Implications for Philanthropy, Impacts on Foundations and Possibilities for Dialogue
Three questions:
How will this bequest change the philanthropic conversations in the US?
How will the gifts to the five foundations affect the staffs that work in the foundations?
Is there a role for Dialogue in this new philanthropic ecosystem?
In the wake of the rather stunning news that Warren Buffett has earmarked the lion share of his considerable fortune for inclusion into the equally considerable endowment of the Gates Foundation some interesting questions about implementation, and potential cause for concern may soon be emerging. First though, a few thoughts on the impact of Mr. Buffett’s decision to invest in the work of the Gates Foundation on philanthropy in general, and then on the possible impact on the foundation itself.
There is certainly much that is laudable about Mr. Buffett’s decision to invest in a foundation with a proven track record thus far for allocating vast sums of money in reasonably effective ways. Perhaps his most laudable decision was to resist the urge to endow an eponymous foundation with the bulk of his fortune. Because he is a man of so much wealth (second only to Mr. Gates by most reckoning), he is uniquely positioned to influence other wealthy individuals to develop strategic partnerships, and leverage their fortunes that can dramatically amplify the impact of their wealth for the public good. At some point the trustees of the Bill and Melinda Gates Foundation may choose to rename it to the Gates-Buffett Foundation. Certainly this would be a magnanimous gesture, but undoubtedly this is not something that Mr. Buffett either expects or covets.
It is less easy to applaud Mr. Buffett’s decision to give his fortune away, however. While it is refreshing to hear a man with his wealth and stature in the community make a strong appeal against dynastic wealth, and the accumulation of so much wealth in just a few families, there is the question of what else could he do with such a fortune except give it away. His three children are all financially comfortable, and seem to share their father’s values – especially in terms of living fairly autonomous lives. According to some reports, their father made it clear from the time they were young that he did not want them to have so much wealth that they would literally have nothing to do with their lives. That has clearly paid off handsomely. Each of his adult children has been involved in philanthropy for some time. Indeed, since their father is adding $1 Billion to each of their foundations’ portfolios, they are facing similar (although smaller in scale) growth curves.
This lack of enthusiasm for the decision to give this money away is not meant as a criticism. Rather, it is meant to posit a clear distinction between generosity, and perhaps a higher value that he might hold – a returning to a posture of equipoise, and desiring that the fortune he has amassed be released back into society for the public good.
A final point here is to note that, even with all this giving, Mr. Buffett still has $7 Billion of Berkshire Hathaway stock left in his own investment portfolio. Although he has stated that this too will go to charity, he has not indicated where the funds will go, or if they will be released during his lifetime. So, there may be other foundations that might become recipients of his largesse in the future.
In terms of the impact on the Gates Foundation itself, no doubt some smart and highly talented individuals, who are experienced with managing large assets on a global stage, lead the foundation. And these leaders have had a few years under their belts to begin to understand the challenges that come with grappling with some of the most complex and intractable problems to have ever vexed the human race. This latest wrinkle, however, may be a zebra with a different stripe. According to our reading of the plan, Mr. Buffett’s contribution will be incremental over a number of years. The first such installment - in the neighborhood of $1.5 Billion – is to be paid out in one year. By our calculations that will mean that the foundation’s program officers will face the enormous challenge of spending in the neighborhood of $4,109,589 a day, every day of the year. Spending that amount of money may not be difficult, but spending such a sum wisely over time may prove insurmountably daunting.
The size of foundations is a thorny issue, however, and as a society we are seeing more money being sequestered in foundation portfolios at a remarkable rate. To get a sense of this exponential growth one need only look at the growth patterns of foundations over the last century. In 1910 there were 18 foundations in the US, and only one of these had assets in excess of $10 million. (Consider, if you will, a recent suggestion to Congress by Elliot Sptizer, New York’s Attorney General, to ban foundations with assets of less than $20 million.) Today there are about 80,000 foundations, grant making public charities and corporate givers. Of these 80,000 some 50,000 are private foundations. When one considers the fact that more than one-quarter of all foundation giving each year is done by the 25 largest foundations, one gets the sense of just how many small foundations there are in the United States.*
Many of these small foundations lack the staff and other infrastructure needed to have the impact that their founders might have hoped for. And many of these small foundations have a very narrow scope to their mission tightly targeting specific types of giving. And finally, and perhaps most unfortunately, many of these small foundations and individual philanthropists join their larger cousins and give their money to the least needy organizations among us. A case in point: of the $29 billion that went to charity in 2001, only ten percent (about $3 billion) went to human service providers. A staggering twenty-five percent went to university and college endowment funds, and the lion share of the rest to hospitals, museums and well-established arts organizations and civic orchestras. Perhaps Mr. Buffett’s strategy for giving his money away in the manner he is will have a positive impact on this trend as well.
Size does matter, but that is not the whole picture. It is a near certainty that values matter more. Mr. Buffett appears to be a genuinely humble man – urged on by humanistic values - who wants the bulk of his fortune to be used to help alleviate the suffering of the very poorest and most anguished among us. He also clearly believes that he does not need to have his fingerprints on every good outcome of his personal philanthropy. He is more than willing to leverage what is already in place with an infusion of new money that can potentially change the entire map of philanthropic giving in this country.
Yet, with all these positives there is some cause for concern. This rapid growth that the Gates Foundation will now experience will not be stress free. Much of this stress may actually become very distressing, especially for those in the organization charged with implementing the new initiatives that will soon be coming over their transoms. Along with these stressors will also come important opportunities to learn what works and what doesn’t in such rapid growth cycles for foundations that may follow in Mr. Gates and Mr. Buffett’s rather large footsteps. Those of us on the sidelines can only hope that structures are in place to capture this learning from the outset.
One possible structure, or learning process, they might wish to consider is Dialogue. Over the last several years we at the institute have been convening such a dialogue - a monthly “Funder’s Reflection”. This reflection/dialogic process is one in which a number of philanthropists, board members and program officers from several foundations meet to explore issues, concerns, and potential learning that comes as a result of deeply intentional conversation.
In a setting such as Reflection, dialogue participants are freed up to openly speak of their work – both the joy that comes from working in philanthropy and the many pressures that also come with such work. One of invaluable learnings for many participants in these dialogues centered on the “pile of paper” syndrome. This theme emerged several times over the past two years. The amount of paper on a program officer’s desk takes on its own meaning. In some ways their very identities as program officers become tied to those stacks of grant proposals, evaluation reports, MOUs and such. Program officers find that, as they are inundated with requests for funding, they are also overwhelmed sometimes at the prospect of having to say “no” to so many worthy organizations, grantees, and programs.
These reflections cross generations and organizational boundaries. This allows for a type of learning to occur that leads to immediate action. As other program officers engaged in that deep conversation about the meaning of the papers on their desks, they were able to frame their experiences in very different ways than previously. They were able to see how the meaning they were making of this was draining them of vital energy, and they also felt less isolated.
One important artifact that we have noticed with regard to these deep, intentional dialogues is that they reduce the incidence of staff burnout within the organizations. Retaining experienced, talented and dedicated professionals in philanthropy can be a daunting task. Reducing the sense of isolation in the work can be a key factor in that retention scheme.
Often these program officers are asked why their board did not approve the grant, and they are then put in the very difficult light. If they say too much to the disgruntled applicant, they sometimes risk putting themselves and their foundation in the awkward position of then having the applicant question why another organization was funded and they were not. If they say too little, then they risk damaging a relationship with a potential grantee who might be funded in the future.
Furthermore, all the participants began to pay closer attention to their organizations’ integrity, as they dialogued about ways to make sure that the staff that makes up their foundation is treated with the same care and concern as they treat their grantees. In addition board members who participated in reflections had a greater sense of how removed they often are from the work, and how this buffer sometimes serves them ill.
Working in this expanding universe of the Gates Foundation will likely add significant stress to their program officers as well. If they must say no to a potential grantee, they will be hard pressed to tell them that it was because of too little funding available. And yet, as large as that universe it, it is not infinite, and in all probability they will be saying no fairly often.
Of course one way to avoid becoming entangled in so much negativity is to design a filtration system, such that the bureaucracy buffers them from the onslaught of so much need. As they become less engaged with the grantee culture, they risk becoming less effective in their roles as program officers. Removing themselves with such a layering strategy may cause them to tip the scales of the carefully balanced position most highly effective program officers strive to maintain.
Another important learning from the reflection process is the extent to which there are two often disparate drives embedded in the very position of Program Officer. One of these drives is to be an enthusiastic advocate for the grantees they work with in the course of developing program proposals and grant requests. These can take several months, and larger grants may take much longer to articulate. Outstanding program officers quite mindfully walk the treacherously narrow path between “professional objectivity” and “enthusiastic advocacy” for the programs and organizations they are working with through a funding cycle.
The second drive embedded in the position is to act as a “responsible gatekeeper” for the foundation and make sure that only the most worthy, and highest quality program proposals make it through the bureaucratic gauntlet whose finishing line is the docket that is presented to the board. In this role it is often very challenging to make sure that promising and innovative programs also have the opportunity to receive funding – some of these riskier endeavors have a greater likelihood to fail, yet they are also the one often on the cutting edge and are most in need of funding at such an embryonic stage.
Finally, because Mr. Buffett’s fortune is being invested in several foundations at the same time, it may be that the leadership in these organizations can nurture some natural affinities across both organizational boundaries, and across generational ones as well. The learning that can be captured through such dialogues could be invaluable as other foundations begin to experience both the benefits and the tribulations of hyper growth.
To be sure the leaders in foundations – both at the board and the executive levels – are a vital factor in sustaining the overall effectiveness of any philanthropic organization over time. However, in larger foundations especially it is the program officers who comprise the heart and soul of the organization. They are the ones closest to the work that is being funded. They are the ones fostering, managing and nurturing the relationships with the grantees. At the end of the day, or the funding cycle, or when all the assets are finally allocated, it is this cadre within the Bill & Melinda Gates Foundation that will determine whether or not Mr. Buffett’s dramatic decision to give his money away in the manner he has was worth it after all.