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New Year’s Eve Procrastinators and New Year’s Strategists

January 2nd, 2017

Richard Marker

Whew! The end of the year solicitation onslaught is over. It is safe to look at your email again – and even to open some of your snail mail. If an end of the year contribution was on your agenda, you have made sure it was paypal-ed or stamped by Saturday evening. Time to return to more contemplative and plan-ful philanthropy.

I am not an expert in fundraising at all but I have to assume that all of those solicitations work – at least for some. Do they persuade people who otherwise wouldn’t give or just provide that last-minute oomph to procrastinators? I am not sure.

What I do know is that around this time of year, because of what I do professionally, people often ask me why people give. If I listen to the question carefully, I usually see that there is an underlying bias by the person who asks: some are absolutely sure that a “tax deduction” is the driver. Others are convinced that guilt is a prime motivator. Fewer want to credit pure altruism. This year, a lot of folks believe that political fears are yielding more advocacy funding than ever. Social pressure to “give back” is often suggested, raising the question whether those funders would give at all if their peers weren’t giving as well. Among younger funders, “making a difference” surely is a major motivator. And, let’s not forget the insights from our friend and colleague, Jenny Santi, whose research demonstrated that giving can be a source of happiness.

Fortunately, our role is never to persuade someone to give; everyone with whom we work is already a “giver.” Our role is only to help them make good, ethical, and wise decisions. However, what we do know about giving motivation is that reductionism – that is looking for a single motivator – is wrong. No one’s philanthropic behavior can be reduced to a single cause. We are all complex beings, all of us, and it belittles the significance of philanthropy to try to reduce any individual’s giving to only one rationale.

However, when we work with funders and foundations, all of these reasons do come into play – not in whether to give but in making decisions where and how to give. When giving itself is no longer the question, knowing what will prove gratifying is. Sometimes that will determine recipients; more often it will determine how a grant or gift or contract is structured, what intended outcomes are to be, and what relationship a funder or foundation wishes to have with recipients of their funds.

In this context, self-awareness matters a lot, especially if there are family or board decisions. Knowing why one is drawn to or is averse to a particular request may have nothing to do with the legitimacy of the request or even how compelling it is, but everything to do with whether that proposal will align with our giving culture or style. And that culture or style is very much influenced by underlying values and attitudes toward the proper role of philanthropy or government, what we think is the essential nature of human beings, one’s relationship to peer groups, and more. None of these is necessarily more legitimate than another, but knowing what comprises our own drivers, and understanding the complex motivations of those around our giving table may make all the difference in how we end up feeling about the funding decisions we make.

And, as clients and students of ours can attest, that applies whether our giving reflects New Year’s Eve procrastination or New Year strategies.

Some Thoughts on Work in the NFP/NGO Sector- A Funder Perspective

December 29th, 2016

Richard Marker

This post is longer than most. It was precipitated by the convergence of two related recent events: The rebranding of “Talent Philanthropy” into “Fund the People” and a conversation with a highly respected professional who works as an executive in the not-for-profit sector. This affords me an opportunity to compile a series of thoughts and an overview of an issue that matters to the philanthropy sector. [Some of the content has appeared over the years in previous posts; much hasn’t.]

As many of you know, for a good chunk of my career, I was an employee of not-for-profit organizations. Admittedly, I was fortunate – my own roles were always at the professional and executive level and, while I was certainly paid substantially less than most of my peers, I never saw myself as a “communal servant.” Indeed, just the opposite – I was working in a professional capacity for the kinds of organizations that allowed me to do work I wanted to do in settings in which I wanted to be.

Don’t misunderstand, the pay differential hurt. Financially, they were challenging years. But most of the time, I didn’t feel that I was a part of a class system that looked down on me. In retrospect, I am quite sure that there were two factors that let my self-image be at odds with my financial reality. One, I came from an elite type background, so even if the resources that defined my upbringing were not mine, my identity had been set. Two, very few people thought they could do what I did. It meant that board members never looked at my work and said “I can do it better.” It led to mostly healthy volunteer-professional partnerships during that part of my working life.

Having said that, I don’t want to dismiss or belittle the all too frequent under-respect and under-recognition toward many who are in this sector. Over the years, I myself have felt it. Was it an insult or a compliment when friends and acquaintances would say “You’re a smart guy; why are you working for a non-profit?” Or isn’t it patronizing when asked: “You work for a non-profit; why do you work so hard? [When I was in that sector, I regularly worked from 6 AM until after 7 PM every day]. And there were others.

Over the last 20+ years, when I have been on the funder side of the table, I have witnessed too many structural inequities that perpetuate an often unhealthy state of affairs that directly impacts one of the largest sectors in the US economy. So, despite the welcome attention that “Fund the People” has brought to the table, it still needs attention.

It would be unhelpful to deny that in much of the world, there remains an implicit caste or class system in the field – if not for all, certainly for too many. Some of this is the result of a culture that confuses non-profit work with a vow of poverty. Too often one still hears the counterproductive assumption that a choice to work in the NFP/NGO world by definition means that one has chosen to accept a marginal salary, perhaps okay for a summer internship or a first job, but certainly not a preferred career path. It is a destructive confusion that just because a non-profit depends on voluntarism, so the employees should see their salaries as an extension of voluntary good will and not as hard earned and well deserved professional compensation. [I will speak to “budget balancing” later.]

There are a number of interesting causes of these perceptions, about which much has been written elsewhere. One element rarely discussed is who is likely to be a volunteer leader in the sector. Let’s face it, volunteer leaders are often those at the top of the financial pyramid. Those who work in the sector, therefore, are not typically interfacing with their economic peers. Right or wrong, those with substantial means understand that their leadership has come with a price-tag, and those who work in the sector often see themselves or are even told to see themselves as working FOR those who are paying the organization’s bills [as opposed to working FOR a cause or organization]. It is far too easy to see the funder and volunteer leader as always right. [If you want to see a relatively benign example of the derivative “power” of a funder, be a fly on the wall when a funder is coming to visit a non-profit office. You may be sure that a notice will be sent around reminding staff to clean their desks, dress appropriately, and be on good behavior.]

In fairness, since I have advised and taught many hundreds of philanthropists and foundation professionals over the last 17 years, I can attest that most funders are not even fully aware of this informal exercise of their power and, when it is pointed out, are quite open to and even prefer a less power-laden relationship.

Before addressing some strategies and tactics to redress some of this, I want to emphasize how internalized this is for many who work in the sector. A couple of examples: in my last position on the non-profit side, I had executive roles in the USA and in other countries. It meant a lot of travel. While my expenses were not borne by the places I visited, I depended on those on the ground to make hotel reservations for me. In some few places, I was very pleasantly surprised, but in many more, I was shocked at the low level of accommodations provided. These were often either very low level hotels or student hostels. I quickly came to realize that those who were making the reservations were simply projecting what they might afford and assumed that it was the norm. Very telling.

Similarly, at one point, over 20+ years ago, I served as elected Vice President [volunteer] of an international association. The name was “…. Of Communal Service.” When I realized that for too many the words implied “communal servants”, I proposed changing the name to “…. Of Communal Professionals.” The change was rejected since it was far too great a leap for many who had spent their careers internalizing their “service” status. [There is much more to be said about this example than is possible in this post.]

The final example is one to which I alluded in the first paragraph. [Out of respect for the anonymity of this very respected and successful professional, I will purposely blur the details and simplify the case.] This professional sits on the board of an organization. That board has decided to honor the founder and chose to set up a one-time board appeal to help fund the event. There was no specified amount and there was, not surprisingly, a range of gifts. The only person who raised a question about participating was a professional in the non-profit world. The issue was not how much the person chose to give, as much as wanting to make it clear that this person should be viewed differently from other board members and perhaps shouldn’t have been solicited. As far as I can tell, this person has never been treated differently from every other board member, but his/her self-perception was otherwise.

These examples are certainly not intended to “blame the victim” as much as to show how far we have to go to re-align things. Below are several ways that have had a positive impact over the years. Some speak to sector wide opportunities; others address the distinctive roles that we funders have. The list is far from fully comprehensive, but might stimulate additional thinking among all who are entrusted with leadership of the NFP/NGO sector around the world. Readers are encouraged to add to this list.

1. Budgeting: Non-profits adapt their budgets and priorities to the questions funders ask. All too often, funders ask a legitimate but ultimately insufficient question. Looking at the budget of an organization we fund, we may ask if there are ways in which the budget can be balanced at a lower level. Since personnel is almost always the largest budget line by far, there is really only one place to hold the line or make cuts. So, benefits, or conferences or salaries may be curtailed. But that isn’t the only way we funders can ask the questions about the budget: since personnel is the essence of what most nfp’s, why not first ask about personnel policies or staff training or retention or career opportunities? If organizations perceive that this matters to funders, it won’t take very long for those same organizations to organize their budgets and staffing to show that they take these issues seriously. Surely, discussion of retention, recruitment, training, advancement opportunity are all relevant to the strength of an organization, and are best addressed when not hidden behind a “balance the budget” starting point.

2. Compensation: Similarly, in the USA, the 990 non-profit tax return asks for compensation information but only about the highest paid employees. All well and good and potentially a source for some constructive conversation. But what if we were to have information about the lowest paid employees as well? Just think about what the conversation would be if a non-profit were expected to address the imbalance or, perhaps, a pattern of abysmally low salaries at the bottom. Most funders, I suspect, would want to work closely with our grantees to redress this imbalance.

3. Roles: The NFP/NGO sector is large and diverse. When I was a CEO, I would encourage all professional staff to seek a board position in a different non-profit from ours. While their first response was to say that they couldn’t afford it, it didn’t take long for them to discover that there are many smaller local non-profits that are thrilled to have someone with the experience or expertise of a seasoned professional on their boards. In many cases, financial board contributions are manageable or negotiable. The results were consistently positive: the professionals became much better partners with their own volunteers, they learned how respected their knowledge was in the field, they developed more constructive approaches to development and fundraising, and learned how to present their work more persuasively – understanding what it means to those whose role it is to govern and advocate.

4. Transiency within and between sectors: Since I began my professional work, I have had 5 careers; for those my age that is a lot but I have read that younger people anticipate having 7. When I was an executive, I always assumed that everyone was, in some way, thinking about what was next on his or her own career journey. I know that I was. The idea that anyone looking for her/his next job or professional challenge is disloyal seemed both ridiculous and counter-productive. Therefore, I would help every professional who reported to me to update his or her resume every year. You may ask – aren’t you giving the wrong message? My response was that I would rather work with my professional colleagues on their career planning than have them do so in secret. Moreover, more often than you may think, as the CEO, I was in a position to address their evolving interests or their boredom with a part of their job descriptions. Many would choose to remain longer than they might have otherwise.

And what if they chose to leave? The next place they landed would have a satisfied, empowered employee who would be enhancing that organization, the field and the sector. And presumably, we earned a positive reputation so that people would want to work for us and we would have great choices when it came time to replace them. Not a bad dynamic.

It is also important, and I think a positive, development, that not only do people change jobs in their working life, but shift between sectors. If we work hard to structure learning, respect what various sectors offer, including the non-profit sector, the entire workplace benefits. I don’t want to idealize this transiency or the transportability of skills, but I do believe that if we view these as opportunities there is much to be gained by both individuals in their own careers and by employers who now have workers with overlapping skill sets but very different perspectives on how it all fits together. Seems like a recipe for a culture of innovation.

5. Funding: Funders need to remember that grantmaking is a problem-solving exercise, not a negotiation. We need to make it safe for those who seek or receive our funds to feel free to tell us the truth. And those who do receive or hope to receive funds need to learn how to say “no” if the funds offered are insufficient to do the desired work or would take their organization down a donor-driven cul-de-sac.

There is still a lot of remediation necessary on both sides to accomplish this. Seekers of funds have had a long experience of feeling the need to sugar coat the real challenges before them, or to create padded budgets in anticipation of automatic discounting of their requests. And, despite several years of urging funders to welcome failure, if we as funders are honest with ourselves, it is still a challenge for our grantees to do so safely and with impunity.

Part of this remediation requires that both funders and recipient organizations acknowledge the full range of professional competencies necessary to succeed. That may involve recognizing credentials, salary levels, accessibility – or not – of those with specialized knowledge. Often a project or program can only succeed with such a staff person, and to downplay the necessary training and support to get there may well ensure avoidable mediocrity. Under any circumstances, though, if a staff person of a NFP/NGO sees that her/his employer has the institutional ego-strength to be willing to say “no” to a funder, it makes it easier to behave as a professional partner with volunteer leaders.

In recent years, many of us have written about the need to provide adequate infrastructure support for any organization to succeed over time. More recently, in the funding world, there has been a welcome recognition that time-restricted or short-term funding has a related limitation. To be sure, there are occasional special programs that require single time funding. But most efforts to address real stakeholder needs or societal problems are not “quick and dirty.” They are complex, involve moving targets, and need ramp up time to work and adjust, and even longer to measure what is and isn’t working. [To take but one real case of what not to do, a foundation funded a volunteer afterschool program for teenagers. After only 6 months, deciding whether to renew the grant, they wanted “evidence” how this program had changed the teens’ lives. Sadly, while a bit extreme, this is not as unique as one would hope. Funder colleagues, take note.]

Shaping a funding package should be a collaborative effort. Once a funder has decided that something is to be funded is when the work should begin in earnest. Of course we funders have agendas, but without collaboration our agendas may not be real or realizable. If we want a project to outlive our funding, the structure of our funding should enable the non-profit to address that from the very beginning. If we will want an independent evaluation at the end of a project, bringing in an evaluator at the beginning will ensure that appropriate and relevant data is being collected and that the staff who are implementing the project help articulate what and how that can work, and what information is most useful.

6. Staff-Board-Funder Collaboration: All too often, organizations assume that information is gathered by only one of the players. Most often a staff person is asked to prepare a report that is presented to a committee and then to the board and then subsequently submitted to a funder. Or, on occasion, the process may begin with a board member who has heard of new approaches or of a successful new initiative by a competitor. At each stage, there are assumptions and biases that inform not only what is said but, more importantly, what is heard. When there are “teams” representing all of the key decision makers who do site visits together, or jointly review information, more complete and thoughtful information is gathered. For example, if one wants to understand the “competition,” a joint staff-board-funder team is likely to return with a far more nuanced understanding that addresses needed adaptations and changes. This is particularly true if an organization has been doing things a certain way for a long time and there are entrenched opinions that need to be challenged. Or when an organization is going through a periodic strategic review, the more stakeholders who review the same information and data together, the better. Or when a field of service is evolving, team attendance at a conference is more likely to yield an understanding of the newer concepts and their implications.

This team approach reinforces a constructive partnership between staff and board, reduces defensiveness, and will usually lead to better decision making.

7. Mainstreaming support for staff development. It is great to see the recognition that “Fund the People” has been receiving. It has brought much needed attention to lacunae in the NFP/NGO sector. I do, though, have a concern. The solutions cannot be perceived to be one time corrective grants or special project funds for conferences and staff training. If the issues are systemic, the fix must be as well. When staff training is a “soft money” benefit, it will disappear when the grant does, or when the next fad hits. To guarantee that we eliminate the caste system, that we recognize professionalism, and that we see all of this as essential to a thriving sector, budgets must build this support in as essential and core; board leaders need to learn to adjust their thinking to what it means to have professional partners in the organizations they lead; and we funders must make sure that our decisions and behaviors reinforce the kinds of policies and behaviors that strengthen our hands, and the hands of our grantees, in addressing the systemic challenges of our times. These times require no less.

Philanthropy or Misanthropy

December 13th, 2016

Richard Marker

Caveat Reader: This is #4 in a series about what our philanthropy field might offer in the current political context.

Every reader of this blog is well aware that the word “philanthropy” comes from the Greek meaning “love of humankind.” While many use the word as a synonym for charity, it really implies something much larger and deeper.

Charity shows that we care for our fellow human beings, especially those who are in need. And to be sure, need comes in many forms: health, welfare, hunger, physical safety to mention some basics. Every society, every society, has a form of charity since it is unthinkable for the vast majority of us that we willfully allow those in our midst to suffer. Indeed, the first stage of philanthropy is typically compassion. We see a homeless person, we volunteer at a soup kitchen, we know family who have a life-threatening disease. It touches us deeply and we choose to volunteer or give money or advocate for better services. That is charity.

Philanthropy, though, is a step beyond. It takes that empathy and personal commitment and builds upon it. We quickly realize that there must be a better way, a more just distribution of the goods of the world, a larger vision that eliminates the need for instantaneous compassion, a strategy that helps us make decisions, a recognition that our love of humankind requires more than the charitable handout.

The basis of civil society, for many, is that very love of humankind. We organize hospitals, and schools, social services and safety nets, and even cultural institutions because of a vision of both sustaining of life and the quality of life. Philanthropy is the commitment to use resources, all resources, to make the world a better place for all.

“Misanthropy” is the opposite. It thinks poorly of human kind, and only invests in distributing the goods of the world to the degree it prevents anarchy. It is built on a deep-seated cynicism about human nature, and does not envision a world made better for all based on the good we can and must do through our central institutions.

To be blunt, it is pretty obvious that we are about to have an entire government built on misanthropy. We will privatize the safety net and leave it to individuals – and charity – to make do. We will appoint a chief of education who does not believe in a social commitment to educate all citizens equally. We will appoint someone to protect the environment who does not believe that it needs protection – and let millions around the world be damned in the process. We will appoint someone to safeguard workers who doesn’t believe that they have rights. We will appoint international representatives who disregard treaties and agreements. We will see policies eliminating social choices of all sorts, despite all evidence that it will lead to deaths and not the protection of life. We will pass tax reforms that only exacerbate an unconscionable divide between the very rich and all others. We will permit conflicts of interest to allow the leaders of the US government to behave no differently than a disrespected third world demagogue.

No – these are no exaggerations – they are exactly what the incoming administration has stated as goals and what are the stated opinions of nominated cabinet officials, even when they are stated in language that makes it try to appear to empower individuals. They reflect a misanthropic view of the world, a cynical role of government, and a disregard for the rights of all residents and citizens. And, en passant, as the data around the United States has shown, allows an explosion of hate speech and action to flourish.

Those of us on the philanthropy side have a different and competing vision. We may not all agree on exactly what the best specific policies should be, but we start from an affirmation of the value of all, and not simply the power of a few. During this very difficult time in our country, that competing, more affirmative vision must not be lost and needs to constantly inform what we do and how we act. It may be that the privilege of private philanthropy, a controversial privilege in the past, may prove to be the last barrier to a tragic march to the 19th Century.

Some years ago, I heard a lecture stating that the most privatized society in history was France just before the Revolution. Its aristocracy controlled all, with few legal or parliamentary restrictions and virtually no rights enjoyed by the populace.

We know how that turned out.

Right-Sizing

December 8th, 2016

Richard Marker

[Caveat Reader: This is post #3 showing how lessons from the philanthropy world may help inform political thinking. I encourage you to look at the previous posts.]

Many funders, especially those who become philanthropists after successful careers in business, treat grantmaking and philanthropic giving as a kind of negotiation. The NFP asks for a certain amount, and the funder discounts that number and offers less. It becomes a vicious cycle – those requesting money pad their requests on the assumption that, inevitably, they will receive less than asked for and funders assume that those requests are padded so they give less.

The sad part of all this negotiation-based funding model is that it starts and ends with the wrong question. Because potential grantees are worried about the discounted bottom line, they don’t feel comfortable stating, clearly, what the real need is, what the risks are, and what the trade-offs would be with less, and even if a project is viable for less. Funders, quite sure that they aren’t getting the whole story, discount…. And don’t ask themselves or the grantees what they really need.

Fortunately, many funders are getting beyond this conundrum and reviewing requests from a results/outcome perspective. The beginning of the discussion is about what problem will be solved, what wrong will be righted, what illness will be cured, how long will it take to make changes, what partners will be needed to make the difference. Only then does the budget discussion enter the picture. Of course, not every funder has the resources to answer any and all of the questions, and not every NFP’s request is realistic. However, in this scenario, the starting and end-point is not budget but impact.

When one looks at “problem solved” as the question, the size of the organization or the grant is not necessarily the primary driver. Some funders are perfectly gratified to know that their place-based organization is being sustained and continues to serve its local community. However, more and more funders fund projects that have the potential to be sustainable and, indeed, there is an increased interest in non-profit mergers to leverage influence and the efficiencies of scale. It leverages the impact of voluntary dollars.

It is also true that in many fields, independent studies have consistently shown the efficiency of government support over voluntarism. For example: Every independent assessment has shown that adequately funded SNAP funding is far and away the most reliable way to reduce food insecurity. Similarly, independent assessments have demonstrated that no medical funding approach is more efficient than a national single payer system would be. Private prisons may produce profits for their owners, but if reducing recidivism is a goal, they have proven counter-productive. And more.

Sadly, there are too many who argue for “small government” and privatizing as much as possible, all on the assumption that private is better and more efficient than public. But, in fact, as we learn from philanthropy, the challenge for government is not size. It is focus. Are we building a society with a commitment to serving Americans, all Americans, or is to be built around a commitment to reducing spending and taxes above all else? But just as foundations and philanthropists have learned to make sure to ask the right questions – to make sure that what matters is outcome – so too we need to demand that the new administration and congress, who must make decisions on behalf of more than 350 million Americans, never lose sight of their primary responsibilities: Feeding, healing, educating, housing…caring for all… There is scant evidence of that vision in the incoming administration. They have a lot to learn from our world of philanthropy.

Transparency and Self-Dealing

December 7th, 2016

Richard Marker

Transparency and Self-Dealing Matter

[Caveat Reader #2: This post is another with both a philanthropy and political point of view.]

Being a funder is a power position. The more money one gives or can give, the more power. Whether that is the way it should be is beside the point.

The ngo/nfp sector is existentially dependent on the largesse and beneficence of those with money. The challenge of how to accept, mitigate, reject the power of those funders is real and all non-profits understand that. Hopefully, all funders understand that with power comes responsibility.

This power dynamic is the reason that foundations, and the principals and trustees, have certain legal obligations that attempt to bring some equilibrium and an element of fairness to this imbalance. For example, there are limitations on certain related parties in doing personal business with a foundation with which we are involved. Our insider status gives us an advantage. The law is concerned that we insiders might benefit from money we control but isn’t ours. And with more specificity than applies to any pubic charity, the law is adamant about real estate transactions, compensation, purchases, professional services, etc. After all, a foundation may have a funder’s name on the door, but the money is no longer the funder’s- it has been given for the public good and not for private benefit.

To control for that, there is a required transparency regarding where the money is spent: every single grant, no matter how large or small, must be listed on the publicly available tax return; each board member and key staff members must be listed on that same return with information about compensation; there are certain reporting requirements, investment guidelines, limits of control of for-profit businesses, and much more that apply only to private foundations. And, while it is called an excise tax, private foundations even pay a tax on earnings, unlike public charities.

The penalties for violating these rules can be severe, even draconian.

All of this is a way that the law attempts to control for the power of money and the unusual control that a funder has in using money that is no longer his or hers. To repeat, the law reminds us, over and over again, that the public good must trump private inurement. [hmmm, pun intended.]

It seems that no less should apply to a president and any other elected official. They have chosen to run to do public service. The public, therefore, should have access to transparent evidence that this so-called public service is not a way to enable private inurement. Public tax returns are one way to assure that. Surrendering control of private businesses to disinterested parties is another. Recognizing that relatives are interested parties with built in conflicts of interest is a third.

We, through the law, believe that there should be limitations on the exercise of power for every single private foundation. It seems to me that, at the very least, the same should apply to our elected officials, all elected officials, whose power far exceeds even the very largest private foundations, and the potential for abuse far exceeds that of those very same foundations.

Transparency and self-dealing matters. We should insist.

A Contract is a Contract

December 5th, 2016

Richard Marker

[ Caveat reader: This post is the first of several addressing politics as well as philanthropy.]

When I teach philanthro-ethics to philanthropists and foundation professionals, one of the “best practices” I emphasize is the need to pay grants in a timely fashion, and no later than the dates specified in the grant agreement.

Funders need to understand that grantees rely on the good faith of their funders to do their business – they hire staff, publicize programs, plan their facilities, and much more based on the valid expectation that money granted to them will be there when promised and in the amount promised.

This may seem obvious and straightforward but, alas, one would be amazed how often this is observed in the breach. While I consider that commitment to be a contractual obligation, and therefore binding on the funder, many funders seem to think that this “commitment” is no more than an “intention.” If they get to it, of course they’ll send the check promptly, but perhaps it is not convenient, or maybe they didn’t plan their foundation’s cash flow carefully, or any of all sorts of reasons- so the money isn’t transferred. They forget that, once promised, they aren’t simply doing their grantee a favor but have made a contract with them.

The non-profit is now in an awkward position. They are relying on those funds but they are also respectful of [or perhaps frightened of] their funders and reluctant to bug them. They shouldn’t have to. A contract is a contract and funders have an obligation to fulfill their part.

[There are indeed some few circumstances that legitimate a reconsideration, but that isn’t the topic of this post.]

Why is this political? It appears that some congressional leadership has announced their intention to change Medicare and Social Security. They don’t like “entitlements” as a burden on the federal budget. Why not simply privatize the system and let citizens take responsibility for their own retirement and health-care?

The problem here is one of contracts. An entitlement means that there is a contractual obligation. Millions of us have paid into a system throughout our careers with the guarantee of a benefit at the other end. This is not simply a favor a benevolent group of government officials do for us, but their lifetime contractual obligation. It cannot be unilaterally broken just because a current group of elected leaders wish that contract didn’t exist. To break a contract is, as we know, illegal, immoral, unethical…. And given the destructive impact on millions relying on that contract, unconscionable.

Just as there are funders who must be reminded that paying their grant commitment is not a choice but a contractual obligation, so too our current national political leadership must be held to that standard. Medicare and Social Security are not favors to be bestowed if they happen to feel like it but a binding obligation, not negotiable at the whim of political winds.

Perhaps the details of how to assure this obligation may not be simple, but the principle certainly is.

The Purpose of Philanthropy is Not to Avoid Taxes

November 7th, 2016

Richard Marker

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

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

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

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

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

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

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

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

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

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

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

November 2nd, 2016

Richard Marker

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

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

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

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

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

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

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

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

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

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

What was heard got in the way of the message.

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

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

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

Yes, words do matter.

In Innovation Funding, the Second Funder Makes All the Difference

October 26th, 2016

Richard Marker

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

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

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

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

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

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

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

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

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

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

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

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

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

October 4th, 2016

Richard Marker

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

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

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

Can’t we: [choose one or more]

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

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

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

• Be open to a site visit whenever we wish?

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

• And more….

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

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

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

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

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

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

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

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

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

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