Last week, a group of nonprofit leaders known as the Leap Ambassadors released a collection of essays, aimed at foundations, called Funding Performance. They argue that donors need to do a much better job of supporting and trusting the charities that they fund.
The authors sound a call for change:
Funders, heal thyself! Your intentions are noble, but your practices aren’t. The vast majority of you are starving your grantees rather than nourishing them. When your grantees get a chance to speak freely — that is, anonymously — about the way you treat them, they express resentment that you’re not listening to them or giving them what they need for success. Enough is enough!
They go on to say that foundations should empower (and not hamstring) nonprofits by giving them multi-year, general operating grants. They should trust and respect the charities they support (and not micromanage them). They should come to aid of charities when they make mistakes (rather than punish them). And they should give out more money when times are tough (instead of fretting over their endowments).
This is all excellent advice, if not exactly new, as Phil Buchanan of the Center for Effective Philanthropy wrote the other day:
The essays are insightful, persuasive, and full of practical guidance. But what’s frustrating, honestly, is that they even needed to be written at all. For decades, numerous organizations — from CEP to GEO to NCRP to the Nonprofit Finance Fund to Bridgespan to the recently established Trust-Based Philanthropy Project — have been calling for nonprofits’ needs to be heard and supported differently.
Maybe that’s because the essays are too nice. What Leap Ambassadors has not done — indeed, what none of the groups trying improve philanthropy have done, with the exception of NCRP — is to call out, by name, foundations that disrespect, micromanage, abandon or mistreat the charities they fund.
This reflects philanthropy’s culture of politeness. Criticizing donors is deemed to be indiscreet, if not self-defeating. (Many people either get money from a foundation, or would like to.) Nor does the sector publicly identify those nonprofits that underperform.
Rank ’em and spank ‘em
Not calling out bad actors is a missed opportunity. While reporting on business for FORTUNE, I found that corporations can be motivated to change by criticism as well as by praise. That’s why their critics publish lists of the best or worst companies — for women and minorities , for deforestation, for animals, whatever. They “rank ’em and spank ‘em,” as the saying goes.
While reading Funding Performance, it struck me that some foundation leaders could benefit from a good old-fashioned public spanking. In a fine essay, Lowell Weiss, a former Gates Foundation executive, describes bad behavior by foundation executives identified only as Leader A and Leader C. He adds: “Our purpose isn’t to cast stones.” But why not?
In his essay, Sam Cobbs, a Bay Area nonprofit leader who used to run a nonprofit called First Place for Youth and is now CEO of Tipping Point Community, recalls a time when First Place for Youth got “the kind of audit report that I hope to God no other nonprofit ever gets. It looked like War and Peace; it was that thick.” There was good reason for the bad audit. Cobbs had hired a top-flight auditor to help First Place for Youth identify its flaws and improve.
Tipping Point, a funder of First Place, understood and offered to help. But Cobbs writes that
…another funder that I won’t out — but wish I could, to provoke introspection and improvement — had the opposite reaction. That foundation, which uses the term “partnership” all the time, pulled out of its previously announced $2 million commitment to us.
Even though Tipping Point helped me fill some of that void, the loss of that $2 million gift was devastating. Because we had received a written commitment for the gift, we had already developed ambitious plans for expansion to Los Angeles and had begun hiring accordingly. We weren’t able to take advantage of a large contract with the City of Los Angeles — an opportunity that never came up again. Our staff morale sank, and my own confidence took a big hit.
Why not name the funder, I asked Cobbs by email. He replied:
I really appreciate your question and the intention behind it. I agree — we need to be sharing the “bad” examples just like we often tout the good. I’m all for that, but also don’t feel that naming peers/partners will benefit anyone or further prove my points.
To his credit, Cobbs offered to share with me mistakes he’s made at Tipping Point. But that’s a different issue.
Hillary Pennington’s essay, meantime, describes the Ford Foundation’s BUILD program, a $1bn initiative that provides five-year grants for general operating support to more than 300 nonprofits in 28 countries. It’s a laudable effort, but long-term, unrestricted grants work only if they go to organizations that use them effectively. Some nonprofits will sure outperform others, and Ford staff will presumably evaluate their performance.
Will Ford make those evaluations public? The foundation will gain insights that would be helpful to institutional as well as individual donors.
Pennington, Ford’s executive v.p. for programming, says no. By email, she tells me: “That isn’t something we plan to share publicly…We are comparing each grantee to its own baseline, not to each other.”
I don’t mean to single out the Leap Ambassadors. They do great work, as I’ve written. This tendency to avoid offending anyone is pervasive.
Fundraising isn’t fun
Mark Tercek, the former CEO of The Nature Conservancy, writes an excellent newsletter called The Instigator. Here’s a recent excerpt, describing a visit to a foundation CEO during his early days at Nature Conservancy:
I arrived early for my 11:00 am meeting and waited patiently in the beautifully appointed reception area.
At 11:30 — still waiting — I started getting restless. A nice young person asked if I’d like a cappuccino or latte. Okay. But what about my meeting?
At about 11:45, the same nice young person offered me a tour of the foundation’s brand new LEED-certified headquarters building. Fine. We had a pleasant tour. And yes, the building was beautiful. But so what? Anybody willing and able to spend enough money could do this.
At 12:15 I called my office. I asked my assistant to tell my next appointment that I’d be late. I was way behind schedule now.
At about 12:30, I was finally ushered into the foundation CEO’s fancy office. Game time. I was ready to go.
But, as you’ve probably sensed by now, things didn’t go according to plan.
The CEO quickly introduced himself (with no apology for the late start) and launched into a monologue about how the foundation focused on metrics, accountability, and rigorous measurement.
“We’re all about achieving results,” he told me. “Great,” I responded. After all, I had come prepared.
I wanted to jump in and explain that my team had done well on the projects the foundation had funded. Not perfectly, of course. But we had mostly accomplished everything we had promised. And where we fell short, we tried to figure out why so we’d be better going forward. But the monologue continued.
“How about asking some questions about the projects you funded? Hold me accountable. Ask for some metrics if that’s what you like,” I thought. But before I could vocalize anything along these lines, another young person came in to inform the CEO that it was time for the next meeting. Sorry, time’s up. I was ushered out.
Rude? Clearly. Uncommon? Perhaps not.
I’m aware that nonprofits can’t call out their donors, for obvious reasons. The closest thing to a “rank ’em and spank ‘em” for foundations is a website called Grant Advisor, where nonprofits can write anonymous reviews of their funders. It’s not a reliable gauge of foundation performance because few people write reviews, and those who do tend to be unhappy. Still, it makes for interesting reading. One reviewer says of Ford: “My experience is that if you let them believe that they are really smart and know more than you do and that they helped shaped the proposal, you can get them to fund it.” Another describes Hewlett Foundation program officers as “out of touch, arrogant, and ineffectual grant-makers” who “have pet projects and theories of change that are immovable.” If you are a nonprofit with something to say about a funder, good or bad, go write a review.
In the meantime, when the next report about foundations and their impact comes along, I dearly hope the authors will be able to speak truth to power. After all, there are thousands of foundations and nonprofits out there. Some do great work. Others don’t. Wouldn’t it be nice to know which is which?