Grant Makers Asked to Assist in Improving America's Health Care at National Meeting

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In health care, economic development, and other national issues, President Obama is seeking the assistance of grant makers and other nonprofit groups, several high-ranking government officials said during the Council on Foundations' annual conference here this month.

Among the Obama administration officials was Kathleen Sebelius, the secretary of health and human services, who told the 1,200 grant makers at the meeting that foundations should be the "research-and-development arm" of her agency and called on them to assist the president in improving the American health system.

While the money grant makers provide is key, she said, just as important is their ability to work with grass-roots charities and needy people to create a discussion about how health services should change.

"Health-care reform won't work if the only people engaged are inside the Beltway," she said. "Help us help all Americans."

Ms. Sebelius, the former governor of Kansas, said she learned about the important role foundations play in society from her sister, who is a vice president of the Greater Cincinnati Foundation.

"I see this as the beginning of a very good dialogue," she told the audience. "You have experience we need to tackle the challenges ahead."

G. Edward DeSeve, a senior adviser at the Office of Management and Budget, asked for similar advice from grant makers.

Mr. DeSeve is in charge of tracking the $780-billion economic-stimulus package, known as the American Recovery and Reinvestment Act. To help federal, state, and local governments spend that money, he said, foundations can make sure that poor and other disadvantaged people have a say in stimulus efforts, see that separate government programs designed to help low-income families work together, and suggest ways to measure whether the stimulus package achieves its goals.

To be involved, however, foundations must move quickly because a lot of the stimulus money must be used this year.

"The speed that this recovery act is rolling out is incredible," said Mr. DeSeve.

With Obama administration officials expressing interest in working with foundations, Ralph Smith, executive vice president of the Annie E. Casey Foundation, in Baltimore, wondered how a closer relationship with government would change philanthropy.

Mr. Smith, who is also chairman of the council, an association of about 2,000 foundations, with headquarters in Arlington, Va., said that foundation leaders would need to be more agile, confident, and willing to work with each other.

Grant making, he said, is usually akin to "giving birth" in the amount of time it takes. The decision to support a charitable effort can take nine months, as a staff member makes a recommendation to a chief executive, he or she then deliberates with the board of directors, and finally a grant may be made.

In contrast, the Obama administration is making spending decisions about the economic-stimulus money in a matter of weeks, Mr. Smith said.

He also said that foundation leaders can no longer "mumble" about what they want from policy makers but need to strongly assert their requests and be "more muscular."

Michael R. Bloomberg, New York City's mayor, told the council meeting that the city, in a concerted effort to help charities struggling because of the poor economy, has employed a "three-pronged strategy."

First, New York is testing a "group purchasing" program for organizations that get city contracts. If it is successful, Mayor Bloomberg said, he hopes to expand the program to all of the city's 30,000 nonprofit groups as a way to help them reduce their overhead costs through discounts on supplies, insurance, and other purchases.

City agencies are also making it a priority to pay nonprofit groups quickly for services provided. "Too often, too many nonprofits in New York have suffered because New York City hasn't paid them as promptly as we should, but not anymore," he said, to applause.

Finally, Mr. Bloomberg said the city is helping charities share "best practices" and get access to advice from business leaders. As part of this effort, the city has created a project called NYC Service to encourage volunteerism.

Mr. Bloomberg said New York City has striven to "set a new standard for how cities can use philanthropy to advance innovative public policies" through efforts like the Mayor's Fund to Advance New York.

Since 2002, he said, the fund has raised more than $167-million and paid for projects such as giving eyeglasses to children, planting new trees, financing domestic-violence centers, and paying for public-art projects, including the creation of several waterfalls within the city.

Philanthropy at its best, he said, is "inspirational, entrepreneurial, needs-driven, and, whenever possible, data-driven."

In a session billed as "CSI for foundations," speakers at the council meeting dissected the Bernard Madoff investment scandal, which resulted in the deaths of 51 foundations and left 143 others "seriously injured," according to Jeffrey R. Solomon, president of the Andrea and Charles Bronfman Philanthropies, in New York.

Speakers noted how many of the organizations that were hurt by the scandal missed signs of potential problems because officials relied on personal, religious, and social connections that they shared with Mr. Madoff.

Melissa Berman, president of Rockefeller Philanthropy Advisors, said one lesson that has emerged in the scandal's wake is that such relationships and a sense of trust are no longer enough.

The "acid test" for financial advisers, she said, must now be "Can you fire these folks comfortably?"

The violation of personal relationships, she added, has fed into a broader "trust deficit" that is now a major issue for philanthropy.

"If we're in a situation in which foundations can't be trusted as appropriate stewards of private resources for public good, then the very sort of 'license to operate' that everybody in philanthropy enjoys is under threat," she said.

Mr. Solomon said Bronfman Philanthropies considered investing with Mr. Madoff but did not after its chief financial officer investigated and discovered four factors he found troubling: The returns looked too good to be true; Mr. Madoff's group did not welcome an office visit; the group would not disclose how the investments worked, and wouldn't answer the chief financial officer's questions; and the auditors for the effort were "two guys at a strip mall."

Mr. Solomon added, "Having procedures in place and simply doing the kind of due diligence does result, in this case, in avoiding the problem."

More articles about the Council on Foundations' meeting are available on The Chronicle's Web site.