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Posts from the ‘Equity and Ethics’ Category

#353 – A Philanthro-ethics Choice of Long Ago – Was I Wrong?

October 16th, 2019

Richard Marker

Over the last few years, the underlying ethical challenges that all of us, on both sides of the philanthropy table, face have surfaced because of far too many abuses and embarrassments in our sector. Sad, indeed. In its most recent issue, the Chronicle of Philanthropy focuses our attention on those ethical dilemmas faced by fundraisers. As most readers know, my own work on philanthro-ethics focuses on the other side, on the ethical responsibilities on the funder side of the table but the issue that stimulated this post goes back a few professional incarnations ago.

As many of you know, before I was on the funder side full time, I had a long run of executive roles on the nonprofit side. Those roles well positioned me for what I have done for the last quarter century as a funder: executives in the nonprofit sector are faced with choices between breadth and depth, the recruitment and support for professionals with great responsibilities with all too few resources, the need to understand competing stakeholders, and balancing the measures of short term successes with long term impact are all the daily work of non-profit CEO’s. Sounds a lot like the issues we funders have as well.

In the early 80’s to mid-90’s, I had CEO responsibilities for many programs with their own facilities. None of them had deferred maintenance funds, most were inadequately designed or too small for their current and projected utilization, or simply needed to be replaced, and the expansion of our system called for several new facilities. This challenge was not unique to the Hillel Foundation – it characterized a huge swath of nonprofit facilities from universities to churches and everything in between. All too many were built in the 40’s, 50’s, and 60’s by institutions so happy to get capital gifts, any capital gifts, that they never planned for or insisted upon the long-term needs of those facilities. But just because it was not a unique problem didn’t make it any less urgent. [Much of this has changed as many more funders are willing to provide much larger capital gifts to all sorts of institutions with greater sophisticated understanding of what longer term needs are.]

In another context, I would be happy to write more extensively about how we, largely successfully, managed this and set up the conditions that would preempt these capital challenges from continuing into the future. Below I mention one. But for this post I would like to tell only about one approach that I found easy to dismiss at the time but wonder how one might respond today.

One day, someone scheduled an appointment to discuss a proposal. This fellow, whose name I have long forgotten, had developed a particular expertise. He facilitated getting bond funding for non-profit organizations, especially those whose size put them below the normal bond radar. While our needs were in the $m’s, he would fold “our” bond request into a much larger public bond offering of a much greater amount. These publicly issued bonds had low interest rates and would provide all of the capital we needed for re-hab and construction projects in one easy step. Universities and hospitals and other large institutions do this all the time; no reason, he argued, why relatively smaller non-profits shouldn’t benefit as well.

But here was the kicker that turned me off immediately: when I pointed out that I couldn’t see how we would be able to repay the bond amounts in a timely manner, he tried to seal the deal by assuring me that the bonds would never really have to be re-paid. If memory serves, he said that bond holders understood the risks when buying the bonds and they would be very unlikely to come after a non-profit like ours for non-payment.

It struck me at the time as more than a bit sleazy and I politely thanked him and let the proposal finds its way to a circular file. Eventually, we did get the capital for most of our projects, and by then the board and I had developed a policy that no capital project would be accepted without an accompanying endowment. [Whatever one thinks about endowments in general, it is clear that facilities have new, predictable, and substantial costs over time that should be accounted for from the very beginning. It was a gutsy but persuasive policy that worked.]

It is now well over 3 decades since that episode. In my current roles which are now restricted to the funder side, I teach about using PRI’s to accomplish philanthropic goals. To remind those who may not be familiar with the term, a Program Related Investment is money taken from the grants side of a foundation’s ledger that can be given with the desire for or expectation of a financial return. That might be an investment in a for-profit firm aligned with the grantmaking mission of a foundation or it can be a loan to a grantee. A straightforward example of a PRI: a non-profit has a short-term cash flow crisis for any number of legitimate reasons. A foundation chooses to lend the non-profit sufficient capital to tide it over at very favorable terms. If the anticipated money comes in to the non-profit, the loan is repaid. A foundation then must re-grant that money within a certain time frame. But should the non-profit not repay the loan, the foundation must reclassify that loan as a “grant” to that non-profit. [There are more technical issues, but for our purposes this example should suffice.]

In thinking about PRI’s, I began wondering if there might be a similarity between a foundation PRI loan and a public bond. Both are for public good, both provide funds that a nonprofit desperately needs, and both carry the risk of non-repayment. [Bonds are rated according to that risk.]

To be sure, there are very different decision-making processes, different stakeholders, and different legal requirements. But in many ways there are more similarities.

Now let it be said that in the example I gave, the sleaze factor was quite relevant. It seemed ethically problematic that the sales pitch so quickly affirmed that one could take these funds and not feel any repayment responsibility. From my perspective at the time, that was an ethical non-starter.

But given what I now know about PRI’s, I wonder: was I so blinded by the sales affect that I ignored the potential effect? Had I underestimated that the bond raters and the bond buyers would do their own due diligence to determine if we would have been worthy? Had I not overlooked the pattern of philanthropic giving that rewards success – had we demonstrated success in our massive [for us] facility projects might that have changed the giving level of current and potential donors, perhaps making those repayment obligations less elusive? Had I applied a sincere but irrelevant ethics screen that delayed much needed upgrades to our facilities and service systems?

Of course, PRI’s were not very evident in those days, and hindsight is… well, you know. During my time in those executive roles, there was a long litany of ethical, moral, and even legal issues that required a clear ethics grounding if I were to do my job responsibly; if my antennae were too sensitive in this area, it was because I required them in many others.

However, ethics, unlike morality, is often choosing between two credible and often legitimate options. I now wonder if I was too quick to see only one.

#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.
…..

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.

#345 Accountability Begins… Our National Shame

July 8th, 2019

Richard Marker

An alert to those who only read my posts for their thoughts on philanthropy. This is another one that deals with politics. If others in the philanthropy world may feel that it leads to increased advocacy, so be it.

Many of you know that one of my life changing experiences was having been in Berlin on 9 November 1989, known widely as the day the Wall came down. I have written about my thoughts on that day in the past; this piece is inspired by the larger context of my visit to Germany that ended on that date.

1989 was the second generation after WWII. Sadly there are deniers today who choose to not believe the facts of the German depravity and culpability that led to the Holocaust of 6 million Jews, and 5 million others, but the Germans knew then [and still do!] that it was not hyperbole, and represented national shame, embarrassment, and an ineradicable blot on their place in history.

My visit was one of many that the then West German government sponsored to demonstrate that they did not ignore this shame and were trying, in the most institutional ways that they could, to internalize their own commitment to “never again.” Our small group were young-ish leaders in the Jewish world of North America. The 3 weeks were exhausting and powerful.

There was no attempt to sugarcoat German history or to claim that it was unrelated to their present. Thus we saw remnants of the Holocaust institutions, the earliest concentration camps and preliminary gas chambers, the memorials, the archives of the shocking official propaganda developed to shape German opinion. And much more.

Because 1989 was just beyond the 50-year anniversary of the Kristallnacht Pogroms, there were exhibits in libraries, schools, town centers, and elsewhere. We saw how grandchildren confronted their grandparents, how people outed themselves as having Jewish relatives that they denied or rejected to protect themselves. Two generations were enough time for people with memory to come clean, and for those who had not yet been born to learn what their unchosen legacy was all about.

The trip, though, was not only about the Holocaust and German culpability. It was very much about how a nation was re-thinking itself, rebuilding itself, contemplating a new world order, and trying to achieve the delicate balance between a history of German excellence in arts, science, literature, education, music, and more – with this abysmal period. [We also visited places that are chapter headings in Jewish thought over a thousand-year period, but that is for another article.]

We learned that German education mandates Holocaust education and even site visits to “camps.” In those days, there were still enough survivors to have presentations in every school by those who could relate their painful and horrific memories.

We also learned, and we are now getting to the essential point of this essay, that soldiers were taught that they must resist immoral, inhumane orders. Just because something is ordered doesn’t mean one should obey, and just because something is legal doesn’t make it right. The military system taught every single soldier of these distinctions. After all, they knew, it wasn’t only a depraved despotic leader that caused these deaths and the suffering of the Shoah, but it could only happen because of those who decided to follow those orders. I am not an expert on military training or how this is or isn’t taught elsewhere in the world, but I confess that I was profoundly moved by a nation that taught its own civil disobedience as the highest form of civic duty.

It is unnecessary to point out the immoral, dishonest, questionably legal actions of the person occupying the seat of the presidency of the United States today. He is certainly not the first despot in history – and sadly he won’t be the last. But we do need to take stock of what allows so many of our fellow citizens to feel that this immorality and dishonesty doesn’t matter. And we do need to take stock of what allows people, wearing uniforms and acting in the name of this country, to do despicable things that we hope they know are wrong.

After WWII we learned that “just following orders” is not a sufficient alibi when ordered to do immoral and inhumane acts. International law has been enacted to insist on that. But what have we not done in the US education system – of the military or of ICE or the police or even of too many everyday citizens – that they feel free to act in such ways or feel supportive of them? It is beneath contempt and brings a blot on the identity of all of us who call ourselves American who believe in the rule of moral law and justice.

And let’s be clear: the issue isn’t whether the correct descriptions of the places where this insanity is carried out are “concentration camps” or “detention camps” or any other nomenclature. That argument is merely a political obfuscation of the terrible and unacceptable actions taking place.

I have no doubt that one day our country, too, will be held accountable in very real ways. I suspect we too will learn, far too late, what West Germany needed to learn in the 50’s, that we prevent immoral behavior by teaching its unacceptability at every level of society. That doesn’t guarantee that there won’t be despotic leaders, but it diminishes the likelihood that their minions will feel empowered to follow inhumane orders for political purposes.

Let us hope.

#340 “Foundation People Aren’t Like Other People”

June 18th, 2019

Richard Marker

There I was, sitting in the waiting room at New York’s Penn Station. The person sitting next to me was on the phone discussing her work for the entire time I was there, in a decidedly non-whispery voice.

I have only an inkling what this person does, and even less about what those on the other end do. All I can report is the one line that immediately caught my attention. “You can’t let it upset you. Remember, foundation people aren’t like other people.”

You are probably not surprised that I began to listen more intently, and it became clear that she was talking about a very well-known foundation. And, interestingly, one that has made public strides to become more user friendly and equity oriented. Yet, evidently, not so much so that the invisible person on the other end could resist complaining.

All of us in our field know that saying “no” or “yes” is loaded, no matter how hard we try. I want to be very clear that I have no reason to assume that the foundation person was unreasonable, curt, demanding, officious, or any of the other pejoratives for which we are known, sometimes deservedly. So, let’s not assume that the foundation person was culpable. Nevertheless, the person I was listening to had no problem painting us all with a single brush stroke.

Is it true that we are “not like other people”? Is it true that our privileged role, by definition, makes us inscrutable to everyone else? Is our power, exercised or not, so intimidating that, even without trying, we all seem to be living in our own world?

I don’t think so and many of us spend a lot of time trying to model accessibility, honesty, candor, and support. Yet, this episode, even if anecdotal and not worthy of statistical generalizations, is one that we all need to take seriously. Especially since the well-known foundation has very publicly tried to model best behaviors, this comment cuts deep. We clearly have a lot to do.

There is much to say about issues of equity, decision making, and many of the larger systemic issues – about which we have written in the past and to which we will return in subsequent posts. But in the meantime, let’s not forget that many of us on the grantmaking and foundation side of things still have some catching up to do if we are to be models of genuine partnership, collaboration and collegiality.

One never knows what lessons one can learn simply minding one’s own business. Hearing unsolicited evaluations, and taking them to heart, isn’t a bad start.

#337 Localism need not be Isolationism: A Mandate for Philanthropy

May 26th, 2019

Richard Marker

I wouldn’t be writing this if I hadn’t observed it on a number of recent occasions in philanthropy settings. [As readers know, I try to write these pieces so that individual funders or foundations are not easily identified, so the examples below will be, purposely, devoid of identifiable specifics. But they are real.]

In our field there has been a very healthy discussion about the best ways to use our voluntary resources, including our philanthropic dollars and leadership roles. That is always appropriate, never more so than in this misanthropic political era. None of us want those precious resources to be wasted, and most of us recognize that there are persistent systemic issues that beg our attention.

Many funders, either for reasons of habit or because they have carefully determined that it is the best for them, focus all or most of their resources locally. Place-based philanthropy is surely as old as any philanthropy, and most of us can see needs right in front of us if we choose to look. However, rarely does that local funding rise to the level of systemic solutions.

If one reads much of the current literature, one may feel that such local funding is inadequate or ill spent or simply irrelevant. It isn’t. For even if we were to determine that we know exactly how to solve huge systemic issues such as education, health care, poverty, climate change, etc., the only way that happens is if there is an on-the-ground component. People need to be healthy, not just the health care system. Children need to learn, not just school systems. People need to practice good environmental practices, not just through the EPA [when it is allowed to do its job!] That all happens to real people in real places, all of whom are, by definition, somewhere- that is local.

Let me be clear and reiterate what most of you know: I am a big believer that social and systemic change requires advocacy, big picture thinking, and a commitment to equity. Classic philanthropic giving alone won’t cut it. But I also know that it can only work through implementation, on the ground, locally.

However, what I recently discovered, to my surprise, is that many funders, yes, even some well-staffed foundations, still don’t see the relationship of their local funding to a bigger picture. They have decided to fund locally and act as if that place is a closed, self-contained system.

For one example, I recently was present when a group of funders were reviewing their reaction to a very genuine local disaster/crisis. Their compassion and generosity were beyond reproach. They did good things, their thinking was right on, and they developed some short-term very effective responses. What surprised me, though, was that they had gone through the entire process, and were about to extrapolate long term implications, without anyone in the room having heard of an organization that has already developed best practices through many disasters and has examples directly applicable to the community in question. It wasn’t my imagination, because when I mentioned that organization, everyone in the room confirmed that they hadn’t heard of it.

It was a classic example where localism had, unnecessarily, led to isolationism. It might be disappointing if a single funder had acted and thought that way, under the assumption that no one knows and understands their “place” as well as they do. But when a group of funders and foundations, some of whom were quite sizeable and staffed, acted that way, it troubled me.

Another example of this is the tendency of some affinity-defined groups to see themselves as unique. “Our… [choose one: religion, ethnicity, political history, race, gender, …] is not like others and, just as others cannot understand us, so too we need not learn from others.” I have previously written about the “with us or agin’ us” tendency of intersectionality, but here I am speaking about the tendency of some funders within these groups to mirror an isolationist tendency in their funding decisions. Why learn from or collaborate with others if we don’t feel that they can understand our uniqueness.

Lest anyone misconstrue what I am trying to say, I want to categorically affirm that there are distinct challenges to every affinity-defined group and there are indeed legitimate special interests and concerns that should be factored into all sorts of areas, including funding. At the same time, there are generic issues of decision-making and ethics and equity and systems- change that transcend those distinctions. It is not, and should not be, one or the other; understanding both the distinctive and universal at the same time is absolutely crucial.

One of the reasons I began to be an educator of funders in 2000 was my impatience with the field’s mantra at the time: “You’ve met one foundation, you’ve met one foundation” – usually stated with a self-satisfied chuckle. One doesn’t hear that very often anymore because the world has changed: There are more affinity groups. There are more on-line resources. There have been more articles in the mainstream media about our field. And there are more educational opportunities. Even those who may choose to fund locally or idiosyncratically are fully aware that there is a field, there are substantive things to know. [I am not so naïve to think that everyone joins those groups or takes those courses, only that working in isolation is now a choice, not a default.]

There is, as well, an implicit and important mandate for local or place-based or affinity-defined funders to take the larger picture seriously. Just as it is impossible to actualize systemic change in the abstract, so too it is impossible for those funders committed to systemic change to make good funding decisions if they don’t fully see how those decisions work- or don’t. Place based funders hold vital insights and actionable data that needs to feed into the policy and systems conversations. Some few situations may very well prove to be too idiosyncratic to be useful, but most local funding situations are reflective of larger challenges. How local funders answer those questions of learnings, provide information on what worked and didn’t, and participate in a dynamic dialectic on those issues can make the difference between moving toward real change vs another “big bet” gone sour.

In other words, funder isolation is counterproductive in both directions; place-based and affinity-defined funders can – and many do – learn from emerging practices and systems thinking; and big picture funders can – and many do – learn from those on the ground.

Place-based and affinity-defined funding will always have a place. Systems funders do as well. Neither should work in isolation even if they choose to fund only within their sphere of commitment.

Good philanthropy requires no less.

#336 Varsity Blues, Legacy, and Equity: the Challenge to the Philanthropy Sector

April 1st, 2019

Richard Marker

This was first posted on 21 March. Apparently a tech error prevented it from being disseminated to all subscribers.

I was a third generation “legacy” attendee of an Ivy League school. Growing up, I don’t recall too much uncertainty about whether I could go there – only if. We attended football games, my family made annual gifts [although, admittedly, there are no buildings or chairs bearing the family name], and I knew all of the school songs [do they still do that?]

My subsequent career has, I am proud to say, justified their acceptance, but I daresay, looking back, I would have been a marginal applicant today. It is my suspicion that the admissions committee did not have a heart to heart about my capabilities; rather, I was a “legacy; next application…”

In those days, that kind of legacy was sort of assumed. It rarely required an affirmative or expensive buy-in. It was the privilege that accompanied privilege.

We didn’t think about that too much in those by-gone days. I became more aware of it during the 11 years I subsequently spent teaching/working at a different Ivy League school as the world began to change and last names more readily attracted attention. But so did proactive “diversity”. There was the sense that whatever favors names or money or national origin or color brought, they were capable students who just happened to have a leg up in the ever more perverse and competitive admission process. [Along the way, I learned that there was a lot more inscrutability to the process than how much money someone had.] [My son and my nephew chose not to attend the family legacy school, so it is left to our 3-year-old grandson and his cousins to, perhaps, resurrect the chain. But that is a long way off – a good thing given the current financial realities. And only incidental to the remainder of this post.]

In any case, over the past days, there have been millions of words written about the admissions scandals – legal and illegal – in American higher education. What concerns me in reading them is that too many of the op-eds and government responses focus on too narrow a question. Here are some of my responses:

• Let’s be cautious about passing new laws regarding endowments and tax deductability. Bad cases make bad law and too quick a “fix” may saddle us with even bigger problems for both philanthropy and education. Both need fixes – but not headline-driven patches.

• I am struggling with the all too thin line between illegal bribery and legal influence buying. Of course, there is a difference, but they reflect deeper systemic issues that encompass both.

• Underlying the bribery is the reality that that not all favored admission is to the wealthy; it is, though, to the wealth of the school Athletes bring a different financial value to a school. All one has to do is look at how much a university nets from a bowl game or a March Madness slot.

• There is a real issue of what the true meaning of education has become. Here is a case where a very dated marketing device to encourage higher education has come back to bite us: Starting in the 50’s, students were encouraged to attend higher education to enhance their earning ability; true and fair enough. But when earning ability supersedes critical thinking and education as a deep-seated societal value, it loses something. [I needn’t belabor this point: We are paying the price today in the character of public discourse, the absence of critical thinking, and the horrendous lacunae of basic knowledge by too many in the USA.]

• This leads us to the challenge to and of education. We have an ethically abysmal system. Even moderately upper middle-class families cannot afford most elite higher education, and lower middle class are even priced out of State schools. And if one takes a look at the shocking attempts to defund and privatize El-Hi education as well, we have a profoundly cynical approach to the concept of civic obligation toward an educated and literate populace. [I am reminded that Thomas Jefferson and Benjamin Franklin created the first free library out of a belief that a democracy can only function if the demos is literate! How far have we fallen from those ideals?!]]

There are few public policies more transcendent than that of education. With the erosion of the commitment to a thoughtful and thinking population, combined with the sense that, at least at the higher education level, it must be bought, we have a much greater problem than a few wealthy people securing their place in a social caste system.

Philanthropy does not have clean hands in this. After all, the largest gifts typically go to the already wealthy institutions. And while a few outliers like Michael Bloomberg may have committed a 10-figure gift toward scholarships at his own elite alma mater, one has to look very long and hard to find equivalent 7, 8, or 9 figure gifts to the institutions a bit lower on the class scale, but perhaps no lower on the teaching one. Our field talks a lot about equity, power, and the challenge of privilege, but it is rare indeed that our largest investments go to the kinds of investments and grantmaking that redress those societal needs.

More than anything, education needs a major adjustment in public policy – more resources, more affordability, and more genuine commitment to critical thinking. No question that philanthropy can never and should never be expected to do that alone. What we do have is an obligation to make sure that we are using our position of suasion and our resources in ways that narrow the caste, wealth, and learning gap.

If not, we may be sure that Varsity Blues type scandals will continue to cast a harsh light on our privilege.

#333 – Medicare for All, Equity, and the Philanthropy Question

February 11th, 2019

Richard Marker

When I first started writing this article, it was intended to focus on how and why “Medicare for all” has become a screen for concepts of equity and fairness in the United States. Indeed, it has become an early metric for where on the Liberal/Progressive continuum Democratic 2020 candidates position themselves.

In an addendum below, I will address my thoughts on this question, but as I was writing them, I realized that my key issue has more to do with the gaping chasm between those few who have and the massive numbers of those who don’t.

Most readers, I am sure, recall the “Occupy Wall Street” movement of a few years ago. There were some tactical and strategic errors that their leadership made so the initiative fizzled. Yet, it did serve the purpose of changing the vocabulary of how we discuss the impact of public policy on matters of wealth accumulation. We became friendly with some of the key organizers and felt comfortable associating ourselves with the main thrust of their rhetoric. We are very far from underprivileged ourselves, but, as the chant went: “we are [among] the 99%”.

We were not the only ones in our position to join in the marches. I, for one, chose to wear my customary bow ties and bespoke suites since I wished to, semiotically, emphasize that this was about policy and policy includes all of us. Professionally and personally, we know many people who do fit into that 1% category and most [but far from all] of them readily acknowledged that there was inequity, injustice, and a disproportionate disparity between the very wealthy and everyone else. Many wealthy and super-wealthy people were more than willing to affirm, at least in private, that the protesters were correct, and they and other people of great wealth could easily double their own taxes and not feel a thing.

It appears, though, that their own lobbyists didn’t get the memos so when the tax sham was passed in the current administration, it only widened the divide. I haven’t done a survey myself, but I suspect that many of the same wealthy folks I spoke to in the Autumn of 2011 would privately give the same answers regarding equity and taxes. But now that we have an administration and cabinet led by those with extreme wealth, it appears that the special interests of the wealth class take precedence over everything else. That means a willingness to push to violate decades old contracts for social security and Medicare for the masses of people in order to preserve those tax reductions for the few.

History doesn’t look kindly at this vast a wealth divide and those who want to learn from history should look very carefully about whether our current inequities are sustainable.

I for one feel that the only way to preempt some of those cataclysmic possibilities is through a change in public policy toward taxation. [Just as Medicare for all has become a metric in the political discourse, so has the issue of whether wealth above a certain level needs to be taxed at substantially more progressive rates. [None, we should note, are arguing for the rates that existed during the Eisenhower years.]

When I have publicly articulated these advocacy positions in some circles, one of the predictable objections is that I am advocating a redistribution of wealth. They are quite correct – but after all, I rebut, how to explain the growing wealth divide except by a legal wealth redistribution in the other direction. Rhetoric aside, all some of us want is to redistribute societal resources to a more equitable balance. Some of us think it is simply unacceptable for hunger, illiteracy, poverty, to exist because of policies that reward “wealth beyond the dreams of avarice.”

We in the philanthropy world are in a sensitive place in this conversation. After all, much of the best-known philanthropy exists because of the decision by those who have accumulated more than they think they will ever need to have some of their personal resources transferred to public good. But even though the resources are transferred, a huge amount of control remains, the power imbalance is sustained, and, if done without sensitivity, becomes just another display of privilege.

It is my view that philanthropy should always understand our role vis a vis public policy. We alone cannot eradicate systemic social ills. Our analysis of the best use of our financial and other resources should always include a determination of what each sector can and should do more effectively. I cannot imagine anyone believes that private voluntary philanthropy is equipped to eradicate hunger, illiteracy, homelessness, disease, and public safety on our own. We may have a role – there is legitimate debate about how extensive that role should be – but none can seriously believe that we have the capacity to solve the problems on our own.

That does mean that addressing public policies and social weal, including about taxes is essential to what we are about. As unique and distinctive as our sector may be, it may not, must not, exempt itself from addressing the inequity that tax policy fosters.

Of course, that will have an impact on our foundations, and our own wealth accumulation. It is a fair price to pay to correct for the radical, systemic, but fully legal inequity that has only become much worse since the Occupy Movement chanted and marched.

In many ways, our philanthropy sector is ideally suited to take the lead on this. Since we are identified with the privileged class [even though only few of us are at the rarified mega level], our voices carry a moral suasion to policy makers, and affirmation to those in need and at risk. We know that our legal and moral legitimacy mandates our commitment to public good.

We must affirm that there are profound risks to the stability and future of our nation if we don’t.

Addendum: Some thoughts on “Medicare for all”

On the surface, this should be a no-brainer:

1. The USA is the only first or second world nation with no societal commitment to provide health care to all of its citizens as a matter of right and justice [and practicality].

2. Any insurance plan is more financially viable when it includes low risk as well as higher risk. Medicare is expensive now because it is restricted to the highest user population. It would assuredly be more affordable for all if it included all.

3. Many people misperceive that Medicare is a gift offered by a benevolent Congress. In fact, all of us have paid for it from the day we first earn a pay check. To date, it has been a contract where the payback is only offered to seniors and certain others.

4. Medicare for all is NOT the same as a government run health system. Quite the contrary, we choose our own plans and physicians, with Medicare being the insurance of first claim. It is a total [and often willful] misrepresentation when anyone decries government run health care as the same as a single payer insurance program.

5. If the money individuals and companies now pay for private insurance were added to the mix, it is highly likely that the gross cost of medical insurance would drop. [I will trust folks at places like the Peter Peterson Foundation to crunch the numbers.]

6. It will eliminate the uninsured, a major drain on health care institutions. One way or another, those costs are rolled into the fee determinations we now pay. If there are no uninsured, there will be lower costs for all of us.

7. Most Medicare recipients also purchase supplementary insurance plans though the private insurance market. There shouldn’t be any reason that that cannot continue as an option..
There are legitimate concerns

8. Even if the long-term costs will prove to be lower, there will be transition costs. While I believe those transition costs will be temporary, I am not naïve to the fact that they will exist.

9. An entire insurance industry will need to be restructured and, from a political perspective, that won’t be simple even if the larger public policy benefit is clear.

10. For many employees, health care insurance is covered by employers. [Those coverages are far stingier than they used to be.] That shouldn’t be a long-term issue since it simply would require employers to redirect their payments to payroll taxes from private insurers, but, as in 9, it will require a comprehensive transition.

As I see it, this is pretty straightforward. Why do we hear that it is too radical, un-American, or too expensive?

For some, any increase in government involvement in anything is anathema. It doesn’t matter whether it is financially beneficial or more humane – they simply don’t believe in the active role of government. To those folks, there isn’t much I can say since those ideologues have their minds made up.

For some, there is fear of change even when they acknowledge that profound inequities exist in our current system. To those we need to provide quick wins and a commitment to as little bureaucratic log jamming as possible.

For some, there is still a widely held perception that, for all of its faults, the current US system is superior to others. Sadly, the data doesn’t demonstrate that now, even if it ever was true,, but we need to find ways to show individuals that their own access to health care will be easier and less expensive than what they currently have.

And if any have doubts, all they need to do is ask those of us who are currently beneficiaries of Medicare what we think. Millions would be thrilled if they could have it too.

#328 – Aligning Donor Intent with Donor Practice: Not as Easy as it Sounds.

January 10th, 2019

Richard Marker

This post is the second of a series on “Alignment” as funders – aligning our values, our staffing, our funding, and our intentions. Clients and those who have participated in our educational offerings are well aware of this thinking, but I have not previously published these practica. Please see #328 and #330 for the other installments.

The series focuses on three necessary preconditions for the successful implementation of a funding strategy. It assumes that readers already have chosen what kind of structure in which they are making these decisions – e.g., a private foundation or a DAF or an LLC, et al. For those readers who are still deciding among those options or when to use which, please feel to be in touch directly since those choices are beyond the scope of this series.

A. About a dozen years ago, I was approached by 2 third generation family members who were struggling with a dilemma. Their grandfather’s instructions were to use the foundation to support “conservation” but didn’t want any of it to go to “environmentalism.” Even if they understood the implicit political leanings in their instructions, how to implement this was proving a challenge. After all, any meaningful “conservation” funding was, of course, a form of commitment to the environment.

B. Many readers, I suspect, are familiar with another challenge of donor intent. A foundation was created “to keep the family together” – as if a lifetime of disfunction or rivalry can suddenly be eliminated because the family members are now forced to sit at the same funding table. Money may go out the proverbial door, but just having a philanthropic vehicle isn’t likely to solve unresolved family issues.

C. A similar dilemma is seen by this not uncommon scenario. The founder wanted the family to come together to make philanthropy decisions, but the organizational recipients or the geographic parameters are so tightly structured that the successor board members are all disenfranchised before they begin. What incentive do they have to participate?

D. Recently, a foundation affirmed that they did not want to support any “social justice” initiatives, when, in fact, they have a long and continuing practice of anti-poverty funding. What might that mean in practice – now and in the future?

E. And then there are those who choose to leave their intentions unstated, freeing subsequent trustees to struggle about what, if any, guidelines should apply. Should they extrapolate from the founders’ own priorities or practices? Is that liberating – endowing future generations with complete freedom – or a sign that the founder was reluctant to face his or her own mortality? What if the kinds of funding the founder chose to do are at odds with the preferences – for whatever reasons – of successor generations? Should they be free to start their thinking de novo, as if no precedent applies? And, finally, in the absence of stated expectations one way or another, is the default assumption that a foundation should exist in perpetuity?

Since the majority of funding entities, especially foundations and donor advised funds, are personal or family oriented, the matter of donor intent is not abstract. In families, every decision is personal and how family members choose to interpret or implement donor intent[ or its absence] can be read as a commentary on his or her relationship to the family, its values, its history, and its legacy. And commentaries can be affirming or judgmental, not always endearing, to others at the table.

An approach:

As we have shown in prior articles, in most cases, differences of opinions are not necessarily reflections of character flaws at all but may simply be differing but legitimate approaches to philanthropy. I have found that one helpful way to address this is to begin the process by identifying guidelines of what should always be off limits – that is, what should never be funded – because it would have been abhorrent to the founders or would violate their stated intent.

“Negative” guidelines are often easier to address than positive ones. The process can allow wholesale dismissal of entire categories, no matter the merit or type of grant requested. It even can make procedures more efficient especially with on-line guidelines or systems. Insofar as they help address our topic, families can usually agree on these guidelines more easily than those that are inclusive. At least in my professional advisory experience, it has often proved the easiest and quickest way to get at the discussion of what should be on the decision-making table where the real hard work begins.

Problem Solving:

To illustrate the way “alignment” works, let us revisit the 5 scenarios above to see what might make sense or be helpful in each case.

A. The third generation chose to apply a “conservative” approach to their approach to “conservation.” While they fully recognized that government action can be exponentially more protective, and therefore leverage a conservation commitment, they chose to restrict their funding to the localities and regions where the family lived, and where their decisions would be respected as personal commitments. Their reluctance to engage in advocacy or larger issues was a reluctance to challenge an implied intent, even if, they acknowledged, that mission might be addressed more effectively, and more in keeping with the values of the third generation’s values and priorities through advocacy.

B. There is no single or best practice answer to this one and I suspect that any of us in this field have helped resolve the challenge in a variety of ways. Sometimes, the foundation is large enough and its reach broad enough that the family can simply delegate the operation of the foundation to staff and perfunctorily go through the motions when required. Or perhaps, to set it up so that it is a single foundation in name only but functions as multiple entities under a single rubric. The Foundation continues, but no one is forced to make joint or mutual decisions.

In other occasions, even that may prove too uncomfortable, so the family may decide to close the foundation with a limited number of larger gifts honoring the founders or, perhaps, turn the corpus over to a Donor Advised Fund [see C below.]

C. When the founder/funder tries to “rule from the grave” it invariably backfires. Some in the second generation may feel a sense of obligation to their parents, but very few in subsequent generations will. They may live in different places, have different priorities, or merely not want to waste their time pretending to make decisions that are pre-determined. This is a case where a Donor Advised Fund may be an ideal solution – at lower cost they can manage and honor the founders’ restrictions, and still, nominally at least, keep the family in the loop. [This can work as a partial solution if only some of the institutional commitments are pre-determined. It means that the family or board can concentrate their energies and attentions on matters where their deliberations matter.]

D. When the words and actions diverge, it presents a real cultural challenge to funders. As in “A”, none of us in naïve about the political leanings of the founders, so what should subsequent trustees do – especially since poverty alleviation is always about addressing unfairness and social justice?

This is a case where “alignment” needs to rely on Stage 1 of the strategy process, understanding the implicit “cultures” of the foundation and those in the room. [A process alluded to in post #326 and developed more fully in numerous prior articles.] That process, if done well, has already clarified preferences regarding risk, recognition, involvement, and more. By articulating the how and why of this foundation’s poverty alleviation commitments, it can obviate the need to rely on politically loaded terms about which trustees may disagree.

E. Unarticulated intent is both the most liberating and puzzling at the same time. It happens quite frequently. Often, an attorney is more committed to creating an estate motivated vehicle than fully exploring the philanthropic needs of the family or even the client. [You would be amazed how frequently foundation Articles of Incorporation are little more than boiler plate documents reiterating basic foundation law with virtually no attention to motivation or function.]

In my experience, this has led to a variety of responses. In more cases than one might imagine, the 2nd generation did not even know a foundation existed before the founders died. To take but one example, after a difficult few years trying to make sense of it all, the responses of the third generation proved decisive: they didn’t care where the money went – only that it afforded them the opportunity to connect as an entire family on a regular basis. Once that happened, it obviated the tensions among the 2nd Gen siblings, and led to an affirmative raison d’etre of the foundation.

In another case, an unusually magnanimous founder explicitly articulated her reasons for not formulating messages to successors. She pointed out how the world had changed in her lifetime, her perspectives had evolved over her lifetime, and her understanding of the world was certainly not the same as when she was young. Certainly, future generations would be faced with a very different world and they needed the same autonomy to face their radically changing world. In my experience, there aren’t that many folks who think that way,

Most often, the absence of donor intent serves to handcuff the successor trustees as much as it liberates.. It means that everything is on the table including how committed they need to be interpreting what might have been intended but unsaid, how long to exist, how open-ended their process, how extensive their reach, how open to risk. At the end of the process, if done properly, the successors will have developed an integrated aligned funder approach that works for them and has the impact they desire. If not, it can lead to years of ungratifying grantmaking and having much less of an impact than the resources would allow.

It is worth doing properly.

#326 – Aligning Our Funding Strategy with Our Words and Intentions: The Case of “Equity”

January 7th, 2019

Richard Marker

This post is the first of a series on “Alignment” as funders – aligning our values, our staffing, our funding, and our intentions. Clients and those who have participated in our educational offerings are well aware of this thinking, but I have not previously published these practica. Please see #328 and #330 as the next installments.

The series focuses on three necessary preconditions for the successful implementation of a funding strategy. It assumes that readers already have chosen what kind of structure in which they are making these decisions – e.g., a private foundation or a DAF or an LLC, et al. For those readers who are still deciding among those options or when to use which, please feel to be in touch directly since those choices are beyond the scope of this series.

A quarter century ago, I realized that the classic strategy process I was taught, and the one still widely used, had real limitations. It called for developing and articulating an organization’s Mission and Vision as the first step in the process. Mission and vision are fine, but why was it, I wondered, that so many of the very same disagreements and misunderstandings that existed prior to developing a mission presented themselves in the decision-making board room only hours after that Mission statement was so carefully crafted?

The insight I had then, one now widely understood and used in the field and recently much disseminated by groups such as GEO and CEP, was that culture trumps strategy. So, the challenge, I felt, was to get deeply into the underlying cultural assumptions of everyone in the room PRIOR to the decision-making process. Surfacing those cultural assumptions had the power of legitimating differing inclinations regarding philanthropic behaviors. [Mission Statements still have an important place in the strategy process, just at a different stage.]

Over the years, as 100’s of foundation clients and those who have taken workshops with me can attest, I have added levels of sophistication about how to get at those assumptions and to lead directly into the next level of decisions that every funder at every level needs to address. Over those same years, additionally, I have formulated the subsequent elements: how to align all of the pieces of strategy – culture, values, focus, capacity, and style to develop an effective implementation. That requires careful alignment of all of the factors that inform those decisions. It is this alignment that makes it all work

As a way to understand this approach, this first piece in the series will address a very contemporary challenge to all of us as funders. While not new, it has never been so crucial as now, nor ever as present in our public discourse – the role of equity in our grantmaking.

To understand this, we need to decide what we fund, how we fund, and who makes the decisions that funding – in this case, about equity.

1. The “what we fund” question seems the easiest – on the surface. After all, social justice, correcting the systemic and endemic inequities that have defined our society for generations, seems to be a no-brainer. There are differing approaches about who should have what role in redressing these ills, but only the myopic or misanthropic deny it is an issue.

a. Compassion: The challenge for most of us is where along the continuum of needs we should use our resources. Compassion may inspire many to provide food, clothing, housing, and other services that provide immediate relief. Indeed, it is typically the first stop along the funding continuum. We see results for a visible problem. Those results may not be lasting, and they are certainly not systemic, but they work – and after all, the food, clothing, or housing is needed now.

For those who desire hands-on involvement, support for their local community or neighborhood, or who want the very legitimate gratification knowing that there is a positive result of one’s personal altruism, this may be a perfect alignment of values and funding.

b. Strategic: It doesn’t take long, for many, to realize that one cannot efficiently or effectively give every homeless person some food or money, so if those categories matter, compassion funding has genuine limitations. Many look for better strategies to leverage their compassion – to feed more people, to house more people, to clothe more people. When we ask the questions of effectiveness and efficiency [and they are NOT synonyms], it leads us to look for organizations that provide those direct services in better ways than we can do ourselves. Our motivations, to make a difference that goes beyond our own individual funding capacity, leads us to examine alternative methods and organizations. This process requires that we need and use additional skills and approaches to make our decisions and lead us to consider a variety of competing claims. For those willing to defer the immediate gratification of direct funding for the satisfaction of a broader and more comprehensive reach to address these same human problems, and willing to put more time and energy into making hard decisions, strategic funding is an important approach.

c. Systemic: Strategic approaches have the advantage of helping make good choices among competing organizations. Not every organization is equally adept at delivering services and not every organization does so in a way consistent with the approach of a given funder. But, for many, even strategic funding is insufficient. For systemic thinkers, the question is not which organization provides food or clothing or housing most effectively, but rather how to eliminate the need for those services at all.

Once one begins to approach questions of equity systemically, it becomes evident that most issues require a multi-sector approach and are not simply a matter of choosing between the best available option. If someone is homeless, it reflects a confluence of failures. A solution also requires a convergence of interventions. No single entity, indeed, no single sector, can deal with the large issues of homelessness, food insecurity, long term economic disparity, education, and, of course, poverty. Each requires public policy responses, private sector investments, social service expertise, and community development organizations – in addition to private philanthropy.

Aligning these efforts is no small task – failures far outnumber successes. Funders need patience, mediating skills, advocacy, a willingness to surrender some autonomy, and a tolerance for failure. A full self-awareness of the elasticity and parameters of one’s funding culture and style are preconditions. If these larger systemic challenges align with your comfort level, it opens up the possibility of addressing and perhaps making a permanent dent in society’s more resistant challenges. If, though, you don’t bring those attributes to the table, it is likely that this kind of funding will prove frustrating and unsatisfying. Alignment matters.

All three of these funding approaches legitimately count as equity funding but not all will work for every funder. Thus “alignment.”

2. How we fund is about the methods we use to get the information we need and then how we make our choices. After all, any subject as big as “equity” has many players, and at many levels, and there are very legitimate competing claims for our resources..

[There is no end to information we can gather about potential grantees, but much of it is not useful, or won’t really be used to make a decision. If you would like further advice about how to understand and effectively utilize the kinds of information that can inform our choices, please be in touch directly. That is beyond the scope of this series.]

Depending on how open or controlling we wish to be in our grantmaking, how competitive or funder pre-determined our method, will help lead to our approach for getting proposals in our docket. As we will see in #330, much of this directly relates to our preferences or choices about staffing, but it also reflects different preferences about how we wish to spend our time, how open we are to innovation, how committed we may be to certain organizations, and what relationship we wish to have with grantees.

There is no single correct/right way to do this, and indeed many funders use multiple approaches. What is clear, though, is that if we are never open to new ideas or explorations from organizations we have never funded, our own knowledge can easily become stale. And since equity has historically been so elusive to achieve, it would be quite shortsighted to presume that our past approaches are sufficient or our knowledge complete.

The implications for equity funding are very real. Those who are committed to established organizations are more typically [not always] more risk averse, and more likely to want to establish or maintain direct involvement with a limited number of organizations. Their confidence in those organizations makes it more likely that core support will be provided, or that new projects will be developed collaboratively. They are more likely to use evidence-based criteria, and it is likely that any projects they fund will succeed albeit in a strategic and not systemic way.

Except for the deepest pocketed funders, this also, typically, leads to organization that are either geographically or ideologically very close to the funders. Very very few funders have the in-house expertise to determine organizational effectiveness all over the place. Similar to the above, it leads to a likelihood to provide operating grants or core support and to be committed to the strength of the organization as a necessary precondition to reducing inequity in the field in which that organization works.

However, as we have stated above, we also know that there are problems that can only be addressed systemically, at scale, and with equal parts guts and patience. Funders open to partnerships and collaborations, willing to take big risks, and accept uncertainty are more likely to fund this way – and therefore will customarily choose to use a more varied process for obtaining potential grantees and projects. If one wants to get at the underlying causes of poverty or the seemingly ineradicable racism in American society, equity issues if there ever were any, we will likely broaden the sources of information, expand the scope of the thinking, and look for intersector opportunities before proceeding. This will usually demand a much longer time frame for decision making and be much more committed to using a not yet proven theory of change.

The alignment issue is quite clear in these examples. At different stages along the way, a funder is in or out, has comfort or doesn’t, considers the challenge within their scope of focus or not. What matters is being sufficiently self-aware to make the choices that will work best.

3. Who makes the decision: For those who have been on the funder side of the table for more than a while, this may seem to be a strange question. After all, one of the hallmarks of private philanthropy is the autonomy it allows. All sorts of people might be invited to have opinions or share their expertise, but the decision about who makes the decision where to give the money is [was] clear – and not terribly negotiable.

The “equity” question, though, forces a different reckoning – and it is here where debate is rampant in our field. And for good reason. Philanthropists and foundations are reflective of the haves. There is an implicitly patronizing element to our work – no matter how genuine and beneficent our affect and intentions. We traditionally give TO those who need it – or, more accurately, to organizations who know who needs it. How often are our recipients in the room, in any of our decision-making rooms?

If one wishes to reduce the divide and responsibly work toward social justice, it means, many now say, that funders need to take seriously the new mantra “nothing about us without us.” They would argue that the real change that must take place is not that money needs to be allocated with care, but who actually makes the decision.. This equity argument has both a practical side [“who knows better than we…”] and a justice side [“who are you to decide what is best for me…”].

Even if one fully endorses that empowerment should be a given, it is far from a given where in the continuum of decision-making that empowerment ends. The arguments range from full surrendering/delegation of decision-making to the impacted stakeholders to making sure that they have seats at various tables along the way.

From a philanthropy perspective, it is far from easy. Succession and surrendering control have proven hard enough when the successors are family. To go so far as to say that the only true social justice philanthropy is surrendering decision making to what had previously been the “recipient class” is a profound and radical leap.

Yet if one is committed to addressing systemic inequities, and eradicating destructive class and financial divides, it is a discussion that one must have.

Alignment in #1 and #2 above are making sure that our way of being funders works best – for us. #3 reminds us that none of our decisions is made in a vacuum. Each has implications not only for how we do our work, but what our values and funding stand for. That is never easy…but always important.