And, yes, there are many in the field who are comfortable delivering that message. It may make the CEO happy to be vindicated by an “outside” expert, but not surprisingly, little new strategy and few new directions emerge from a pre-determined outcome. Many of us, me included, will not take such contracts, but I understand those who do: if a CEO hires them, the CEO is the client and, unless otherwise agreed upon, it is her/his approval that matters. One can readily imagine that few others in the organization have much confidence in such a study, and have few incentives to embrace it, but the consultant will have done what the client asked and paid for.

2. Too few stakeholders. In developing a strategic direction, there is no magic number of those who should have a say. However, it is important to make sure that those who have to endorse it and those who have to implement it are involved early on. It need not and in most cases cannot include every possible individual, but the process must have credibility to the key stakeholders if its conclusions are to be taken seriously. If not addressed early in the process, or if an organization chooses to automatically discount or exclude key stakeholders, the credibility, will be suspect and thus the ultimate implementation will likely fail.

A related example is an unwillingness to include outside stakeholders. In one case, an organization simply believed its own hype and tried to develop strategies from the misperceptions of their own self-image. Reluctantly, at my insistence, they went kicking and screaming to see their competition. They were shocked by the degree to which others had simply outpaced them in the quality and effectiveness in what they did. I was by no means their first strategy planner but I was the first who insisted that their stakeholder list include a broader range of input. [This story has a good ending, but any further details would necessarily identify the client.]

3. All too often plans are too abstract and/or don’t include an understanding of the culture which pervades an organization. When I was recruited by one of the large well-known strategy groups 20+ years ago, our discussions diverged when I expressed my commitment to implementation and the inclusion of corporate culture within the strategy. At that time, less so today, the response was unequivocal: we do strategy; it is up to the client to implement it. To understand the importance of this, all one has to do is look at the long list of failed corporate mergers over the years. Pure strategy made them look like a slam-dunk; real cultural differences made them an air ball.

4. The new plan is too far reaching. When I was heading a foundation, we partnered with many other foundations in support of new and innovative ideas. In one case, one of the partner foundations felt that a boutique program we were jointly funding was too good and should be brought to scale. A planning consultant was hired who produced a textbook plan for how a small and promising organization can be ramped up to have a national reach. The plan was elegant and thorough. However, it didn’t account for two crucial realities: there was no internal competence or commitment to such a massive re-make, and by becoming a new national player, it became vulnerable to larger full service competitors. The plan was too far reaching. The organization closed within a year.

5. The plan is not ambitious enough. The flip side of this kind of thinking is a strategy plan that is too cautious, barely incremental, and does not compel any kind of change at all. It should be remembered that any planning or evaluation process is, by definition, an intervention. There is nothing wrong if a serious strategy planning process reveals that an organization is at the top of their game and the most respected in what they do. [Wouldn’t that be nice?] However, it is hard to imagine an organization that is excellent across the board, or doesn’t need to anticipate changes in demography or utilization patterns, or need to enhance professional and board succession. A plan needs to be reaching enough to get even star performers to consider how to respond to tomorrow’s challenges.

6. Lack of an Implementation Plan. Change doesn’t just happen, it rarely happens smoothly, and it becomes chaotic without a plan. Now, in the current discourse, there is room for disruptive change; indeed I myself have been contracted to “disrupt” so that an organization’s stasis is shaken up sufficiently to begin to hear and see things differently. But once that has begun and a new direction is set, it needs management of the agreed upon changes. As suggested in #3 above, implementation is not simply a listing of what has to be done. It needs to have a mix of short-term victories, mid-term targets, and emerging long term changes. Change needs to account for the inevitable, and sometimes legitimate, pockets of résistance. It needs to recognize the style of decision-making and power. And it needs to be sufficiently adaptive to adjust to efforts that simply missed the mark even if the longer-term goals are valid. Finally, change needs to have a shepherd – preferably with appropriate authority or status – who “gets it” and is able to manage this complex process.

7. An Orphan Process. Transitions within an organization can create an orphan planning process. Turnover among professionals and volunteer leadership is normal. Since any planning process takes time, the planning facilitator may be working at an agreed upon pace but those who owned the process are no longer there. It happens! In this context, it is not surprising to find that reports are prepared, submitted, acknowledged, paid for, and shelved. It is possible to pre-empt this dynamic if the caveats of #2 above are followed, but it isn’t guaranteed. After all, does a new CEO want to start out by endorsing the vision and change processes determined by a predecessor? Rarely.

The cautionary tales are clear. But good strategy can and does happen. Avoiding these 7 pitfalls ups the chances for success. And saves a good chunk of wasted time and money along the way.

The ICYMI Series – Do you want to work in a Foundation?

March 3rd, 2015

Richard Marker

Wise Philanthropy has been publishing pieces of interest to the funding and foundation community for 8 years. I have been flattered that so many in our field read these pieces, either directly or though syndicators. When I attend conferences, many of you graciously tell me that one or another article has been helpful.

Through the magic of tracking, we have also been able to note which posts are the most popular and which ones have yielded the most comments.

I am well aware that no one, not even I, can remember everything I have written. As our field has grown over the past few years, and so many people have entered the field, I have decided to re-post a number of the most popular or controversial postings in the hope that newer readers will find them equally helpful. As always, I welcome your reactions and suggestions.

One of the most read posts has been for those interested in working in a foundation so I am begining this ICYMI series with this posting from 31 May 2011. You may find a follow up piece from 5 August 2014 to be helfpul as well.


Do you want to work in a foundation? [31 May 2011]

This year marks the 11th year of my teaching philanthropists and foundation professionals at NYU’s Heyman Center for Philanthropy and the 10th since the development of the program now called the NYU Academy for Grantmaking and Funder Education. This posting is one of a series of reflections on a decade of teaching funders at the USA’s oldest and most comprehensive university program of its kind.

The very first course I taught was one of the first three offered by the Center for Philanthropy, and was intended to introduce fundraisers to the other side of the table. It was entitled “Do you want to work in a foundation?” At the time I was still heading a now closed foundation and in fact was able to host the entire course at the offices of the foundation.

Much to the surprise of the new NYU Center, a large percentage of the attendees were already working in a foundation and were anxious to build a knowledge base. In subsequent articles and postings, I will expand on what we teach, why, how it has developed over the past decade, and more. However, here, I would like to return to that very first question.

Interestingly enough, that question was quite prescient – albeit in an unintended way. While it doesn’t describe those who take the NYU courses, it is a question I am asked, one way or another, on a regular basis. After all, what could be better than giving money away – surely it must be better to give money than to raise it. What follows are some of the responses I give during these “informational interview” type meetings.

A. Are you temperamentally suited to do this work? This seems like a strange question but many people have unrealistic expectations about what giving money away entails:

• Are you prepared to say “no” much more than you can ever say “yes?” Any funder, volunteer or professional, is well aware that one has to reject a very high percentage of requests. [That is true for all of us, but the difference between an individual simply discarding all of the unsolicited fundraising letters and a foundation is that many of those requests are consistent with the foundation’s mission. There are simply too many.] This, as most funders will tell you, is much harder and more demanding than it may appear.
• Are you prepared to be a walking dollar sign? Once one is identified as being a funder or a gatekeeper, it is absolutely guaranteed that every social event will become an opportunity for a veiled solicitation. Years ago, the day that it was announced that I was going to head the foundation, Mirele and I were at a reception. On the way home, she said, “we had better learn not to become cynical.” All evening people lobbied her to lobby me for their pet projects. I can assure you that to this day, as soon as someone finds out what I do, I am solicited. It may be the first or third paragraph, but it is absolutely predictable that it will happen. One has to have the temperament and judgment to know who is a friend and who is an opportunist [albeit with the very best intentions].
• Are you prepared to have someone else take the bow for your success? If you are a responsible foundation professional, your job is to enable someone or some organization do what you are funding. They may thank you, but the credit for the success of the project quite properly should be theirs. Is your ego sufficiently in check so that all of your hard work can be someone else’s reward? If one is used to being the programmer or executive of a non-profit, it is quite an adjustment to assume a supporting cast role [important but still supporting.] • Are you prepared to have almost no measureable way to determine if you are dong a good job? After all, a fundraiser knows that more money was raised or more donors gave. But a foundation professional has little say in how much is given in total each year. And the number of grants given is hardly a measure of the effectiveness of the foundation’s strategy. Ironically, at a time when funders are looking for outcome measures from their grantees, it is at least as difficult to measure the success of a program officer’s work. If you get your satisfaction by meeting or exceeding objective measures, you aren’t likely to find the work of grantmaking to be as gratifying.
• Are you comfortable with spending a lot of time doing back-office work? Much of the work of professional grantmaking involves reading proposals, checking out the non profit, writing up board and staff summaries, and keeping current with the fields in which funding takes place. Only a small percentage is “out there”.

B. These questions are not to discourage but to add a bit of reality to what is often a too romanticized career. If though, you feel that these questions still leave you excited, there are some additional considerations.

• Do you need to work? If you do, planning a career working for a foundation is not a statistically reliable career plan. There are simply too few jobs. But of course there are some. As this list will show, it is advisable to think more generically than simply looking at traditional private and independent foundations.
o The large foundations typically hire those with content expertise, and assume that they will send their staff to our courses, or teach how to be a funder in-house. Very rarely will they look to hire philanthropy generalists. If you want to work in the big-name foundations, the best way is to make sure that your professional and academic training are in line with their giving priorities.
o Medium and smaller foundations are more likely to hire a generalist, but realistically, only rarely do these positions get posted.
o There are many other opportunities to use these generic skills. Big umbrella charities [e.g., United Way, Catholic Charities, Jewish Federations, American Cancer Society, etc.] all need allocation specialists whose job is quite similar to a foundation program officer. Once the money is raised, these professionals play a crucial role in the effectiveness of these large and well-established organizations.
o State and municipal entities have grants programs in arts, humanities, public affairs, etc. which also call for similar skills.
o There are a growing number of outsource firms and consulting firms which provide grants management and leadership for funders. Some are full service, others niche players. The skills and competencies that are called for are much the same as a foundation officer, but one step removed.

C. While no one can guarantee a grantmaking position, there are steps one can take to enhance one’s competitive position:

• If you are not in the sector, it is very useful to serve on a non-profit board to learn something about the way decisions are made.
• Attend public lectures about trends in philanthropy so that one can learn the terms and categories of the field. This is not simply a matter of learning the lingo; it is also demonstrates that the way in which funders approach questions may be quite different than the way other related professions do.
• Take courses. This recommendation may sound self-serving, but if one’s professional background is close and one’s experience is relevant, taking courses at places such as the NYU Academy can help round out one’s competitiveness.
• Network. There is no better way to get on short lists of candidates, especially for small to medium sized foundations, than to hear of positions through networking. [Please remember that all the networking in the world won’t help if you don’t have other credentials or relevant experience.] • Win the lottery. Absolutely the only guaranteed way that you can work in grantmaking.

Is this all sobering? It is supposed to be since so many of those with whom I meet have less than realistic understandings of what they would do all day as full time funders.

Having said that, being a funder, professional or volunteer, can be one of the most gratifying ways in which one can spend one’s life. One can indeed make a difference, usually in small yet meaningful ways, occasionally in larger and influential ways. And one can take pleasure in knowing that, every day, one is helping to shape the character and values of our society. What can be better than that!

Is it time for your foundation to hire…. A Consultant?

February 18th, 2015

Richard Marker

This is part one of a series on how and when to hire or outsource support for your philanthropic effort. Subsequent posts will address hiring staff for your foundation and how to choose among outsourcing services.

I am asked this question all the time: both by funders who have decided that they could use some help and by those who want entry into our field. You may be surprised since I am a philanthropy advisor myself, but most understand that I do so in a very niche area which is right for some but certainly not right for everyone. So I am asked for advice quite a lot.

Another posting in this series will address the wide variety of support service you might consider and how to decide among them. In this post, I will only address issues to review and questions to ask before selecting a philanthropy advisor, consultant, or advisory firm.

! What is their expertise?

There is no formal bar to entry in our field. [I have written elsewhere that there should be, but, as of now, there isn’t.] There are lots of folk who use the title “Philanthropy Advisor”. [I am sure that I need not add that the generalizations I will use below are just that. There are superb experts in every one of the categories.]

A. Wealth Managers who have an interest in managing the philanthropy assets as a part of their service to clients. Some have earned the Certification as Chartered Advisors in Philanthropy. That credential is fine for investment vehicles such as trusts, but don’t focus on philanthropic giving strategies. If your primary concern is the investment part of your philanthropy, this may be a very good starting point, but if you are mostly concerned with making decisions about where and how to give, very likely this group is not your best choice.
B. Family systems experts are particularly helpful to multi-generation families. Since families of means are often involved in philanthropy, it is quite logical that philanthropy questions may enter the agenda of this work. Some of these experts are really quite knowledgeable in the philanthropy component; most are not. If what you are looking for is someone with expertise in facilitating a family retreat or an intergenerational int4gration process, these folks may be just what you are looking for. But if you want to do that toward an approach to your family giving, you may want to look further.
C. Trust and Estate Attorneys are often the first address for those with wealth. They have a unique and trusted relationship, especially with the founder. Many attorneys are excellent at helping their clients establish philanthropy vehicles such as foundations, trusts, DAF’s, and more. Very few of them are as knowledgeable about the giving part.
D. Independent philanthropy advisors can mean lots of things. Some have appropriate credentials – such as the professional certification from the NYU Academy for Grantmaking and Funder Education, or an earned certificate from the Johnson Center at Grand Valley State. If so, you know that these consultants have core knowledge of grantmaking and philanthropy. Some have had experience working in a single foundation and thus know a lot about one foundation, but they don’t have breadth of knowledge. If their experience coincides with your needs, great; if not, maybe not so great. Some have none of these. Be cautious: While some organizations of philanthropy advisors can attest that those on their lists have had other clients, certainly one very useful datum, I would recommend that you ask about their training as well Sadly, at the risk of alienating some in our field, there are simply too many who hang up shingles with very limited proven competence.
E. Content experts can be very useful and constructive to your foundation if your foundation is committed to funding in the area of their expertise. These experts can add knowledge of grantmaking to their core knowledge, but it is not as easy to become a content expert. Of course, if your foundation has a broad mission, content experts may bring only limited assistance to your decision-making.

2. What is their business model?

As you consider selecting an individual or firm to assist your foundation, it is useful to have a clear understanding of their business model and how they charge. Or to put another way, what is their self-interest in the advice they give?

A. Retainer contracts to manage your giving or your assets. This represents the majority of philanthropy advisors. These professionals, or the firms which employ them, serve as part time program officers of your foundation for a retainer fee. Their fee might be based on a percentage of time, a percentage of assets, or a percentage of your giving budget. This arrangement is optimal if you want a wide variety of staff support – from developing rfp‘s to reviewing proposals to preparing board packages to maintaining connection with grantees, etc. but don’t need a full time staff to do so. It is important to remember that, in most cases, these individuals or firms have multiple clients and therefore are not available to you on demand. Additionally, some of the firms will have a minimum fee – sometimes a challenge for smaller foundations or funders with more limited means.
B. Wealth management firms. A number of wealth management firms offer philanthropy advisory services as a component of the range of offerings to their high net worth clients. Some of these advisors are quite excellent. However, since most of these firms wrap this service with others, not surprisingly, the larger the assets under management, the more accessibility to these advisors. And it is also important to remember that wealth managers make their money by having more money under management – while philanthropy is the commitment to giving some portion of those assets away. It creates, for some, an implicit conflict of interest. Since most people of substantial means are accustomed to dealing with those who manage their money, these folks are often the first address for philanthropy decisions. As above, the billing model is typically based on asset base.
C. Trust and Estate Attorneys It is a toss up whether people of wealth speak to their financial advisor first or to their legal advisor first. Many have a well-developed knowledge of the laws of foundations, trusts, and estates, but fewer have deep knowledge of philanthropic decision-making. As you decide if such a person is right for your situation, remember that lawyers have a defined and legally circumscribed relationship with their clients. In most cases, the “client” is not an entire family but an individual. Loyalty to that individual trumps interests of the rest of the family or a foundation board. If the client is the founder of a foundation, his or her attorney may propose a continuing paid role for him or herself to “guarantee” that interests of the client are protected even after his or her death. It is not always evident that such a role is in the best interests of the heirs or the foundation. In general it is better to be on a board or a contract professional to that board, but not both.
D. Project Specialists. [Disclosure – this is the category in which I fit.] Not every advisor wishes to be a full service consultant. Some have distinct specialties: program evaluation; systems experts; family facilitation; strategists; etc. Most of us in this category work on a project basis and charge accordingly. Some charge on an hourly or daily rate, some on a project rate. How much you have in the bank or how large your annual giving budget is typically not a primary consideration for setting fees or the scope of work. A benefit of working with a project specific professional is that many of us don’t aspire to a long-term contract. Some do. It is important, therefore to determine if their business practice is to turn initial contracts into a longer-term retainer arrangement or if they restrict themselves only to episodic work. Either is fine but it will help you put their advice into perspective.

3. Compatibility

A good consulting relationship is indeed that, a relationship. There needs to be trust, mutually agreed goals, and, yes, some of that indefinable chemistry. A few additional things to pay attention to as you choose:

A. Is this person a sycophant? – They agree with whatever you say – at the beginning, in the middle and at the end. Now, admittedly, some funders actually look for such people as a way to reinforce decisions they have already made. It is up to the consultant to agree to those terms. But in general, a consultant should have the experience and confidence to say “no” to you. Or at least suggest serious alternatives. The job of an outside consultant is not to see how much they can get you to like them but rather to help you solve whatever problem you are dealing with. Sometimes that requires being tough.
B. Is the consultant too committed to having your question fit into their narrowly defined methodology? There is nothing wrong with a proprietary or proven methodology. But not every square peg fits into every round hole. A consultant should be able to explain why their methodology is correct for you at this time and for this question. Or to show how it can be adapted. Or to suggest another consultant….
C. Does the consultant tell you that they can help solve your problem no matter what it is? Very very very few people can do everything well. I haven’t yet met one. One would hope a consultant would have enough self confidence and experience to tell you that they are not right for you or for a particular project and would recommend a more suitable colleague or firm.
D. Does the consultant have experience and a good record of helping to implement what they recommend – or at least help you know how to implement their recommendations? Far too many clients of ours have pointed to shelves of reports by very prestigious firms that did nothing more than gather dust. You, as the client, may choose to accept or not accept the report, but their suggestions should not fail because the consultant gave no attention to recommend how to implement those findings in your setting.

As I suggested above, there are no legal or professional barriers to entry in our field. Anyone can hang out a proverbial shingle and call him or herself a philanthropy advisor or consultant. Hopefully this post will help you choose the right consultant for you, and most important, help your funding and philanthropic efforts be both more satisfying and effective.

Guest Blog: 5 Ways to Teach Philanthropy to Your Children, by Jane Chua

February 8th, 2015

Richard Marker

We welcome guest blog posts as long as they are content appropriate and are not implicit advertisements for products or services.
reprinted from with permission of

Philanthropy is such a noble act and it is such great ideas to have your kids share your passion with you. Generosity and compassion are charitable values that we would want our children to acquire, but in this fast-paced and social-media driven world, how can we instill these to them?
Here are five steps on how to teach philanthropy to your kids:

1. Talk it out with your partner. A study had been conducted in 2009 and it found out that most couples are seeing eye-to-eye regarding charitable giving, but it would still be good if you and your spouse are on the same page when it comes to this issue. Talk about the nonprofit’s goals and missions and make sure it does not violate any of your own beliefs.

2. Right from the beginning, talk to your kids about your charitable passions, including your favorite causes, as well as what you do to show your support. Once they see you all enthusiastic about it, they would just follow suit. It should not surprise you anymore if they ask starting questions or offering help.

3. Make them a part of the decision-making. Encourage your kids to take part in the decision-making process. Let them adopt their own causes and support the medium they will use to have their advocacies known.

4. Volunteer as a family. Not only is volunteering a good way to improve your kids’ self-esteem, but it is also a great opportunity to acquire new skills, share experiences, spend quality time together, establish traditions.

5. Imbibe financial literacy. As you teach your kids philanthropic values, you also get to teach them about the value of money. You have to teach them how to manage their savings, on top of establishing clear goals on how the money should be spent.

These are just few of the many ideas out there on how to teach philanthropy to your kids. Out of this experience, your kids would learn how it feels to make a difference in the world and contribute to its betterment.

The Argument for Place-Based Funding

February 1st, 2015

Richard Marker

“Give a person a fish, he/she eats for a day; teach a person to fish, s/he eats for a lifetime.” In my travels around the world, I have yet to come across a culture or tradition that doesn’t have some variation of this adage. I have heard it quoted in China, India, Scandinavia, Spain….

What better way to convey the progression from the customary entry level of philanthropy, compassion, to the next level, that of strategy. Almost every funder goes through these stages and learns, or at least intuits, that there can be a more efficient method with better long term outcomes than that of responding emotionally to an immediate plea for support. Learning how and when to say “no”, how and when to say “yes”, and doing so in a planful proactive way are the basic outlines of what has become known as “strategic grantmaking.”

Strategic grantmaking is most effective in solving a specific problem or choosing among a discreet and finite number of causes or organizations. It is the necessary stage 2 of grantmaking.

To return to our metaphor: it assumes all sort of things: that one lives near a place to fish; that the fish are not mercury laden; that there are still fish in the river; that there are enough fish for all… I am sure colleagues have developed even longer lists of the limits of the fishing metaphor as the solution to larger problems. All of these symbolize the third stage of grantmaking: addressing systemic issues and not just presenting ones. While one can choose the highest quality intervention of those which are presented [e.g., which fishing method is most effective; what time of day is best to fish; what bait catches the most fish, etc.] but if none addresses underlying issues of polluted streams or overfished oceans, your funding/fishing choice, even if it is the best, simply replicates the systemic conditions for continuing hunger.

It is no wonder, then, that so many in our field argue for more overriding accountability for funding. It has become quite common for many newer funders and foundations to go immediately to the “systemic” – articulating that the purpose of their funding is to address underlying causes and not just the symptoms, eradicating and not just treating diseases, bridging sectors, taking data seriously but willing to take big risks…

This point of view has a lot to commend it. After all, millions upon millions of dollars have been spent over many years to address social inequity, environmental degradation, educational inadequacy, and in far too many instances there is little to show for it. Something must surely have been missing. Maybe funders have simply been asking the wrong questions or have had too much faith in legacy agencies and organizations.

Many legacy organizations have yet to get this, and still argue that their’s is only a problem of messaging. And of course, in fairness, it is true that many of them have done and continue to do wonderful things, often with one hand tied behind their resource-poor back. But it is also true that too many are stuck in old methodologies or ways of thinking, and confuse organizational survival with systems thinking. No wonder that “innovation”, “social entrepreneurship”, “impact” all capture funders’ imaginations.

As appealing as these systemic approaches may be, they can overlook real immediate needs or local organization that don’t aspire to change the world. One example: There is simply no doubt that adequate SNAP funding will feed far more people more efficiently than volunteer soup kitchens. We should all be advocating for more humane and responsible public funding. But I am not so naïve to think that we are anywhere close to being able to close all of the pantries and therefore they too need ongoing support.

Or another example: on a comparative basis, very few local community theatre companies or operas or symphonies can match the quality of the famous destination arts companies in our biggest cities. But it doesn’t render them irrelevant or unworthy of support. If one were to give financial backing only to the ones meeting the highest competitive rankings, most of the regional and local arts and cultural enterprises would close, to the detriment of the quality of life in communities everywhere.

Or another: I am quite sure that the vast majority of after school programs are not transformative. Many are undoubtedly pedestrian. But that doesn’t imply that they are not worthy of support, especially at times of unconscionable cutbacks at public schools all over the country.

Now these examples are not an endorsement of mediocrity. Nor are they suggestions that funders should not be concerned with performance and quality. Rather they affirm that, on the ground, there are needs on the local level, the quality of which need not rise to the level of “state of the art.” Indeed local funders are often best suited to determine what needs are indispensable, the absence of which could cause real harm to a community. A national funder may not have the boots on the ground to be able to determine that, especially if they are making non-geographically based competitive grants. That same national funder may be more committed to developing cutting edge responses to a cause or need than solving local problems.

Local communities cannot and should not have to wait for the metrics to wend their way through the funding and political systems to receive services. Commitments to local communities are important all along the way.

Now, let me repeat: this is not an argument for mediocrity. Funders can and should aid and support capacity building, technical assistance, training, access to emerging knowledge of best practice, advocacy, convening, and every other way to make local organizations reach their own optimal potential. All I am suggesting is that that optimal potential need not be, in every case, state of the art – the circumstances, the resources, the demographics, etc. may make that impossible.

There is a place for place-based funders with passionate commitment to their own communities. While not right for all funders, those who have this commitment should not be made to feel that their philanthropy is any less valid or meritorious than those committed to transformative systemic change. I suspect that, just as many who start with compassion funding on the very local level eventually work their way to becoming systemic change agents, similarly, many who start committed to radical and systemic change may well learn that support on the ground matters as well.

We need both.

Talent? Leadership? Really, it is all about Culture

January 26th, 2015

Richard Marker

Did you know that in the philanthropy and non-profit world we have no followers, only leaders? How else can one explain that every community, every organization, every affinity group, and who knows how many others recruit actively for their leadership training/development programs?

Given all of these leadership programs, it makes one wonder whom they are leading? And how many of these leaders were actually elected as leaders by the very people they are supposed to lead? Or, perhaps, how many have been designated as “leaders” because a program or organization would like them to become leaders and successors to current leaders – some day? How many of those volunteers were designated for these programs, not because of their demonstrated leadership assets but because they have the financial assets to make them desirable future board members? And how many of the professional directed programs always seem to select the very same people who were already selected and trained and funded by other organizations and programs?

The most striking evidence that too many of these programs are either flawed, or at least mislabeled, is the hue and cry about the current and future leadership vacuum in the entire philanthropy and non-profit sector.

But can it be true that there is a paucity of capable leaders in an entire sector? Can it really be that all of these well funded programs, national and local, are inadequate? And is it credible that, for all the many thousands of highly motivated, intelligent, capable employees, only a tiny few have demonstrated the talent for “leadership”? Isn’t it possible, indeed quite likely, that something else is going on. Let’s see….

1. Traditionally, the non-profit sector has trained its professionals for careers in the sector, on the assumption that one will spend ones professional time in the sector and work ones way up a career ladder. However, that bears scant relationship to the way talented people’s work life works these days. Once upon a time, people entered a field and stayed. Today people go in and out of sectors – a non-profit professional one year, a private sector one the next, a volunteer leader along the way. Any program built on old assumptions of sector boundaries is bound to come up short. Frankly, I think this inter-sector commuting is to be encouraged and is likely to strengthen both the for- and not-for-profit sectors.

2. For that matter, any organization which treats its staff as if they owe long term fealty 24/7 and assumes that those very staff people intend to remain for 10, 15, 20 years, is delusional. [Ok, maybe not delusional, just out of date.] Most workers – and their supervisors – are always contemplating their next stop, and they will be thinking that way even if an employer mandates loyalty. Indeed such overt expectations of loyalty probably hasten turnover, and most assuredly will guarantee that employees will try to keep their career ambitions secret and under wraps. I firmly believe that supervisors and executives who openly acknowledge transiency will find their staff more likely to remain longer, will be more open about how to frame job descriptions in a more productive way, and are likely to lead to greater professional collaborations. [When I was an executive/supervisor/ceo, I would offer to help everyone who reported to me to update his or her resume every year. Everyone knew that I wasn’t trying to give a subversive message to leave, so colleagues were always very straight. Amazing what I learned, and how easy it was to adjust job assignments to meet emerging and evolving professional interests!]

3. Sadly, one still hears old-fashioned canards that those in the non-profit world don’t work as hard as those in the for-profit sector, or that if they were really talented, they would be in more financially remunerative fields. Worse, there are still those who assume that a non-profit career should be the equivalent of a vow of poverty. “Why are you asking for a more competitive salary, or fringes? You chose to work in the sector; you shouldn’t expect more.” It is simply counterproductive and wrong. So let’s be clear: Only boards and funders of non-profits can make sure that these destructive myths are laid to rest and that staff are properly recognized and compensated.

4. The flip side is another canard, just as pernicious – that too many in this sector are getting rich, with bloated overhead and nothing to show for it. They cite the periodic “revelations” of $million non-profit salaries implying that non-profit leaders are abusing charitable dollars if they receive such munificence. Why, some ask, support a sector which is so frivolous with hard earned contributions? As I have previously written and lectured in numerous places, I feel that this is a fake issue, reinforced by the information gathered by 990’s [he American tax return for non-profits] that only asks for info on the 5 highest paid employees. Frankly, I care more about the lowest paid than the highest paid. If a non-profit is underpaying its employees or denying them appropriate benefits, that is much worse than overpaying a few senior executives. As suggested in #3 above, only funders and boards can insist that this change.

5. Another area which has garnered a good deal of attention lately is investing in talent. [e.g., Talent Philanthropy] Advocates argue, correctly, that the non-profit world is shortsighted in seeing training and professional development as a luxury, or a special benefit only for the highest achievers. These advocates demonstrate that underinvesting in staff abbreviates tenure, leads to greater dissatisfaction, and incrementally lowers performance. However, there has been a missing ingredient in the arguments of most of these advocates Most have not addressed the structural underpinning of why this is so hard to implement consistently over time and throughout the sector: if staff training, conference attendance, etc. are viewed as an independent expense line, those lines are the most vulnerable at budget times. I have always argued [and, I am proud to say, implemented when I was still a senior executive in the field] that staff training should be a non-negotiable part of the benefits package of every employee, in much the same way as health, retirement, vacation, etc. should be. Unless such a commitment is built into the way in which professional employees are paid, and the budget is structured accordingly, this will constantly be an uphill battle at budget time and will require constant advocacy with all too sporadic successes.

6. Which brings me to “Ageism”. Typically, “ageism” that refers to prejudice against those more senior. There isn’t much new I can add to this part of the equation [although I can personally attest that it exists.] But, less addressed, and more complicated, is the more subtle ageism toward younger folks.

NextGen – How, you ask, can that be true when there is a surfeit of programs targeting “NextGen’s”? Aren’t they the most favored and fought over cohort? Perhaps, but I don’t buy it. How? I have said many times over the past few years that I really don’t like the phrase NextGen. One only hears it in the non-profit sphere. Imagine the NYSE telling Mark Zuckerberg that he is a NextGen and will simply have to wait until he is old enough to have an IPO for Facebook. Of course they will provide a mentor and a 6-month training program of seminars and peer learning experiences in preparation, after which the established c-suite leaders would pass judgment on his eventual suitability to join them.

Yes, this takes this to absurdity, but in fact I once spoke to the annual meeting of the top leadership of a major non-profit at which their outstanding “young leader” was honored. That “young leader” was a 50-year-old dot-com multimillionaire retiree!

All of this underscores an irony. If we are being honest, it should more accurately be ThisGen. Most of the ways in which we communicate, a great deal of the vocabulary we use to describe our daily activities, the technology we use every moment of the day, are all informed by a younger generation. The for-profit sector does everything possible to empower and include them. In the non-profit sphere they are only NEXT-gen. It is time to stop the self-defeating patronizing of this talent and make sure that there are fully empowered voting spaces at the grown-up tables.

In the workplace and on volunteer boards, there is an emergent problematic dynamic and confrontation. On the one hand, healthy and energetic people with experience and unfinished ambition are often discounted for no other reason than their age. Younger people, impatiently, don’t want to wait around for them to leave, so they leave. The challenge for all sectors, especially the volunteer driven one, is how to synergize the attribute of “judgment” which often does accrue with time, and the attribute of “knowledge”, increasingly the purview of those who are younger Those few organizations and foundations that have figured this out are setting admirable standards for all.

7. I believe that everyone who works at the professional level in the non-profit world should sit on the board of an organization other than the one that pays his or her salary. It doesn’t matter how big, what its mission is, or how large the board. Of course, it is highly unlikely that the Metropolitan Museum is going to be interested in a second year non-profit program professional, but there might be a small community based group which would be thrilled to take advantage of the energy, knowledge, and enthusiasm of such a person. And it is of mutual benefit: the professional becomes a much better professional, with much more perspective, after wearing a volunteer hat and an outstanding volunteer when he or she commutes out of the non-profit sector. Want to influence a board? Think like one and model that you understand what it means. Now, I know that many community foundations and junior leagues have observer-ship mentored programs. That is fine, but that isn’t what I am talking about: I mean actually being on a board, making decisions on budget, policy, strategy, and even personnel. Talk about real leadership development…

Underlying all of this is “organizational culture”. All of the suggestions in 1-7 above are unlikely to be very effective if the organizational culture does not endorse or support them. An organization which talks better than it walks, an organization which espouses empowerment but doesn’t empower, an organization that bemoans a dearth of leadership but in fact belittles and patronizes its professionals by regularly hiring outsiders for leadership positions, an organization that still thinks in hierarchical terms when flat organizations are the norm, an organization that wonders why creativity is always somewhere else but squelches any new idea with endless sign offs and consensus processes, an organization that “demands” 24/7 but guarantees nothing in return, an organization which treats staff as in-service to volunteer leadership as opposed to being their professional partners… Do you recognize any of these? All of the talk about talent and leadership is for naught if an organization doesn’t have a culture that allows for growth, risk, reach, and ambition. None of this is new. All of these ideas have been talked about and written about, and implemented…in some places. Evidence of how elusive these goals and how rare their achievement are, though, are the continuing emergence of “new” leadership and talent training programs.

Pogo’s old bon mot still applies: “we have met the enemy and it is us.” Organizational transition and leadership development needn’t be elusive aspirations. The methods of cultivating and training are within the reach of most organizations, often with only small but meaningful cultural adaptations.

On their own, very few non-profit organizations can make these changes – and make them stick. Only boards and funders can ensure that they do.

Interest in Conflict of Interest: Why now? Why it matters? What are Best Practices?

January 8th, 2015

Richard Marker

For some reason, topics of interest to philanthropy folk seem to arise in bunches. How else to explain the surge of discussions about COI on social networks, at conferences, on boards on which I sit, and among clients?

To remind readers: there is a difference between the legal category called “self-dealing” and “conflict of interest”. Since I am not an attorney, I won’t address matters of “self – dealing” which are quite clearly proscribed by the law and are never allowed. A “conflict of interest” in the non-profit sphere is usually not a matter of law but rather arises when there is some overlapping or intersecting roles that a trustee or staff member has which may call into question that person’s decision making allegiance. Of course, every private sector and non-profit organization should have such a statement, require periodic [at least annual] sign-off by boards and staff, and minute the determinations of which conflicts matter.

One would hope that these definitions and recommended actions are not new or news. Indeed, I would even argue that one should never sit on the board of an organization that does not have a COI procedure. But if this is such an established ground rule, why the surge of interest among grantmaking foundations at this time?

1. Increased accountability and transparency. A shout-out to colleagues at NCRP and GEO, inter alia, for raising the expectations that foundations behave well. If there is a question of the integrity of a foundation, even if unintended, it can make a grantee, potential or actual, quite reticent to share information or feedback. This really matters: When I have met with funders in Eastern Europe or in developing countries, they report that the absence of a concept or culture of “conflict of interest” or transparency has limited their influence and made the larger society dubious about their genuine commitment to using philanthropy to build a civil society. Even in the United States, a country with highly developed practices, there is an unfortunate cynicism about the intentions and self-interests of funders.
2. The laws have changed. A number of states have updated their laws related to charity and to align them more closely to those applicable to the for profit sector. One of those changes has been some tightening of the “COI” rules. For example, in New York State, there is a distinction between COI where there might be financial interest, and COI where there might be a role conflict. Any non-profit or private foundation in New York State should have updated its written policies by now. Those in other states may or may not be legally obligated to do so, but best practices would suggest the wisdom in updating theirs as well.
3. Second generation family funders and business school trained philanthropists look at things with a demand for more clarity and professionalism. They know, either intuitively or by training, that foundation money may be theirs to control and allocate, but it isn’t theirs. The multiple roles of funder, investor, heir [in some cases], and change agent make many of them sensitive to the competing nature of these roles.

There are many sample COI statements available for download and modeling. I urge you you to check them out; many may be immediately applicable in your situation. Most of them focus on matters of financial conflicts which don’t rise to the level of self dealing. Or they answer the question of related business and family members. Most of the statements are pretty clear but if you are a funder with a particular [non-legal] question in your situation, I would be happy to help think it through with you.

In my experience, though, the area that gives funders the greatest pause, and is often the most controversial, is the question of interlocking directorates. Is it ever acceptable to be a trustee of a grantmaking entity and at the same time to be a trustee of a current or potential grantee? If yes, what parameters should apply? Do different situations call for different responses? Here are the variety of approaches I have seen:

Option 1: No trustee of a foundation/grantmaking entity may sit on the board of a current grantee organization.
Option 2.: No trustee of a foundation/grantmaking organization may sit on the board of a grantee organization unless that organization has already been receiving funding for x years.
Option 3: Any trustee must make clear that he or she sits in an interlocking directorate role and excuse/recuse him/herself from any decision-making role. The foundation/grantmaking organization should minute their acknowledgement of this COI.
Option 4: Trustees of grantmaking entities are encouraged to sit on the boards of long-term grantee organizations and to play an active role in making sure that the grantmaking entity is fully aware of the developments in those grantee organizations.

What, you legitimately ask? How can all of these be legitimate options; aren’t they self-contradictory?

Indeed they might be. But circumstances may dictate different legitimate foundation solutions.

Consider a few situations, a non-exhaustive list:

Foundation A has an open rfp process with guidelines permitting applications from anywhere. They typically end up giving grants to only 10% of eligible applicants.
Foundation B only does place-based funding in the small community where it is located and is known for supporting all local cultural organizations on an annual basis.
Foundation C only uses outside reader/consultants and the board simply approves the grants in toto.
Foundation D has a competitive rfp process but its guidelines are quite specific about eligibility.
Foundation E is a major funder in a particular field of service, and funds extensively with no geographic limitations. Its board includes other Funders in this field. This foundation does not issue an rfp, and only invites proposals.

Best practice would call for very different COI practices. It is my recommendation that the COI guidelines should reflect differing grantmaking policies:

I. For any Foundation which does competitive grantmaking, it is important that there be as much distance as possible between grantees and decision makers.

In a situation like A, best practice would suggest that there be no interlocking directorates since the grants are competitive and it would be quite hard to show the world that the board has acted without prejudice if a grantee and the foundation were to share a trustee.
If it is a situation like D and E, those on the board are probably on the board because of their interest in the field of service. It would be a shame and counterproductive to preclude their board involvement because of their interest, and there is no pretense of an objective competitive process, so a formalized recusal policy should suffice. However, in this case, recusal should include not only final decision-making but any participation in the processes involving grantees leading up to decisions as well. These two often comprise the most nuanced challenges for foundation practice.

For C, assuming that the decision making process is made clear to all stakeholders, simple recusal should suffice for the board and staff, but it is important there also be a formal record of acknowledgement of any possible conflicts among the readers/consultants.

II. In a situation where there is a minimal or no ongoing competitive process, the appearance of conflict is largely removed and the policy can be more open.

The situation of Foundation B is not at all unusual. Many argue that Option 4 above should apply – for several reasons: in a small community, it would be quite counterproductive to require the top communal leadership to choose between roles. Since the Foundation’s annual funding of recipient groups is not really a competitive concern, the interlocking roles typically raise no ostensible issues of favoritism. Similarly, if a foundation often serves as a key convener for a field or communal planning, informed trustees play an important non-fiscal role. To preclude their involvement would not serve the larger mission of the foundation or indeed of the fields/communities to which they are committed.

There are many emerging challenges to quality grantmaking and exercising responsible communal citizenship. Most elemental among them is a thoughtful COI policy and practice. Hopefully these brief guidelines will help the growing number of foundations committed to develop your own best practice.