The ‘New Philanthropy’ Isn’t New — or Better

Various publications recently have been touting “the new philanthropy,” which, they say, promises to make grant making more effective and accountable.

The new philanthropy, according to those accounts, includes two types of grant making. The first is the emergence of new large donors, many of them from the prosperous field of technology, who want to apply their business skills to giving away their money. The second is the increasing number of foundations that are directly and intimately involved in the development and implementation of their grantees’ projects and programs.

So what’s new in the new philanthropy? Not much. Such practices have long been common. But their growing frequency and size are a disturbing development that raises the fundamental question of who should control the mission, goals, and agendas of non-profit organizations: donors, or the boards and staffs of the non-profit groups themselves?

For the wealthy newcomers to philanthropy, grant making generally is viewed as a hands-on process in which individual donors are involved from beginning to end. Like venture capitalists, they want to insure that their investments pay off, that there is a measurable product, and that the recipients of their munificence are good and accountable managers. Being intimately engaged also gives the donors an added sense of personal satisfaction. It does not seem to matter that they may not have any skills, experience with charitable organizations, or other qualifications beyond their business background.

While some commentators are calling this approach new, it is nothing of the kind. Large donors like John D. Rockefeller, Andrew Carnegie, and Walter Annenberg took a close personal interest in the way their money was distributed, at least in the initial stages of their philanthropic ventures. Nor can it be said that a concern for accountability, good management, and measurable results are novel qualities that big donors, individual and institutional, are bringing to the grant-making table.

Responsible foundations and program officers have traditionally insisted on their grantees’ accountability, made grants that have produced results, and helped non-profit organizations improve their performance. How else can one explain the many successes in many fields of which foundations can rightfully boast?

Of the two types of “new philanthropy,” programs that are both inspired and controlled by foundations — or what might be called frontline philanthropy — is the more disturbing. Such philanthropy is often characterized by the heavy involvement of foundation staff members in the gestation and management of a program, by the selection by the foundation staff of consultants to grantees, by evaluators from foundations who assess the results and success of the project, and, in some cases, by the creation of new non-profit groups with little legitimacy in a community or in a particular charitable field.

To justify their strategy of increased control, many foundations cite the importance of their having more of an impact. As a senior program officer from a major New York foundation told me, “We have a limited amount of money to spend on domestic social programs. We therefore want to make sure that this money is well spent and targeted to meet our institutional objectives. In order for us to have an impact, our staff must play a key, active role as a partner.” Given the imbalance in financial power between foundations and their grantees, it is not surprising that those “partnerships” are usually controlled by the grant makers.

There are other reasons for foundations’ wanting to be involved in the implementation of programs. Many bright program officers have their own ideas about how things should be done and are not content merely to respond to proposals by non-profit organizations. They want to set goals and objectives and shape new programs and public policy.

Then, too, some foundations that specialize in a particular field have one or more experts on board who believe that they know what to do about certain problems. It hardly matters to them that the non-profit world has hundreds, if not thousands, of experts for every one in the foundation world.

The Annie E. Casey Foundation, for example, spends almost all of its large grants budget on its own programs. Although grant applicants may have other needs and priorities, they do not have the option of asking for such funds. Either they buy into the foundation’s program, or they get no money.

The same is true for the Equal Opportunity Program at the Rockefeller Foundation, and at other foundations as well. In the environmental field, the Pew Charitable Trusts has built a reputation for pouring millions of dollars into its own environmental projects and creating new organizations. In large measure, Pew has ignored much of the environmental movement, especially the grassroots organizations, that over the past 35 years have provided outstanding leadership on environmental issues throughout the world.

That is not to say that all foundation-inspired projects are manipulative and controlling. Many have been eminently worthwhile, and many foundations have been properly mindful of the independence of their grantees. Among them are the Charles Stewart Mott and Public Welfare Foundations.

But the growing number and size of foundation-controlled programs pose serious dangers to the non-profit world. The more money that is devoted to such efforts, the less is available for desperately needed general operating support, for unsolicited proposals, and for other important special projects. For too many non-profit organizations, which often struggle to make ends meet, the lure of money has unfortunately led them to sacrifice some of their independence, flexibility, and institutional creativiity.

Behind many of these programs is a lack of confidence and trust by foundation executives in the ability of grantees to run successful programs. That attitude, which reflects the views of a small group of elitists who presume to know what is best for communities and charitable organizations, has done as much as anything else to arouse the deep suspicion, frustration, and resentment that so many non-profit executives have long felt toward their colleagues in the philanthropic world.

There is nothing really new in this state of affairs. The new philanthropy is nothing more than the old philanthropy, except that it is occurring more frequently and involves greater amounts of money. As such, it deserves to be analyzed, questioned, and challenged, both by donors and by grantees. Unchecked, it could threaten the vibrancy, creativity, and independence of non-profit organizations at a time when such qualities are needed more than ever before.

Pablo Eisenberg, vice-chair of the National Committee for Responsive Philanthropy and former executive director of the Center for Community Change, is a regular contributor to these pages.