Grant Makers Need Leadership

For years, the Council on Foundations has failed to provide any serious leadership to the foundation world, preferring instead to pander to the narrow self-interest of the less-than-enlightened grant makers who dominate the organization.

The announcement last month by the council’s chief executive officer, Dorothy S. Ridings, that she plans to retire this year gives the council a fresh chance to focus on its mission and step up to the major challenges facing philanthropy. But it is hard to be optimistic that Ms. Ridings’s successor can make major changes without reforming the entire organization.

The council has a weak and ineffectual board, too many mediocre staff members, and a proclivity for timidity and caution that has rendered the organization incapable of anticipating and riding the crest of changes that are sweeping through philanthropy.

The organization was slow to recognize the gravity of the growing number of foundation scandals so effectively exposed by the news media and slower still to speak out strongly against flagrant foundation behavior. While it has adopted a set of guiding principles for its members, the council has not done anything to ensure that its members follow those principles.

Nor has the organization tried to establish any strong relationships with the nonprofit groups that foundations support, ties that might have led the council to recognize and publicize the crucial importance of foundation grants for general operating expenses. The council is so insular that it has been unwilling to change its longstanding practice of treating nonprofit guests at its annual conference as second-class citizens, failing to cover their expenses — including registration fees — for more than one day.

During her tenure, Ms. Ridings brought a great deal of energy to the public-relations task of selling foundations to the American public, an effort that may have deflected her attention from other, more substantive issues. As a good journalist, she oversaw the transformation of the moribund council publication, Foundation News & Commentary, into a more lively and interesting journal. But since the departure two years ago of its longtime editor, Jody Curtis, the magazine has lapsed back into its old state.

Ms. Ridings also managed to keep together the increasingly disparate groups that make up the council: independent foundations, family foundations, community foundations, corporate foundations, venture philanthropists, and others.

Still, the council’s board and membership have encouraged the fragmentation of the grant-making world in ways that are not entirely healthy. In an attempt to reach out to more grant makers, the council has encouraged the rapid growth of what it calls affinity groups, each clustered around a particular grant-making area such as health, neighborhoods, or racial and ethnic minorities. The groups have spread like wildfire; the council recognizes 41 of them and yet more operate unofficially. Many, if not most of them, are staffed with budgets totaling millions of dollars.

While the affinity groups encourage collaboration and the development of expertise on specific topics, the growth of what some jocularly refer to as infinity groups has a downside. They have diverted attention from the cross-cutting issues that face philanthropy and their existence takes pressure off the council to look at the broad picture, to anticipate future developments and problems, and to recommend changes that foundations should make to meet urgent public needs.

As a result, the council remains simply a trade association, not a central body that can stimulate new thinking about philanthropy, sponsor important research efforts, seek better ways for foundations to conduct their business, and develop strategies for enhancing foundations’ relationship with nonprofit organizations.

The search for a new president could provide an opportunity for the council to rethink its mission, structure, programs, and leadership role. Following are some changes it could make to bolster its operations and improve the work of foundations:

• Strengthen the council board. While it is important for the board to be sensitive to the diversity of philanthropies represented by the council and to geographical interests, it will be more important to appoint the grant-making world’s strongest thinkers and innovators, especially foundation executives and program officers who are not afraid to challenge conventional wisdom. The board should also include nonprofit executives who are not intimidated by grant makers and who could provide different perspectives. Excellence should be the principal qualification for board members.
• Set high public accountability standards for all grant makers. The council’s guidelines should emphasize tight limits on “self-dealing” activities and encourage full disclosure of relationships between board members and contractors and consultants. In addition, foundations should be encouraged to be very careful about spending money on trustee fees and travel for board and staff members. The organization should also encourage donor-advised funds offered by the nation’s community foundations to disclose information about their activities and the amount they distribute to charity annually.

  The fact that many foundations, including some of its members, do not have strong accountability records is no reason for the council to avoid setting high standards and holding their own members accountable. It’s about time the council transcended its role of being merely a trade association.

• Build bonds with grant recipients. The council must start to take responsibility for improving relationships with nonprofit organizations, and not just the handful of large establishment organizations that are members of Independent Sector. At a time when the issues and concerns facing the entire nonprofit world are growing, it is imperative that both foundations and nonprofit groups communicate more effectively with one another and cooperate more fully in resolving mutual problems. One way to begin would be for the council to create a permanent committee, composed of an equal number of donors and grant makers, to serve as a sounding board on matters of concern to both charities and foundations. Regional associations of grant makers might be persuaded to create similar bodies.
• Improve training of foundation program officers. For many years the council has periodically sponsored sessions for new program officers at foundations. In the 1970s, those sessions were robust and intensive, involving outspoken grant recipients and scholars as well as foundation officials. In recent years such meetings have been much tamer and less frequent. The council should sponsor training sessions for new program officers and executives on a regular basis. Such sessions should involve more than the token one or two grantees and be stimulating and provocative.
• Focus on critical issues. The council should begin to focus major attention on the most-important issues and problems facing philanthropic institutions.

Foundations may be the nation’s most undemocratic institutions, and their closed nature has become more worrisome as they grow in number and in wealth. The council and its members should seek ways to ensure that foundation boards grow more diverse in terms of class, gender, ethnicity, and temperament, and that they reflect more accurately the makeup of our society. Grant makers should consider whether it would be wise to place limits on the size of a foundation that distributes tax-subsidized funds for public purposes without the benefit of advice from the public.

Foundations also should be grappling with the contentious issue of whether they should provide more money for general-operating support and for public-policy and advocacy activities, money that is increasingly in demand by nonprofit organizations. Questions of public accountability should be a major priority item on the council’s agenda, as should the ways that foundations can tailor their procedures and practices to the needs of nonprofit groups. Foundations must also pay much more attention to evaluating their own performance, especially as they increasingly demand such evaluations from nonprofit groups.

In following such an agenda, the council could assume the leadership role that, in the past, it has so zealously avoided.

The new chief executive of the council will be the key to whether the organization forges ahead in a new direction. He or she will have to bring to the job a strong sense of vision, a deep understanding of philanthropy and nonprofit organizations, intellectual rigor, and a good deal of courage. Those qualities are hard to find these days. But a few good people are out there waiting to assume the challenge. Is the council wise enough to seek them out?

Pablo Eisenberg, a regular contributor to these pages, is senior fellow at the Georgetown University Public Policy Institute and the author of Challenges for Nonprofits and Philanthropy: The Courage to Change, which was published in December by Tufts University Press. His e-mail address is pseisenberg@erols.com.