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Posts from the ‘Philanthropy Advocacy’ Category

#390 Listening vs. Hearing: The View from the Other Side

August 5th, 2020

Richard Marker

A couple of years ago, my accumulated professional careers crossed the half-century mark. Knowing that it has been an untypical journey, a number of people asked if I was planning to write an autobiography. While I don’t believe a full autobiography is warranted, I have written a pamphlet size retrospective built around lessons learned. It will be published sometime this Autumn.

While writing, I was reminded of a number of influential episodes, some of which are applicable to current developments in the philanthropy world. This piece emerges from one of them. Watch for additional posts that will address others.

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“Strategy” is the constant among my five careers. Whether in the non-profit or for-profit sectors, or, in the last quarter century in the philanthropy arena, being a strategist has been the core competence that ties it all together. I learned very early on that the elegance of a strategy, the completeness of the data, and the rigor of the process are often for naught if there is not attention to implementation. There is much to say about this, and I have written and taught about this extensively. But a current discussion in our field has underscored, once again, how crucial the implementation stage is in achieving any effective strategy. In this case – the difference between listening and hearing.

The anecdote: I recently had occasion to be reminded of a project I did fairly early in my career. In my first full-time post-graduate school position, I was a young associate chaplain/faculty at Brown University. Toward the end of my first year [’71-72], a graduating senior came to meet with me. He told me he had a beef: He said that there were matters of identity that he and his friends had never discussed and, now, on the eve of graduation, realized that he wishes they had. He told me that he thought that the only person he knew who could have facilitated that much needed conversation was me.

Now, to be fair, while it was a nice compliment, there were undoubtedly lots of folks who could have facilitated that conversation; his was probably more a comment on the still existing divide between faculty folks and students even in the early 70’s. It did challenge me, though, and I subsequently began a practice that I continued for my remaining years there. [I left in 1982.]

At the beginning of every Spring semester, I would invite graduating seniors to my home for small group teas. Over the years, I learned a lot. The most sustaining lesson was this: whatever perceptions I may have had about students’ commitments and involvements based on what I observed proved to be only coincidentally aligned with what students said about themselves. I might see a student doing some particular program or activity almost every day, yet those very students would describe themselves as only very marginally connected; other students might talk about how important a project was to their undergraduate life, even though he or she might be totally invisible to others involved.

In other words, self-perception is not always aligned with how others see us. The data alone was misleading – or at least insufficient. It was a lesson that has served me well in every subsequent career, but none more so than in my journey in the philanthropy sector over the last quarter century.

Our field is fraught with opportunities for misperception. It historically has been built on a power imbalance – one side wants, the other side has. Those who want financial resources need to convince those who give that they should give to them. Built in is a challenge of perceptions. Organizations that want resources from funders try to determine what the funder really wants to hear, what will give them a tactical advantage, what is legitimate hyperbole vs dubious exaggeration, and what will give a funder the confidence that their articulated missions will best be fulfilled in supporting your organizations. Funders have our own set of desiderata: yes we want to assess all of the items presented by those seeking our funds, but we also have our own independent considerations: where does this request fit within our own priority system, how does supporting this organization or project align with our own risk tolerance, how does this request compare to other similar requests on our docket, what is the internal push and pull among family or trustees or staff, and more.

Those requesting funds rarely know all of these internal considerations – meaning that there is an endemic disconnect. They are limited by their perceptions – extrapolating from the knowable [grantmaking history, articulated missions] to the “best guess.” Proposals, whether written or oral, all reflect a best guess of what the funder really wants, but since there are so many subjective factors, there is always, by definition, the unknowable.

Some funders have made our own mistakes – that of assuming that we can take the guess work out of our decision making. It is a little less true today than it was a few years ago, but for a while, funders thought that we could apply a rigorous due diligence and metric system to make the “right” decisions. That too is wrong – and also for an important endemic reality: we fund the future, and the future is never guaranteed. We may choose to reduce the risk by supporting only well-established organizations, or well-developed programs, or sector leading executives, but…. COVID-19 only proves that nothing is assured. Moreover, the lower the risk, the lower the likelihood that creative change can occur. If, as many funders claim, we want our money “to make a difference”, it is important to remember that “difference” has to mean something will be different.

If that is true, we too have an obligation to learn how to extrapolate beyond that which is presented. But how?

This is where our field is moving in a healthy direction. There have always been some in our sector who have made it safe for potential or existing grantees to tell the whole story in honest ways, but not most of us. There have always been some in our field who know that those on the ground are more likely to understand real needs, especially in the realm of direct service/at risk populations than we. There have always been funders who have an understanding that funding the future means that some things we fund will [and should] fail, but too many still don’t have the tolerance for failure or the importance to endorse its legitimacy.

Many of the most welcome changes in the current climate in our field are attempts to address exactly these things. Initiatives such as “Trust Based Philanthropy” or “Listen4Good” or “Nothing about us without us” or the ongoing work of CEP are all very welcome attempts to rebalance. How do we as funders make it safe for grantees to tell us honestly what they need? How do we make sure that the direct stakeholders are the real beneficiaries of our intended largesse? How do we allow grantees to take enough risks toward much needed change that some will assuredly fail? These, and numerous other initiatives are pushing us as funders toward redressing gaps in our own practice and affect. The primary responsibility in making these adjustments is ours.

It is also true that not every nonprofit is guiltless. All of us on the funder side have seen organizations that have chosen to hide essential information, to reject thoughtful support as inappropriate intrusion, to be blind to their own failures, and to view us funders as inscrutably “different than us.” We as funders may have the primary responsibility to readjust our behaviors but we are not alone in this. Non-profits too need to learn how to listen – to words that may appear patronizing or distanced or judgmental or overly jargon-y, often presented in settings that are intimidating but are usually well-meaning and more often than not intended to be constructive.

All of us, yes every single one of us, has filters that align what we are told with “our own” reality. The real challenge, then, is not only listening but also knowing how to hear. Since affect and tone and setting and implicit biases [on both sides] can so easily distort, knowing how and what to absorb from feedback and shared information is a constant challenge.

As we know from so many other contexts, collecting data may be hard; interpreting that data is much harder. Creating strategies may be daunting; implementing them is much more so. And, listening may be hard; hearing is much harder. For all of our benefit, it is a skill worth learning.

#385 – I’m Not Traveling; Why Should my Money? The Surprising COVID-19 and Racial Inequity Dilemmas for Funders

June 15th, 2020

Richard Marker

NB: This was written but not published prior to last week’s announcement by 5 major foundations of issuing debt as a way to get more money to the field. In many ways, that extraordinary development only underscores the dilemma discussed here.

As you may recall, when the COVID-19 quarantine began, I extended an offer to any funder anywhere to provide a pro-bono problem solving session. This post in an extrapolation of some underlying themes that I have gathered from those conversations and from the slew of many articles on funding choices at this time.

What has emerged for me is an interesting challenge from funders of less than mega-means. Choosing where to put funds comes down to hard choices, and those who fund on the local level/place based, are particularly sensitive to the implications of saying yes and no. Yet over the last few years, many of those funders became aware of the need to address systemic issues and were more open to funding national initiatives, sometimes at the expense of place-based funding. [Please see #293, 27 Dec 2017 and #337, 26 May 2019 regarding the significant continuing role for place-based funding, even when a funder is fully aware that the local organizations being funded can never aspire to the excellence of world-renowned organizations in the same fields.]

I cannot imagine that any funder or foundation is unaware of the financial challenges facing all non-profits, and the catastrophic challenges facing some. [I recommend the very recent survey published just this week by CEP on the unevenness of funding at this time.] Surely all funders know that their long-time grantees are in need. And, hopefully, every funder is aware of at least one local collaboration to address the massive local needs – even if that hasn’t previously been a core priority.

Moreover, it has been gratifying to see that hundreds upon hundreds of funders are learning that this is not a time for complex reviews, clever new initiatives, and burdensome reporting. It seems from the data that I have seen reported by others and anecdotal [no claim that it is scientific] evidence, most funders have either sent more money out the door, plan to spend more this year, or have committed themselves to funding new or ongoing needs in the next grant cycle.

Most of this is local.

At the same time, never has the need for systemic redress been more glaring. The funding community had been coming around to understand that band-aid type funding of societal needs of all sorts is far too short-term and nearsighted. Acknowledgement of the role of advocacy, providing support for national organizations addressing systemic issues, and seeing how existing funding aligns with underlying systemic needs has finally been high on the agenda. Both the pandemic and the BLM moment have starkly underscored the validity of those needs.

However, I am hearing, given how massive the local needs are, how can one justify diverting resources from “here” to “there”? Shouldn’t that be the job of the deepest pocketed funders whose focus is rarely place-based directed? Even if “woke” to the needs, perhaps this is the time to pull back from those national initiatives to focus on this place? After all, the putative systemic issues are visible right here – on our streets, in our schools, in our neighborhoods, in our policing, in our healthcare, in our workplaces.

I don’t disagree with the logic of this thinking, and for many it is a very valid way to go. But I also want to remind of the importance of not losing a connection with the groups with a larger and summative perspective, whose expertise allows alignment between current urgent need and optimal policy so that local funders don’t inadvertently reinforce counterproductive systemic causes, whose analyses of experiences elsewhere might provide a more laser focused use of local funds, and whose understanding of the political landscape might provide leadership in much needed policy reform.

Perhaps a single example will illustrate – and please excuse that this is a summary that elides some important local details: A couple of years ago, not long after we moved to the DC area, the government was shutdown for an extended period of time. The shutdown was felt throughout the country but, not surprisingly, hit the DC area hardest. Many in the local funding community stepped up with a variety of palliatives to alleviate very real hardships faced by many thousands of furloughed government employees and contractors. When the government re-opened, a meeting of many locally based funders was convened to address lessons learned. At the meeting, I [still a newcomer] asked if there had been any conversation with or utilization of material prepared by the Center for Disaster Philanthropy. To my surprise, no one in the room had heard of the CDP. As the local funders listed all the things they had learned and their commitment to document those learnings, it struck me that they had spent a long time largely reinventing the wheel – when, in fact, they could easily have adapted many of CDP learnings from many other natural and human-caused disruptions.

It is true, of course, that all politics is local – and most funding for many funders is and should be local. But just as local politics does not and cannot address systemic issues without national policy change, so too local place-based funding without a connection to the larger context in which we operate is insufficient.

Many of us would like to hope that the societal lacunae exposed by COVID-19 and by endemic racism will make this the time to finally address the systemic in real and transformative ways. So, while we absolutely must increase our support for and engagement with our local communities, we do need, as well, not to lose sight of the knowledge and wisdom that can come from continued engagement with organizations and affinity groups that extend beyond our own backyards. It need not be “either/or” but should be “both/and”.

#374 Building Blocks to the “Next Normal”- Health Care

May 8th, 2020

Richard Marker

This post is a continuation of thoughts on what we need to put in place as we rebuild our world. The pandemic has revealed or underscored so many systemic inequities and injustices that it is clear that we will have a lot of work to do, even if we didn’t have deniers, ideologues, and others who want nothing more than to return to some idealized – and never existing – past. Different posts have or will be dealing with many of those issues.

This one has to do with health care:

First a personal story. Going back 2 decades, a time came when I had increasing responsibilities for my elderly parents’ health care decisions. It wasn’t easy for many reasons. One was that they were private/secretive [chose one]. My brother and I were kept in the dark about their medical situations, their preferences, and more. This was particularly challenging when hard decisions had to be made for my father and we had no clue that there were documents specifying his preferences. There were medical interventions that went beyond his written preferences, but we never knew about them, and our mother either forgot or chose not to share them with us. It was only when we were called upon to help resolve his estate that we came upon the documents.

I am sure that this story, abbreviated to be sure, is familiar to many, but it is not the primary part of my narrative with real implications for public policy and medical practice.

The second part of the story does, and this has to do with my mother. After my father’s passing, she went from denial to dementia in rapid order. Our responsibilities grew including taking her to medical appointments. One of the pleasant surprises was to learn that all but one of her physicians were connected to the large University of Pennsylvania health system. And Penn had already instituted shared computerized information between all physicians in the system. Our mother had no clue what her ailments were, what medications she was taking, and more. Fortunately, at every medical appointment, each specialist could promptly identify all of these things. It was a difficult decade but made easier knowing that there was a level of coordinated care that we would simply have been unable to do on our own. [Since we had uncovered that her medical directive was identical to my father’s, when there were genuine end of life decisions to be made, it was very clear to us and to the medical team what to do and what not to do.]

To bring this personal story to a close, let me add my own experience much more recently. As many readers know, we moved from NYC to Washington DC 2 ½ years ago. Among the challenges of relocation is the identification of health care providers. In New York, I had the benefit of having the equivalent of a concierge doctor who coordinated my health care and I lived walking distance to numerous world class institutions. The quality of my care was a luxury, to be sure, but never in question. When moving, I hoped to find a world class health care system that would replicate the benefits of the coordination of information that Penn provided for my mother a decade and a half ago.

Since Johns Hopkins fit the bill as a world class health system, I decided to find specialists who were connected to them. Hopkins had developed a presence in DC, including 2 first rate hospitals and an entire network of affiliated physicians. Seemed like a perfect transition. And, indeed, I have found a number of first-rate specialists with that affiliation. But what I discovered was that, even there, the computer systems are not interconnected. Each department asks for its own information with its own software. While I suspect it is more interconnected for in-patient care [fortunately I haven’t had to find out], it was a bit disconcerting to see that this world class medical system hasn’t found a way for all of its related medical staff to access the same data bases. I am well aware that there are privacy issues – and I am not dismissing them. But privacy should apply to access and not to compatibility.

My own story is only indicative of the shocking and embarrassing gap that has become so glaring during the COVID-19 pandemic. Even setting aside the corruption and dishonesty that regularly is spewed by White House officials, what we have seen is that this system that many pretentiously still consider the best is flawed, underprepared, overly dependent on competitive private sector resources, and implicitly exacerbates the inequitable access reflective of race and class divides. Why don’t we have accessible data bases? Why are there shortages of medicines and equipment? Why need there be competition among States, and between the States and the Federal government?

The pandemic has exposed the deepest flaw in the US healthcare system – that insurance should be connected to employment. Why? Why is the US the only major nation with this bizarre – and unjustifiable – approach? [Yes, I do know the history of how we got here, but watching millions of people lose their health care along with their jobs should convince even the most reluctant ideologue that the post WWII approach has become both unsustainable and immoral.]

At this point there should be no reasonable objection that the “next normal” includes health insurance for all. [I don’t care what it is called since any nomenclature has become partisan. I only care that it happens – and, I believe so should our public policy commitment.]

I began with my own dilemma with our flawed system. Let’s face it: my challenges are those of “privilege”. For too many millions, health care access is literally a life and death issue. If we are serious about the “next normal”, that must change.

#371 “The New Normal” – What is, What Should be, What must not be

April 24th, 2020

Richard Marker

Over the years, there have been both great advantages and great disadvantages to being an independent voice in the philanthro-eco-system.

After the foundation of which I was CEO closed in 2002, I made the choice to play an independent role as an educator, advisor, speaker, writer, and thinker about philanthropy. Having been an employee – albeit at a fairly high level – for the entirety of my professional life until that point, I decided to see what it would be like to be my own boss and to take full responsibility for my own words, involvements, and my own professional destiny. [for those readers who want to discuss the risks/rewards of that choice as they may apply to you, please be in touch directly – we can set up a time to chat.]

On the whole, that choice was a good one. I discovered that there were real opportunities to say and do things on both a professional and volunteer leadership level that might have required approval – or disapproval – in prior contexts. There were invitations to speak and teach in many places around the world that may not have been possible with executive or organizational obligations. And, perhaps most telling, I discovered that people were suddenly hearing my “voice” that, in the past, seems to have been hidden beneath a subconscious political sensitivity to the institutions in whose employ I was – even if I was the CEO.

There are also some significant disadvantages, though. In much of the philanthropy world, the question is “whom do you represent” determines which boards you sit on, which committees you are invited to, which task forces include you. While I surely have sat on many boards, committees and task forces, there were many more on which I might have wished to be a part that were addressing matters close to my heart and my expertise. And while I am not complaining about the depth of our own pockets, they are not deep enough to warrant others automatically making space as an independent player.

In the current COVID 19 context, this reality means that there are many statements, conversations, webinars, and conceptual considerations to which I am an outsider. When I – or our Institute for Wise Philanthropy – is invited, we eagerly participate, or sign on, or endorse, but rarely are we at the drafting table. I wish it were otherwise, but it does provide an opportunity, perhaps even an obligation, to take a broader view of what is happening now, what probably will happen, and what must not be allowed to happen to our field, and our nation as a whole.

I don’t know any more than any reader does about the sane and reasonable timeline for our current quarantine. I do know that it has exposed and underscored deep and abiding issues for all of us, philanthropists and philanthropoids included.

It has underscored that the human need for connection encourages creative uses of existing technology in ways that will surely change the way we do workplace and the way we do family – even when our in-person lives return. It has underscored that we do have control over our climate if we behave in ways that reduce pollution and the waste of natural resources, that public behavior matters – and that public policy matters more. [While I am sure deniers will continue to deny, the overwhelming evidence of cleaner skies over cities around the world is only one proof-text among many.] It has proven that the absence of a reasonable and equitable national health system is a death sentence for too many, and an injustice for all. It has proven, as if such proof were still necessary, that underlying and systemic racism – and other forms of xenophobic hatred such as anti-Asian-bias, anti-Semitism, Islamophobia are too close to the surface and too present in attitude, behavior, and impact. And it has proven that American claim of equal access and equal rights are all too hollow in the face of overwhelming evidence of a permanent underclass. [I am sure others can add to this list.]

This moment in time has also shown the vulnerability of organizations and institutions in stark and ominous ways. A society that chooses to rely on the voluntary sector to provide for essential human services, to address food insecurity, to enable much of our education system, and to care for our infirm and elderly suddenly finds that a voluntary sector can only do so much to provide palliatives to a deeply fragile system.

Therefore:

Lesson #1 What Must Change: We must not return to a normal which maintains systemic injustice. There are structural inequities, there are conceptual injustices, and there are entrenched bigotries that are destructive and simply wrong. There may be room for discussion about how to redress these systemic matters, but not whether they must be redressed. Without doing so, I am afraid that our nation will implode from within.

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It is true that our sector, i.e., the funder community, has responded with alacrity and impressively to our current disruptions. Many foundations have made new funds available, many have made – at least temporary – changes in the way we do business, many have recognized anew that our missions cannot be fulfilled without profound trust in the nonprofits that implement our funding, and many have joined together in unprecedented collaborations and joint efforts. The scope of what needs to be done to respond and rebuild is massive and far beyond the capacity of our sector, but it is certainly true that we can stand tall in our response.

A larger and more long-term question has to do with sustainability: of the nonprofit world, of our altered tactics, and of the world as a whole. No serious person imagines that we will return to an unchanged world – but that doesn’t mean that our practices will or should change. Or if they should, in which ways? And who should decide?

For example, I would hope that no funder ignores the evident and demonstrable class and race chasm in the USA. But even if one recognizes that consideration of “DEI” needs to inform our grantmaking, there are various credible ways to do so: advocating public policy change, supporting intermediary organizations, funding local direct service entities, etc. I personally endorse certain practices and associate myself with the joint statement of 700 US foundations about utilization of our funds at this extraordinary time. Yet I continue to feel that, in the rush to provide resources where they are desperately needed – a flexibility that is indeed a crucial value-added of our field, we don’t surrender our other value-added asset – the ability to have strategies that take a thoughtful long view independent of contemporaneous political pressures. After all, as we look back to lesson #1, it is certain that the systemic societal inequities will outlast the pandemic and will demand every bit as much of our attention and funding. To do our work well, we need to combine both of those values – flexibility and perspective. [I will be offering a recorded webinar on this subject to be available for public viewing on Monday, 27 April.]

Therefore:

Lesson #2 – What Shouldn’t Change: The philanthropy field must continue to play its crucial role as a funder and thought leader. There may be exigencies that require short term funding adjustments, but our strategies should reflect longer term endorsement of our distinctive role. Hopefully, all of us have a strategy that allow both.
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If it is true that our strategies should not be cavalierly disregarded as events unfold, it is also clear that it is time to underscore many of the best practices that have developed in our field. For many of us, as my clients and students know, these practices are well established; for many others, the emergence of the work of CEP, GEO, NCRP, and TBP are welcome correctives to deeply entrenched and often out of date practices.

To take just a few examples:

a. There needs to be an open and honest relationship with grantees and potential grantees. . We want to know what a grantee really needs to be successful, what is in the way of that happening, and what measures will truly show those things. And only funders can make that a safe place to be. Many funders are clueless about how the power imbalance, even when unintended, distorts that openness and gets in the way of an honest dialogue.

b. There needs to be a simplifying of what we ask of applicants for our funds. In teaching this over the years, I have learned that most funders want to ask as much as possible but only use a small portion of that information to make a decision. Why impose that extra work on the applicants, and ourselves, if it doesn’t really inform our decision?

c. Most grantees would benefit from unrestricted grants and most projects need more than one year to implement. There are important exceptions to both, to be sure, but our norm should be that, if we trust a grantee sufficiently to invest our money, we should give them the greatest chance to utilize their expertise.

d. We need to assure that our grantmaking enhances the professionalization of any program or organization we fund and not inadvertently reinforce the shameful pattern of undercapitalizing the sector we presumably believe in.

e. There needs to be proportionality of what we ask and require of our grantees, reflecting the size of our grants, and the capacity of the grantee. It may seem equal to ask every grantee for a quarterly report, but not equitable if one of those grantees is a 3-person neighborhood-based startup and another a well-established research university.

Therefore:

Lesson #3 – What Should Change: Best practices in the funder world have made major progress toward more open, honest, streamlined, and constructive relationships between funders and grantees. This doesn’t render strategy irrelevant, only that this way of thinking and behaving is likely to achieve a funder’s desire strategy in a more effective and less burdensome manner.

As we are now thinking through what will emerge, it is crucial for our field to take the lessons of these weeks and apply them to what will become normal and normative. Our work won’t end when the doors are open again but will call for us to play even more crucial roles during the forthcoming weeks and months – to do what we can and should do best.

#366 Planning for the Post COVID-19 Recovery – It Is not too soon

March 22nd, 2020

Richard Marker

This is a follow up to #365 which reinforces the extraordinary work our philanthropy colleagues are enabling at this profoundly overwhelming moment in history. This post challenges our field, with the benefit of perspective afforded to few other sectors, to consider how we help rebuild our world going forward.

We are far from the end of this thing. We certainly don’t know how long our lives will be disrupted, how long we will be living in physical isolation and virtual connection, how high the mortality numbers will be, how deep and far reaching the inevitable recession will be, how permanently our lives will have been changed in every way.

We do know that there will be an end to the pandemic. And as happens at the end of every tragedy, crisis, disaster, things will never be quite the same. Thus, it is not too early to begin thinking about what those changes might be, can be and mustn’t be allowed to be.

Let’s start with the most sobering: we have begun to see the surge of problematic behaviors. In the USA, gun purchases and anti-Asian racist incidents have surged. Elsewhere in the world, domestic violence has begun to rise after an all too belated but welcome reduction in recent years. Nativism is a destructive political force in many countries. Limitations on civil society in many more.

Of particular concern in the USA is the growth of antinomianism and very deep cynicism toward any articulation of truth. Is it a surprise that teenage college students disregard alerts about COVID19 as irrelevant to them when they have come of age hearing that news and facts, even scientific ones, are “fake”? Is it a surprise that people selfishly hoard when they see that our government has dismantled the agencies charged with planning for crises such as this?

It didn’t take COVID 19 to see this deep-seated distrust. To take but one example: I have been a bit involved in the local funders’ Census2020 efforts. Let’s not forget that the census determines our representation and allocation of federal resources for the next 10 years. If any groups have a lot at stake it is the historically undercounted: immigrants, Latinos, African Americans, the poor, etc. Funders nationally have recognized the need to address these inequities by working toward a “complete count.” Yet in session after session, it was clear that those communities have no trust that their anonymity will be assured; that it isn’t simply another way for ICE to find ways to their front doors; that there won’t be manipulation of the results to further assure their long term disempowerment. Even when the head of the US Census Bureau tried to say that the Constitution guaranteed their anonymity, they didn’t trust that the current administration had any respect for those guarantees.

There are many more examples one can give about the erosion of civil society here in the USA, and many more that transcend political boundaries. Suffice it to say that, once we begin to see beyond the current pandemic [may that happen soon!], we will have a lot of rebuilding to do. Below are some systemic issues that we in the philanthropy world need to take seriously and in which we should assume leadership.

1. The fiction that any nation can be isolated from what is happening elsewhere in the world. One can close borders, erect artificial fences, but nature and economics seem to have a way of disrespecting any of those human-constructed boundaries. Therefore, first and foremost, let’s commit ourselves to insisting that public policy needs to take climate change seriously in any infusion of massive dollars into the economic system. The current pandemic should be a wake-up call to the impact on the world as our human-made destruction continues apace.

If one needs a proof text, all one needs to do is to see how quickly the air has cleared in Italy and China. Just imagine if we required that appropriate environmental policies were made permanent – using currently existing technology. We are beyond preserving everything, but such a massive environmental mobilization would go a long way to sustain much more of the world than predicted only a couple of months ago.

No, I am not advocating permanent social/physical isolation. I am advocating that, in the USA, we restore protections that have been removed in just the last 3 years, that we infuse as much of these newly approved billions into public transportation such as buses, trains, light rail – and not just for airlines. I trust that it need not be added that there is no need for our tax dollars to continue to subsidize fossil fuels. None.

2. Systemic Economic Adjustments: The divide between the rich and the not rich has become so severe that it has become as extreme as almost any society in history. And while it is true that the very rich have lost a lot of money over the last couple of weeks, let’s not pretend that they will be forced to sacrifice their lifestyles. Those same percentage drops in retirement funds will, though, make retirement a far more vulnerable reality for the vast majority.

If we do care about revitalizing the economy, let’s resist strongly 2 myths that have been consistently disproven except by extremist ideologues – both are implicitly immoral: that public support makes people lazy, and that trickle-down economics works. Enough has been written about this over the years by those more expert than me that I will simply refer readers to readily available documentation. But there are still those who believe it – or at least espouse it. There were Senators who refused to support the first bailout on the basis of creating dependence by the most at-risk members of our society. Shame on them!

3. Equity as the basis of public policy. Where to begin?

a. Minimum wage positions disproportionately are held by those of color, those from certain minority communities. Recent studies, long before COVID 19, have proven that, despite our national myth to the contrary, pulling oneself up by one’s bootstraps has become far more difficult in the USA than in many other countries. This is reinforced by…

b. Racism, xenophobia, anti-Semitism, Islamophobia, nativism, misogyny, gender bias – long standing cancers on the national ethos that have surfaced in more pronounced and dangerous ways than in 2 generations.

c. The absence of a meaningful safety net. The USA has always had one of the most porous safety net systems in the developed world. Over the last few year, exacerbated by this administration, those gaps have become every larger.

d. The US Medical System – if one can call it that – has been exposed. Surely, those with the means have been able to access the highest level of medical care in the world. For many others, to access care is a major personal sacrifice -and there is no guarantee of its quality. And for far too many others, basic medical care is a luxury beyond their means. The Pandemic, though, has shown that the absence of any system, any planning, and any underlying societal commitment. The ACA, an all too modest attempt to address this reality has been substantially dismantled. [For those who still choose to believe that the US is anywhere near the top of the world’s heap in this only need look at comparative infant mortality rates, the dropping of longevity compared to other nations, and the numbers of health related bankruptcies – unheard of elsewhere.]

I have previously advocated, only a bit sarcastically, that our national standard should be whatever congress provides for itself, but beyond that I have no commitment to any of the catchphrases. It should be clear to everyone, I hope, that anything less than a guarantee of medical care for all would be unconscionable after this episode.

4. Underlying all of this is a challenge to what a commitment to civil society, based on constitutional rights, means.

a. Education: It is shocking how uneducated our population has become. Once upon a time, the USA’s education system was a model to the world; today it is an embarrassment of illiteracy. Once upon a time, civil education was a core competence of our educational system; today most high school graduates would be hard pressed to articulate the rights guaranteed by the first 10 Amendments to the US Constitution. Once upon a time, substantive educational accomplishment was considered a sine qua non to financial security; today…

It cannot be overstated that we need to undertake a massive commitment to the value to an educated populace. And, indeed, massive is the right word since only a literate and informed citizenry can make decisions faced with purposeful disinformation, the mockery of science, the disregard of the responsible institutions of government, and more. At a time when information has become anarchized through the web, an educational system that addresses these new challenges is a mandate as never before.

b. Civil Discourse: It would be easy, and certainly not incorrect, to place much of the blame for the erosion of civil discourse and safe public spaces in the lap of the current occupant of the POTUS. If we are honest, though, it didn’t start with him or even in the last election cycle. And even when there will be a change in the person who sits in that seat, that will not suffice to begin to fix this. What is now considered acceptable in public settings was considered an embarrassment only a few years ago; the empowerment of xenophobic voices and concomitant hate crimes pushes us to the edge of the elasticity of what it means to be a part of a shared national community.

I am far from the first, nor will I be the last, to make these observations. Much has already been written and spoken about the dilemma and proposed paths forward to repair these deep wounds. But if it is true that we now have a moment when we will be called upon to rebuild our world, our national understanding, a restoration of a concept of civility, civil discourse, and the public square are indispensable.

We are about to be in the unique position of being called upon to rebuild our world – in many ways. History has taught us that there is no guarantee that such moments do not always bring out the best in people or their polity. We in the philanthropy world need to consider how we build all of this into our advocacy and in our funding so that we provide leadership to a rebuilding world that emphasizes values, understanding, knowledge and civility as core competencies that infuse every aspect of the way we live our lives.

It is a daunting mandate. We should do no less.

#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.

#356 – Now, About that Humongous Transfer of Wealth…

November 11th, 2019

Richard Marker

Reader alert: This piece, as #354 and #355, has a clear public policy point of view that many will find political.

One cannot be in the philanthropy world, the financial management industry, or the demographic field very long without hearing about the massive multi-trillion-dollar transfer of wealth. The amounts to be transferred from generation to generation boggle the mind. Surely it is so great to be transformative.

While I am neither an economist nor a wealth manager, I have no doubt that those numbers are derived from real data. I also have no doubt that wealth managers are hyperventilating over the fees that will accrue when these monies are invested, and fundraisers for both nonprofit and for-profit funds are salivating in anticipation. [I am only slightly exaggerating but in conference after conference, I see their evident enthusiasm.]

More relevant is that I am absolutely sure that some heirs and their families will be well cared for, as they used to say a century or more ago, “beyond the dreams of avarice.” But only some, and that’s the point.

If the transfer were in anyway broad-based and really likely to raise the living standards of everyone, the demographic projections wouldn’t be as bleak as they seem. Why is it that whole swaths of millennials assume that they will not achieve the financial security that their parents had, that they see home ownership as elusive, that they wonder how health care and social security and college loans will be paid for? And what about all those McMansions that were supposed to be guaranteed nest eggs that are now waiting and waiting for buyers?

Even after one of the longest economic expansions in history, middle class incomes are barely covering what they did a generation ago and certainly don’t reflect this great run-up in stocks or provide cushions against emergencies.

Now, let’s turn to the philanthropy piece of this: Initiatives like The Giving Pledge [full disclosure, I have a very peripheral connection] are intended to give some of those billions a place to do some good. And some of the signers are being very proactive with their funds to expand their giving to non-profits or at-risk populations or systemic social issues. But many who have committed at least 50% of their net worth to philanthropy have chosen to fulfill their pledge by funding their foundations upon their death. Far be it for me to malign that decision, but let’s be honest, that means that in many cases only 5% of that money will be distributed on an annual basis and only at some uncertain time in the future. That counts and that money is certainly important but hardly a game changing transfer of wealth to the non-profit sector. To date, sad to say, under 300 billionaires have signed on. There are many others who have yet to announce their intentions.

When looking closely at this massive “transfer of wealth”, it becomes ever more evident that it is a boon to the already wealthy, and a smidgeon to the vast majority of the rest of the population. If there has been an inordinate, and morally dubious, concentration of wealth in the hands of an ever-shrinking percentage of the population over the last years, this transfer is destined to intensify and solidify that oligarchy.

There are some public policy strategies that can help that transfer be more widely enjoyed. Most of these do indeed have an impact on the highest net worth among us; none of these will have the slightest impact on their lifestyle. I am sure that these 7 are not an exhaustive list, but I do feel that together they may begin to redress some of this accumulated equity imbalance:

1. Eliminate the cap on taxable earnings subject to social security tax. That is the single most regressive tax – with a much greater burden on lower- and middle-income earners, and an exemption to the highest.

2. Tax capital gains at the same rate as other taxable income.

3. Support some sort of guaranteed medical care for everyone. I doubt such a national insurance policy will ever come close to what congress grants itself or what top executives in the corporate sector receive, but it is an inequity widely written about. [I am purposely not applying terms such as “Medicare for all” or “Obama Care” etc. They have become so loaded and weaponized that it is impossible to discuss the true underlying issue.]

4. Support policies that restore SNAP funding to levels that make the measurable difference in reducing food insecurity for children, the working poor, etc. Studies show the impact in the workplace, in school performance, and in public health when the population receives adequate nutrition – or doesn’t. The financial return to the society as a whole will more than outweigh the short-term public expenditures.

5. Support a minimum wage that doesn’t guarantee continued poverty. Assuming that the working poor can actually live on $15/hour in almost any municipality in the USA is willful neglect. The deteriorating impact on society of the growing homeless population, even of people working full time, is measurable. We can argue about employment statistics, but it is unconscionable that those numbers are on the backs of full-time workers who can barely afford housing.

6. Support the development of reliable, regular, and widespread public transportation. Those without access to public transportation are fully reliant on private automobiles. For many, that is the second largest annual expenditure after housing. And, needless to say, that impacts lower income folks the most. If one can provide the kind of public transportation taken for granted in many parts of the world, it would immediately provide an increase in net spendable income, reduce the palpable tension in the workplace caused by driving to and from work [according to several studies], and help to sustain engaged community involvement [that has dropped precipitously over the last 2 generations].

7. Restore Pell Grants and the equivalent to the levels they were originally intended. When developed, they were the second most significant source of higher education tuition funding [after the GI Bill]. Millions of lower middle-class people earned college degrees through those grants without incurring back-breaking debt. As those grants have been eroded over time, they have moved from being the “leg-up” to just another bureaucratic burden with minimal return. Simply restoring those funds to the level they were originally intended [inflation adjusted] would make a huge difference in reducing the $trillions of debt too many college graduates carry.

Now, of course, while some of this will require increases in taxes, let’s be clear -that is why we have taxes. “Tax” is not a dirty word – taxes are how we express our individual commitments to having a functioning society. An equitable tax system, without undue breaks for those who need it the least, is the truest form of a “trickle down” economy.

Now I know that some lobbyists will argue with every one of the 7 points, and I am not so naïve to think that whoever gets elected will find it simple to enact public policy that easily. But I do call upon those who will be the primary beneficiaries of the much-celebrated massive wealth transfer to lead the way. For most, it will be painless.

Several years ago, I was meeting with a very wealthy family in another country. The scion, the oldest of Gen-2, told me that he and his peers felt very bad that so many people in their community could not afford the kinds of wedding celebrations that they had. Did I have any thoughts on how they could address that social stigma and provide the less wealthy with the kinds of weddings the wealthy took for granted? I asked this fellow if he and his fellow wealthy had ever considered toning down their own over the top ostentation that only reinforced the wealth divide and played into that very stigma. It would reduce the social pressure and the need to create an entire funding enterprise. It had never occurred to him or his peers. It caught him off guard to suggest that their behavior sets the standard that leads to that perception of inadequacy and that they might have a role to play in reducing that divide.

Perhaps it is time for those whose wealth exceeds any possibility of human consumption to ask themselves that question. It might make a modest increase in taxes more palatable, and it might lead to a level of empathy that would change the social discourse in less judgmental and patronizing ways.

And ultimately make that transfer of wealth something all can celebrate.

#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.

#332 – Values Based and Impact Investing: Who is leading the way in the Philanthropy Sector

February 7th, 2019

Richard Marker

In a recent front-page story in the Chronicle of Philanthropy [“Doing Well and Doing Good”, 8 January 2019], Marc Gunther reported on an in-depth analysis about how many of the largest foundations are or are not using “impact investing” as a significant part of their investment strategy.

Not so surprisingly, he found a wide variation, although somewhat more surprisingly, he found that some of the foundations most outspoken about certain issues such as the environment and social justice do not apply impact or social value investment strategies on their investment side. Of course, some do, and many others have made their long-term intentions to do more quite clear.

In this post, I would like to add a bit of nuance and a different bottom line about where the philanthropy field is at this time.

Exactly what “impact investing” is has inspired a good deal of debate. Is it the same as “values based” investing? To illustrate how complex this question is, permit one very personal example: When I mentioned our personal investments in a company developing solar fields in Africa to a prominent expert in the impact investment field, one who takes a fairly purist view of the term, s/he needed to be convinced that what we did was a true “impact investment.” Our decision was based on an attempt to apply a series of values screens and a conviction that the ability to use renewables rather than fossil fuels would allow these nations to leapfrog a dated and destructive infrastructure. The social and environmental intervention persuaded us, and the “financials” persuaded our advisors. However, the above mentioned expert said that until there was a deeper analysis of the underlying impact and metrics, it was not yet a proven “impact investment.” S/he did not say it was a bad thing to do, only that it might not rise to the level of a true impact investment.

Therein lies a tale – but first let’s go back a decade or two.

Philanthropists and foundation trustees used to [forgive this gross generalization] accept an iron clad wall between the investment side and the philanthropic spending side. A few outspoken outliers used the shareholder activist tool to challenge tobacco companies, resource sourcing, and a few other values screens, but they were the exceptions.

A very few even challenged personnel practices internal to those companies or in the companies that were providing services or resources. Mostly, though, the practice was pretty consistent: trustees followed the leads of their investment managers – “our job is to make the maximum amount of money so that you can spend your money toward social good.” Indeed, in those days, investment managers were quite convinced that values-based investing, no matter what screen you chose, required that a funder accept concessionary returns – i.e., trade off income for values.

A series of convergent factors began to challenge that: some of it was coming from idealistic b-school students and graduates who believed that doing well by doing good should be a realistic aspiration. [Elsewhere, I have challenged the conviction that only for-profit solutions can solve social needs.]

The second major challenge to the traditional divide came from within the philanthropy world itself. Many began to ask about why only 5 cents on every foundation dollar were going to social good and 95 cents ignored it. That doesn’t seem right, especially when it could be shown that the investment and the program teams were functionally cancelling each other out, and the legal enabling of a foundation or donor advised fund requires that it be for social good.

Therefore, values-based investing emerged as a logical vehicle. It served the larger interests of those who wanted to feel good about their financial aspirations and allowed a rethinking for philanthropy folks to see if there might not be a better alignment.

Unlike Marc Gunther’ well documented piece, these next sets of comments are not based on structured research, but I have been in the field for a long time and am invited to speak and participate in both impact investment conferences and philanthropy gatherings on a regular basis. So, while the next set of generalizations may not be scientific, they are more than a random collection of anecdotes.

Whether or not one views them as synonyms, my observation is that “impact investing” and “values-based investing” are now mainstream. Being mainstream does not mean that everyone does it, but it has become part of the consciousness and planning of many philanthropists and investors. Indeed, while a decade ago, at investment conferences. impact investing was an outlier topic reserved for the “soft” session on philanthropy, the legitimacy of which was frequently challenged by wealth managers. Today, entire conferences talk about many investment opportunities independent of any philanthropic motivations, and values-based investing is integrated into most of those same conferences. There is now plenty of evidence that, when done with the same diligence as any other investment, there is no need to view the returns as “concessionary” and the market opportunities are growing.

Among many smaller and medium sized foundations, the alignment questions are very real and may even be easier to implement than for larger ones. How much or what percentage or what values or which methods are the best are all topics of active debate, but rarely are they not on the table. Often any resistance is not with the funder but with an outside investment manager for whom this still doesn’t compute with longstanding planning orthodoxies.

If my observations regarding the field of non-mega givers is in any way accurate, it reflects more of a sea change than was suggested by the findings reported in the recent Chronicle article. Why might that be?

Every society has had royalty or aristocrats or oligarchs whose wealth was massive, and whose philanthropy was very visible. That was true before modern times, and in virtually every society today. However, what often defines the more authentic philanthropic character of a society is the behavior of those who are successful but not so that their lives are fully removed from those who are not wealthy. The more authentic story of philanthropy always has been about the merely rich or the not quite so wealthy more than the mega. [I write this at the conclusion of the recent government lock-out in the USA. If one wants to understand the difference of world view, listen to the tone-deaf comments of the super wealthy in the administration regarding how people should be able to deal with the sudden deprivation of a pay check.]

To return to a very personal perspective, it is admittedly not so easy to be fully values based invested. There are many new “social” mutual funds, but upon close examination, they have a lot of overlap. Even for not-so-deep pocketed investors such as we who are committed to move fully into the values space, it isn’t so easy to develop a proper investment strategy.

If one has huge amounts of money that must be invested, it is not so simple to consistently apply values screens. Even many of the largest polluters have invested heavily in alternative energy solutions. Alternative and direct investments of all sorts matter, but they usually require more intensive due diligence. To be sure, the mega funds have more resources for that due diligence, but even with that, a good deal of money finds its way into traditional investment vehicles.

However, the reason I think that a deeper dive into the philanthropy field would find more active engagement than reported in the article is that with less money come more low-cap or local options. Or more to the point, there is less need to have philanthropy funds invested in the large-cap type stocks and funds. A more modest, even if well-heeled, funder can engage in local affordable housing or career changing projects, or alternative energy solutions that are too small for the fund managers of the mega funders to consider. Shallow pocketed funders can choose to put funds into one or more of the growing number of values defined mutual funds. They can extend loans to local non-profits to cover cash flow or growth strategies or government shutdowns because they have the relationships that allow both good due diligence and hands on local knowledge.

This does not mean that every funder with more limited means is using our resources with a values screen [nor, for that matter, am I suggesting that mega funders aren’t] – only that it is easier for those funders to choose to do so, and, to the point raised by the Chronicle, to have those investments be a larger portion of one’s investment portfolios.

Not that many months ago, the largest investment company in the world, Black Rock, announced that it was now applying an ESG [Environment/Social impact/Governance] screen to all of their investments. Their conviction is that, over time, it is not only the right thing to do ethically but also will yield superior investment returns. Many now argue that values based/impact investments will soon be the norm and those categories will be as central to investment strategies as financial due diligence. When that happens, the mega foundations will be right there.

Until then, though, it may well be that many more modest funders and investors are leading the way.

Mandatory Annuity Distributions and Corporate Social Responsibility

October 19th, 2014

Richard Marker

How did that happen? It sort of sneaked up on me but a manager of some of our retirement funds was unequivocal that I am not very far away from having to take distributions from those funds. One may try to deny the inevitability of getting older, but the IRS only looks at your birthdate.

What I learned was that I have done a respectable job of planning and saving for the post-work years – which I hope are still many years away, but I haven’t done such a good job at doing so in the most tax advantaged way. [Before I continue – if you are a financial planner, wealth advisor, or fund raiser, please do not contact me. The point of this post, to be made below, is about something else altogether.] I confess that I hadn’t given much thought to the way in which annuities and other accumulation vehicles are taxed – or why.

Indeed, in looking at the way different vehicles are taxed, it became pretty clear that there is no inherent public policy benefit which accompanies the various instruments yet there are real tax differences. The only logical explanation is that certain approaches are beneficiaries of effective lobbying efforts; they may or may not be in the best interests of either retirees or of the society writ large.

As long time readers of these posts know, I am a believer in taxes. Frankly I think that most of those who can afford to pay taxes pay too little, and are willing to pay more. We should expect more and pay for more from our government. Health, education, retirement, etc. shouldn’t be dependent on the vagaries of one’s employment but rather built into the fabric of a functioning society. These are communal values which should be made manifest by our support for the systems that sustain them, i.e., taxes.

Yet, it is not surprising that faced with the option of additional income into our pocket, it is tempting and probably prudent to make significant changes in our investment allocations. In doing so, I and we would only be following the law, and not doing so would make us seem like saps, squandering what can be rightfully ours. As one who has, in principle, done our own taxes every year, that is no different than what I have done each year – utilizing all legal and available legal deductions and reductions. [I am proud to say that IRS auditors have agreed.]

What upset me, though, in contemplating the choices before us now, is that our current choices would be based exclusively on taxes. That hasn’t been the case in the past. We didn’t buy our co-op primarily because of tax advantages; we don’t make charitable gifts because of tax deductions; we don’t go to doctors because of health care deductions. Those tax implications are benefits of other more primary and essential decisions we have made and are consistent with some clear public policy benefit. But if we change our investment approaches now it wouldn’t be because of any value in our lives other than our tax bill. Something to think about.

Which brings me to what this post is really about: Corporate taxes and corporate social responsibility.

It is no secret that many corporate entities make major strategic decisions based on taxes. One would have to have had one’s head deep in the sand for months to have missed some highly visible and flagrant recent examples. Some companies have “merged” in order to move their corporate headquarters to a more tax friendly country. Some have incorporated in states or cities or countries with more favorable tax rates. Some have negotiated with states or local government for tax relief – only to move elsewhere when those exemptions expired.

If one listens to their arguments, they suggest that US taxes are too high. That would be credible if they actually paid those taxes. But every study of what many corporations actually pay shows that there is very little correlation between what the tax rate is and what is actually paid.

Of course, they argue, they are only following the laws, only taking deductions they are permitted to take. That may be true but it is, at best, disingenuous. After all, these corporations pay very, very, very, big bucks to lobby for favorable tax laws. Is it any surprise that some have a balance sheet showing profits of $billions, sufficient to pay dividends and huge salaries, but, miraculously, they have no taxable income? That doesn’t just happen, and it certainly isn’t good public policy. Why, I wonder, should I, through my taxes, be subsidizing these $multi-billion companies?

Many of these same companies pride themselves on their generosity. They have employee engagement programs, corporate matching of charitable gifts, sponsorships, have a corporate foundation, and many other worthy and well meaning efforts. All of this is called “corporate social responsibility.” These efforts add up to an average of about 1% of their profits.

I have a proposal to corporations. Do you want to be known for your corporate citizenship? Pay your taxes at the same rate as your employees. My guess is that would far exceed the amount now allocated for CSR.

Just imagine how much would be available to solve social problems: SNAP funding and unemployment benefits for the long-time unemployed could be restored. Pell Grants could be readjusted. Social welfare organizations could get paid in a timely manner. Bridges and railroad tracks could be repaired. Who knows what else?

Sure, the voluntary efforts currently known as corporate social responsibility are very welcome. Keep it up. But they pale in comparison to what social good could be accomplished if these same companies paid their fair share – as all of us are expected to do.

No one likes paying taxes, including me. But all of us take advantage of what our taxes provide, including corporations. None of us should be exempt from our communal social responsibilities. None.