Gara LaMarche, President and CEO, The Atlantic Philanthropies

NCRP Report Should Spur Reflection About Social Justice, Not Attacks

By: Gara LaMarche

The recent report by the National Committee for Responsive Philanthropy (NCRP), “Philanthropy at its Best: Benchmarks to Assess and Enhance Grantmaking Impact,” has stirred up a storm among foundations not seen since, well…the last time foundations were called upon to be more attentive to addressing social justice issues and serving the needs of diverse communities.

That wasn’t too long ago. Last year, a number of California foundations were up in arms about a Greenlining Institute report purporting to find that communities of color were underrepresented in their grantmaking. This was followed by a clumsy effort by the California Assembly to require foundations to be more transparent about their practices and efforts to ensure diversity. The bill was dropped when the 10 largest foundations in California agreed to “settle out of court,” as it were, by announcing a set of steps to pump more money into low-income minority communities.

The objections to the Greenlining report and the California Assembly bill had some merit. First, there were some legitimate concerns about the study’s methodology. And second, many were alarmed with the crudeness of the legislature’s effort, which had the quality of a shake-down operation and may in fact have treaded on important values of philanthropic independence and pluralism. Nevertheless, it is inarguable that philanthropy has far to go to in dealing with the appalling inequalities in American society, and the structures of exclusion that have produced, perpetuated, and exacerbated these divisions. We need all the help we can get to move us to a better and more effective place.

You might think, therefore, that a careful and thoughtful report by the NCRP, a respected nonprofit watchdog, would be welcome. Especially since the report represents a real effort to feed the discussion about philanthropy and social justice and set forth voluntary benchmarks meant to promote debate. (Full disclosure, I serve on the NCRP’s board, which is composed of nonprofit and foundation leaders.) But the report has hardly been welcomed.

The attacks from the Wall Street Journal and the few avowedly right-wing foundations are predictable, since they have a forthright ideology that sees racism as yesterday’s problem, government as the enemy, and inequality as something for the free market to sort out, if at all. What has been more surprising and troubling, however, is the intense opposition from some quarters of the philanthropic community—from people of reputation and goodwill who are genuinely concerned about inequality and racism and who want to make philanthropy more strategic and effective.

In recent years, the philanthropic effectiveness movement has promoted all kinds of metrics for impact and benchmarks for best practices. I have sometimes quarreled with the particulars, but the effort is worthwhile. Yet this movement has been to a considerable degree technocratic, and the discussion it has generated has had a certain sterile quality much of the time. This is so because the discussion of effectiveness is too often detached from the social worthiness of the aims of philanthropy.

As a practitioner of advocacy grantmaking, I can admire, for example, the Bradley Foundation’s strategic success in promoting school voucher programs. At the same time, I abhor the creeping privatization of education it has spawned. The NCRP report goes further to provide real tools for measuring effectiveness within a social justice framework and thus, combines the drive for effectiveness and the kind of change so many of us seek.

I am not equally enthusiastic about every recommendation put forth by the NCRP report, just as I do not equally support every recommendation made by the Center for Effective Philanthropy, though I admire each group and Atlantic supports both of them. Atlantic, like virtually all foundations, does not meet every benchmark in the NCRP report, and some we care about more than others. The report recommendations are meant to be viewed as aspirational, more in the nature of one’s New Year’s resolutions than stone tablets handed down from Mt. Sinai, and there is nothing in the report that suggests otherwise. We in philanthropy should be gratified to see a serious effort made to assist foundations in advancing equality and social justice. The report should be engaged on its merits, and not with ad hominem attacks.

No one has a monopoly on the benchmarking business, and those who attempt to marry two important philanthropic movements—one for social justice and the other for effectiveness—deserve our congratulations, not condemnation. We need to ask ourselves why the sector has raised it voice loudest in opposition to efforts to assure its social responsibility. We can and will do better.

Gara LaMarche is the president and CEO of The Atlantic Philanthropies.

Message from the President

Steve Gunderson, President & CEO, Council on Foundations

Maybe I’m just nostalgic. Or maybe it’s that Abraham Lincoln has always been one of my political heroes. But his words seem to hold a special meaning for philanthropy on this, the 200th anniversary of his birth.

In June 1858, Lincoln accepted his party’s nomination for the United States Senate from Illinois with his now-famous speech “A House Divided.” Some say the speech caused both his loss in 1858 and his presidential victory in 1860. His exact words, “A house divided against itself cannot stand,” suggested that the nation could not permanently endure “half slave and half free.”

I’m reminded of these words as I listen to the many responses to the National Committee for Responsive Philanthropy’s (NCRP) recent publication, “Philanthropy at its Best.”As you know, I personally issued a statement as president of the Council on Foundations. In doing so, I sought to reaffirm the Council’s guiding philosophy by stating that we:

…support the diversity of philanthropy—in our members’ missions, our work, and our people. We do so because diversity of purpose and perspective defines the mission of each philanthropic organization. Given this belief, we cannot endorse mandates, or impose measures that seek to promote a one-size-fits-all approach. We believe that the combination of voluntary leadership promoting diversity and inclusion, as evidenced by the Council’s work in this area, combined with a rejection of mandatory government regulations will best promote philanthropy—in size and service to society.

The Council believes in these values: foundation accountability to many stakeholders (boards; advisors; federal, state, and local authorities; donors and founders; and grantees), transparency in their operations, and effectiveness in their work. We want to see foundations remain committed to their missions and operate in an ethical manner.

We also believe that a single set of measures to strengthen philanthropy and the nonprofit sector are unrealistic. Each foundation is different in its structure, mission, place of work, and pursuit of goals. The Council aims to honor and respect that uniqueness. In fact, we have different standards and principles that address the specific needs of our constituencies: community foundations, family philanthropy, corporate giving programs, and independent foundations.

That said, NCRP’s document contributes to the discussion of these matters—and it’s a discussion our field must have. It is in that spirit—and my hope—that whether you agree or disagree with their recommendations, we have substantive conversations here, on the pages of TAI and in other forums, such as the Townhall session we’ll host at the upcoming Annual Conference in Atlanta.

We know that there are many, diverse voices. So let us ponder the role of philanthropy in 2009—at this time of economic crisis—and beyond. Doing so will only enhance, enrich, and empower us to consider better ways to serve the common good.

These conversations should not serve as a wedge to divide us.

The View from Here

Redefining Exemplary Philanthropy

By Aaron Dorfman

Aaron Dorfman, Executive Director, National Committee for Responsive Philanthropy

When I took over as executive director of the National Committee for Responsive Philanthropy in 2007, the board and I listened intently to dozens of people—fans and critics alike—about NCRP’s past work. And one message came through loud and clear: people wanted to know what NCRP’s vision for exemplary philanthropy looked like. So we started the process of developing what ultimately became “Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact.”

The criteria establish aspirational goals that, if practiced by more of our nation’s grantmakers, would lead to a more inclusive society and a stronger civic sector.

In our chapter about values, we call on grantmakers to find ways to ensure that marginalized communities are benefiting from their grants. We also discuss why funding advocacy, community organizing, and civic engagement is important for the health of our democracy. We believe it is a strategic way to have impact on issues that really matter.

In our chapter about effectiveness, we call on our nation’s grantmakers to provide general operating support and multi-year grants—practices that nonprofits say they need most in order to be more effective.

We also take up issues related to ethics, suggesting that diverse boards contribute to ethical operation. And, we reassert NCRP’s longstanding commitment to transparency.

In our chapter about commitment, we challenge foundations to give out more in grants, and to engage in mission investing.

The benchmarks we set throughout Criteria are all achievable. Many foundations we list in the report already meet or exceed the thresholds.

Our goal is not to set standards that will be uniformly imposed on the sector without regard for the rich diversity found among foundations. Nor are we advocating that these issues be codified into law. Instead, our goal is to have the leaders of every grantmaking institution in the nation seriously consider the important issues we raise. That’s why we have included discussion questions at the end of each chapter and why we distributed the criteria to 25,000 grantmakers. We are confident that if executives and trustees engage in serious discussions about these issues, some will decide to change their practices. If this happens, it will be good for our nation and the world.

I was very surprised by the venom with which the criteria have been met by some. Contrary to what a few vocal critics have been saying, we’re not establishing mandates. We’re not suggesting quotas. And, we’re not telling grantmakers to ignore donor intent.

Part of the problem is that people are basing their opinions on a pre-publication summary that doesn’t fully reflect the richness of the final publication. Further, whenever you challenge the status quo, some people are going to get upset

I urge grantmakers to keep an open mind until they have read the document for themselves. And I welcome debate and discussion about the substance of our recommendations, which tackle the critical and difficult issues we face as a sector.

Aaron Dorfman is the executive director of the National Committee for Responsive Philanthropy.

Enlightened Leadership

By Antonia Hernández

Antonia Hernandez, President and CEO, California Community Foundation

Critics have balked at diversity mandates advocated in the recent report by the National Committee for Responsive Philanthropy. Without offering a workable, alternative solution, however, the criticism falls flat. How do we ensure that our institutions and, by extension, our grantmaking, are inclusive of donors and grantees and benefit all charitable groups, including those with the greatest need? Through enlightened leadership.

Philanthropy is at a crossroads—congressional oversight and greater public scrutiny are demanding change. We need to take the lead. It’s time for the boards and staff leadership of the more than 72,000 foundations in the U.S., as well as the nonprofits they support, to think about what’s good for business and how to be transparent and accountable to a commitment to diversity. The face of wealth and philanthropy is changing in the U.S. and globally. Neglecting this would mean a missed opportunity.

Our boards and staff should reflect the demographics of the communities of donors and nonprofits we serve. Small, incremental changes won’t do. We are not there yet. The 2006 average among U.S. foundations is 23.2 percent staff diversity and 13 percent board diversity, according to Rockefeller Philanthropy Advisors.

What’s the tangible benefit of diversity? If those who govern and staff foundations are from diverse communities and have experience working with those communities, their fresh perspectives, knowledge, and skills will lead to a more robust and creative strategy that will better serve community needs. They’ll also attract a new crop of philanthropists and partners.

Diversity goes beyond a special initiative overseen by human resources. It’s part of an organization’s DNA that runs through everything it is and does. And it must start at the top.

At the California Community Foundation (CCF), the staff is 67 percent minority and 78 percent female. Reveta Bowers is our first African-American woman chair, leading a board that is 40 percent minority and half women.

Our tangible benefits from this feat are significant. We have more than doubled our assets since 2000. And over the last two years, we have doubled our competitive grantmaking to about $23 million. As of end of February 2009, we are 50 percent ahead of last fiscal year’s contributions and new funds. While diversity alone can’t be credited for these achievements, diversity was a critical component to making it happen. That’s because the composition of the staff changes an organization’s strategy and trajectory.

Look no further than what’s happening in California. Three other community foundations in this state are headed by innovative and strong leaders this sector needs ― in Silicon Valley, San Francisco, and East Bay. These foundation presidents are role models and yes, minorities.

Let’s not wait for another report or more congressional hearings to try to regulate how we do our business. We must take the initiative.

Foundations are experts at collecting and compiling data. If foundations do not like the data cited in the NCRP report or take issue with its criteria for good grantmaking, they are hard pressed to produce their own set of data and recommendations. Enter the Council on Foundations, which can exert its leadership by focusing on collecting objective and accurate data. It must convene the leadership and develop a plan with clear objectives to hold its members accountable.

The NCRP report has rattled some in the philanthropy sector. While its harsh tone may be problematic, the recommendations are hardly unreasonable. Many of us are already meeting many of the NCRP benchmarks. The report gives us an opportunity to lead. We must now take action. It is our best bet against the forces of regulation.

Antonia Hernández is president and CEO of the California Community Foundation.

NCRP at its Most Presumptuous

By Paul Brest

This article was originally published on March 5th on Brest’s Huffington Post Blog. Paul Brest is president of The William and Flora Hewlett Foundation.

Paul Brest, President, William and Flora Hewlett Foundation

Earlier this week, The National Committee for Responsive Philanthropy (NCRP) published a paper entitled Criteria for Philanthropy at its Best®: Benchmarks to Assess and Enhance Grantmaking Impact. NCRP starts from the premises, which I share, that philanthropy is seriously underperforming in achieving “social benefit or impact” and in helping “solve the most urgent problems facing our nation and the world,” and that disparities of opportunity, wealth, and power, especially when systematically coupled with race and other personal characteristics, are high among these problems.

From these premises NCRP derives prescriptions for both the proper ends and the proper means of philanthropy. With respect to ends, NCRP asserts that no foundation can have as important a goal–whether it be curing cancer or mitigating climate change–than addressing the plight of marginalized communities. Therefore, at least 50 percent of any foundation’s grants must be devoted to this cause.

As for means: “it is almost impossible … to examine each of the nation’s more than 70,000 grantmaking institutions and determine the extent to which that foundation is enhancing the public good, creating positive social benefits or advancing the public interest.” In an effort to impose a common metric, NCRP would require that 50 percent of a foundation’s grants be spent on general operating support and 25 percent be devoted to advocacy. It also sets some requirements for foundation governance and accountability.

Even for someone who shares NCRP’s concerns about marginalized communities, its hierarchy of ends is breathtakingly arrogant. Its prescriptions of means are more of a mixed bag. Many of the 70,000 foundations in the United States might actually contribute more to society if they followed some of the Criteria. But the tremendous social good done by others would be severely compromised. In aiming for the lowest common denominator, NCRP pushes the entire sector toward mediocrity.

NCRP has issued the Criteria at a time when philanthropy is highly concerned about social impact, good practices, and evaluation. Many of the issues NCRP discusses–such as forms of funding, payout, and mission investments–are the subjects of vibrant ongoing discussions in the sector. Surprisingly, the Criteria don’t recognize that foundations’ approaches to these matters ultimately depend on their particular missions and strategies.

If NCRP’s main purpose were to present its strong opinions for the benefit of foundations and other practitioners, the Criteria would be a valuable contribution to the debate. NCRP makes the most comprehensive case I’ve seen for what might be called “progressive” or “social justice” philanthropy. Although it presents a tendentious one-sided brief for one position rather than a balanced set of arguments, that’s the nature of debates.

Rather than participate in the debate, however, NCRP seeks to control it. By trademarking the unremarkable phrase “Philanthropy at its Best,” the organization apparently aspires to create a philanthropic version of the Good Housekeeping Seal of Approval. But while NCRP disclaims any “call for regulatory action,” the introduction to its Criteria states that policymakers “will find the benchmarks … informative when considering issues related to philanthropy.” The version that NCRP sent around for prepublication endorsements was more direct: “Policymakers may find the criteria valuable when considering regulations or legislation that affect institutional grantmakers.” For anyone who has experienced the Greenlining Institute’s efforts to legislate social justice philanthropy in California and watched its efforts in other states, this lets the cat out of the bag. NCRP has just concealed Greenlining’s fist in a velveteen glove.

Although I would oppose legislative enactment of the Criteria, NCRP’s earnest contribution to the discussion of these issues deserves an item-by-item response, and that’s what I shall try to do in the posts that follow.

Before signing off, though, I should note that though we often disagree with its positions, the William and Flora Hewlett Foundation has provided NCRP with general operating support as part of our grantmaking for the infrastructure of the philanthropic sector. Ironically, this grant would not count as Philanthropy at its Best®, since NCRP is not a disadvantaged community. It is just a minor sign of NCRP’s tunnel vision that, while issuing rules for the proper practice of philanthropy, it ignores the value of grants whose purpose is to help the field become more effective.

Moreover, the Hewlett Foundation actually follows many of the precepts articulated in the Criteria for Philanthropy at its Best. Much of our grantmaking focuses on disadvantaged communities, not just in the US but also in developing countries–whose billions of impoverished citizens NCRP largely ignores, notwithstanding its throwaway statement that philanthropy should help solve urgent problems worldwide. And the Foundation pursues its goals through advocacy with ample amounts of general operating support.

But that’s not the point. Rather, the point is that many foundations whose goals and methods differ from Hewlett’s provide no less value to society. Indeed, it is differences among the missions and practices of foundations and the diverse nonprofit organizations they support, that give the US the most vibrant civil society of any country in the world.

Overheard

In early March, the National Committee for Responsive Philanthropy published its “Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact.” T>A>I invited several leaders and grantmakers to share their thoughts about the publication.

Here—in their own words—is what we learned.

“…our field can do so much more…to promote equity and to work…with our grantees.”

As a board member of the National Committee for Responsive Philanthropy, I endorsed and helped develop the criteria because I believe our field can do so much more than we are currently doing to promote equity and to work in true partnership with our grantees. The Winthrop Rockefeller Foundation doesn’t meet nearly all of the benchmarks. That’s okay. NCRP’s goal is not to mandate standards. Our goal is to have the leaders of every grantmaking institution in the nation seriously consider the important issues we raise. Have the discussions, and if a recommendation makes sense for your foundation, make the change. That’s all we’re asking.

- Sherece Y. West, President and CEO, Winthrop Rockefeller Foundation

Comment

“Family foundations are a vehicle for people to express their passions charitably.”

First, to impose a 6 percent payout as NCRP proposes is not sustainable. A foundation really needs to make 9 percent a year to meet its 5 percent payout requirement, because it has to get 5 percent plus 3 percent for inflation plus 1 percent for investment fees. A return of 9 percent is just about the long-term rate of return on stocks, yet for diversification and cash flow, a foundation cannot be 100 percent in stocks. Six percent puts foundations on the slow road to spending down. If NCRP wants to debate perpetuity, let them do so directly, not through a non-sustainable formula.

Second, I am ambivalent about quotas and mandates about race and general support. The Memorial Fund would probably stack up well on these measures. Nonetheless, would it be wrong for a family foundation to devote its grants entirely to the support of classical music organizations, and to do so on a project basis? NCRP clearly thinks so. I am not so sure. Family foundations are a vehicle for people to express their passions charitably. If their love is a particular kind of music, so be it.

- David Nee, Executive Director, William Caspar Graustein Memorial Fund

Comment

“NCRP’s criteria is…a challenge to the philanthropic status quo”

NCRP’s “Criteria for Philanthropy at its Best” is intended and received as a challenge to the philanthropic status quo. By benchmarking best practices and naming foundations that fall short of these benchmarks, NCRP has certainly stimulated debate. However, I find it unfortunate that the debate is not focused on NCRP’s core assumption that tax-exempt foundations have a role and responsibility to promote social justice and full inclusion in public life. Nor has the debate focused on the pluses and minuses of the specific practices recommended by NCRP. Instead, discussion has centered on the question of whether any one organization should dictate values for the field as a whole. Although I serve on the board of a family foundation that supports social justice through community organizing and has pioneered many of NCRP’s best practices, I respect and appreciate diversity in the field of philanthropy. I regret that the normative approach of the document has distracted readers from its well researched and thought provoking content.

- Sarah Stranahan, Trustee, The Needmor Fund

Comment

“…choices about grantmaking approaches need to be made in the context of [a foundation’s] goals.”

NCRP’s report fails to adequately address the fact that foundations are widely diverse in the goals they choose to pursue with their charitable dollars, and that choices about grantmaking approaches need to be made in the context of those goals. I worry that readers will be distracted by the prescriptive nature of the criteria and avoid the more fundamental questions that all foundations should be addressing. Does the foundation have clear and specific goals? Does it pursue coherent, well-implemented strategies to achieve those goals? Does it use performance indicators—including feedback from grantees and others—to regularly assess and adjust strategies as needed to achieve those goals? Absent affirmative answers to these questions, any proposed criteria will be insufficient to move foundations toward greater effectiveness and, ultimately, more impact on communities, issues, and people.

- Lisa Jackson, Vice President, Research, Center for Effective Philanthropy

Comment

“…without those periodic efforts to push the sector…the voluntary actions of foundations remain largely dormant”

NCRP has taken a bold step in putting some meat on the discussion of what it means to practice philanthropy for the social good. Institutional philanthropy’s largely knee-jerk outrage at any recommendations proposing grantmaking criteria or standards of institutional behavior has a long history and, yet, without those periodic efforts to push the sector towards greater inclusion and equity, the voluntary actions of foundations remain largely dormant. Our endorsement of this report reflects our support for NCRP’s efforts to recommend voluntary criteria and benchmarks, promote greater foundation accountability, and provoke debate.

- Karen Zelermyer, Executive Director, Funders for Lesbian and Gay Issues

Comment

“The vigorous debate about the criteria… will undoubtedly take the field to a higher level”

Since its inception in 2001, Marguerite Casey Foundation (MCF) has been helping low-income families in disadvantaged communities strengthen their voice in order to mobilize their communities to achieve a more just and equitable society. Based upon this mission and having researched conservative movements that have successfully demonstrated that long-term core support builds strong, self-sustaining organizations, MCF adopted a multi-year, general support grantmaking approach. While we do not embrace all of the NCRP criteria, we support the benchmarks selected by NCRP to assess and enhance grantmaker impact because they represent the best practices to support our strategy of movement building. The vigorous debate about the criteria developed by NCRP will undoubtedly take the field to a higher level and benefit foundations as they strive to maximize their impact and advance movement building.

- Luz Vega-Marquis, President and CEO, Marguerite Casey Foundation

Comment

“The…sector is best suited to support efforts that… still exist around issues of race and class.”

Philanthropy should be a transformative force in society and the criteria, which I proudly endorsed, challenges our field to decisively act to address societal inequities. Let’s face it, money still equals power and NCRP, rightly so, is calling on us to use a portion of our resources to help lift the voices of those too often ignored. The philanthropic sector is best suited to support efforts that confront the deep divisions that still exist around issues of race and class. The NCRP report puts forth sound principles and practices we ought to follow to advance social change. Foundation leaders should give it a fair review and ask how your institution is making a lasting impact.

- Victor De Luca, President, Jessie Smith Noyes Foundation

Comment

“…any analysis of philanthropic leadership that fails to consider…cross-border grantmaking…is almost certain to be incomplete…”

The stunning emotional stir caused by NCRP’s new report on philanthropic leadership suggests that it has hit a raw nerve, probably because there is at least some truth to its critique. However my main concern about the report harkens back to the narrow scope reflected by the organization’s original name—the ‘NATIONAL’ Committee for Responsive Philanthropy. In our new, ‘flat’ globalized world, any analysis of philanthropic leadership that fails to consider the complexities of cross-border grantmaking—and justice in the global context—is almost certain to be incomplete or even ethnocentrically distorted.

- Chet Tchozewski, President, Global Greengrants Fund

Comment

“Philanthropy can benefit…from…a clear…code of conduct…”

Philanthropy can benefit enormously from having a clear, strong code of conduct widely accepted and understood. Such a standard might be comparable to the 1980’s Sullivan Principles that contributed so much to the demise of apartheid in South Africa.

The basic, if not all the principles of such a valuable compact have been developed by the National Committee for Responsive Philanthropy under the compelling name: “Criteria for Philanthropy at its Best.”

All of us concerned for philanthropy should endorse and work for these practices to be part of a national consensus enhancing the public good.

- John Morning, Trustee, Charles Stewart Mott Foundation, Rockefeller Brothers Fund

Comment

Public Domain

Jeanne Shaheen (D-NH)

Jeanne Shaheen knows a thing or two about leadership. She’s the first woman in U.S. history to be elected both as governor and U.S. senator (from the state of New Hampshire). She served on the board of the Nellie Mae Education Foundation. And, she led the Institute of Politics at Harvard University’s John F. Kennedy School of Government.

The newly elected senator from New Hampshire spoke to T>A>I about her nonprofit leadership experience and the importance of developing the next generation of leaders.

T>A>I: You have a lot of leadership experience in the academic, nonprofit, and public sectors. Describe your leadership role on the foundation board.

Senator Shaheen: To me, there were many benefits of working in the nonprofit sector. At the foundation, we were able to set our agenda and decide how to spend our grant dollars. We determined the criteria, goals, and schedule. This is much harder to do in the public sector.

During my tenure on the board of the Nellie Mae Education Foundation, I was impressed with the foundation’s “engaged grantmaking” model. Basically, we helped our grantees on several levels—working with them closely, providing them with resources, and encouraging them to share ideas and information among themselves and with other organizations and state agencies.

T>A>I: How did the “engaged grantmaking” approach work?

Senator Shaheen: For example, the foundation contributed to an afterschool program in New Hampshire called PlusTime NH. We encouraged PlusTime NH to meet periodically with other organizations in the Boston area to learn about what they were doing and what was working. Ongoing participation was part of the grant commitment so these organizations had to meet and learn from one another.

The “engagement” model is something the public sector should use because very often, the different government agencies tend to work in silos.

In addition, I realized that part of my experience on the foundation board was our work around “outcomes.” At times, it’s important to take a step back from contributing to programs and discuss outcomes. This is something we should do regardless of which sector we belong to.

T>A>I: Do you have any advice on recruiting and training emerging leaders?

Senator Shaheen: When I was the director at the Institute of Politics at Harvard, engaging young people in politics and public service was my mission. But the challenge was—how do you identify leaders?

I asked a roomful of young men and women, “How many of you want to run for public office?” And I was surprised to learn that almost all of the men raised their hands but very few women did. I realized that we needed to create a leadership program to identify and develop young women to be leaders. There are still a disproportionate number of men in leadership positions in almost every field.

So, we developed a credentialed, semester-long leadership development program for young women to provide them with training and mentoring opportunities. For example, we brought in speakers who shared their experiences and offered advice. One speaker helped the women develop negotiation skills because often, women aren’t as assertive as men are in this area.

T>A>I: How can the nonprofit sector work more effectively with government officials?

Senator Shaheen: There are a number of examples of nonprofit organizations working very effectively with government officials, including AmeriCorps. When I was a state senator and we first brought AmeriCorps to New Hampshire, a number of volunteers worked with the courts on domestic violence programs. This program still exists today, placing volunteers throughout various advocacy organizations and law enforcement agencies where they offer support and information to victims of domestic violence.

This is a good example to expand upon as we work to address all the important issues facing our country. A great new option is the possible creation of an EnergyCorps.

Note: Established in 1998, the Nellie Mae Education Foundation works to stimulate transformative change of public education systems across New England by growing a greater variety of higher quality educational opportunities that enable all learners – especially and essentially underserved learners – to obtain the skills, knowledge and supports necessary to become civically engaged, economically self-sufficient life-long learners.

10 Minutes with…

Mary Galeti, Vice Chair, Tecovas Foundation

Chances are if you ask Mary Galeti to define “leadership,” the 26-year-old will offer a very candid view of the concept. As vice chair of the Tecovas Foundation, Galeti was thrust into the leadership spotlight in 2004, after the deaths of her grandmother, mother, and aunt who had previously been the foundation’s leaders.

“In my opinion, leadership means acknowledging that I don’t know everything. It also means letting the people who are good at what they do, do their jobs, and learn from their knowledge and experiences,” Galeti said. “I had to figure out on my own, and very quickly, how to lead my family’s foundation. I did have a base of wisdom to fall back on, but I couldn’t call my parents anymore.”

The experience was “terrifying and exhilarating” according to Galeti. And she credits the one-on-one conversations with experienced leaders in the foundation world as one of the most effective ways to learn about the issues and gain leadership insight.

Galeti is part of the “next generation” of philanthropists and philanthropic leaders who are growing in both strength and numbers. In the coming years, the onus will be twofold. For the field, it will mean identifying and developing the next generation. For these emerging leaders, it will mean participating and immersing themselves in the field’s most pressing and challenging issues.

In the Leadership Spotlight

Galeti’s grandmother, philanthropist Caroline Bush Emeny, created the Tecovas Foundation in 1998. Emeny wanted to build a performing arts center in Amarillo, Texas, and made a multimillion-dollar gift to begin its construction. Emeny died in 2001, four years before the center was completed.

In 2000, the foundation invited Galeti to join the board—but only after a rigorous “application” process.

“I had just turned 18 and I had to write and tell the board why I wanted to join the foundation and what I wanted to do once I was on the board. Frankly, it was as tough and intensive as filling out a college application! In fact, I think I ‘borrowed’ some of the language from my college application for my foundation one!” Galeti said.

After her grandmother died, the foundation was managed by Galeti’s mother and aunt. Sadly, her mother and one aunt both died in 2004, leaving Galeti and her generation with a new responsibility and a bigger endowment.

“This was a very difficult period because we needed to go into succession planning mode: a majority of the board was, and still is, under 30. In addition, the foundation was serving two areas—Cleveland, Ohio, and Amarillo, Texas. These are two very different communities with different needs—we needed leadership in both places,” Galeti said.

The Tecovas Foundation board has been immersed in a strategic planning process since 2004. The foundation has fulfilled donor intent and continues to honor legacy but aims to create its own mark.

One of the issues Galeti and the board are grappling with is how to manage grantmaking in the current economic climate when immediate needs are so great. From its $10 million endowment, the foundation gives away between $700,000 and $800,000 in grants every year.

“This is a tough decision: should we spend down the foundation’s endowment and meet current demand or should we issue small grants and spread out our money for the long term?” Galeti questioned. “As a leader, it’s a question I think about every day.”

Being Part of the Conversation

It’s important for the next generation to have a seat at the table because they bring diversity of thought to discussions around policy and the future of philanthropy.

Galeti believes that if the next generation is excluded from these conversations, young leaders will become disillusioned.

“I look at it from the standpoint that this is the current leadership’s opportunity to shape the way we—the next generation—think, and for us to have influence in shaping the field—a field that we will inherit,” Galeti said.

That’s why she believes that the National Committee for Responsive Philanthropy’s recent report, “Criteria for Philanthropy at Its Best,” which lists measurable criteria that foundations can follow “to operate ethically and maximize the impact of their dollars,” has raised some good questions.

“This report has forced our field to have these discussions and debate the issues,” Galeti said.

One of the philanthropic field’s strengths is that it allows for autonomy and innovation. Galeti worries that adopting the NCRP criteria may be “limiting.” But, nonetheless, she notes that having these types of conversations and soliciting varied viewpoints, which include generational perspectives, will create a better field in the long run.

Servant Leadership

What does Galeti think about the future of philanthropy?

“I am curious to see how people will give away their money—what kind of vehicles will they use?” she said. “Will we see a surge in donor advised funds, more private foundations, or will we devise other vehicles?”

For now, she’s focusing her efforts on the communities the Tecovas Foundation serves.

“When I do get overwhelmed,” Galeti said, “I think about my favorite quote by Max Dupree: ‘The first responsibility of a leader is to define reality. The last is to say thank you. In between, the leader is a servant.’”

Ethical Quandary

Andrew Schulz, Deputy Counsel, Council on Foundations

Can we pay our board members? Should we?

Always a controversial topic, the issue of whether to pay foundation board members is likely to get even more attention. The precipitous decline in foundation assets has everyone trying to make the most effective use of their resources. Expect the media, regulators, general public, and even your grantees to scrutinize the decisions you make.

What is legal?

Though the rules may vary slightly by type of foundation, the law allows all types of foundations to compensate board members if the amount is reasonable.  “Reasonable” is what similarly situated people are paid for similar work. “Compensation” refers to payment for overall board service. It should not be confused with reimbursement for reasonable and necessary expenses.

Who compensates?

Even though compensation is legal, new Council research, which will be available in early May, finds that only about 25 percent of foundations compensate board members. This number has stayed fairly even over the past two decades.

Compensation practices also vary by type and size of foundation. Large independent foundations are most likely to compensate board members, while  it is almost unheard of for community foundations to compensate their boards.

Should You Compensate?

Knowing what is legal and knowing what others do is just a start. Determining what you should do—what the best allocation of your resources is—requires careful consideration. There are solid arguments in support of both sides of this issue.

The Case for Compensated Boards

Expertise and Skills: Pay helps attract individuals who are highly visible and well-connected in the community or who have technical, professional, or subject matter expertise essential to the foundation’s mission.

Diversity: Compensation may help attract individuals from different cultures, classes, ages, or personal situations who may not otherwise be willing or able to serve as volunteers.

Risk: The perceived personal and professional risks inherent in board service dissuade many from volunteering. Compensation may tip the balance in favor of serving.

Attentiveness: When compensated, board members may tend to be more responsive and attentive to their board responsibilities in light of all the other demands on their time.

Expectations: Trusts and for-profit boards compensate, often for the same work. Paying foundation boards helps establish the expectation that the professionalism and commitment are similar.

Loyalty: A paid person may be less tempted to manipulate the foundation’s operations and programs for personal gain.

The Case for Voluntary Boards

Stewardship: Board compensation reduces the amount of money available for grants, programs, and operations.

Public Trust: Paying board members sends the wrong message about the foundation’s priorities and leads to negative public perception.

Mission Commitment: Volunteers are more likely to be motivated to serve solely because of shared values and philanthropic goals and not out of economic interest.

Leadership by Example: Foundations often expect grantees to make the most of their charitable dollars, including keeping their administrative overhead low and using volunteer boards. A foundation can set the tone by modeling the same behaviors.

Fairness: Public charities rarely compensate boards, but the obligations and responsibilities of their board members are essentially the same.

Conflict of Interest: Volunteers are less susceptible to conflicts between doing the right thing for the foundation and staying in favor with management, who may have influence over board compensation.

Determining Compensation

If you decide to compensate, you next have to decide how much to pay. Take into account such things as:

• size and anticipated growth of your foundation’s current assets
• number, amount, and frequency of grants
• the complexity of the grant process or programs
• staff levels and staff capabilities
• board member experience and management responsibilities
• amount of time the board member spends on foundation matters

Also consider whether you offer board members an annual fee, pay them for attending each board or committee meeting, or some combination of both. “Determining Reasonable Compensation for Foundation Directors And Trustees” can help guide you.

Record Keeping

Whatever you decide, be sure to carefully document the process you followed and the factors you considered. If you relied on any data or an outside consultant to help you determine compensation, record that as well. Finally, be sure to carefully and accurately report board compensation on your IRS Form 990 or 990-PF.