A Wake-Up Call for Foundations

Grant makers urged at meeting to be more global and more vocal

Grant makers were urged to pay greater attention to global issues at the annual meeting of the Council on Foundations, held here last week. At the same time they were told to keep their eye on domestic politics on Capitol Hill, where some lawmakers may try to cut back on the tax privileges grant makers now receive.

In one of the keynote speeches to the nearly 2,300 foundation officials who attended the meeting, James D. Wolfensohn, president of the World Bank Group, said that “the responsibilities we have do not end in our cities and our communities; they end with a global view.” Mr. Wolfensohn, a former member of the Board of Directors of the Rockefeller Foundation, said foundation leaders must look beyond the borders of the United States if they hope to solve pressing social, environmental, and health problems.

Rep. David E. Skaggs, a Colorado Democrat, said foundations should not underestimate the challenges they have at home, however. The very survival of foundations could be at stake as Congress considers options for simplifying the tax system. He said foundations need to be prepared to respond to everything from “some pruning around the edges” to “a frontal attack on the financial underpinnings of the tax code that have a lot to do with whether you survive in anything like your current form.”

He urged grant makers: “You should be well-positioned to explain what you do, why you do it, and why you need to continue to have a tax code that supports you.”

Other speakers echoed Representative Skaggs’s views.

The rapid growth of foundation assets in recent years due to the soaring stock market means foundations will become part of future policy debates, whether they like it or not, said Joel Orosz, a program director for the W. K. Kellogg Foundation. He noted that a couple of weeks ago, the David and Lucile Packard Foundation’s assets jumped $1.8-billion in a single day. “That’s the kind of scale we’re talking about,” Mr. Orosz said. “It means that we’ve become players.”

Judy Miller Jones, director of the National Health Policy Forum, in Washington, said Congressional aides who deal with tax issues have real questions about foundations, including whether they are distributing enough of their assets each year in grants.

“What they see is the huge amounts of money that are going into foundations,” said Ms. Jones. “They’re not sure if there is appropriate accountability. And they don’t really understand the wide variety of organizations that you support.”

Capitol Hill aides also may not understand what a private foundation is, according to the findings of a recent survey of Congressional aides by the Council on Foundations. While three-fourths of the 30 staff members — all of whom deal with tax issues — said their bosses were at least somewhat knowledgeable about the work of private foundations, about a third had trouble naming any foundations. Many aides listed United Ways and other charities in response to the question.

Dorothy S. Ridings, the council’s president, said foundations are paying a “terrible price” for the lack of understanding by legislators — and the public at large — about foundations’ work. “What many of us have believed through the years was discretion, or reserve, or even propriety in our public appearance has come across as secrecy, unaccountability, arrogant, and elitist,” she told conference participants.

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Several members of Congress said they were alarmed by the state of public-policy discussions and hoped that foundations could do more to inform such debates.

Representative Skaggs, who plans to retire at the end of January, said he hoped that if foundations got more involved in public policy, they would help deal with his key concern: “I can’t tell you how worried I am about the fraying of the American community,” he said. Foundations should “help this country pull back from what has become a period of ragged individualism, rather than our long tradition of rugged individualism,” he said. “Most of us in public office are hungry for a more connected, empathetic society, one more engaged in the public business of this country, and we need your help.”

Sen. John D. Rockefeller IV, Democrat of West Virginia, told grant makers that he worries about a gap between the work that foundations do to improve kids’ lives and the policies that emerge from Congress.

“I beg for an end to the disconnect,” he said. “Foundations are the entrepreneurs of the policy world. They have a tremendous opportunity to make sure that what works at the local level works at the state and national policy level.” Indeed, he added, “sharing that information with the nation is a moral imperative.”

Trying to shape public policy is not without its risks, however, conference speakers noted.

Michael S. Joyce, president of the Lynde and Harry Bradley Foundation, in Milwaukee, recounted his fund’s experience with two controversial efforts: overhauling Wisconsin’s welfare system and promoting parental school choice for poor residents of Milwaukee.

Both efforts grew out of the foundation’s concern that the existing social-welfare and public-school systems were seriously flawed, Mr. Joyce said, and both involved challenging entrenched interest groups in fundamental ways.

“It’s not beanbag to participate in this realm,” he observed. “We’ve experienced denunciations of every conceivable kind, and our moral character has been called into question.”

Foundations interested in pursuing public-policy goals must be prepared for controversy, Mr. Joyce advised. They also should be very open and responsive to questions from a potentially skeptical press and public, and they should be tenacious in the face of criticism. “If you’re willing to be called a racist and the Prince of Darkness, then go for it,” he declared.

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Global poverty and related health and social crises pose increasing challenges for foundations, Mr. Wolfensohn of the World Bank and other speakers said. Mr. Wolfensohn noted that three billion people live on less than $2 a day at a time when developed nations are spending just $40-billion a year on foreign-assistance programs. That is well below the peak of $66-billion that was spent in 1991.

Although non-profit groups are helping to alleviate the suffering caused by such poverty, they cannot do so without support from foundations and other organizations that represent wealthy nations, Mr. Wolfensohn said. “There is no way the World Bank — or any other international institution — can do this job alone; the job can only be done on the basis of partnership.”

Since taking over the World Bank in 1995, Mr. Wolfensohn has encouraged foundations and other non-profit organizations to join the international financial institution, which employs 10,000 people worldwide, in creating projects around the world. And in recent months, the World Bank has established a partnership group, including an office dealing with foundation relations, to facilitate cooperation with private grant makers.

“We want to work with you, not because we want to pick your pocket for money,” Mr. Wolfensohn said. “We need your brains, your experience, your ingenuity — and, of course, your funds — to try and make sure that the world we give to our children is a better place.”

One of the most extensive collaborations between the bank and a foundation is the organization’s venture with the J. Paul Getty Trust, which is designed to preserve the cultural heritage of developing countries. Under the agreement, employees of the bank and the Getty Conservation Institute will work together around the world to craft policies and projects that will protect and conserve historic sites, particularly where construction projects may threaten to destroy them.

But the World Bank’s relations with foundations have not always been smooth, as grant makers have struggled to understand the sometimes byzantine bureaucracy of the bank. And it may have to work hard to overcome the suspicions of wary foundation officials.

Bradford Smith, vice-president for peace and social justice at the Ford Foundation, recounted a somewhat humorous encounter that occurred when the fund made a grant to support a World Bank project in India. Speaking at a session for grant makers who do work overseas, he recalled that, upon receipt of the grant, the World Bank sent the foundation a large stack of documents that needed to be processed by Ford before the bank would accept the foundation’s money. His reaction: “I think something is reversed here. We are giving the grant.”

Connie Higginson, vice-president of the American Express Philanthropic Program, chose a humorous metaphor — courtship — to describe the awkward steps toward the building of a relationship between the World Bank and corporate philanthropy. First there is mutual attraction, she said, and then a period of dating, which breaks down in the familiar confusion of shifting gender roles: Who is supposed to pay?

Ms. Higginson said that the World Bank and private grant makers have each mistakenly assumed that the other would bring big financial resources to the table in any partnership but that in real ity, each side has limited discretionary money.

She said that foundation officials can work successfully with the bank. But the programs, she said, should be developed together, instead of having one side try to persuade the other to help pay for a program.

So far that has not happened. Affecting an air of coyness, Ms. Higginson said, “I sit by the phone and wait.”

Ms. Higginson’s concerns are mild in comparison with some of the criticism the World Bank has encountered over the years. Many international relief and development organizations — as well as environmental and human-rights groups — have faulted the financial institution for promoting policies and projects that have had disastrous consequences. But bank officials said that they hope to work with foundations and other non-profit organizations in constructing programs, even if the groups don’t approve of all of the lending agency’s policies.

“Partnership does not imply that all collaborators agree on everything,” said Jessica Einhorn, a managing director of the World Bank. “You do not forfeit your right to criticize us just because you engage in partnership with us.”

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Foundations can do more than just provide funds to make sure the nation’s poor children are receiving adequate health care, an expert said at one meeting session.

Sandra Stiner Lowe, who directs a program that delivers health care to poor children in Fairfax County, Va., said the effort has been successful in large part because foundations have encouraged charities, businesses, government, and health-care providers to work together to develop creative approaches to taking care of the health needs of the county’s uninsured kids.

The Medical Care for Children Partnership, which began in 1987 serving 35 children, now serves more than 4,500 kids, Ms. Lowe said. The cost is $318.50 per year per child, far less than the national average of $1,800, she said. The county pays for 22 per cent, and the rest is paid for by businesses, foundations, health-care providers, and individual donors.

The program has been able to keep costs low in large part because participating physicians have agreed to charge program participants lower fees than they charge other patients, Ms. Lowe said. In return, the program has made sure that the patient caseload is distributed evenly among doctors, and program staff members have worked hard to make sure that parents show up with their kids for appointments.

Foundations, Ms. Lowe said, have played a key role in getting other organizations to support the effort. Several local foundations, including the Arlington Community Foundation, the Freddie Mac Foundation, and the Northern Virginia Community Foundation, have invited business leaders to help them devise ways to make the program appealing to parents and health-care providers.

The Northern Virginia Community Foundation also manages the program’s endowment, which was created in 1990 when the program received a joint award from the Ford Foundation and Harvard University for innovation in local government.

Some of the incentives aimed at getting parents, physicians, and businesses to participate, Ms. Lowe said, include transportation services for families, as well as translation services for those who do not speak English. Doctors and health-care providers who agree to participate sign contracts in which they commit to the program for one year (and are given the option of dropping out after that). Businesses and other participating organizations are feted for their contributions with an annual gala and community-recognition awards.

The program has been copied in about a dozen other locations in Virginia, Maryland, Illinois, and Ohio, as well as in the District of Columbia.

Ms. Lowe said she hopes it will continue to expand, especially as more states and localities seek ways to deliver health care to poor kids. Starting next year, the federal government will make $24-billion available over five years to states to provide health care to uninsured kids.

Many state programs, she said, are likely to fall short of the provisions included in the Medical Care for Children Partnership. For example, she said, it is unlikely that states will include children who are illegal immigrants in their plans.

In fact, Grantmakers In Health, an organization of foundations that deal with health, released data at the meeting suggesting that only two to five million of the country’s uninsured children will be covered as a result of the new federal money in the State Children’s Health Insurance Program. At least 11.3 million kids under age 18 were uninsured in 1996.

Grantmakers In Health distributed a document that suggests 10 things foundations can do to insure that state efforts to expand health insurance coverage for kids are effective. They include:

* Keep the spotlight on the problem by putting “a human face on the statistics.”

* Supply technical assistance to state policymakers as states develop or refine children’s insurance programs using new federal funds.

* Help states learn from each other by creating forums for state program administrators to exchange ideas and disseminate information on what others have done.

* Provide information and support analytical research.

* Support advocacy efforts.

* Improve outreach and education efforts so that eligible children actually take advantage of available coverage, and then connect kids to the health services.

* Monitor and evaluate the effects of state efforts.

For a free copy of Expanding Health Insurance for Children: Opportunities for Grantmakers, contact Grantmakers In Health; (202) 452-8331; or e-mail acameron @gih.org.

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As the number of foundations continues to proliferate, more and more grant makers are looking for ways to associate themselves with other foundations sharing common interests.

The direct result has been a rise in the number of grant-making associations that focus on a particular program or topic. Today, some 35 such groups are affiliated with the Council on Foundations, and many held their meetings in conjunction with the council’s annual conference. Among the groups created in the past 18 months:

* Grantmakers Concerned with Care at the End of Life.

Grantmakers for Effective Organizations, which is trying to strengthen charity management and operations.

* The Grantmakers Forum on Community and National Service, which was created in response to the Presidents’ Summit for America’s Future.

* The Harm Reduction Funders’ Network, whose members are concerned about drug abuse and drug policy.

* The League of California Community Foundations.

A sixth group, the Technology Affinity Group, will be formally established later this month.

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Many of the first-time attendees at the council meeting came because they wanted to participate in the meetings of the Association of Small Foundations.

Created in 1996 for foundations that operate with few or no paid employees — not necessarily those with a small endowment — the group has more than doubled its membership in the past year.

With over 920 member foundations, the group holds combined assets of $13.5-billion and made grants last year totaling $1.1-billion. The funds had an average payout rate of 7.5 per cent — exceeding the legal requirement that foundations give away at least 5 per cent of their investment assets each year.

The association’s goal is to help foundations that have up to five staff members in all aspects of grant making. That includes: writing letters, cutting checks, mailing and processing grant applications, working with trustees and grantees, doing site visits and evaluations, managing assets, and public relations and tax matters.

According to officials from the group, foundations with few or no staff members provide half the total foundation dollars in the country, but thousands of these foundations are located in small cities or towns and often feel cut off from the larger philanthropic community.

“Many of our members feel very intimidated by the large foundations,” said Charles Scott, the group’s co-executive director. “They feel as though the work of a Pew or a Hewlett or a Packard or a MacArthur is very different from their work. They’ll give a $1,000 grant to a local boys or girls club. They know that the big foundations spend more than that in a day in paper clips.”

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The council announced awards during its conference to two grant makers who it says have been unafraid of controversy and of taking on projects other grant makers would not:

* The Robert W. Scrivner Award for Creative Grantmaking was presented to Thomas C. Layton, executive director of the Wallace Alexander Gerbode Foundation, in San Francisco. Mr. Layton was hailed for supporting efforts that dealt with “death and dignity,” including advocating physician aid in dying in limited circumstances for informed, mentally competent, and terminally ill adults.

* The Distinguished Grantmaker Award, which honors lifetime achievement in organized philanthropy, was given to Irene Diamond, president of the Irene Diamond Fund and former president of the Aaron Diamond Foundation, both in New York. Mrs. Diamond was praised for her foundation’s focus on AIDS research.

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Marina Dundjerski, Stephen G. Greene, Domenica Marchetti, Jennifer Moore, and Vince Stehle compiled this report.