Posts Tagged ‘Foundations’

“Social media powers social networks for social change.”

Beth Kanter and Allison Fine offer that thesis in The Networked Nonprofit: Connecting with Social Media to Drive Change. They argue that transformation can result from online technologies, including social networking sites, blogs and wikis.

In recent weeks, the New Yorker’s Malcolm Gladwell has stirred debate by criticizing this and other broad notions about the power of social media. In an article, Gladwell suggests that, at best, social media can make things more efficient. However, such technologies cannot fundamentally alter the status quo or foment social revolution.

Maybe not—though both Kanter and Fine took to their respective blogs to contest Gladwell’s claims, which are driven by a focus on past efforts at social activism and protest. Activism is not the only way to bring about social change, however. And technology advances have altered society (think of the introduction of steam, of the printing press and of the automobile) providing a new status quo. Finally, small changes can lead to bigger things. But not always better things.

In their book, Kanter and Fine focus in part on the way foundations operate, and on the way the next generation of “digital natives” will give: responding to causes rather than individuals and organizations. The authors contend that future individual givers will be inclined to join or support a network of people and organizations that collaborate to tackle an issue. And foundations have given rise to crowd-source grantmaking, as I’ve discussed in previous blogs.

Kanter and Fine believe that transparency will increase in the nonprofit sector. They envision more organizations operating with a “hive” architecture, rather than hierarchies or in silos. And they imagine that everyone in a hive organization, not just an organization’s leader or communications staff, would be engaged in true, two-way interactions with people on the outside.

Even if, citing Gladwell, “the revolution will not be tweeted”— and there has been too much hullabaloo over technology’s power— social media offer tools, which, when used to full advantage can promote transparency, collaboration and a new openness to ideas from unusual sources. Surely these are values to promote, especially in the world of social change. But— as Digg and its Digg Patriots demonstrate—this tool can be used to distort as well as to discover. Intentions matter.

—Jane Wales

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Life ain’t fair. Foundations pay full value to the for-profit consultants who advise them, but often fail to cover the true costs of the same services when offered by non-profits. How often have nonprofit leaders been tapped to provide advisory services to a foundation’s grantees or skills training for the foundation’s program officers, without thought of compensating the leader’s host organization for his or her time?  How many grants cover direct expenses but do not cover the true costs of a program or project by including indirect expenses? The Ford Foundation will pay 10% overhead. The Knight Foundation will pay none. Thus, each borrows from the grantee’s other sources of revenue, such as membership dues, registration fees or those increasingly rare general operating grants from other foundations or donors.

It turns out that governments do the same. The Government Accountability Office (GAO) surveyed nonprofits that receive federal grants and contracts and found that 88% are not reimbursed for their full costs. Some receive nothing at all for their indirect costs. Further, many of the federal grants managed by states are inconsistent in their treatment of indirect costs.

Federal agencies permit nonprofits to retain a share of contract funds for indirect costs, but when state and local governments administer the grants, each follows its own practices. The GAO offered the example of a US Department of Health and Human Services grant program, for which Wisconsin allows a reimbursement to nonprofits of up to 14% for indirect expenses, while Maryland provides no overhead at all.

In the meantime, for-profit contractors are usually able to recover true costs, while their non-profit colleagues may get as much as 20% less as a result of a government’s policy with respect to reimbursement to nonprofits.

Something is very wrong, especially given that many non-profits are often far leaner and more cost-conscious than their for-profit counterparts. Let us hope that the GAO report inspires a rethink at a time when governments are increasingly shifting their responsibilities to the social sector without the resources required to meet them.

—Jane Wales

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If Congress were to double or triple the private foundation excise tax, asks Joel Orosz of Grand Valley State University, “does anyone truly think that there will be a groundswell of support for foundations” that resist? In a March 10 guest post to the Center for Effective Philanthropy blog headlined “Déjà vu (or 1969) All over Again?”, Orosz suggests it’s too late for foundations to react effectively to stem a possible backlash against the sector. Still, the philanthropy professor counsels foundations to take steps on their own to improve practices, including training employees to be more professional and more accountable to nonprofits.

Orosz is just one of several commentators recently suggesting that a growing populist fervor in society isn’t just anti-government, but anti-institution—and a threat to philanthropy, one that can’t be summarily dismissed and should propel changes. For example, in Small Change: Why Business Won’t Save The World, Michael Edwards wrote that foundation leaders will vociferously resist and complain about the many suggestions he makes in the book calling on Congress to require more transparency and accountability from foundations. But Edwards, a senior fellow at the think tank Demos and the leading skeptic of philanthro-capitalism, says that public and political pressure will eventually build and force changes in the sector. Similarly, in a February 25 Chronicle of Philanthropy opinion piece, the Hudson Institute’s William Schambra argued that philanthropy’s increasingly business-minded approach is at odds with the populist mood of the American public on both ends of the political spectrum. He thinks the tide is turning against foundations.

To help improve the situation, Thomas David of the Community Clinics Initiative argues that foundations should show they’re making sacrifices in this economy along with everyone else. It should not be a time of hunkering down, cutting grantmaking, trimming staff and expenses or focusing on re-growing endowments. Instead, David writes in an essay published by Grantmakers in Health (GIH) that foundations should make some big bets, ease up on control of grantees and practice mission-related investing. In other words, take risks that put them on the line in ways that might tangibly, not just symbolically, benefit nonprofits in a time of need. More specifically, David advises foundations to increase their grantmaking this year—even if they’re one of those already exceeding 6 percent payout. He complains that over the past couple of decades, foundations have evolved to become more risk averse than ever; they’re so focused on assets that growth is their priority, not giving.

David’s hard-charging essay is just one of several included in Taking Risks at a Critical Time, released in March in tandem with GIH’s 2010 annual meeting. Foundations hesitate, according to this publication, in part because of an over-reliance on proven practices, unwarranted anxiety about engaging in public policy and avoidance of failure of any kind, despite the fact that a healthy proportion of failures in a grant portfolio is a sign that a foundation is successfully venturing in new territory. The lead essay includes examples of “risk taking in action,” efforts to improve health.

Tom David is not optimistic, however. He essentially calls foundations fair-weather friends to nonprofits: “It is at times like this that nonprofits, who like to think of foundations as allies in their struggles, have learned not to count on their friends when they need them most.” I wonder. It is not the role of foundations to support nonprofits based on need, but rather based on merit, because doing so fits a larger strategy—one that produces a social benefit. I have a good deal of faith that foundations will do their best to achieve that end. But the way in which they do it must take into account the public mood, and even distrust that these observers so powerfully describe. No institution is being given a pass, particularly one that is seen as opaque while claiming to advance the public good. “Trust us” has never been an adequate response to doubters.

—Jane Wales

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Will the Supreme Court ruling giving greater political voice to corporations have the effect of focusing the minds of those funders who support policy advocacy?

Many foundations now appreciate that the impact of policy advocacy is not as hard to measure as once thought. Less clear, according to papers in the most recent issue of the Foundation Review, is how fully foundations appreciate the importance of their support for advocacy as part of a larger social change strategy, and how much investment they are willing to make in its evaluation. The recent Supreme Court ruling allowing corporations to spend more money on political campaigns may change their perspective.

The latest issue of the Foundation Review offers a number of research papers with insights for foundations working in the public policy realm. In particular, one paper from Innovation Network’s Johanna Morariu and Kathleen Brennan notes that three-quarters of advocacy organizations have not evaluated their work, and more than 80 percent of them have never worked with an outside evaluator. What advocacy strategies are appropriate in what contexts? What combinations of organizational capacities are most important? What are the most meaningful interim indicators in the journey from grassroots organizing to sweeping social change? The authors say these and other critical questions can’t truly be answered without greater support from foundations for advocacy evaluation. Morariu and Brennan go on to identify the key qualities of an effective advocacy funder, which include the usual suspects of offering extended grant cycles, support for program evaluation, and general operating support to enable grantees to respond flexibly to changing circumstances.

Another paper in this issue of the Foundation Review offers specific insights for foundations working to influence policy across the U.S. Ann Whitney Breihan of the College of Notre Dame of Maryland focuses on a multi-state program of the Robert Wood Johnson Foundation that has impacted national policies on care for developmentally disabled adults. Among her suggestions: To build momentum for a particular policy, resist a temptation to fund states scattered across the country and instead focus funding in a region. Her study bears out that states are more likely to “follow the pack” in their own region. She also says funders should focus funding in those states that have already demonstrated interest – by spending their own funds – in a particular policy area. They’re more likely to consider further innovation in the area.

In general, philanthropists may be less hesitant about helping to define the voice of the social sector. Noting the success of highly strategic politically conservative foundations, other funders across the political spectrum have come to believe that nonprofits and foundations need to gain a greater voice when it comes to public policy. Many have taken concrete steps to do so by hiring more communications and policy specialists and more frequently collaborating and engaging with politicians and government agencies. As borne out in the Foundation Review, evaluation of these efforts is necessary in order to gauge how effective the current strategies and programs are and what can be done to improve them. With the recent Supreme Court ruling, the need for these steps has become ever more apparent.

For further reading, the book Seen But Not Heard: Strengthening Nonprofit Advocacy (published by the Aspen Institute) presents the findings of a multi-year research project called the Strengthening Nonprofit Advocacy Project (SNAP), conducted by OMB Watch, Tufts University, and the Center for Lobbying in the Public Interest and offers specific suggestions that nonprofit leaders can take to strengthen their organization’s advocacy work.

-Jane Wales

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Might trustees be the solution to the woeful lack of knowledge civically engaged Americans have about foundations?

That’s the hypothesis of an experiment underway from the Philanthropy Awareness Initiative. PAI is the foundation-funded organization that has reported in study after study that very few engaged Americans, those who represent the 12 percent of the adult population active in their communities as civic or business leaders could cite even one example of a foundation benefiting its community or addressing their concerns. As I noted in a post about PAI’s latest survey, it is the culture of private foundations to shun the spotlight and direct attention to the issues they advance or the grantees they support. This notion is seconded in another recent survey, this one from the Council of Michigan Foundations. According to this survey, foundation trustees tend to focus on their role as investing, growing and distributing foundation resources, not in communicating with other non-foundation leaders.

But what if that changed? Building on its survey, the Council teamed up with PAI to launch a pilot project with 14 members through which they have offered “message training” to trustees, focused on the value of foundations, well beyond their grant-making role. The goal is to encourage trustees to engage peers in their personal and professional networks – in essence, enlisting trustees as strategic foundation communicators. In a Jan. 20 post for the Communications Network blog, the Council’s Rebecca Noricks offered details about this Philanthropy 3-D-Michigan (3D) pilot, noting that its goal is to develop a new communications model for the field. It has the potential to radically change traditional foundation communications and the heavy reliance on press releases about grants, she said, as well as to boost understanding about the work of foundations. The organization is currently testing and evaluating the pilot, with plans to release a report this spring on its progress and adapt it for use among grant-making affinity groups in Indiana and Wisconsin.

Early comments from participants suggest the pilot is on to something. Noricks quotes Joseph M. Stewart, chair of the W.K. Kellogg Foundation, saying that trustees should be “educating others to the important role that foundations play in society today and letting other leaders from other sectors know we want to work with them. Together we can make a difference. Better communication methods and techniques is one way that can be achieved.”

Given the renewed interest in collaboration across sectors, Stewart makes an important point. Leaders throughout society need to know that foundations are transparent, open and willing partners.  Foundation trustees are often employed by or have close ties with for-profit or nonprofit organizations.  There could be substantial, long-term payoffs if trustees were to directly talk to others in their networks about foundation missions, programs and successes. Foundation leaders worry that the story of philanthropy is not well told. Awareness of PAI’s project may spur some to discuss the idea with their trustees now.

-Jane Wales

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Jane Wales, World Affairs Council President and CEO, has two new blog entries up on Huffington Post. The first addresses the expectations Americans have for foundations while the second looks at the new book by Alicia Epstein Korsten, Change Philanthropy: Candid Stories of Foundations Maximizing Results through Social Justice.

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Are your grantees spending too little on overhead? Or are they under-reporting how much they actually spend on such expenses? Chances are, both, according to the Bridgespan Group. In an article in the Fall Stanford Social Innovation Review, the nonprofit consulting firm’s Ann Goggins Gregory and Don Howard write that nonprofits under-spend and under-report operating expenses because they feel anti-overhead pressure, especially from funders. Although nonprofits need to be more assertive in reporting how much it costs to run their organizations, Gregory and Howard say that funders should take the initiative to stem what they call a “vicious cycle” that is “slowly starving” nonprofits. Based on Bridgespan’s research, foundations generally only allow overhead or indirect expenses to total 10 percent to 15 percent of each grant, when the true cost percentage is likely to be twice that. And this compares to an average for-profit rate around 25 percent of total expenses. In fact, the authors cite a survey reporting that most funders realize their overhead allocations don’t adequately cover grantees’ needs, but they proceed as usual anyway. The authors call for a coordinated, sector-wide effort to put pressure on foundations to curb their unrealistic expectations about overhead.

Beyond confirming a wealth of prior research that finds an unhealthy obsession with low overhead costs in the sector, this article underscores the general need for foundations to be more actively engaged in candid and realistic discussions with their grantees. There is a crucial need for more general operating grants, especially given the difficulty many nonprofits are having staying afloat during the recession.  However, this need for general operating support will not fade as the economy recovers.

–Jane Wales

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Associated Press writer Josh Funk reports on Peter and Jennifer Buffett’s NoVo Foundation, detailing their commitment to empowering women, collaborating with other groups to achieve their goal and the incorporation of Warren Buffett’s business ideas to philanthropy.

Peter Buffett will be a speaker at the upcoming Global Philanthropy Forum 2009 Conference in Washington, DC, April 22-24.

Full article: Peter Buffett’s foundation gives millions to girls

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Over at Tactical Philanthropy, Sean has sparked a great conversation about the role of foundations in driving social change.  Instead of giving the post our own interpretation, we’ll just share the opening paragraph:

“Recently I’ve been consumed with thinking about the implications for    philanthropy of a mindset where donors want to achieve a certain goal they think is valuable (such as provide mentors to low-income students) and then go looking for nonprofits to help them do this vs. a model where donors go looking for great nonprofits in a general focus area (education) and the nonprofit focuses on the tactics. In the first model, funders spend most of their time studying how social good is created. In the second model, funders spend most of their time finding and analyzing nonprofit organizations.”

Later in the post, Sean offers his own opinion on the matter:

“I am arguing that the goal of philanthropy should be that of a social capital market. A system for providing capital to nonprofit organizations. … I’m simply talking about a shift in emphasis from one in which foundations think of themselves as social impact engineers to one in which they think of themselves as social capital investors.”

While the post is thought-provoking itself, what has made it an even more interesting read are the comments that have been offered over the past week by leaders of foundations who are attempting to invest in the most effective manner in social change.  We encourage you to read the post and the comments here.

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A Wall Street Journal article today from the end of last month highlights a threat to foundations nationwide. Members of Congress are saying that foundations have an obligation to use the money they save with tax exemptions  – money that otherwise would have gone to the federal government – where it will have the greatest impact on public good.  Meaning – where Congress thinks it will have the greatest good.  If they do not feel that foundations are doing this, they are threatening to get rid of charitable tax exemptions.

To counter this threat, a new organization called the Philanthropic Collaborative commissioned a research project to convince policymakers of the benefits of philanthropic dollars.  The study finds that foundations have a much more positive economic impact on society than we had thought, that “for the $43 billion that foundations spent on grants in 2007, they created direct economic benefits of $368 billion.”

Perhaps policymakers will find that the benefits of foundation work ‘as is’ will significantly outweigh any gains that could be gleaned by denying them their charitable deduction.

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The Foundation Strategy Group just released a report culminating a year of  interviews with leaders in the field on evaluation in the nonprofit world.  The report, From Insight to Action, finds that foundations are undergoing a fundamental change in the way they use evaluation. “A shift in thinking has broadened from “What was the impact of our grants?‘ to ‘What do we need to know to increase our effectiveness?’ ”  The report finds that evaluation is most useful when it is used to answer three questions:

* How can we better plan our work?
* How can we improve implementation?
* How can we track progress toward our goals?

Foundations are increasingly moving toward real-time evaluation, and measuring progress in their field of interest, rather than the isolated impact of their specific grants.  There is increasing emphasis on a culture of learning, and of delegating more aspects of evaluation to grantees, who are much better placed to understand and gather data on indicators in the field.

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