Shining a Light
by Aruna D’Souza
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In the digital and global landscape of the 21st century, Foundation Center is developing new technologies and strategies to connect foundations and individuals with the transformative tools they need to access crucial funding
Walking into Foundation Center, perched on the 24th floor of a glass-clad building in Lower Manhattan, is a bit like walking into a buzzy internet startup. Its 38,723-square-foot, open-plan design means that from practically any spot, you might catch a glimpse of many of its hundred-plus onsite employees working intently in cubicles or getting their creative juices flowing with a quick game of chess or a table tennis match. You might also see one of the nonprofit groups who book meeting rooms for strategy sessions or team-building exercises, or individual researchers consulting its databases and getting guidance from its expert staff. And then there’s the panorama: an almost 360-degree expanse of New York City skyline and harbor views, thanks to the perimeter of floor-to-ceiling windows.
Foundation Center has long embraced the ideal of transparency, and with its July 2015 move to these new offices from its former location in Union Square, it is now literally transparent. How fitting, since it has played a defining role in bringing the work of philanthropic organizations to light, gathering and making available information using the most advanced technological methods. Given the size of the field — in 2014, the Center counted almost 87,000 philanthropic organizations possessing assets of over $865 billion and giving away over $60 billion — this is no easy feat.
Foundation Center was established in 1956, underwritten by a $100,000 commitment from Carnegie Corporation of New York. Since then it has served many constituencies: philanthropic organizations who want to find out more about the different actors working in their areas of interest; nonprofit organizations and individuals hoping to find grant money to support their activities; journalists, researchers, and other watchdogs attempting to trace the contours of particular grantmaking bodies; and a public seeking to understand the workings of an industry that wields increasing amounts of wealth and influence in the U.S. Despite 60-plus years of changes in the philanthropic landscape, one thing has remained constant: Foundation Center has remained fiercely independent so as to preserve public trust in the information it gathers and the work it does.
Glass Pockets and “America’s Freest Enterprise”
In 1952 Russell Leffingwell, chair of Carnegie Corporation’s board of trustees, advocated for greater public accountability among philanthropists: “We think that the foundation should have glass pockets,” as he famously put it. Leffingwell’s call came in an atmosphere of creeping distrust of the work of foundations by politicians and citizens who were beginning to wonder why an industry that held billions of dollars in capital and benefitted from tax exempt status was able to operate relatively free of government regulation and oversight. In fact, this demand for increased scrutiny may have been prompted by the explosion of foundation assets in the 1940s and 1950s: in the six-year period from 1944 to 1950, the number of foundations grew from 505 to 1,001, as did their wealth, from $1.8 to $2.5 billion. Foundations were also watching with growing alarm fraudulent activity taking place under the rubric of charitable activity, and worrying that the integrity and independence of their industry would be at risk unless they began to self-regulate.
The issue came to a head during the McCarthy era, when a few politically ambitious members of Congress began to suggest that the opacity of private philanthropies was a cover for their funding of un-American activities. A series of congressional hearings took place during this period, including the Cox Committee in 1952 and the Reece Committee from 1953 to ’54.
Though no nefarious activity was discovered, a number of leading figures in the field, including Leffingwell, John W. Gardner, and James A. Perkins (president and vice president, respectively, of Carnegie Corporation), decided it would be wise to take proactive steps to ensure philanthropy’s integrity and prevent overregulation by the U.S. government. By proving that foundations had nothing to hide, the industry could remain, as F. Emerson Andrews, founding director of Foundation Center, once described it, “America’s freest enterprise.”
Thus was Foundation Center born. The initial $100,000 startup money from Carnegie Corporation was soon supplemented by contributions from some of the other so-called legacy foundations, including the Kellogg and Rockefeller foundations. Sixty years later, some 500 organizations support the work of Foundation Center with donations, some as small as $250. In order to preserve the independence of the new venture, a number of principles were laid out from the start that are strongly held today, including that it not become an advocacy group for foundations, that it not intermediate any grant processes (for instance, by recommending or choosing grant recipients), and that it not function as a membership-based organization. Instead, the Center would focus on the work of information gathering. It is no coincidence, then, that its original name was Foundation Center Library, and that, from its earliest days, it had a librarian on staff.
The need for transparency in philanthropy has not waned in the years since Carnegie Corporation leaders Leffingwell, Gardner, and Perkins urged a “glass pockets” approach. In a recent interview, Vartan Gregorian, current president of Carnegie Corporation of New York, reflecting on the ideas of his predecessors, emphasized that “People should see everything that [foundations] are carrying, because the public has the right to know. That’s one of the reasons I think it’s very important that foundations list who they are and what they are promoting in annual reports, not through euphemisms but in a straightforward way. That includes how much money they have spent, who the recipients are, and what progress has been made.”
That commitment by some of the leading figures in the sector has paid off. Foundation Center is the single largest repository of information about philanthropic organizations in the world, thanks to over a half century of research into the operations of tens of thousands of entities. That research — and the nature of transparency itself — has transformed radically since the Center’s establishment.
“Many people, when they talk about the work of foundations, are focused on measuring effectiveness and impact. We think of ourselves as working way upstream from these questions — we want to keep philanthropists from constantly reinventing the wheel. The best way to do that is by being able to identify all the actors in the sector and knowing what they’re up to.”
— Bradford K. Smith, President, Foundation Center
In 1956 Foundation Center Library consisted of file cabinets containing about 800,000 paper documents donated by other oversight groups. Center staff went to work gathering information. They relied on foundations’ annual reports, articles of incorporation, news releases and clippings, and, especially, on the publicly available 990-A forms that tax-exempt entities submit to the Internal Revenue Service annually. The latter often had to be hand copied in the face of the IRS’s restrictive access policies. With the IRS and the Urban Institute, the Center created the National Taxonomy of Exempt Entities — a classification system that enhanced annual print directories.
Today, while the available technology has changed dramatically, other challenges have remained consistent. Foundation Center president Bradford K. Smith explains that “foundations, as private entities serving the public good, are notoriously opaque — even something as simple as the names of trustees or a mailing address can be something of a mystery.” There are a number of reasons for this: many foundations are small and don’t have the capacity to build the infrastructure that would be required to act in a more public-facing manner, others are motivated by privacy concerns, and still others simply don’t know where to begin. Fewer than 10 percent of foundations, says Smith, have websites, for example. And IRS documents, while remaining crucial to the work done by Foundation Center, necessarily involve a time-delay between when the forms are filed and when the public can access them, making real-time updates difficult to achieve.
Foundation Center is working hard to meet these challenges. By mining advances in information technology, the organization has developed tools that allow its researchers to harvest and distribute data. One of these tools uses machine learning to scrape news sites, identifying any stories about the existence of a previously unknown foundation or grants that foundations might have disbursed. The amount of raw material gathered is vast — in 2017 alone, the Center coded four million individual foundation grants to add to its databases. The taxonomy Foundation Center had used to categorize grants and grantmaking bodies since 1961 has recently been rebuilt as the Philanthropy Classification System. The process took two years, was international in scope, and included a period for public comment, with the goal of setting standards for information gathering that can be used by organizations worldwide to prioritize and categorize data about the sector.
In addition to information gathering, Foundation Center is increasingly turning its attention to helping organizations make their operations more transparent. One of the Center’s services, Glasspockets.org, offers philanthropies the opportunity to benchmark their own efforts and make their work publicly visible against what their peers are doing.
To assist foundations for whom building an online presence might be an onerous task, the Center offers free, customizable, hosted websites. For others, it creates Web apps and platforms that might, say, allow a foundation to create a virtual map of every organization working on their issue worldwide, one that is constantly updated as new information enters the Center’s databases.
IssueLab.org, another Foundation Center service, facilitates the creation of custom research modules on particular topics by drawing on an archive of almost 23,000 publications and reports of the activities of 5,600 organizations worldwide.
These and other tools assist philanthropic organizations in answering what Center president Smith identifies as the two “primordial” questions they face: “Number one, who does what where, and number two, how can I identify the people who already know about my issue?”
“Many people, when they talk about the work of foundations, are focused on measuring effectiveness and impact,” he says. “We think of ourselves as working way upstream from these questions — we want to keep philanthropists from constantly reinventing the wheel. The best way to do that is by being able to identify all the actors in the sector and knowing what they’re up to.”
“There’s an incredible hunger for resources about philanthropy and data on philanthropy. We’re trying to do as much as we can to fill that need.”
— Bradford K. Smith, President, Foundation Center
For instance, human rights–focused foundations trying to make the argument that the area needs additional resources might need to know exactly how much foundations are currently spending on human rights work, what non-foundation actors might be working in the field (for example, government funding agencies such as USAID in the U.S. and CIDA in Canada, nongovernmental organizations like Doctors Without Borders, and so on), where they might direct money to be most effective, and what gaps exist currently.
Finding this information is a matter both of access to data, and refinements in search processes. “When we were asked to create a map of organizations working on human rights, we started searching terms found in the International Declaration of Human Rights,” explains Smith. “But soon we realized that the question is far more complex. When is soccer, for example, a human rights issue? In some cases, when a program is using soccer to facilitate peace processes in Gaza, it may well be. At other times, it is not. Our tools have to be sensitive enough to know the difference.”
The Human Touch
At the same time that Foundation Center is developing such cutting-edge technology, it relies heavily on human expertise to connect people to the information that will be most useful to them. “In that sense, we’ve never left our roots as Foundation Center Library,” Smith says.
Within a few years of the organization’s founding, it became clear there was a demand for its services that could not be met by a single office in New York. Satellite offices were set up around the country, each replicating to the extent possible the information and expertise available in Foundation Center’s New York headquarters — including an onsite librarian to assist users with their searches. That spirit continues today at sites in Cleveland, Atlanta, Washington, D.C., and San Francisco. In addition, Foundation Center has created a network of an additional 436 community-based organizations all over the U.S. and in an increasing number of international locations (to date, Switzerland, Germany, Spain, Puerto Rico, Nigeria, Colombia, and Mexico), where users can take advantage of the full range of available information and search tools the Center offers. Each of these affinity groups agrees to have an expert on hand. While there is a “lite” version of the Center’s databases available for free to offsite users, it is only by visiting the Center’s offices or community-based organizations that clients can access the full power of the Center’s search capacities. (There is also a paid subscription option.)
That users are encouraged to actually come to the Center is no accident. “We don’t want people to just walk in and see a blank computer screen. We want them instead to know there’s a real person there who can help them navigate and refine their search,” says Smith. “Whatever our technological advances, there’s no doubt that human intelligence makes the search process much more efficient.”
At the New York office alone, Foundation Center receives 40,000 visitors per year — not including people who take advantage of the Center’s “Ask Us” service, which allows them to engage the Center’s team of experts answering questions via email or in real time via online chat. Users can tailor their database searches to find foundations that are most likely to fund activities like theirs. They can see the list of officers, contact numbers, and addresses, how the grant process works, whether and how to apply, when application deadlines are — information that is often difficult to glean when so few foundations have online presences. One of the most useful features is a list of past recipients of grants and their amounts for each foundation listing, which allows users to identify those foundations with which they might find the most funding success.
In addition Foundation Center offers free and fee-based educational programs to the public, including grant-writing workshops. GrantSpace.org, another Foundation Center website, aims to answer the most pressing questions of nonprofit organizations: How can I find board members for my organization? How can I find sources of pro bono expertise? Can nonprofits engage in advocacy or lobbying efforts? What is crowdfunding? For those who cannot travel to the Center or to one of its satellites, at foundationcenter.org there are webinars, training videos, sample documents, and a “collaboration hub” that allows small organizations to come together to lower costs and expand their reach.
“As philanthropy begins to play a larger role around the world, and as U.S.-based nonprofits search for the information they need to make strategic decisions about starting or expanding programs and grant opportunities outside the country, Foundation Center’s international reach is growing. So, too, is the need to gather information differently.”
For Jon Gilgoff, founder of Brothers on the Rise in Oakland, California, such resources were crucial to establishing his nonprofit. “I never had any interest in starting an organization, but then I did. It’s very humbling to have a lot to learn; you’re the executive director and so you’re supposed to know what you’re doing. You need places to go that won’t be judgmental and will welcome you in, and that are friendly and patient.… There was good information [at Foundation Center] and I remember spending hours doing the research and getting a grounding through those introductory workshops that are free, which is important when you’re small and just starting out.”
In 2016 Gilgoff partnered with Foundation Center to organize a “Meet the Funder” gathering, because a similar event years earlier had proven definitive for his own success. “I didn’t have any relationships with funders — how could I when philanthropy wasn’t my world? I didn’t know anyone. So if relationships matter, Foundation Center is a place to start building them.”
As philanthropy begins to play a larger role around the world, and as U.S.-based nonprofits search for the information they need to make strategic decisions about starting or expanding programs and grant opportunities outside the country, Foundation Center’s international reach is growing. So, too, is the need to gather information differently.
In our visit to their New York headquarters, we stopped to talk to Cynthia Nuara, who works in the division of Social Sector Outreach. She explained the challenges and opportunities involved in Foundation Center’s global ambitions: “The needs of the international community are quite different than here. For example, our partner from Spain was just visiting, and was noticing that for the organizations that they serve, the information that we gather in our database is pretty U.S.-centric. Also, the different regulations when it comes to transparency in other countries are quite challenging to navigate. In addition many non-U.S.-based organizations don’t make grants, they operate programs, which means they are often not obligated to report their activities.”
At the same time, collaborations with international partners have proven invaluable when it comes to information gathering and sharing. The Center’s Colombian partner has recently translated a number of training modules into Spanish, and their Chinese partner is doing the same, making the Center’s resources usable by thousands of additional clients around the world. The Chinese collaborating organization also shares the data it gathers with Foundation Center’s global network.
The next stage, says Center president Smith, is rethinking this network and expanding their research on global organizations. So far, Foundation Center’s collaborations have been opportunistic, “mostly people coming to us and expressing interest,” but that’s poised to change. “We’ve never had a concerted strategy to reach out and develop our presence in certain areas. But we’re closer to that. We’re moving in that direction. There’s an incredible hunger for resources about philanthropy and data on philanthropy. We’re trying to do as much as we can to fill that need.”
Aruna D’Souza is a writer based in western Massachusetts. Her essays and articles on art, culture, food, and books have appeared in the Wall Street Journal, Bookforum, CNN.com, Time Out New York, Garage, and other publications. She is a regular contributor to and member of the advisory board of 4Columns. arunadsouza.com
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