Communication Key to Foundations’ Prosperity

By ALLAN PARACHINI

Of all the divides that separate the press and institutions on which they report, few are as broad — and populated by hurt feelings and suspicions — as the one between journalists and foundations.

Foundation officials — often very high officials — justify their unwillingness to communicate their affairs to the public by saying, “It’s not about us; it’s about our grantees.” Those same officials lament, even castigate, news coverage of foundations, saying journalists oversimplify, under-research, distort, and misstate what the foundation industry does. Or, they say that journalists commit an even worse sin: They fail to heap enough unquestioning praise on foundations.

But an honest appraisal of why coverage of foundations is so poor, haphazard, and infrequent establishes something else. Deficiencies in coverage of foundations are due far more to failures by foundations to take their communications obligation seriously than they are to any lack of skill or nefarious intent by reporters and editors.

To rectify this situation, foundations must scrutinize their own perspectives on communication. They must decide that communication to a variety of constituencies is not just important but critical to their near-term and long-range prosperity.

The need for such recognition is gaining urgency because of a clear reality that touches today’s foundation and news industries.

The foundation industry, because of the money it holds in its ever-expanding endowments, has become big business. Foundations held more than $358-billion in 1998, the latest year for which total asset figures are available, and their size continues to grow. This enhanced, largely market-driven prosperity is already beginning to attract increasing attention from journalists.

In the space of just one month quite recently, I had phone calls from three separate reporters at the same major urban newspaper expressing interest in becoming better informed about foundation affairs with the intent of proposing to their editors that they develop coverage of philanthropy as a regular assignment. And in recent months, several major newspapers and chains have assigned reporters exclusively to the topic. There is a widespread realization among journalists today that foundations are not only news, but a largely under-recognized source of good articles that range broadly from the challenging to the scandalous.

Whatever the motivation, the reality is clear: Our industry is huge, and growing. Its enormous scale, not to mention the politics that come with that, ensures that foundations will soon be subjected regularly to sustained media scrutiny of an intensity and level they have not experienced previously.

With such high interest, we must dispense with the disingenuous bromide that we foundations should be invisible, with the spotlight focused on our grantees. Among the many reasons that open communications are essential to foundation survival:

• We are a government-regulated industry whose well-being depends on our ability to communicate who we are and what we do.

Even though President Clinton’s veto of the estate-tax repeal was sustained by the House of Representatives this month, it’s clear that the issue has not died. And estate-tax repeal is likely to have direct effects on the creation of new foundations and the operations of many existing ones.

Government interest in foundations is further underscored by the report by the staff of the Congressional Joint Committee on Taxation, which has proposed a substantial increase in public disclosure by foundations.

For the public to understand how foundations justify their own perspectives on regulation, it is critical for them do a more thorough job of telling the public who they are, why they exist, what they do, and — most important — why, and how, they add value to the American society. This is not just a matter of planting a few isolated human-interest stories about praiseworthy grant making — the “great grants” strategy. In some ways, grant making is the least important way foundations exercise leadership.

To the contrary, it is about engaging the true issues in the public mind about foundations: the percentage of assets distributed annually, the inclusiveness of grant-making processes, the balance between tax benefits awarded to foundations versus public benefits derived, and the overall integrity of the foundation industry.

Like any regulated industry, ours will receive only as much public sympathy and understanding as our communication strategies engender.

• Communication strategies are key to getting the public to share foundations’ visions of the priority issues in our society.

Despite the enormous size of foundation endowments, foundations will always lack the raw spending power, by themselves, to achieve any substantial societal change simply by distributing money to non-profit groups. The problems are too vast and the solutions too elusive and controversial. To pretend that foundations have enough spendable assets to effect change by grant making alone is also to accept the argument that non-profit organizations can replace government as the financing source for a broad range of social programs.

That being the case, framing issues for the public, using a broad range of communications strategies, is one of the most productive activities in which foundations can engage.

Foundations can use strategic communications to identify the issues and approaches they believe the public should embrace as critically important and can use communications to help reach and keep a consensus on how the country should proceed in addressing these issues.

That is not politics or advocacy, necessarily, although it can involve both of those. Primarily, it’s about public education. And foundations must stop hiding behind the uninformed premise that their tax-exempt status precludes their participation in that kind of strategic communication.

A frequent refrain from foundation executives and trustees is that every dollar spent on communications efforts is a dollar not spent on traditional grant making. But communications dollars offer foundations a way to propel their views and perspectives on issues in which they have expertise far more broadly than giving that same dollar to a single social-service organization. In that respect, grant making may in some situations be the least important thing foundations do.

• Foundations enjoy enormous favorable treatment under federal and state tax laws, and that privilege comes with an obligation to be publicly accountable. This is not only the most important reason that foundations should enthusiastically embrace the notion of far greater public disclosure of their affairs, but it’s also a powerful justification for the view that, just as society has chosen to accord foundations financial privilege — and could decide to strip it away from them — foundations must be forthcoming with the public.

• Marketing a message helps market a foundation. Although it’s only the nation’s more than 500 community foundations that raise money from the public, and therefore need to market their services to attract donor attention, all foundations must increasingly appreciate and understand the value of public visibility. But other foundations market, too, or facilitate marketing. For example, if a foundation makes a grant to a museum to sponsor a blockbuster exhibition, the marketing of the exhibition is part and parcel of the foundation’s interests since it will maximize the public impact of the grant.

The news marketplace will soon make quick work of the last holdouts of the foundation industry that cling to the public position that grant makers should remain the invisible, humble supporters of their grantees.

Soon enough, journalists will recognize that foundations that offer that public position don’t actually hold it privately but use it as a spin strategy to avoid saying that they prefer to think their operations are no one’s business but their own and that foundations are entitled to conduct their affairs entirely behind closed doors, accountable to no one.

That has never been true. It’s not true now, and the future of press and public scrutiny of foundations is certain to force us to make communication and sophisticated communications a priority.

Allan Parachini is vice president of communications at the California Community Foundation in Los Angeles, and a founder of CommA — An Association of Community Foundation Communicators. He spent 26 years as a journalist, including a dozen years at the Los Angeles Times.