Philanthropy Front and Center - Washington, DC

Glasspockets Find: The Annual Conference Goes Digital

The explosion of social media is having a multiplier effect on the reach of the traditional annual conference.  Long gone are the days when only those lucky enough to travel to the host city were able to attend a few sessions, network with peers, and grab as many handouts as possible to share with the folks back home.  With today’s social media, everyone in attendance can be a virtual fly on the wall, able to connect with everyone on the outside—in real-time—via text, audio and video.  A new window—transparency—is coming of age, bringing with it the potential for increased participation.

As a case in point, take the 2012 Annual Conference of the Council on Foundations that concluded in Los Angeles in May.  Here are some of the topics of discussion that have emerged which you can explore, or even add to the dialogue:

• Challenges and Opportunities for Foundations Communicating in a Digital Age
• Do IRS Nonprofit Media Rules Need a Digital-Age Update?
• The Power of Storytelling

A rich media archive of tweets, blogs, recordings, and images is now available, opening up new possibilities for more and more people to learn and interact than ever before.  As one of two Strategic Partners for the 2012 conference, The James Irvine Foundation asked three of its grantees who participated in panel discussions to share some of their thoughts.  It’s yet another example of our world becoming ever more transparent, with multiple points of entry.

-- Mark Foley

The History of Philanthropy in the U.S.

This overview was originally published by Rob Bruno Catalog/Reference Librarian at the Foundation Center--NY office (thanks, Rob!). For two more perspectives on Philanthropy in America see here and here. For yet another perspective, stay tuned- I'm almost done with it myself.

Those of you wishing to get a sweeping overview of the history of the nonprofit sector and philanthropy in the United States will be well rewarded by reading Philanthropy in America: A History by Oliver Zunz (Princeton University Press, c2012). It “tell[s] the story of the convergence of big-money philanthropy and mass giving that … sustained civil society initiatives over the 20^th century in the [U.S.]." The book is part of Princeton’s “Politics and Society in Twentieth-Century America” series and focuses on the legal and public policy aspects of the topic.

Zunz tells us that after Congress ratified the 16^thAmendment (the levying of income tax) in 1913, the Treasury Department created a single category in the tax code for exempting philanthropies; the exemption in turn nurtured and ultimately entrenched philanthropy in the U.S.  It also allowed groups with divergent interests to work together and foster a powerful and well-supported nonprofit sector.  

He points out that while the philanthropic sector operates on a much smaller scale than government, the resources available to charities and foundation are large and influential enough that the continual “debate about the proper relationship of government to philanthropy has become a distinctive feature of American society.” Throughout the book, he illustrates the constant dance between politics and civil society, and discusses how Americans of all classes invested an enormous amount of energy in philanthropy while in the process enlarging American democracy.

Chapters take the reader chronologically through time, starting with the period after the Civil War when an unprecedented number of Americans became rich and powerful enough to shape community and national affairs (i.e. John D. Rockefeller and Henry Ford). Zunz also examines the coming of mass philanthropy and how it became part of core American values beginning during the Great Depression, important regulatory compromises and their impact, and philanthropy’s ensuing role during the Cold War in 1950s through Civil Rights in the 1960s. 

The book ends with an examination of the globalization of U.S. philanthropy: American groups saw opportunities to promote capitalism and civil society as engines of democracy overseas after the collapse of the Soviet Union. A key moment in that transition was the massive response to the 1984 Ethiopian famine, which highlighted America’s special role in international relief. In joining global efforts to end famine, the nonprofit sector "trumped Cold War dynamics" and "claimed its independence from foreign policy." In the final pages, Zunz examines how the Bill and Melinda Gates Foundation merged the global with the local, focusing on pragmatic solutions to the global public health issues especially regarding the spread of diseases.

There are an extensive amount of other resources on the history of philanthropy and the role of foundations in the U.S. Two recent titles of note include The Foundation: A Great American Secret; How Private Wealth Is Changing the World (Public Affairs, 2007) and American Foundations: Roles and Contributions (Brookings Institution Press. 2010).

Philanthropy In America is available to read at our Foundation Center- Washington DC library, and also available at the Washington, DC public library for check-out.

Glasspockets Find: Beyond the Grant Dollars, Hewlett Foundation Explains Tools Available to Support Grantees

As we continue to showcase examples of foundations' transparency, Paul Brest, retiring president of the William and Flora Hewlett Foundation, provides a nice window into the thinking behind the foundation's work. Grants aren't the only way the foundation seeks to solve social and environmental problems. In Beyond the Grant Dollars, his opening essay of the recently released 2010 Annual Report, Brest pulls back the curtain to explain the added value of the program staff in magnifying and maximizing impact.

He writes, "The Beyond the Grant Dollars project has two primary objectives:

• To improve the Foundation staff's and Board's decisions about the mix of strategies and the allocation of financial and human resources that can best achieve our goals.
• To determine the skills, experience, and other qualities we should look for in new staff members and ways to improve the development of Foundation program staff."

Brest does a fine job detailing a number of ways that funders like the Hewlett Foundation employ staff to get the biggest bang for the buck, all the while trying to keep their eyes on the prize. With solid examples from the foundation's own experience as a highly engaged philanthropist, he thoughtfully presents the rationale for the various tactics mobilized for mission achievement. And, as in the best instances of lessons learned, he does not only discuss successes. In his own words, "potentially high returns also involves a significant risk of failure."

Finally, Brest mentions the desire to capture the substantive knowledge that program staff acquire in their fields and in their various activities and disseminate it for internal use as well as externally "when it has the potential to inform nonprofit organizations, foundations, and others."

View the President's Statement and the full Annual Report, or see past Annual Reports dating back to 1966.

Originally posted by Mark Foley on the Glass Pockets Transparency Talk blog.

2011 Grantee Community Call Hosted by Bill and Melinda Gates Foundation

Glasspockets is the web site created by the Foundation Center that focuses on transparency in philanthropy. Transparency Talk is its blog where this piece was originally posted.

As part of our "Who Has Glass Pockets" transparency and accountability assessments,the Foundation Center regularly scouts for mechanisms that allow grantmakers to receive ongoing grantee feedback, as well as ways in which grantmakers are using technology to build networks and learning communities.

How does the nation's largest foundation encourage two-way communication and engage with its global grantees? One method is through its second annual Grantee Community Call. I had the opportunity to listen in on the first of two one-hour conference calls (12 hours apart) that were hosted by the Bill & Melinda Gates Foundation on November 21. With more than 600 participants on this call, the session began with CEO Jeff Raikes citing the importance of understanding the perception and the reality of working with the Gates Foundation and the critical role of "smart collaboration" between the foundation and its grantee partners and with other funders. He repeated the foundation's commitment to grantees based on three concepts: quality interaction, clear and consistent communication, and opportunities to provide feedback that will be used to make continuous improvements. Indeed, this Grantee Community Call was a means to put this philosophy into action—and may serve as a good example for other grantmakers with a lot of ground to cover.

Grantees were reassured that the foundation's priorities will not be changing, despite two new leadership additions and the melding of the Global Health Program with the Global Development Program. The foundation also remains committed to the evolving process of breaking down silos in order to integrate and better coordinate the sharing of information across multiple sectors, both internally and with its grantee partners.

The first half of the community call featured presentations by three program directors: Gary Darmstadt, director, Family Health; Vicki Phillips, director, College Ready; and Sam Dryden, director, Agricultural Development. Each, in turn, reinforced the foundation's commitment to constructive, effective relationships by:

• encouraging grantees to challenge the foundation to strive for continuous improvement at various levels;
• working together as thought partners;
• breaking down internal silos to encourage cross-sectional integration; and
• promoting transparency and welcoming accountability.

The second half of the session was a time for questions and answers. Participants were able to submit questions before the call via an e-mail address and during the call via a special Twitter hashtag and by queuing up with the conference call operator. There was time for nearly a dozen questions from a representative assortment of grantees, including callers from Asia and Africa.

What was perhaps the most impressive take-away was the seemingly genuine and sincere effort of the Gates Foundation to display respect and gratitude to its grantee partners. As Mr. Raikes said in conclusion, [we strive for] "greater impact together." With multiple opportunities for feedback, grantees should not hesitate to engage with the foundation in their mutual goal of improving lives. One very interesting, and rare, feedback mechanism allows grantees to anonymously report issues that raise ethical concerns to EthicsPoint, a service provided by an independent third party.

Finally, the foundation plans to conduct its next Grantee Perception Report, working with the Center for Effective Philanthropy, in the first quarter of 2013.

Recorded versions of the 2011 Grantee Community Calls are now available on the foundation’s web site.

-- Mark Foley, Foundation Center-Washington, DC

If your organization participated in this call, let us know what you thought of it!

Charting Impact for Nonprofits

It is so easy for many of us to get lost in the fine print of our daily activities that we can soon lose sight of the ultimate purpose of our hard work. Charting Impact is the newest tool to help charitable organizations highlight the difference they make, sharpen their approach, and be in a position to work with others. Here’s how it works: Answer a series of five simple, yet powerful questions, and your organization will receive a concise, standardized report to share with potential supporters and partners. Charting Impact was developed by BBB Wise Giving Alliance, GuideStar USA, and Independent Sector, with assistance from an advisory group that included the Foundation Center.

This is a tool that can help your nonprofit make its corner of the world a better place — and help improve the chances that your story will become known to those who wish to invest their time, money and attention. Many foundations are placing a greater emphasis these days on tracking the impact of their funding, and they are asking their grant recipients for more information for that purpose.

“Charting Impact reports empower organizations to respond to the specific concerns of donors in one thorough, thoughtful format,” says Bob Ottenhoff, President and CEO of GuideStar USA. “For organizations, the introspection required to fill out the report is designed with results in mind: increased financial support from donors responding to tangible measures of progress.” Read more from Mr. Ottenhoff in this blog post he wrote for Tactical Philanthropy.

Learn more and create your own unique Charting Impact report for free at www.ChartingImpact.org.

-- Mark Foley, Manager, Associates Program

Yes, Virginia, It's Time Again for Your Annual/Project Report!

For many nonprofit managers and development directors, the holiday season is not a restful time. It is filled with last minute appeals, donor follow-up calls, thank you letters, and reports. If you are looking for assistance in constructing an annual report for your organization, one resource that you should consult is the Knowledge Base on GrantSpace, where you will find the article Where can I learn more about making a nonprofit annual report? This article includes links to sites with examples of annual reports along with the suggestion to "google" annual reports of other well-respected nonprofits in your community or field for ideas.

Another idea for finding examples of effective annual reports is to review the winners of the Wilmer Shields Rich Awards Program for Excellence in Communications. This award is given by the Council on Foundations at its annual conference to recognize outstanding annual reports, special reports, and web sites issued by grantmakers.         

Or maybe you need to put together a summary report for one of your funders. For DC area organizations, one way to structure an effective grant report is to follow the template spelled out in the Washington Grantmakers Common Grant Application Form. If you construct a document based on the form's questions, you will have one that can be submitted not only to grantmakers who accept the Common Grant Application, but also to many others. Another helpful tip in preparing a grant report is to be sure to read what the funder's reporting requirements when the grant is awarded, so you can collect the needed data as the program progresses.

Once you have created an annual report, you may wrestle like other organizations with the question of whether to print it or just make it available on your web site. Let us know what your organization is doing on this issue!

Glasspockets Launches Transparency Talk

In 1952 Russell Leffingwell, chair of the Carnegie Corporation, stated that "the foundation should have glass pockets" during his testimony before the Cox Commission, convened to investigate foundations for alleged support for "un-American activities." It was as a result of the Cox hearing, along with the Reece Commission that followed, that the Foundation Center was born in 1956 as a "strategic gathering place for knowledge about foundations."

At the beginning of 2010 the Foundation Center created Glasspockets, a web site dedicated to bringing transparency to the world of philanthropy. We're excited to announce that Glasspockets has now launched Transparency Talk, a space for conversation about what foundation transparency and accountability look like in today's information age.

Our first segment of Transparency Talk is a podcast with Lucy Bernholz, founder and president of Blueprint Research and Design, blogger, and co-author of Disrupting Philanthropy: Technology and the Future of the Social Sector.

Is technology disrupting your philanthropic efforts? Is it making foundations more transparent? If so, how? Join the conversation.

-- Natasha Isajlovic-Terry, Assistant Librarian, Foundation Center-San Francisco

What's New with Project Streamline?

Drowning in Paperwork, Distracted from Purpose: Challenges and Opportunities in Grant Application and Reporting was issued by Project Streamline in Spring 2009. Eight organizations representing grantmakers and grantseekers managed by the Grants Managers Network launched this initiative. The project's report outlined 10 flaws in the grant application and reporting process and proposed four guiding principles for grantmakers wanting more efficient operations. Since the report was released, workshops have been offered around the country to alert and engage concerned parties on the issues raised.

Sub-commitees composed of grantmakers and grantseekers were also formed  to provide practical guidance on how to implement the principles. The first two reports are now available -- Online Applications and Reporting and Grant Budgets and Financial Reports -- with others scheduled for publication this spring.

The online application report lists essential features that web-based applications should include, such as the ability for a grantseeker to save work and return to it later. The report on budgets and finances has a section on how the new Form 990 can help the streamlining process. Though aimed primarily at grantmakers, each report also contains useful tips for grantseekers. You can download these and future reports here.

During this economic downturn, when both grantmakers and grantseekers are being asked to do more with less, participating in this initiative is one way we can all spend more time on our missions and less time on paperwork!

After reviewing the reports, be sure to send suggestions and comments to info@gmnetwork.org.

Financial Ratios, Babies, and Bathwater

(Dahna Goldstein is the founder of PhilanTech, LLC, and serves on the Advisory Board for the Foundation Center-Washington, DC. This post was originally featured on the PhilanTopic blog.)

The nonprofit sector has been abuzz the last few weeks with talk of abandoning financial ratios in favor of program information to evaluate the impact of nonprofit organizations. The renewed focus on program measures was partially spurred by a joint press release issued by GuideStar, Charity Navigator, GreatNonprofits, and others.

There's no question that program information is essential in evaluating nonprofit performance and impact. But let's not get carried away.

There are good reasons to reject expense ratios as a tool for judging nonprofit performance, and they have been well documented (including here and here). I completely agree. It was, in part, the misplaced focus on expense ratios that led my company to team up with an expert in nonprofit finance several years ago to build a better financial analysis tool for the sector.

Many states require nonprofits to audit their financial statements. But while the quality of prepared and audited financial statements varies widely, much can be learned about an organization's financial health and stability by reading its audited statements and performing a few simple calculations. One can learn, for example, how many months operating reserves the organization has (a recent study showed that 53 percent of nonprofits in the Washington, D.C., area have less than three months, a significant vulnerability in these challenging economic times). Prospective donors also can see how quickly an organization pays its expenses, how well it is able to service any debt it has, and how much money raised in excess of expenses is available for investment in the organization's sustainability and growth. There's a wealth of information available -- if you know where to look.

Not everyone has the time or knowledge to analyze nonprofit financial statements. That's where our financial analysis tool -- and other tools like it -- can help. Based on nonprofits' financial statements, these tools typically produce a series of analyses that provide a detailed view of an organization's performance without presupposing specific financial analysis skills on the part of the person using them.

True, financial evaluation is only one tool in the nonprofit evaluation toolkit. But it's a critically important one as you make your donation decisions. A nonprofit that is doing great work but barely has enough cash on hand to sustain its operations is not likely to be an organization in which you'll want to invest. Or, maybe, if you believe in the organization's work, you'll decide to go all in and give it a larger donation with an eye to helping it survive. In either case, rigorous financial analysis can help you make an informed decision.

As the sector continues to explore ways in which program information can be used to evaluate nonprofits and help drive the more efficient allocation of scarce resources, let's be careful not to throw out the financial baby with the expense-ratio bathwater. And remember: Informed donors are effective donors.

(Original artwork: Patrick Gannon)

-- Dahna Goldstein

The nonprofit sector has been abuzz the last few weeks with talk of abandoning financial ratios in favor of program information to evaluate the impact of nonprofit organizations. The renewed focus on program measures was partially spurred by a joint press release issued by GuideStar, Charity Navigator, GreatNonprofits, and others.

There's no question that program information is essential in evaluating nonprofit performance and impact. But let's not get carried away.

There are good reasons to reject expense ratios as a tool for judging nonprofit performance, and they have been well documented (including here and here). I completely agree. It was, in part, the misplaced focus on expense ratios that led my company to team up with an expert in nonprofit finance several years ago to build a better financial analysis tool for the sector.

Many states require nonprofits to audit their financial statements. But while the quality of prepared and audited financial statements varies widely, much can be learned about an organization's financial health and stability by reading its audited statements and performing a few simple calculations. One can learn, for example, how many months operating reserves the organization has (a recent study showed that 53 percent of nonprofits in the Washington, D.C., area have less than three months, a significant vulnerability in these challenging economic times). Prospective donors also can see how quickly an organization pays its expenses, how well it is able to service any debt it has, and how much money raised in excess of expenses is available for investment in the organization's sustainability and growth. There's a wealth of information available -- if you know where to look.

Not everyone has the time or knowledge to analyze nonprofit financial statements. That's where our financial analysis tool -- and other tools like it -- can help. Based on nonprofits' financial statements, these tools typically produce a series of analyses that provide a detailed view of an organization's performance without presupposing specific financial analysis skills on the part of the person using them.

True, financial evaluation is only one tool in the nonprofit evaluation toolkit. But it's a critically important one as you make your donation decisions. A nonprofit that is doing great work but barely has enough cash on hand to sustain its operations is not likely to be an organization in which you'll want to invest. Or, maybe, if you believe in the organization's work, you'll decide to go all in and give it a larger donation with an eye to helping it survive. In either case, rigorous financial analysis can help you make an informed decision.

As the sector continues to explore ways in which program information can be used to evaluate nonprofits and help drive the more efficient allocation of scarce resources, let's be careful not to throw out the financial baby with the expense-ratio bathwater. And remember: Informed donors are effective donors.

(Original artwork: Patrick Gannon)

-- Dahna Goldstein