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Posts from the ‘Best Practices’ Category

#378 Whatever Happened to Noblesse Oblige? Have We Gone too Far? – A COVID-19 Takeaway

May 15th, 2020

Richard Marker

This is our 12th article for funders, philanthropists, and foundations regarding COVID-19. As always, we welcome your thoughts and reactions to any and all.

Two decades ago, noblesse oblige was still the standard rationale for funders to be charitable and philanthropic. If asked why one gives, the answer was likely to be “to give back.” With riches come responsibilities.
The underpinning of that thinking is that there are those less fortunate who need something that a generous gift might provide. While most funders had opinions about which organizations or causes they cared most about, on the whole giving had a social context, in every sense of the word. Some of that social had to do with communal leadership responsibilities; some had to do with responding to peers’ requests. Most funders didn’t assume that they knew better than those who worked in the fields they funded about how best to use the money, only that the recipients certainly needed it.

Approximately two decades ago, a mostly healthy corrective began to supersede that rationale. For all sorts of reasons, the subjects of all too many books and articles that one can read on this subject, loyalty was summarily discounted as an imperative for supporting organizations, and measuring impact became the new value-added. After all, why continue to support a literacy initiative year after year if people still cannot read? Why do organizations dealing with homelessness warrant support if there are still so many homeless? The motivation for giving thus morphed from altruism to efficacy.

At first, there was denial from legacy institutions. Despite the growing anecdotal and statistical evidence to the contrary, those 20th century institutions convinced themselves that this was simply a temporary or transient aberration. When people got older, got married, got jobs, had kids, their giving patterns would revert to the past practices of their parents and grandparents. As time went on, as the change became more pervasive, it also became more persuasive, and many of those organizations had to pivot to find ways to catch up to the zeitgeist. Some did and some never did.

In the meantime, newer funding models emerged, all of which were based on some sort of measure of impact. There are a variety of models of those systems, often differing on what the true bottom line of effectiveness is, how far out a longitudinal perspective must look, which stakeholders or sectors have the greatest claim, how subjective the giving might allow or how comparatively demanding the objective claim, how “profit sector” they behaved, and more. Not only did funders not feel any assumed loyalty to organizations, but their giving was increasingly conditional. “We will fund this – IF you do that” or “We will fund that as long as you can demonstrate that our metrics are being met.” Not only did it reflect the changed motivation for giving, but it changed the way organizations had to deal with funders.

Implicit in all of these changes was a set of assumptions that have proven all too specious. It assumed that funders knew better than the experts what would work, how to do the work, and what constituencies deserved service. After all, funders made their money in the for-profit world; that alone, they believed, demonstrated that they must know more than those who are stuck in the non-profit world. [Need I say more?]

Over time this led to the institutionalization of attempts to develop standard ratios – such as “overhead” to program, or appropriate balance of sources of income, or cash reserves. Using these new metrics, some organizations began to rate nonprofits, and woe to one whose rating slipped. Eventually, though, most of the raters saw that they were imposing a very limited and limiting set of metrics to a very complex field. Did it really make sense to use the same rating system for a local food pantry as for a university? And if that food pantry were to have a mediocre rating but was the only one in a food desert neighborhood, would that be sufficient reason to discontinue funding it?

Thus, over the last few years, more sophisticated means of determining impact have been developed. [including, inter alia, the cutting-edge methodology developed by the UPenn Center for High Impact Philanthropy with which I have a part time connection.] These looked more deeply beyond simple-to-measure efficiency and to longer terms effectiveness as a means to decide where to put substantial funding. There is no doubt that our funding world was developing ever more useful way of making sure that our resources were used to bring about the changes we hoped for and in the ways that made the best use of our money.

Then COVID-19 hit.

And, suddenly we recognized that, for all of our sophistication, for all of our rigor, those non-profits on the ground doing the daily hard work were certainly better equipped to know where the immediate needs are, where the preferred interventions should be, how to spend precious dollars, and which skills are most applicable. Our field – or at least 700+ foundations and philanthropy support organizations – avowed [or perhaps acknowledged] that our reporting systems, our proposal systems, our laser focused funding approaches [and perhaps even our investment policies] were no match for the needs of the moment.

Maybe, we had strayed too far from the long standing, seemingly dated noblesse oblige rationale for giving. Maybe our demand for metrics, too often based on our categories, contingent on our priorities, reflecting our own systems overwhelmed the reason for philanthropy in the first place. Maybe, we are being reminded, that altruism is a social value, and that our own demands for systematic analysis everywhere along the line may be handcuffing those whose real job is to provide services to those in need.

Over 20 years ago, my first published article on philanthropy was entitled: “Hubris vs. Humility”. At that time I was the CEO of a major foundation, and I learned how easy it is for us to think we know everything, how fortunate we are to have the resources to try to make a difference, how seductive the power imbalance – and how arrogant so many of my colleagues appeared. [Of course, I never was. 😊] But I also recognized that, not only was that ethically problematic, but it was also pragmatically wrong. After all, it meant that grantees were less likely to be fully honest, that it allowed us to pretend that we are never wrong, and it allowed us to function in a self-referential bubble.

Over the last couple of decades, our field became so committed to the efficacy of impact and results that we often forgot about the nobility of “giving back.” COVID-19 seems to have forced a rebalancing. Perhaps a bit overdue.

Endnotes: I know my colleagues in the field quite well and can anticipate some rebuttals, so permit some addenda:

• Yes, funders sometimes do have perspectives or expertise their grantees lack. But even when a funder is more “right”, implementation should rarely be top down and requires a relationship that allows the “right” and the “real” to become aligned.

• Yes, of course there were always funders who wanted results – even in the days of noblesse oblige. But before the days of impact and metrics, the norm was more typically that funders gave, nfp/npo’s spent.

Yes, due diligence and program evaluation is indispensable. But too often due diligence and the post program evaluations go way beyond gathering information that will truly inform our decisions. If we as funders don’t need the info, why impose extra work on grantees?

Yes, there is great value in research as a basis for sophisticated decision making – but… One admittedly extreme contrary example: in an Advanced Grantmakers course I taught a few years ago, I invited a guest speaker who was considered the national expert on a particular then- hot initiative in the field. It turned out that the expert whose work was widely published, had never met with any foundation, never worked in a foundation, never spoke with any practitioners. I am sure that no one knew more about the research or the laws related to that initiative than the guest speaker. However, the “expert” was fully unable to answer a single question on its functional application from the room full of very experienced funders. Surely this is indeed an extreme example; it does, though, remind us that research that isn’t rooted in real experience is simply a contribution to general academic knowledge, but of questionable value to those who must make decisions on its basis.

Yes, I agree that there are certain times when a restricted gift serves the grantee organization. 2 examples: when a non-profit wants to explore an initiative beyond its core budget; or, perhaps, when it is for a capital project. But in general the tendency of some funders to give only restricted gifts, to be unwilling to fund infrastructure of that same organization, to give for a year at a time, to give less than the amount necessary for the project to succeed, etc. typically handcuffs the recipient organization and limits the ability of that organization to bring the impact the funder claims to want. Our funding should enable the greatest likelihood of the success of a project. That doesn’t mean there should be no limits; it does mean that a funder must make sure the relationship with grantees is open, honest, and trusting. Given the power imbalance, that relationship only works if we as funders enable it to.

Final point: Yes, it is true that I have been teaching and advising funders on how to make good decisions for a long time and hope to continue to do so. So, I don’t want to appear disingenuous in my statements about overreach in due diligence. My hope is that we as funders “right size” our processes and decision making – to make our own lives and the lives of those whom we empower with delivering services easier.

#373 A Courtesy Offer to Fellow Philanthropists and Other Funders

April 30th, 2020

Richard Marker

This post announces a new, fully gratis, offering to philanthropists and other funders.

Over the last 3 decades, the philanthropy world has been my professional home. I have had the honor of leading foundations, advising many funders from around the world, and teaching or speaking to many thousands more in 40 countries. As with so many of us in the philanthropy and foundation world, I feel that it is a crucial time to give back.

Many of us have increased our financial giving despite – or perhaps because of – the sharp economic decline.

This offer goes beyond that and builds on my expertise: I am now offering a FREE problem-solving session of up to 30 minutes to any funder who wishes [to the extent that my schedule permits, of course.] All you have to do is send a message to [email protected]

[The “fine print”: This is not intended to replace a full consultation that many philanthropy advisors offer; it is ONLY to coach through a specific problem. Also, I am not an attorney so I don’t offer legal advice – but I am happy to respond with best practice advice. Finally, I know virtually nothing about fundraising so please don’t schedule a time hoping that it will help identify funds for a project, investment, or organization.] #philanthropy

#372 – Some Thoughts on Volunteer Leadership – Does the Pandemic Change Anything?

April 27th, 2020

Richard Marker

Please see sections #3 and #6 for comments related to COVID-19. You may wish to read a number of our other posts for thoughts on philanthropy’s unique role at this time. I want to thank Lewis Flax, an expert on board performance and an NSA-DC colleague, for his constructive suggestions for this revision.

I recently accepted an invitation to join a board. That is hardly newsworthy or even report-worthy, except perhaps in a Chronicle of Philanthropy trivia page. After all, it is my 61st. [I only know that number because a couple of years ago, I was asked about my board experience over the years, so I reached back and did the arithmetic. I also calculated that I have chaired 12 of them. These boards have ranged from local to national to international, and included a wide variety of topics, styles, and roles.]

Clearly at this stage of my life and career, I don’t join boards for the purpose of résumé padding. In fact, I more often politely say no to such invitations than say yes. For example, I say yes to foundation and grantmaking boards [my field and expertise] and say no to those that are primarily looking for help in fundraising [which is most assuredly not my field or expertise]. I am more open to boards where it is clear that board members play appropriate governance roles and less open to those where one is expected to be a sycophant. And, unless I can see that my participation will actually be utilized and I’ll find it gratifying, there is no reason to say yes at all.

Boards are indispensable to the entire voluntary sector. Indeed, I considered that role so essential that, when I was the CEO of a large and multi-faceted non-profit, I strongly urged every professional of that organization to sit on a board of their choosing. My feeling was that there was a double benefit for that: not only did it help those many non-profits have their expertise, but it also made them better professionals. The experience honed their understand of how board members should best be treated, utilized, and empowered. [All of us, I know, have seen too many examples when board members don’t really know their roles, and professionals don’t either.] Underlying these expectations was the affirmation that we were all beneficiaries of the voluntary sector, and we should, therefore, model our commitment to it.

There has been no shortage of excellent material about the roles of board members and the indicators of successful boards. One very valuable source for that is BoardSource, and there are many more. So, I will take a pass at simply redacting or repeating what is otherwise available.

I do though want to comment on some of my learnings from my own experience, and to share a couple of very preliminary observations about the implications of our current reality.

1. Hard Questions: Board governance requires board members to be willing to ask hard questions, even at the risk of seeming unpopular. Permit a real-life example: In one of my own board experiences, something seemed wrong to me about the way the Conflict of Interest statement was written and being applied. I raised the issue in a board meeting when we were asked to fill out our COI forms. The CEO was adamant that I was wrong in my concern, and the rest of the board supported him. A year or so later, the CEO was dismissed for cause, and afterwards it was discovered why the CEO was so insistent: he had abused his role and never reported certain funding practices that would clearly have been prohibited had the COI been applied appropriately. It doesn’t give me pleasure to say “I told you so” but it does reinforce the importance of good governance. [We all can only imagine how much money nonprofits would have saved had board members asked harder and timely, though uncomfortable, questions about Madoff type investments?]

2. Appropriate Behaviors: Having said that, there is a difference between asking good governance questions and being “a pain in the butt” [not exactly a technical term]. Good board membership is not about micro-managing or assuming supervisory roles of various staff members. Staff of non-profits are not board servants, nor are they there to do board members’ private bidding. In my role as a funder and foundation trustee, and also as an educator of funders, I see how easy it is for power imbalance to creep into role misalignment. Most of the time it is not willful, but it is always unhelpful and counterproductive.

3. Meeting Attendance and Role: Historically, there has been a real difference between the activity of boards overseeing locally based organizations and of boards overseeing national or international organizations. A local board can have more functioning committees, meet more regularly, depend more on board voluntarism, and have a more direct relationship to the work. A board of a national or international body certainly cannot meet be expected to meet as regularly, nor to have the same level of direct connection with the daily work.

Another example from my experience: A member of a somewhat famous and even wealthier family had been encouraged to join one of the most prestigious boards in the world. By the time they came to me, they were frustrated and annoyed: this was an international board that gave only the broadest policy questions to the board; this family member would have much preferred, and would have been more gratified to sit on a less prestigious board where their involvement could have been both more robust and more textured. The board probably was acting consistently and coherently given the kind of organization; this particular board member simply should not have been on that kind of board.

Having said that, I wonder if the zoomification of meetings might begin to radically change the character of all organizational interactions, including board meetings. Currently, we are communicating with colleagues and fellow board members around the city, the country, and the world more easily than scheduling board meetings ever was in the past. Indeed, when the quarantine is over, most folks will have mastered the medium and may be reluctant to allocate the time or money to have as many in-person gatherings. It certainly has made attendance at the boards on which I sit, none of which is here in Washington, much easier and efficient. Not sure about all of this, but it seems quite likely that this is one of the changes that will become part of the next normal.

4. Term Limits: I have become a big believer in term limits. You might be surprised how many organizations don’t have them. Those organizations that don’t have them have a tendency for board members to age in place and become all too stuck in dated thinking. In one example I have written about some years ago, I was asked to keynote the annual gathering of the international board of a very prominent and respected non-profit. At the meeting, their top “young leadership” was honored. One of those honorees was a 50-year-old retiree; another was a 48-year-old mayor. I guess they weren’t old enough to sit at the grown-ups table, but more to the point, there was no space for them since there were no term limits.

Let me be clear that I am not saying that experience is irrelevant or that there is no wisdom that comes with longevity. I am, though, saying that a board that doesn’t structure its own rejuvenation is more likely to become stuck than one that has to include new thinking, has to explain itself anew, and integrate new members with experienced ones. 6 to 9 years in a board capacity is quite sufficient to make one’s thoughtful and meaningful contribution, and if one is that indispensable, it is always possible to start anew with a year’s sabbatical. To take another personal example: I was chairing an organization without term limits. After 6 years, I insisted that the organization find a successor. They tried to persuade me to stay until they found the “right” person – open ended.. My response was that they had a maximum of 6 months to do so. Sure enough, it motivated the leadership to identify both a successor and a succession plan. It has proven healthier for the organization and has made my continued involvement more viable.

5. Hard Decisions: Participation on foundations boards is quite different than serving on public charity boards. In the latter, in public charities, the fiscal stability and sustainability of the organization is a constant agendum. Even if one is on the board primarily because of one’s knowledge [Wisdom] and commitment [Work] and not one’s personal Wealth, underlying most decisions is a recognition of board responsibility for financial support.

Private foundation boards have a quite different starting point. Most private foundations are already funded, or the source of their funds is determined, so the primary board challenges are to choose how to use those funds responsibly, ethically, and wisely. [In prior essays, I have written about the issues of serving on a board if the family funder/founder is still in the room vs when it is a successor or independent board, a topic to which we can return on another occasion if readers wish. For this post, it is an ancillary question.]

Having sat on numerous boards of both types, I can attest that the character and balance of the board agenda are quite different. What is true of both, though, is that responsible board participation requires a willingness to make hard decisions. Pushing the hard questions down the road, an all too frequent tendency of reticent boards, ultimately is counterproductive and weakens the impact of the foundation or the NGO/NFP

6. Strategy and Implementation: Another essential role of board members is to set the strategic direction for an organization, and then endorse how that strategy can be implemented. Strategy without an implementation plan is simply abstract desiderata and implementation independent of a strategic overview is simply programs.

These distinctions are crucial to bear in mind at this COVID-19 moment in history since all bets are off for implementation plans for almost all non-profits and most foundations. For many non-profits, this is a time of existential challenge, so all that pre-planned programming is difficult at best. Human service organizations have more business than they can handle; arts and culture organizations have less. What we have seen in this past month is that the organizations with the greatest clarity of their strategic thinking have been able to pivot and adjust better than those that don’t. For better or worse, now that so much is happening virtually, the differences are pretty striking. We can observe organizations all over the world and we can see which have applied their thinking in coherent ways quickly and which ones haven’t. I am not commenting here on the relative quality of those responses – after all, there is a great disparity in accessible resources, but rather the evident quality of the underlying thinking.

Some have argued that foundations need to make immediate changes in their strategies in order to respond to the COVID-19 pandemic. I don’t agree – what I do believe is that if they have to change their basic strategy it means that they didn’t have adequate strategy thinking built into how they operate. Implementation can be agile and if there ever was a time for agile implementation, it is now. But hopefully they are making those decisions consistent with their understanding of their role, their distinct positioning, and a grasp of their capacities. It is in this realm that a board earns its keep. Agility and long-term thoughtfulness must go hand in hand, and that requires both courage and stability in times of disaster or crisis.

The voluntary sector is essential and crucial in every country and every society around the world. The roles and expectations may vary from place to place given governments, cultural histories, and local practice. But each of the 6 board categories above make the difference between a well-run and sustainable nfp/ngo and a more vulnerable one. At this time in history when this sector is asked to play an outsized role with shrinking resources, effective boards and effective board members can and will make the difference to what our multi-faceted sector will look like at the other end of quarantine.

#365 We’ve Been Here Before – Lessons from Past Challenges to the Philanthropy Field in the Time of COVID-19

March 18th, 2020

Richard Marker

“Everything that can be said has been said, but not everyone has said it.” This expression has been variously attributed to Winston Churchill, Abba Eban, and who knows who else.

As I have written and re-written this post over the last week, I have tried hard to avoid saying what so many of my colleagues in the philanthropy space have been saying. I do want to humbly express my admiration to our field for stepping up so quickly, thoughtfully, and, yes, even eloquently. The assertive actions and ambitious outreach I have observed demonstrates that our field is acting in assertive and proactive ways rarely seen in past crises.

Therefore, rather than reiterating those recommendations, these few comments are intended to underscore or articulate a few thoughts that seem understated by many. They are informed by what we have seen and learned from past crises – some caused by human behaviors and misbehavior, and some caused by acts of nature.

Among those lessons:

1. Our field has both short term and long-term capabilities.

a. If there has been one consistent message from this field, it is this: In the short term, our grantees face short falls, diminished contributions, and, depending on the grantee, increased demands for services. Since the US government and even many States have shown themselves to be pokey payers, many direct service agencies face the dilemma of long time wait for reimbursements. Contributions will be diminished and delayed. This is not the time for our grantmaking to be clever; it is the time for us to be flexible. To reiterate, I want to applaud our sector in affirming this point in so many ways.

b. Less stated but very important: We have also learned that we need to keep at least some of our powder dry. There are unanticipated demands, organizational re-alignments, and systemic dislocations that deserve attention – long after the crisis, whatever crisis, has passed from the headlines.

2. Our field needs to underscore our flexibility and agility in our spending policies.

We have just emerged from 11 years of a bull market. Any foundation or private funder would have had to be remarkably counter-trend to have earned only 5% each year over these years. In past economic downturns, some foundations adjusted their “base” corpus to a prior date or number so that there would greater ability to respond to genuine challenges faced by their grantees. This may be one of those time. For US based foundations, the recent change in the excise tax calculation makes this kind of spending adjustment much easier.

3. Our field needs to use all the arrows in our quiver.

a. If organizations are struggling with cash flow for reasons beyond their control, a revolving loan fund may prove useful. For US foundations, this would qualify as a PRI and can be a very effective support vehicle.

b. If the fields we are funding are suffering because of short-sighted public policy, advocacy can/must be a powerful tool to get the attention of policy makers. We know that the entire philanthropy capacity can never solve major systemic challenges alone, especially of the sort we are now facing, we can only accomplish what we are committed to with a concerted affirmation of the need for responsive and responsible public policy.

c. Our field has made great strides over the last few years in learning how to collaborate with each other, and with those who are directly responsible for implementation – sometimes called grantees or partners. The current reality – with both extreme economic dislocation and profound human vulnerability – calls for us to continue to model this welcome change in our behavior.

d. All of this is happening at a time when civil society has been at risk in the USA and elsewhere in the world. [The subject of a longer and more in-depth conversation, to be sure.] We must accept a mandate to become a stabilizing force at a very fragile moment in history.

This list is not intended to be complete nor to replace the extraordinary advice offered by so many, especially about how we work with grantees. It is simply an attempt to emphasize a very few of those recommendations that may not have been as widely articulated as some others.

The current challenges are not short term. Recessions, even those that are short lived, have always had severe implications for the most vulnerable. Add to that the recognition of how universal our human vulnerability is. Our work is only just beginning, and we will be called upon to rely on our depths of empathy and test the range of our sector’s capacity to continue to provide a source of support. We must.

#362 20 Years Teaching Funders from Around the World: Lessons Learned

February 17th, 2020

Richard Marker

Let me get the self-congratulatory stuff out of the way at the beginning. Feel free to skip to ¶ 4:

In 2000, while still the CEO/EVP of a foundation that closed in 2002, I was invited to begin teaching funders at a new [now closed] NYU department, the Center for Philanthropy. At the time, I was only marginally better trained in the philanthropy field than those I was teaching [although by then I already did have 32 years of family, trustee, academic, and professional experience], but I had become convinced that such education mattered – and still does. After all, what arrogance that those of us in the foundation field that we could have all the power, have only self-authenticating wisdom, and no independent barrier to entry to ethically and responsibly give away billions of dollars. [see # 7 below] When invited, I felt a tremendous sense of responsibility not only to dig deep into my own diverse and relevant personal and professional background, but, more important, to include the accumulated knowledge of the key institutional players in the field at the time, all of whom I consulted.

Since then, I am proud to say that, on a very part time basis, I have taught well over 2000 funders from about 35 countries at NYU’s Academy for Funder Education [now closed] and, since 2016, at UPenn Center for High Impact Philanthropy. In addition, I have lectured in 40 countries and in many States, been a guest presenter at innumerable conferences and associations, and advised a significant number of families. The folks I teach are peers: philanthropists and foundation professionals and others of us on the funder side of the table.

Over these 20 years, I have worked hard to fine tune a helpful methodology for both teaching and giving, to articulate key philanthropy ideas, and to continue my own learning as our field expands, evolves, and matures. Moreover, there is no doubt that my work as a quondam philanthropy advisor, now much reduced, has been influenced by my experience with so many hundreds of funders from so many places. It has provided a massive internal database that could never be replicated were we to have developed a more typical philanthropy advisory practice.

¶ 4: In looking back at these 2 decades, here are some lessons learned:

1. Interrelationship between Public Policy and Private Philanthropy Matters: Anyone who has heard me lecture or teach over these 20 years knows that philanthropy cannot be fully understood independent of public policy. Moreover, it is almost impossible to ignore how crucial advocacy is to setting those policies once one is aware of how they impact the role and effectiveness of our philanthropy. I am delighted that this conversation has now finally moved to the center of discourse surrounding philanthropy’s role in society and is being led by many more well-known than I.

2. Every Funder is Unique and Every Funder is the Same: This apparent oxymoron is the reality of our field. People become philanthropically involved for all sorts of reasons. Those individual narratives need to be acknowledged and heard. But once beneath the surface, all philanthropy decisions prove generic. The challenge, as an educator or advisor, is how to get there.

On the international level, this is even more true. Everyplace has its own culture, history, ethos, and legal system. If one doesn’t honor or understand those differences, funders will never pay attention to the classic and generic core competencies that define our field. As mentioned above, I have had the honor of speaking in 40 countries. One must learn to listen very carefully in order to teach effectively and to be taken at all seriously.

3. The Need Continues: A few recent meetings with individual foundations and at speaking engagements have persuaded me that we have only begun scratching the surface of structured and impactful funder education in our sector. The questions of behaviors and practices, roles and responsibilities, expectations and impact that some have been fine tuning for many years are still brand new for many. Far too many philanthropists and funding organizations still function in isolation with little awareness of recommended norms, decision making methodologies, ways of evaluating what or why they are funding, and their larger potential as thoughtful self-aware contributors to a community’s wellbeing. The emerging field of “Philanthropy Service Organizations” [of which we view our Institute for Wise Philanthropy to be an integral part] still only represents those funders who have chosen to affiliate.

4. The Gratification of Helping Funders Learn Best Practices: One of the thrills of teaching is helping the entire potential of our field open up to those who had only a limited understanding. After 20 years, there is a wonderful litany of funders from around the world who have told us what a difference our teaching has made. Needless to say, how we teach has become fine-tuned, and what we teach continues to evolve, but the core competencies recommended by the field in the early aughts continue to inform and frame what every funder should know and what competencies should apply no matter what values, goals, or contexts of one’s funding.

5. The Importance of Affirming Rediscovery: If one has been in the field for a long time, one sees articles offering insights many of us had years ago, or re-inventing approaches that were new many times ago. I have seen numerous articles by other experienced thought-leaders express exasperation with the periodic attention given to those who claim to have invented the proverbial wheel. I know that I myself have to take a deep breath and respect these insights as a reflection of genuine learning. Whether I – or many others – had the same insights or used the same techniques or asked the same questions 2 decades ago or longer matters little to those for whom it is brand new.

Reading articles or press releases or reports that show the most recent innovations in our field, as if they are brand new, may yield a moment of disappointment that those folks never heard of those of us who published or spoke about a lot of those ideas a long time ago, but being an educator has helped me a lot in accepting that as normal. After all, for many centuries, students have read Plato or Maimonides or Shakespeare. Lo and behold, each generation of students comes to much the same understandings as their predecessors. It is the role of an educator to foster those understandings, to encourage those “aha” moments, not to deflate the enthusiasm of newly enlightened readers that what they are now “getting” is old news.

6. The Best Philanthropy Educators have had Multi-Sector Experience: Over the years of organizing courses and attending conferences, I learned something about what kind of background is most likely to produce an effective educator for fellow funders. Of course, good communication skills matter, but beyond that is having a deep range of experience. Those who are identified with only a single, albeit prestigious, foundation may have interesting things to say to the field, but rarely have the scope of experience to respond to the predictable array of funders in any seminar, workshop, or classroom.

7. My Biggest Frustration: This has been my broken record for a long time, and I fear will be long after I disappear from this scene.

It is unconscionable that there is no credential, no formal barrier to professional entry to this field. As suggested in paragraph 2 above, we give away billions of dollars, we are responsible for the well-being of an entire sector, and we can have real influence on public policy. Yet, unlike virtually every other professional field, including fundraisers, one need not know anything about the law, or best practices, or philanthro-ethics to be hired or have a career as a philanthropy consultant, advisor, or program officer. Of course, one cannot legislate what one does with one’s own money, but I believe that there should be a widely recognized credential for professionals that shows that one has knowledge of the basics. [I am not arguing that it need be a precondition to being hired since there are many good reasons to hire folks with other competencies and expertise, but it should be an expectation of every grantmaking professional within the first few years in the field.]

So that no one misunderstands: there is no one right way to give money, no one right set of priorities, etc. But there are many wrong ways. And any of us who have been in this field for a long time know that. I may have my own opinions about what education should inform the credential I would like to see, and I am more than happy to participate in a long overdue discussion since my opinions may not be adequate or even the emerging consensus. This will only work if the field as a whole endorses the validity of a credential and buys into certain core knowledge. [End of soapbox]

8. My Second Biggest Frustration: This one is more personal. I have been surprised by how many, especially those connected to affinity organizations in our field, are suspicious of my motivations to teach, mentor, and provide career advice. I guess I must bear some of the responsibility for this in the way I communicate my commitment, but I have learned that many seem to believe that I teach funders primarily as a way to generate personal business. It is certainly true that over the 20 years, a few, but only a very few of those who took university-based courses have contracted with me for some advisory help, but if I were teaching these courses with that purpose, I certainly have failed and would have stopped a long time ago. [In fact, for a long time, until I was dissuaded from doing so, if a “student” approached me, I would insist on giving the names of at least 2 other advisory firms to whom they should speak.] In any case, after 20 years, I wish I understood why that suspicion seems to persist.

9. Teaching is a superb discipline for keeping your thinking fresh, your knowledge up to date, and your ability to communicate well honed. No, this is not limited to philanthropy education – it is descriptive of what every good educator knows. In my case, teaching has had a salutary impact on my role as a funder, trustee, advisor, and speaker – and each of those roles has had a positive impact on my teaching.

Our field of philanthropy really can and does matter a lot, well beyond what our combined financial assets can accomplish. It is important that we set standards of thoughtfulness, ethics, and self-awareness in doing so. It has been a true honor and privilege to be recognized as someone who has helped reinforce those standards by imparting knowledge in and to my own field in so many settings around the world.

20 years…and counting.

#361 Two Real-Life Lessons for Funders

February 10th, 2020

Richard Marker

Long time readers know that I don’t ever name names. In the case of this post, I had to think about it for a while but then decided that, even this time, I won’t. Trust me, you would know them, and it would make the anecdotes I am about to share more real, but it might derail from my main points. So…

Anecdote #1: I went to an office supply store to pick up a couple of items. The amount wasn’t that great, so I decided to pay with cash. How luddite of me! Unfortunately, the person who checked me out miscounted the change by a few dollars. Thus, began an episode worthy of an old comedy skit.

The aforementioned salesperson couldn’t figure out how to get the register open again or even how much the correct change was supposed to be. She assured me that she has a PhD [she mentioned a first-rate university – also not named here in order to save them embarrassment] and since she only worked at the store part time, she didn’t know how the system worked. [Nor, it appears, did she know basic arithmetic.] So, she called a supervisor over to help. This new person needed to get the receipt in order to proceed but it was an e-receipt, so there wasn’t one to look at. She too couldn’t figure out how to open the machine, nor could she figure out the correct change [despite taking out a pen and paper to calculate it]. The two people at the register then called someone else, a super-supervisor I assume, who started all over again. She then went to another register to do some machinations related to my purchase, and about 10 minutes later returned, entered my purchases all over again, and gave me the $4.58 change.

All told, this process of checking out 3 small items took over 45 minutes.

I found myself wondering what would have happened if this had been a nonprofit that didn’t receive the correct amount promised by a foundation. Would they be dissed if they asked? Or given the run around to protect an administrative snafu? Or go through hoops to collect what had been contractually promised? Sadly, I have seen all of this.

Which brings me to anecdote #2.

It really wasn’t my day at all. That very same day, I needed to deal with a national phone and wireless company regarding a problem with my log-in. Somehow, the code had been compromised. It took me a while to determine the cause: I had 2 separate arrangements with this company and needed to make a billing change with one. Unfortunately, I ultimately realized, the agent on the phone had made changes to the wrong account and in so doing nullified my log-in.

Thus began an even longer process of correcting all of this. First I worked hard to locate a phone number. When I called, after endless phone menu options, I finally got to a real-life agent, who asked for all of my info, and them determined that I had to talk to someone else. The next person asked for all of the same info and also then said that it was the wrong department. The final live agent informed me, after gathering all of the very same information, that the firm no longer allowed one to address my issues through a live person – I had to make all the changes online but could consult the chat line on the site if I needed help. Eventually, the password was reset, and I was able to activate service without which it would have been impossible to function in this post-modern often surreal world. Total time for this entire exchange, almost 2 hours!

I guess I have a one-track mind since, here again, I found myself imagining the experience of a small non-profit trying to get some information from a large bureaucratic foundation. Calls to their office are deflected to the website Their website affirms that their on-line process is the way in which a grant-seeker is expected to communicate but one may have to proceed through numerous menu options before, hopefully, finding out the one bit of needed information.

One often hears stories like this from npo’s/ngo’s challenged by their experience with inscrutable foundations with impenetrable fortresses. Not every foundation has yet adopted best practices or gone through a CEP type self-analysis.

Now, let me be very fair: I used to head a foundation and was regularly bombarded by inappropriate or nonsense inquiries, or by those who simply didn’t want to accept what was stated clearly about our parameters and priorities, or even by our decisions. The grant seeker is not always correct; and surely not all of us are heartless bureaucrats; nor are all of our systems arcane.

But my experience with the two household-name companies with which I was trying to do routine business reminded me that we should not automatically dismiss what we might hear from those who seek our funds about what it is like to do business with us. We need to listen. They might be right.

#360 Is Money a Guarantor of Success? A Question for Funders

December 5th, 2019

Richard Marker

An earlier version of this post led some readers to infer that this was about only one incident in the philanthropy world – and read it “personally.” In fact, I intended my introduction to give an example of tendency in our philanthropy sector to sometimes be more impressed by the resources than the results. In order to eliminate the potential for it appearing to be a judgement on any one case, I have re-written this.

There is a tendency in the media, and even within our philanthropy field, to be blinded by big bucks. A nine figure gift is guaranteed to get a headline and other larger gifts are likely to get outsize attention. An Accompanying articles will mention the recipient organizations and how the money will be used in general terms, but rarely will those articles address whether the recipient is well-suited to implement such a gift, have a proven track record in the field, have a particular theory of change that makes this a potentially transformative gift, or even who else in that field may be doing important, if unsung, work in the same field.

In fact, if one looks closely at most of those gifts, we find that numerous organizations have been working in those sectors for a while, some for years. A few of these may have made some real impact, others not so much. Few, if any, though, were launched with the funding of this new gift and none ever received the attention this new gift has received. Indeed, if one were not familiar with the sector, one might conclude that a newly well endowed organization is about to plow virgin land even though it has yet to announce exactly what it intends to do. It is as if money talks more than accomplishment.

This is not a new phenomenon and represents a cautionary tale for those of us in the funding sphere. There are funders who always prefer an exciting new venture – assuming either that “new” must be better than “old” or, perhaps, if the “old” organizations really knew what they were doing, there wouldn’t have been the need for a new one. Indeed, sometimes that is true. And it has been my privilege, both as a CEO of a foundation and a trustee of others and even as a personal funder, to have been involved in launching some extraordinary and creative start-ups that really did push their respective fields into new and exciting areas.

But not always. When I was the CEO of a foundation, we also made some flawed decisions. Sometimes we overlooked quite successful, if un-showy, organizations in favor of those with more sizzle and pizzazz. Sometimes we pushed wonderful boutique organizations to reach for scale, in the process forcing them to lose the uniqueness that got them there – and all too often destroying them in the process. We occasionally were so committed to “transformation” that we underestimated the long-lasting on the ground, efforts that are always indispensable for any change to have staying power. And, let’s be honest, we too often were taken with early stage charisma more than solid competence and creativity.

That we were not alone in these missteps does not exempt us from responsibility. All too often these errors were because I was taking the lead from others who seemed to have done their due diligence. If colleagues I respected were funding them, why should I spend my time repeating what they had presumably done? Moreover, I had plenty of other due diligence or monitoring or relationship building to attend to. Why not trust those who had already made informed affirmative – or negative – decisions? Yes, even funders have a tendency toward a herd mentality. [Once, following the lead of a goodly number of fellow funders, many of whom we had previously partnered with, we made a grant to what seemed to be a successful and innovative program. Almost immediately I found the executive to be intolerable, the organization unwilling to submit required financial reports, and, literally from the day they received their commitment, they were asking to renegotiate for more. Finally, I called a couple of other funders to ask if that was their experience as well. One said: “We hold our nose and fund them anyway.” Mea culpa. I could and should have discovered that before encouraging our funding.]

There are lessons that have served me well in making subsequent judgments about grantees. More, they have served me well in reminding me of the essential humility that needs to accompany all of our thinking as funders. After all, when we fund, we fund the future, and no matter how evidence-driven or seemingly a no-brainer, nothing about the future is guaranteed. And if we are trying to fund “change”, all the more so.

I don’t want to trivialize or be dismissive of the advantage of resources. After all, far too many non-profits trying to do good and important work have been handcuffed by profoundly inadequate resources. And, there are still too many funders who hold that against them – as if poverty – even among non-profits – must be deserved and even punished. [This was written but not published before the shameful cutbacks in SNAP funding announced by our heartless pseudo US administration. In one heartless stroke, 700,000 people will lose coverage. Those of us in the philanthropy world should take note and make sure we aren’t implicitly doing the same thing in how we treat under-resourced nonprofits.]

Our field has a tendency to forget that the very term “not for profit” was coined precisely because it assumed that social service work will never be profitable – or generate surpluses. There is no doubt that cash reserves of 3 to 6 months are signs of a healthy organization; but, with government cutbacks or a history of hand-to-mouth finances, not every organization providing quality on the ground human services can imagine that kind of financial security that we as funders prefer. Should we as funders penalize them for that? This goes beyond the current, long overdue, commitment of many in our field to provide operating support; it recognizes the fragility that defines a very high percentage of on the ground nonprofits.

It is true that greater resources can allow greater impact. Sometimes those resources are hidden from view but allow an organization to have a healthy infrastructure that ensures increased effectiveness. Sometimes those resources are very visible – allowing marketing muscle to bring attention of a cause to the public so that responsible public policy can be enacted. [The reverse is also true, of course.] And sometimes sufficient resources can fund continuing r & d so that successful organizations can continue to be successful. And sometimes it is because there are only a very few organizations with the size and capacity to absorb mega gifts.

But it is also true that too often we are blinded by the money part and pay far too little attention to the underlying theories of change or whether those funds are going to where the needs are greatest or whether they will be used as effectively as a less well-funded organization might…

Around this time of year, our media celebrate voluntarism, the grassroots work that so many do throughout the year, the necessary boots on the ground of so much social service. They rarely talk about the professional staff, often underpaid, who make it happen and whose work goes unrecognized the remaining 51 weeks of the year.

It is a fair bet that the same media will give headline attention to a mega gift at any time of the year. That coverage is typically of the voyeuristic type, more engaged with the donor than on the needs the gift is supposed to address. There has been a good deal written in the last couple of years about the implications of the concentration of wealth for the nonprofit sector. Those of us in the philanthropy field are discussing the issues of equity at every conference. However, I daresay that most mainstream media haven’t paid that much attention to our heartfelt self examinations.

At this time of year, let’s celebrate generosity in all of its forms and at every level. Let’s also not get blinded by outsized gifts that may or may not accomplish what is really needed. Money talks and money matters, but in the field of real human need and social inequity, money alone does not guarantee success.

#344 Updated -Non-Profit Leadership and Staffing: in Response to Chronicle, Sept 2019

September 12th, 2019

Richard Marker

Upon returning from a recent vacation, I saw that the lead article in the current Chronicle of Philanthropy addresses issues of staffing, retention, and compensation in the non-profit sector. This posting, partially revised, from 7 July 2019 speaks to some of those issues and includes a few practical suggestions not mentioned in the Chronicle article. I hope these will be welcome additions to an important discourse. We funders must recognize the essential nature of quality staffing to accomplish the extraordinarily important work we enable. I particularly call your attention to sections #3, 4, 5, and 7.
…..

A colleague recently expressed surprise that I had not submitted a response to an RFP for leadership training for a foundation board that was posted prominently by a national philanthropy organization. I demurred saying that I really am not an expert on “leadership.” The colleague’s response was pretty strong: “Are you kidding? Of course, you are” and went on to remind me of my own career path.

My professional world over the last quarter century has been fully in the area of grantmaking, funder education, and advising funders and families about how to make informed, ethical, and wise decisions. But the colleague reminded me that I have a long history of volunteer leadership roles, and professional work advising and teaching foundation leadership around the world, and, also have held senior executive and supervisory roles. I acknowledged that I had both relevant experience and some well-developed thoughts about leadership.

For what it is worth, I calculated that, over the course of my career, I have served on at least 60 boards and chaired 12. [It is a role I relish and would be delighted to join additional foundation boards.] Moreover, when I was an executive, I supervised many dozens of professionals and organizations around the world. While I am in the autumn of my career and these roles have been reduced, there are some learnings that have emerged along the way – a few of which may be worth sharing here.

1. I learned early on that there are 2 types of leadership – “ascribed” and “earned.” The former emerges out of “position” – and is often top down; the latter is what others attribute to you independent of the formal “position.” One would like to think that one can hold both roles simultaneously, but it doesn’t automatically follow and isn’t easy.

2. Being CEO or a professional supervisor carries a certain authority. Indeed, one has that ascribed position because there is assumed confidence that one can lead a business, organization, or foundation or some part of one. When one does this well, the staff, board, other stakeholders, and peers all respect the culture, style, and vision of the leader. This confidence must be earned. Without it, a leader has power but only ambivalent or reluctant followers or employees.

3. The empowerment and enfranchisement of others is typically the most effective long-term way to earn that respect. Top-down exercise of power or charismatic style may work for a while, but it rarely inspires genuine long-term loyalty or deep-seated respect. And they certainly do not cultivate future leadership and decision making, indispensable attributes for the long-term viability of any business or organization. [If you see me, ask me about my sobering discovery, very early in my career, about the flaws of charismatic leadership.]

4. The courage to stand for values in the face of organizational challenges is often a measure of how deeply a leader is committed to earning that role. Organizational change matters, and is always disruptive, but when those changes are only because it may be popular or because a few more powerful folks demand it, it may be expeditious but rarely efficacious. [A personal note: Much to my real surprise, in recent months several people told me that what they remember most about my various leadership roles – both as a professional and as a volunteer leader – were the times I stood fast on principle, or told “truth to power” – even when it was unpopular or at professionally cost/risk. Those anecdotes have touched me deeply.]

In this context, perhaps it is important to give an illustration: When I became CEO of a regional non-profit based in Chicago in 1982, I learned that not only was my salary low by any comparative local and national standard, but every single staff person’s salary was way below their comparable standards – and those standards themselves were barely manageable. The board thought that they were paying normal salaries. When I demonstrated the discrepancies, they offered to immediately bring my salary up to national norms. I asked if everyone’s salary would be raised and they said no. I refused to accept my increase until the entire staff received an appropriate increase. It took a full year, but it happened. I wonder what kind of leadership credibility I would have had if I had been the only beneficiary of a much-deserved salary correction!!!!

I also insisted that the increase was not to be a one-time bonus but rather an adjustment to everyone’s base salary. Otherwise annual incremental increases would be calculated on a much lower base.

5. If having a moral compass matters a lot, leadership also requires a profound empathy. That empathy needs to be manifest to those whom one leads. In these days of attention to staff retention and cultivation, perhaps two very concrete examples [of many techniques I used] will illustrate:

a. Career Pathing: When I was a CEO or supervisory executive, I offered to meet with every professional every year to help update their resumes. Why? Well, for one, virtually every professional thinks about his/her next career step; I know I did. Why should I begrudge that ambition in others? No, I didn’t want those colleagues to leave but even more I didn’t want them sneaking around thinking they were disloyal. An unintended consequence was that I often learned that many professionals were 80-90% satisfied but one element of their job was really bothering them. By switching that one assignment with another professional with a different set of priorities, both could be more gratified in their work, and remain longer than they originally intended.

b. Professional Development: In the non-profit sphere, personnel is almost always the largest budget line. So, if there are budget pressures, that is the first place to turn. One line that always seemed vulnerable was the one for professional development. Yet I knew that it was invaluable to the long-term strength of any organization as well as to the growth of individuals within it. Therefore, working with board leadership, we moved that item from being a separate budget line to an assured personnel benefit – in the same category as health benefits. It demonstrated our commitment to how important this was and protected it from budget cutters who saw conferences and staff training as a dispensable luxury item.

6. Effective leadership requires another balancing act as well: keeping an eye on the long term while understanding the daily demands on all elements of one’s organization or business. A visionary who only sees the future may appear charismatic but can often undercut those who need to do the work. One who is only committed to the daily organizational needs may be an outstanding Operating Officer, but rarely can lead the organization into the vagaries and potentialities of the future. This combination of skills and attributes is rarely easy, but, when achieved, it is the mark of outstanding and exemplary leadership.

7. Culture is the grout that holds the organizational edifice together. For example, espousing empowerment and then overruling decisions is likely to inspire only safe behaviors and discourage risk taking. Bragging about staff quality and then always hiring from outside for key positions erodes loyalty and casts doubt on your sincerity. Endorsing the need for equity yet continuing to pay differential salaries to women or minorities is suspect at best. When there is a discrepancy in any of these areas, there is an erosion of “earned” leadership that not only weakens the leader but takes a toll on the business or organization as well.

It is trite to say that leadership is both an art and a science. Typically, it is hard not because of our intentions but because of our blind spots – every single one of us has them.

As we look around the world today, we find a resurgence of a destructive, non-empathetic, self-satisfying leadership, and not only here in the USA. Whether because of blind spots or megalomania, they are the wrong kinds of leaders for long term societal thriving, and a counterproductive paradigm of good leadership. Someday, soon I hope, they will be replaced.

In the meantime, whether on the national, local, or organizational level, leadership informed by these insights learned over 5 decades may help advise the next generations of leaders in every sector.

#351 – Participatory Grantmaking: 3 Years In – What Have We Learned

September 11th, 2019

Richard Marker

It was 3 years ago when a group of funders and advocacy groups announced the Participatory Grantmaking Initiative. It was founded on a key underlying philanthro-ethical principle – now cleverly articulated in the pithy statement: “Nothing about us without us.”

The initiative reminded funders that our power can distort our perceptions of what real needs are and our judgment about allocation of our funds. Underneath our careful diligence we are susceptible to the very same predispositions and biases as anyone else. If those most directly impacted, or at least those responsible for implementing our initiatives, are not involved in the decisions, how can we be sure that we are acting responsibly or equitably?

As our field has finally recognized, our race and ethnicity [and to a slightly lesser extent, our gender] does not always reflect those we are serving or funding. [By coincidence, this was written but not published before a recent Chronicle of Philanthropy article underscoring this point.] And, unless we are funding elite schools and museums, it is certainly true that our economic status is far removed from the at-risk or at-need populations we aim to serve. It is surely a no-brainer that there are perspectives that need to be in the room and a long overdue corrective to the all too pervasive top down process.

But whose room, what roles, which decisions are far from clear. Should or must decision making extend to the board room? Do potential grantees have a disqualifying conflict of interest if they are also decision makers? [Recusal is an obvious technical answer, but we know that if one is a decision maker, even if one doesn’t vote, her/his presence is there.] And, bottom line, empowerment aside, how do we know that who is in the room actually guarantees greater impact? Therein lies the challenge.

These are difficult questions to ask these days for several reasons:

1. At a time when all questions, yes even in our field, are viewed as political, even asking this question runs the risk of implying that I am opposed to “participatory grantmaking.” So, let me set my record straight: I have been on boards which used variations of this form of grantmaking for a long time – long before the phrase became popular. Unquestionably we did better grantmaking because of having on the ground experts in the room. No question. Moreover, as a philanthro-ethicist, I suspect that several thousand funders who have taken courses or workshops with me can attest that I have been a long-time advocate that there need to be many means of countering the power imbalances intrinsic to our field – sharing decision-making is only one.

2. A more practical challenge is determining which stakeholders should be invited into the room. We have learned from program evaluators that determining which stakeholders need to be heard is often the most challenging part of any evaluation process. If that is hard for professional evaluators, consider the challenge to foundations and other funders who want to do the right thing and include the best informants but have limited resources and time to do that research. How do they avoid the challenges that they may have cherry picked their favorites or overlooked an important group?

3. A more far reaching question is what impact matters. Often in the most intractable systemic issues, funders can have perspectives that local service deliverers cannot have. That doesn’t mean that the service deliverers are wrong – but many of them have demanding claims on their time and resources that don’t allow or justify long term thinking. How one balances those two competing claims is not easy, and the impact measures themselves may compete. At the very least, it should force us to determine which interventions are most in line with our competencies and goals, and at the same time encourage us to help think through how the other needs can best be met.

For example, there is no systemic or societal issue that can be solved by a single intervention or funding approach. There are urgent needs for immediate responses to those who are ill or homeless or hungry or displaced. At the same time, all of those require a responsive public policy that helps ameliorate the underlying issues that a short-term intervention cannot. Funders with a commitment to address systemic issues know that advocacy and inter-sector collaborations are indispensable. It is perfectly reasonable to choose which approach is best for any individual funder, but we are not exempt for doing so with an alignment with those who are addressing the needs we cannot.

Impact measures – and which stakeholders should participate in these decisions – depend very much on where one fits on the continuum.

4. Underneath all of this is the question of the larger role of independent voluntary philanthropy in an open society. If, as many argue with a good deal of historic legitimacy, it is to fill in the gaping gaps that government chooses not to fund, then there is no question that there should be a mandate to engage as many stakeholders as possible in decision making. But if, as many others have argued, private philanthropy is society’s risk capital, not subject to plebiscite or opinion polls, then one might argue that it needs to be as free as possible to take those risks and stakeholders should be informants but not have a veto on funding choices. Of course, those decisions should be done in responsible, ethical, informed, and humble ways, but to take those risks is precisely the unique role that no other institution can play.

To return to the key point: our field, created out of privilege, has a lot to answer for. Whether intentionally or not, we have a long history of not treating our potential grantees as we should and knowing how to understand real needs and equity in making our decisions. Participatory Grantmaking is surely one of the correctives we should make to is to bring stakeholders into the funding process. As we see, even with the best of intentions, that approach is often easier articulated than implemented.

#349 The ICYMI Series – from June 2012 – 10 Rules for Funder Ethics

August 28th, 2019

Richard Marker

This post is another that is worth revisiting several years since its first publication. I have made some very modest revisions to account for changes in what I am doing where, but otherwise it is intact. Your thoughts are welcome.
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A few weeks ago, a philanthropist friend forwarded an op-ed regarding ethics for funders. [I like to give credit where credit is due, but the source of the op-ed wasn’t included.]

In reading it, I found myself amused – not because the author was off base, but because it was so clearly written by a fundraising expert who was expressing some exasperation with the overreach of some funders. It is quite true that there are ethical limits to what a funder and grantmaker can request and require from a grantee, and it is useful for funders to hear how they are perceived by the other side of the table. But in many ways, the author’s points are too easy and in other other ways do not go deep enough into the ethical and best practice issues between funders and grantees.

I have been teaching funders since 2000, for many years at NYU’s Academy for Funder Education, now at UPenn’s Center for High Impact Philanthropy, and through our own Institute for Wise Philanthropy. In those courses, we spend a great deal of time unpacking this very complex area. This has also been a key topic of interest in several recent conferences of foundations and grantmakers. Here are 10 key points to help funders stay on the right side of right:

1. Power Imbalance Most funders do not willfully or purposely abuse the role of funder although, to be sure, some do and some do egregiously. Most however are simply unaware of the appropriate boundaries and cross them innocently. Most of these transgressions occur because of an insufficient awareness of the implicit power imbalance and the concomitant and enthusiastic willingness of a potential grantee to do whatever possible to encourage a gift or grant.

2. Philanthropy Law Most funders know the basics of philanthropy law but are less clear on their ramifications in their daily application. For but one example, “self dealing”, always illegal, is not the same as “conflict of interest” which is more nuanced and subject to board-determined policy.

3. Law vs Ethics What is legal is not always the most ethical. For example, the law permits a foundation to pay an attorney or investment manager who sits on its board. Many of us in the field feel that this creates ethical dilemmas for a board’s decision-making autonomy. I for one feel strongly that best practice should be to separate those roles – either one sits on the board or is a compensated professional but not both at the same time. This matter has little to do with funder-grantee relations but a great deal about internal foundation decision-making.

4. Interlocking Boards One area about which there is conflicting consensus is the propriety of a foundation staff or board member sitting on the board of a grantee or vice-versa. We have developed some guidelines to help foundations figure out what makes sense for them. Suffice it to say that there should be a clear alignment between grantmaking process and the policy regarding interlocking boards.
5. Honoring Commitments.. Sad to say, too many funders don’t fully grasp that public benefit organizations rely on receiving their grants on the dates promised. They pay staff, rent space, run programs anticipating that income. A grant letter should be viewed as binding on both the grantee and funder. This problem is more typically evident among unstaffed or outsourced foundations, but it should never be. It is a commitment and it is an ethical lapse not to pay on time.

6. Transparency of Procedure. Many of us have written about what transparency might mean in the contemporary grantmaking world; it has become the subject of much debate. One thing which should not be subject to debate is the expectation that a funding organization makes its procedures known and clear. That process can range from stating that no unsolicited proposals will be accepted, or that there are very specific conditions for consideration or anything in between. An organization searching for funding should be able to ascertain in a clear way who is eligible, what information will be required and when, when they can expect to be notified of decisions, etc. There are no ethical mandates that any one way of doing these things is superior to another, but there are very clear ones that processes should be consistent and evident.

There are numerous other important ethics and best practice issues which every funder should address, and in many cases establish foundation policies. But since the issue of funder – grantee relations is the one which precipitated this post and garners the most attention, let’s turn to some of the sticky issues:

7. Funding for Success. The challenge for a funder is to give the most effective amount toward a project or organization to provide the greatest likelihood that the project will succeed – or at least come close to their expectations. One way NOT to do that is to automatically discount any request. Doing so may save a funder money in the short run but may well guarantee mediocrity in the long run. Now, to be fair to funders, non-profits have been known to pad budgets and a funder often has to work hard to figure out what is really necessary or appropriate. But the key to setting the right amount is to be comfortable that the amount given will make the likelihood of success greater. It is also true that inexperienced organizations may ask for too little – or in their naivete don’t realize what will really be necessary. Such miscalculation from a large university or museum is inexcusable; from a small neighborhood center or start-up may be understandable. This organization may well be understaffed and each of the staff has multiple responsibilities. If one thinks their idea or project is worthy, no reason to punish their insufficient training. Help them know what they understated or omitted. While on the surface this may not appear to be an ethical issue, it veers into it if a funder’s funding pattern makes failure or mediocrity likely. It also underscores the need for those who solicit funds to not play games with exaggerated claims and padded budgeting.

8 Staff and Benefits. Another area where funders, mostly innocently, tend to compound a the challenges for non profit success is to have conflicting expectations. How often do we hear funders bemoan the inability of the sector to retain the best and brightest while at the same time putting pressure on hard pressed groups to cut their budgets? If, say, 80% of a budget is staff, what ends up being cut is salary, fringes, or f.t.e.’s. Funders should hold their grantees to standards of personnel practices which they would expect of a quality run organization, and fund accordingly. [While much has been written about overpayment of a few executives in this sector, in fact the issue of underpayment is far more common.]

9.Leading Them On -or, the Walking $ Sign. Site visits are wonderful ways for a funder to learn about an organization. Yet nothing raises the anticipation level higher than the word that “a funder is coming: a funder is coming”. Organizational execs send memos to their staff to the effect: “clean up your room and dress up”. A site visit makes all the sense in the world if there are really open questions about a grant request or as a way to monitor one already given which can be answered best by seeing for oneself. By all means. But funders need to be aware that when they walk into a room they are not simply flies on the wall, but rather the center of attention. People stop what they are doing, or adjust their activities for your benefit. [I could tell so many stories here, but I imagine that any experienced funder has his or her own litany.] If there is no real decision-making or monitoring, or, especially, if you have no real interest in funding a particular place or project, look for less intrusive ways to satisfy your philanthropic curiosity. Your very presence will lead a non-profit into the assumption that you are open to a proposal or have made a decision to fund them.

10. Expectations and Relationship After the Grant is Given. In my experience, this is the area most fraught with potential frustration. Funders should clarify, when a grant is given, what they expect. Whether this has to do with monitoring or evaluation or recognition or any of a long list of other relationship areas, funders have an obligation to not leave a grantee guessing. This will allow a recipient to give you what you want to know – or to determine if you are overreaching. [To take an extreme example, a $10,000 gift to a major university is not going to get a named chair; the same gift to a food pantry may be the largest gift in its history. The responses and expectations should be quite different. Similarly, it is important for funders to set expectations which are proportional to the size of the gift and the abilities of an organization to respond. A hospital or university or major museum should have no problem producing reports in a timely manner; there should be more reduced expectations from a small 2 or 3 person start-up.

This list in no way defines all of the ethical and best practice issues for funders. It is not even the full list of what we cover in working with and teaching funders, and, indeed, in the years since this was first written, the complex issue of equity and inclusion have moved to the center of our discourse. In a subsequent postings, I have explored the charged area of intervention by a funder into the work, mission, or priorities of a grantee. Until then, I invite you to add your topics to this list and to make this a robust discussion so that we can enhance the quality and standards of those who are entrusted with funds to make the world better.