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January 25, 2007

Momentum Around Operating Support?

Two new and instructive research reports introduce new data into the ongoing debate over unrestricted-operating versus project-based funding. While the findings may seem self-evident to some, these reports provide many intriguing nuggets and will hopefully serve to generate deeper discussions within the field, especially at the board level.

General Operating Support: Research on Grantmaker Policies and Practices, by The University of San Francisco’s Institute for Nonprofit Management, incorporates findings from a survey of California foundations, as well as focus groups and interviews with foundation staff and trustees. I’m particularly encouraged by this observation:

There was stated feeling that general operating grants made the relationship between the foundation and nonprofit more “honest”, and created dialogue between foundation staff and trustees about the long term strategic focus of the foundation.

The Center for Effective Philanthropy’s In Search of Impact: Practices and Perceptions in Foundations’ Provision of Program and Operating Grants to Nonprofits,
finds less backing for operating support than the USF study, which might reflect the national scope of CEP's study. Not so encouraging signs from this report:

Most of the grants made by even the large foundation whose grantmaking is analyzed in our study are program restricted, small, and short-term.

CEOs see operating support as more likely to make a positive impact on grantee organizations, but most place other priorities higher in their decision-making. Just 16 percent of CEOs we surveyed indicate that they favor providing operating support, and a third have no preference. Nearly half prefer to provide program support to grantees – often because they feel it is easier to connect their grants to specific outcomes.

I wonder though how much of that concern with specific outcomes has more to do with ego than impact. There’s also the issue of whether what is measured is what is actually meaningful.

Speaking of impact, the report recommends that:

Those foundations seeking to maximize their impact on grantee organizations should make larger, longer term operating grants – and do so while exemplifying three additional characteristics that grantees most value in their foundation funders.” (quality relationships, clear communication, and an understanding of the field combined with the ability to advance knowledge and affect public policy).

Again, such a recommendation may seem self-evident to some, but clearly not to all, not by a long-shot.

January 22, 2007

The Brain Chemistry of Altruism

Researchers at the Duke University Medical Center have published a study recently in an on-line edition of Nature Neuroscience.

Here are some quotes from the university’s press office:

In the study, researchers scanned the brains of 45 people while they either played a computer game or watched the computer play the game on its own. In both cases, successful playing of the game earned money for a charity of the study participant's choice.

According to the researchers, the results suggest that altruistic behavior may originate from how people view the world rather than how they act in it.

The scientists suggest that studying the brain systems that allow people to see the world as a series of meaningful interactions may ultimately help further understanding of disorders, such as autism or antisocial behavior, that are characterized by deficits in interpersonal interactions.

Interesting chicken and egg questions emerge from this. Are some of the "series of meaningful interactions" a result of brain chemistry, or does the way we "see the world" affect that chemistry?

Here here is a link to the press release. Here is the abstract.

BookTV’s excellent interview with Joel Fleishman, author of The Foundation: A Great American Secret

BookTV’s After Words has an excellent interview with Joel Fleishman, author of The Foundation: A Great American Secret - How Private Wealth is Changing the World

Here is the description of the program from the site:

Joel Fleishman is a professor of law and public policy at Duke University and is the director of the university's Foundation Research Program. Formerly the president of the Atlantic Philanthropic Service Company, a grantmaking foundation, Prof. Fleishman is currently a trustee of the John and Mary Markle Foundation and serves as chairman of the board of trustees of the Urban Institute in Washington, DC. He discusses his book, "The Foundation," with Elizabeth Boris, director of the Urban Institute’s Center on Nonprofits and Philanthropy.

Click here for the video of the interview. Its about an hour long.

January 20, 2007

What Are We Talking About?

Van Jones, Executive Director of the Ella Baker Center for Human Rights, makes some pointed comments about the need to change the present model of philanthropy, particularly the need to for funders and grantees to “stop lying to each other.” He bemoans the parent-teenager dynamics that underlie the field, challenges the widespread fear of admitting “we don’t know”, and calls for a framework that funds “integrity, experimentation, and honest reporting.” He also has thoughtful things to say about the need to create new narratives about social change and the importance of combining inner and outer work.

You can listen to the podcast here.

January 19, 2007

Another Way to Give: eBay to the Rescue

eBay’s "GivingWorks” may be a great way for some folks to donate to their favorite charities. Perhaps you have some gifts in storage that you have yet to regift. Or those sterling silver candlesticks that you received as a wedding gift. Now that the wedding (and maybe even the marriage) is long over, you can sell these items and give some or all of the proceeds to charity with just a few mouse clicks.

Here are all the details.

January 13, 2007

Gates Foundation Investment "Approach"

In a statement on the Gates Foundation homepage Cheryl Scott, the foundation’s chief operating officer, “explains the foundation's approach to investing its endowment.” The explanation seems to represent some backtracking from its pledge to review its investment strategies. It also appears that Mr. Gates is not an enthusiastic proponent of socially responsible investing.

As we mentioned in a previous entry, this is a very thorny issue – made even more complex because of this particular foundation’s impact on the whole sector.

Here are a few excerpts from the statement:

"Two recent articles in the Los Angeles Times have raised questions about whether we should spend time evaluating companies and shifting our investments away from the ones that get a low score on some ranking criteria. We want to make it clear why the foundation focuses on our grant making, rather than on such evaluations, and we want to explain Bill and Melinda’s investment philosophy."

"Bill and Melinda oversee the investment of the foundation’s endowment. In giving guidance to the investment managers, they have chosen not to get involved in ranking companies based upon factors such as their lending policies or environmental record. There are dozens of factors that could be considered, almost all of which are outside the foundation’s areas of expertise. The issues involved are quite complex...Which social and political issues should be on the list?"

"Many of the companies mentioned in the Los Angeles Times articles, such as Ford, Kraft, Fannie Mae, Nestle, and General Electric, do a lot of work that some people like, as well as work that some people do not like. Some activities might even be viewed positively by some people and negatively by others."

"Shareholder activism is one factor that can influence corporate behavior. The foundation is a passive investor because we want to stay focused on our core issues."

Ms Scott’s entire statement is here.

A personal note after the jump.

A personal note: Speaking (or writing) for myself and not the institute… the Gates Foundation is missing an opportunity here. Size does matter, and they are big enough to change the entire conversation about socially responsible investing (SRI).

Imagine if even a 25% of the foundation’s assets were invested in “green companies”. Then imagine their investment managers gradually learning more about SRI, and increasing their stake in such companies to half or more of their portfolio. Then imagine if Bill and Melinda Gates would initiate a conversation with their peers in the technology sector about recycling legacy products in a responsible way, eliminating unnecessary packaging, and just being more environmentally conscious in general.

The Gates Foundation – especially with the enormous addition of Warren Buffett’s investment portfolio – can change the fundamental way philanthropy “does business”, but that can only happen if they change the way they do business

January 6, 2007

Is the Gates Foundation Stealing From the Future?

In the first part of a two-part investigative story in the LA Times, Dark cloud over good works of Gates Foundation, focusing on the investment strategies of the Gates Foundation raises some thorny issues about means and ends.

By comparing [Gates Foundation] investments with information from for-profit services that analyze corporate behavior for mutual funds, pension managers, government agencies and other foundations, The Times found that the Gates Foundation has holdings in many companies that have failed tests of social responsibility because of environmental lapses, employment discrimination, disregard for worker rights, or unethical practices.
Using the most recent data available, a Times tally showed that hundreds of Gates Foundation investments — totaling at least $8.7 billion, or 41% of its assets, not including U.S. and foreign government securities — have been in companies that countered the foundation's charitable goals or socially concerned philosophy.

For instance some of their investments in oil companies, especially in some European firms whose polluting facilities are exacerbating the very same health issues that the foundation is working so hard to alleviate.

The report also describes some similar tensions between the foundation’s mission to treat HIV and their decision to invest in drug companies that seem to make it more difficult for some infected individuals to get needed medication

This is "the dirty secret" of much large philanthropy, said Paul Hawken, an expert on socially beneficial investing who directs the Natural Capital Institute, an investment research group. "Foundations donate to groups trying to heal the future," Hawken said in an interview, "but with their investments, they steal from the future."

This is an important issue for philanthropy. It is much too simple just to throw stones at the 500-pound gorilla. There are systemic tensions and possible contradictions here that many foundations have already addressed, and many more need to.

January 3, 2007

An Experiment in Social Economics

We Want a Million Dollars is an almost interesting charity site. The hook is a scheme to provide a conduit for micro donations from as little as $1for an as yet undisclosed purpose. The donors will have some input in how the money is to be distributed.
Once you drill down into the details, the site is sponsored by a Christian charity, Feed the Children, in Oklahoma. No problem there. But…
When one drills down a bit further (farther?) turns out the site is a “wholly owned subsidiary” of FTC Transportation Inc. “a contract carrier offering truckload hauling throughout the continental United States…”
Shouldn’t take that much effort to learn who owns this experiment.

January 2, 2007

Offsetting America’s “Bad” PR With Philanthropy?

In a wide-ranging interview with PBS correspondent, Judy Woodruff, Bill and Melinda Gates share their thinking about giving. Since their foundation is increasingly seen as a trend setter in the philanthropic world, how they look at investing their foundation’s resources will impact many others.

One of Mr. Gates’ intriguing assertions is about how the US is seen in the world (especially in light of developments in Iraq) and how important it is for the aid to developing and underdeveloped countries to really impact long entrenched problems in those countries. He said:

Well, there's a real question of whether the U.S. will be viewed positively, in terms of, are we bringing health advances? Are we bringing in aid that's really effective? I think that's very important for the country. And right now, there's somewhat of a deficit of how we're perceived.

The video and audio feeds are here.

Teach Them to Fish…

In an interesting twist on that kernel of wisdom Heifer International is an organization dedicated to providing both livestock (and the training in how to care for them) to communities trying to recover from violence of varying kinds. Too late for this past holiday gift-giving season, but well worth remembering for next year.
This appears to be another important example of building sustainability into the donor process.

The Impact of Simplified Data

Well designed graphs have the potential to present complex data in a way that maintains clarity without sacrificing details. The Global Education Project has a site that seems to accomplish this. It shows the relationship between clean drinking water and childhood mortality. It also shows just how far apart the first and third worlds still are. For example it shows that:

More than five million people, most of them children, die every year from illnesses caused by drinking poor quality water.

Here is the link.