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Council on Foundations
May 06, 2009
Council on Foundations
Foundations Should Find Creative Solutions in the Recession, Says Bill Clinton
While the economic recession is hurting nonprofit groups, they must respond by being more creative and working with businesses, government agencies, and one another, Bill Clinton told members of the Council on Foundations.
Mr. Clinton said his own charity, the William J. Clinton Foundation, is not immune from the downturn. Since September, $15-million in pledges have been unfulfilled due to the financial crisis. He added that thanks to cash reserves and trimming its operations budget, his organization has not had to cut back on AIDS projects in Africa or other charitable efforts.
Small nonprofit groups are also facing deficits, added the former president, saying he is helping the Methodist church he attends in Westchester, N.Y., raise money to run a food bank.
“This economy has hit this philanthropic sector pretty hard,” Mr. Clinton said. “I see this everywhere, large and small.”
He added: “The civil society of America is hurting.”
To survive and even expand their work, he encouraged grant makers to innovate and create cost-efficient programs. For example, he is working with companies and the New York City mayor’s office to make the Empire State Building more environmentally friendly.
The move will cost $33-million, he said, but will reduce the building’s energy expenses by $4.5-million a year, practically paying for itself in less than a decade.
He said such efforts need to continue and encouraged grant makers to persevere during the recession.
Said Mr. Clinton: “The role of the nongovernmental sector is essential.”
Council on Foundations
Grant Makers Urged to Be 'More Muscular' in Advancing Public-Policy Ideas
Several Obama administration officials spoke at the Council on Foundations meeting this week about their interest in working with foundations to fight the nation’s most urgent problems.
While the discussion at the event focused primarily on how foundations can influence the White House, Ralph Smith, chief executive of the Annie E. Casey Foundation, in Baltimore, and chairman of the council, wondered how a closer relationship with government would change philanthropy.
He said that foundations would need to be more agile, confident, and willing to work hand-in-hand with each other.
In terms of speed, he said grant making is usually akin “to giving birth.” The decision to make a contribution can be a “nine-month process” as a staff member makes a recommendation to a chief executive, he or she then deliberates with the board of directors, and finally a decision 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.”
Council on Foundations
Federal Government May Revise Voluntary Guidelines for Giving Overseas
The U.S. Treasury Department wants to work with grant makers to revise its voluntary guidelines that seek to prevent charitable dollars from inadvertently flowing to terrorists, a department official said at the Council on Foundations meeting.
Michael Rosen, a policy adviser in the department’s Office of Terrorist Financing and Financial Crimes, said the office wants to work with foundations “to better refine the guidance.”
While saying that the Obama administration is still very concerned about the possibility of philanthropic money helping organizations like Hamas and other militant groups, he said the office’s guidelines can be “more responsive to your needs.”
Foundations have said the guidelines are too onerous and prevent some donors from making grants overseas.
Mr. Rosen also promoted the American Task Force on Palestine as a possible model to make grants in “high-risk areas” like the Palestinian territories. In August, the charity signed an agreement with the U.S. Agency for International Development in which the government aid organization would vet the Palestinian charities the task force would want to support.
Ziad J. Asali, president of the task force, in Washington, said it has raised at least $500,000 in products and cash donations for schools, hospitals, and other charitable institutions.
He cautioned, however, that the approach has its challenges. The charity has to not let the government pick what groups to support and the partnership should not be the starting point for a “more intrusive” government role in philanthropy abroad.
Council on Foundations
Mayor Bloomberg Outlines Steps New York City Is Taking to Ease Strain on Nonprofit Groups
Michael R. Bloomberg, New York City’s mayor, told a session at the Council on Foundations meeting today that New York City has made a concerted effort to help nonprofit groups struggling because of the poor economy by employing a “three-pronged strategy.”
First, the city is testing a “group purchasing” program for organizations that get city contracts.
If 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 by offering 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.
Thirdly, 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 he recognizes and values philanthropy’s role in paying for experimental solutions to social problems.
“The public demands in advance answers to questions that do not exist when you innovate,” he said. “That’s why governments don’t innovate very well.”
Once a nonprofit project becomes successful, however, it “becomes something the public can understand and is willing to pay for,” he said.
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 schoolchildren, 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.”
Council on Foundations
'Trust Deficit' Erupts After Madoff Investment Scandal
In a session billed as “CSI for foundations,” speakers at the Council on Foundations meeting in Atlanta 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 when investing with Mr. Madoff because officials relied on personal, religious, and social connections that they shared with him.
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.
- The auditors for the effort were “two guys at a strip mall,” Mr. Solomon said.
He added, “Having procedures in place and simply doing the kind of due diligence does result, in this case, in avoiding the problem.”
May 05, 2009
Council on Foundations
Foundations Urged to Offer Ideas for 'Social Innovation Fund'
President Obama is asking Congress to provide $50-million to support creative and successful nonprofit groups as part of a new Social Innovation Fund, Melody Barnes, director of the White House domestic policy council, told a session at the meeting here Tuesday.
“The Social Innovation Fund reflects the president’s new governing philosophy: finding and investing in what works; and partnering with and supporting others who are leading change in their communities,” Ms. Barnes said. “We are also working with federal agencies across the government to identify new solutions to problems that have resisted traditional approaches.”
She asked foundations to give her advice about how the fund should operate, what charities it should support, and how the White House can evaluate whether it makes any progress.
Council on Foundations
Obama Official Calls Proposed Change to Charitable Deduction a 'Tough Choice'
President Obama’s plan to limit charitable tax deductions for wealthy people was “hotly debated” in the White House, but ultimately the administration decided that the government should hold onto more tax revenue to improve health care, Melody Barnes, director of the White House domestic policy council, told foundation officials at the Council on Foundations meeting.
During a question-and-answer session after her speech, which focused on the creation of the Social Innovation Fund, she acknowledged the concerns that the tax plan, which would go into effect in 2011, may hamper charitable giving. “It’s certainly an issue we recognize,” she said.
However, she said the money the change would generate is a key facet of President Obama’s agenda — it would be used to support a cash reserve to make the country’s health-care system more affordable and accessible.
The decision was a “tough choice” in the White House, said Ms. Barnes, describing scenes in the White House Roosevelt Room where the issue was debated along with other budget changes.
The robust discussions were dubbed “Project Dave”, a reference to the 1993 movie in which the actor Kevin Kline played the president and tried to curb government spending by recruiting his accountant friend to go line-by-line through the federal budget.
“When we’re addressing tough issues,” she said, “everything’s on the table.”
Ms. Barnes also responded to a foundation official who raised concerns about the fate of projects that are started with money from the $780-billion economic-stimulus package when that cash flow dries up.
Ms. Barnes said the administration wants to make sure there is not a “dramatic cliff” in government spending in the years ahead, although it faces an historic deficit.
“I won’t deny that is a very real problem,” she said. “It’s part of the conversation we need to have about how we can leverage the work that you all are doing and the work that we’re doing to try mitigate that and continue the progress that we hope will be made in this period.”
Council on Foundations
Foundation Officials Debate Watchdog Recommendations
A recent report from the National Committee on Responsive Philanthropy has roiled the foundation world, and during the Council on Foundations meeting several philanthropy officials debated the committee’s recommendations for good grant making.
The foundation watchdog’s contentious report, which was released in March, encouraged foundations to award at least 50 percent of their grants to disadvantaged populations, to provide a total of 6 percent of their assets to charities each year, and made other recommendations for “philanthropy at its best.”
(Read The Chronicle’s article about the publication.)
William W. Ginsberg, president of the Community Foundation for Greater New Haven, said adopting the committee’s benchmarks would hurt his organization’s ability to encourage charitable efforts by a broad group of Connecticut donors.
While he and the foundation are concerned about poverty in New Haven, “the criteria missed the mark on how community philanthropy really works.”
He later noted that only one community foundation has endorsed the report. He and Aaron Dorfman, the executive director of the committee, pledged to start a discussion with community foundations about how the standards could — or could not — apply to them.
Sherece Y. West, chief executive of the Winthrop Rockefeller Foundation, in Little Rock, supports the recommendations, although her organization does not meet all of them. She said her foundation is using the report as a tool to measure its social-justice work.
“It enables us to reflect on our grant making,” she said.
During the session, the participants argued about whether the report will influence lawmakers, whether the committee should have tried a softer approach to pushing donors, and whether the committee used solid data to conclude that only one-third of foundation grant dollars go to “marginalized people.”
Ms. West acknowledged the latter issue was important because better information is needed to track grant makers’ progress in trying to help the poor and others. But she emphasized that what foundations really need is a bigger discussion about the racial inequities facing America. The report, she hoped, would help trigger that conversation.
“Philanthropy hasn’t reconciled itself with institutional racism,” she said.
Her idea was echoed by Janine Lee, chief executive of the Southern Partners Fund, in Atlanta, who wrote an opinion article for The Atlanta Journal-Constitution published Tuesday that backed the committee’s report.
Council on Foundations
Donors Helped Response to Flu Outbreak
With encouraging signs that the H1N1 virus may not be as dangerous as first believed, Richard E. Besser, acting director of the Centers for Disease Control and Prevention, said foundations and philanthropists helped the agency prepare for a potential pandemic.
“Foundations play a critical role during emergencies,” Dr. Besser, a pediatrician, told members of the Council on Foundations.
For example, in 2001, as the agency, in Atlanta, worked frantically to trace the anthrax attacks on journalists and members of Congress, it set up a make-shift emergency-response center in an auditorium.
Bernard Marcus, the co-founder of Home Depot and a board member of the CDC Foundation, a nonprofit group that helps the agency, visited the somewhat jury-rigged facility and began raising money for a state-of-the-art operations center to monitor health emergencies. Mr. Marcus’s foundation also gave $2-million to help build it.
What’s more, Dr. Besser said, the Robert Wood Johnson Foundation, in Princeton, N.J., has helped to organize summits between government, business, and nonprofit officials to discuss how America should response to a disease pandemic.
“Those summits are the reason I believe we can respond efficiently” to outbreaks like the swine flu, Dr. Besser said.
Council on Foundations
Top Federal Official Enlists Grant Makers In Changing Health Care
Kathleen Sebelius, the new secretary of health and human services, called on foundations to be the “research-and-development arm” of her agency as it seeks to improve health care.
During a speech at the Council on Foundations, Ms. Sebelius said the Obama administration wants to work with foundations to change the nation’s health system to be more efficient and inclusive.
While the money grant makers provide is key to this, she said perhaps more important is their ability to work with grass-roots charities and needy people to create a discussion about how health services should change.
These “communications connections” will be critical to the success of President Obama’s health plans. “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 a society from her sister, who is a vice president of the Greater Cincinnati Foundation. As her agency faces problems like the H1N1 virus, she said it will need the aid of the nonprofit world.
“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.”
Copyright © 2009 The Chronicle of Philanthropy