Speeches

American Philanthropic Values and the Future of Philanthropy

Remarks by Susan V. Berresford at the New York Regional Association of Grantmakers Annual Meeting, May 11, 1999, New York Public Library

The end of the 20th century and the approach of the new millennium provide the proper moment to reflect on the privilege we have working in philanthropy. We are able to support courageous people working to reduce human suffering and advance human achievement. Ours is certainly not the only nation to have philanthropy – in fact, most societies have traditions of giving in some form or other. But we are one in which philanthropy affects almost all parts of our culture and a huge proportion of our people. This is then a moment to think carefully about the American tradition of philanthropy that we value and enjoy. Much is changing in the philanthropic landscape and some of the changes are generating critiques of foundations that could threaten what we treasure about our field. We want to do everything we can to ensure that as changes occur, philanthropy continues to expand and increase its effectiveness. That means first being clear about philanthropy’s basic values. I would emphasize three core values that drive American philanthropy. 1. The first is generosity –a value at the core of our profession. As we all recognize, grant making and other forms of giving express the basic human instinct of altruism that faith traditions and our secular policies encourage. But let’s go a little farther. A particularly interesting feature of U.S. philanthropic generosity is that it goes beyond the most typical pattern of giving around the globe which emphasizes giving to one’s family and acquaintances. Much of U.S. philanthropy involves giving to organizations that help people we don’t know, often people far away. And we usually like the idea that our charitable contributions can sustain groups that continue to help people beyond our lifetimes—such groups as the Red Cross, human rights and community service programs and others. A striking example of philanthropic generosity in the U.S. is the creation of endowed funds at community foundations and the creation of endowed family and private foundations which donors establish in perpetuity. As with endowments for universities, museums and hospitals, the foundation’s original donor says “I want this endowment to continue beyond my lifetime, and I leave its stewardship to people I don’t know, in successive generations.” That is an act of remarkable generosity and humility. 2. A second core value of American philanthropy is experimentation. Experimentation is a trait we are proud of in this country -- people take initiative to explore alternative routes to problem solving. If one path doesn't take us where we want to go, we try another, and another, until we have something promising. In many foundations, this has translated into grantmaking directed at root causes of problems. It has built knowledge that helped resolve or ameliorate serious social ills. Our support for experimentation reflects again the American belief in the legitimacy and social benefit that can be gained from a wide range of individual and community actors working on social issues outside of government. 3. Implicit in these two values, generosity and experimentation, is a third. At the heart of U.S. philanthropy is freedom. Grant making reflects the deeply ingrained American concern with freedom. We encourage people to create, be active in and support non-governmental institutions that reflect their views. Within certain regulatory bounds, they can develop and support all sorts of organizations that reflect their notions of how to advance the common good or their group’s concerns. We believe that the sometimes messy landscape and the dialogue that result are good for our country. This freedom gives real scope and possibility to the hopes and dreams of generous people at all income levels. As a result, we can celebrate the fact that our foundations and other nonprofit institutions reflect the rich diversity of our pluralistic society, not one ideology. We see this diversity of views reflected in different foundation-supported experiments in school or welfare reform, arts funding, and support for think tanks. As we approach the 21st century, we need to remind ourselves about these basic values that undergird philanthropy and foundations: generosity, experimentation, and freedom. I believe they constitute some of philanthropy's most powerful attributes, and I am concerned about them. Because they are so basic, and perhaps taken for granted, we may not be sufficiently alert to forces affecting them. We need to ask ourselves: what are the new developments in our field that are influencing foundations and other grant makers? How might these forces constrain or encourage the expression of philanthropy’s core values? One development we need to understand better is the increasingly complex foundation landscape, which will continue to grow and diversify as we enter the 21st century. There's been a proliferation in the number of foundations, the variety of grant-making activities, and total philanthropic assets. Since 1987 the number of foundations in the U.S. has grown from 28,000 to about 50,000. The new foundations hold some of the enormous growth in wealth that has been created recently in the US. Their assets have expanded from $115 billion in 1987 to over $300 billion today. Many have been established and are being run by families and individual entrepreneurs. Others are beginning with donor run collaborative systems, sometimes called giving circles. Their goals range from comprehensive, large-scale international agendas to very specific, single-purpose, single-location grant making. There is much to say about the implications of this new landscape, but I will make just four observations and express a concern: First, one of the most striking developments is the geographic spread of large private foundations across the U.S. and the change that can bring. Hugh Burroughs made this point in a recent speech to the Association of Black Foundation Executives. He pointed out that in 1989, five of the top 10 foundations in wealth were located in the Northeast and the other five were in the Midwest. Today, four are in the Northeast, three in the Midwest, two on the West Coast, and one is in the Southeast. This infusion of new large-scale donors into regions formerly less well served by big private foundations will continue. And it will be good for those regions (and, incidentally, good for the global community, since many of the new donors have a global philanthropic vision). Most importantly, it is visible proof of the vitality and diversity of our field. It means that our field’s biggest institutions can’t be easily type cast as having one regional perspective, one ideology or one set of concerns. Second, we now have a good number of high-tech entrepreneurs who bring an “investment” approach to grant making. These entrepreneurs say they think of philanthropy as they think about their businesses: stressing the need to be clear about the desired program return and being sure that sufficient money and organizational heft are present to reach that result. While some people in our sector worry that the venture capital approach will make donors too intrusive, I think that can be avoided or addressed when it arises. It is, in my view, good to see increasing numbers of donors doing this kind of strategic thinking. What else do we know about the new high tech donors? The president of the Community Foundation of Silicon Valley, Peter Hero, tells us that the giving rate is higher in Silicon Valley than the rest of the nation: 83 percent versus 69 percent. He also reports that 24 percent of Silicon Valley giving goes to K-12 education versus 4 percent nationally, suggesting that basic education may be at the center of many of the new foundations’ concerns in the years ahead. This shouldn’t surprise us, since the value of education is so clear in technology-based economies. And Hero tells us that giving is very private -- in the Valley only 40 percent of donors consult others about their philanthropy while the national figure is 88 percent. And religious institutions are less in the picture, with only 26 percent of the people belonging to a religious organization versus 70 percent nationally. These patterns of giving by new high-tech donors in the West may signal new trends in our field. A third observation about the growth and diversity in the foundation landscape: The multiplicity of grant-making organizations is likely to generate greater concern about what constitutes good philanthropic practice. New donors will be curious about what has worked and what has not. And they are likely to make the normal number of missteps any newcomer group does, which will in turn produce a few horror stories and more discussion of lessons learned. While philanthropy will remain for many a do it yourself business, a growing body of knowledge exists about grant making, program design and planning, mistakes to avoid, tricks of the trade and so forth. A number of foundations, philanthropic advisors, and the Council offer training modules on these topics. For example, the Philanthropic Initiative has a set of exercises that helps donors clarify their thinking about philanthropic values and priorities; Ford has an annual training and orientation program for its fresh grant makers, and a new CD with messages about work practice; and Pew calls its seminars for new staff “Pew U.” This is now a cottage industry which will grow and become institutionalized in the coming decades. Some in our field will argue that training will stifle grant makers’ creativity, but it need not. It can produce a higher sense of service to grantees and beneficiaries and openness to experimentation. We all need to think how this training should be organized and placed across the country. We can be proactive and shape its development and decide if it should be in universities, in regional associations of grant makers, in foundations themselves or some other locations. A fourth observation about the changing landscape: there will be greater need and opportunity for working alliances that don’t now exist between foundations. This is not a point about the familiar topic of program partnerships. It is about organizational structures. Several leaders of foundations around the U.S. told me they expect to see arrangements in which a number of foundations share administrative offices. For example, one person thought some of the large foundations will ultimately offer back office functions to new small ones – a sort of philanthropic incubator function. Other foundations are beginning to incorporate into their staffs, extra persons who blend in as if they were regular staff but who principally assist individual donors outside the foundation. Often these are new wealth donors who want to tap existing foundations’ expertise, and the foundations are pleased to leverage their know-how. The Rockefeller Foundation has already done this under Peter Goldmark’s leadership when it established a four-week program, spread over a year, for new donors who each pay $10,000 for a series of seminars and visits focused on creative giving. A variant of this model may develop when new wealth donors directly hire individuals to help them do their philanthropy, and find ways to attach them informally to several foundations, again drawing on the experience of the large and small, longer-lived foundations. We are going to see more and more creative operational combinations of this sort. I think that all of this change and ferment is exciting and positive. But I worry about one piece of this changing landscape, and that worry takes me back to the core values I mentioned earlier: generosity, experimentation and freedom. We often now hear from new donors that they want to spend their wealth during the their lifetimes -- not a surprising sentiment. After all, they made the money; they have a lot of confidence in their abilities; and they enjoy giving the money away. That is natural. But we need to be aware that some of the “spend down” enthusiasm is based on the mistaken belief that with the passage of time, perpetually endowed foundations all wander far from the donor’s original intent. That is simply not so. Most do adhere to their original charters. Moreover, in many cases, donors established perpetually endowed foundations with very broad charters precisely because they knew they couldn’t predict what would be needed. So the foundation’s program may be unlike what the original donor had imagined, but it is still in keeping with the donor’s intent of flexibility and responsiveness to changing times. Most important, we also need to be aware that some other “spend down” advocates urge that approach just because they don’t agree with what the perpetually funded foundations support. I worry that the frequency with which we now hear about the value of “spend down” and the lack of visibility of donors who are choosing perpetuity creates the impression that “spending down” is the desirable public policy. Going back to the core values I mentioned at the start, I believe we must be sure to offer freedom and options for all kinds of generosity. Some donors will choose to spend down in their lifetimes and society will benefit from that decision. Irene Diamond’s wonderful example stands out in this community. Others, surely a smaller number will want their foundations to exist in perpetuity, and that choice brings other benefits. We see these benefits in the work of our community foundations and others, large and small that dot our landscape. We believe in freedom and giving full expression for each person’s generosity. So we must be sure that future philanthropists have the option to spend down or to fund in perpetuity, and everything in between. Now let me turn to a second change in our field we all are aware of: the increased expectations for foundations to demonstrate short-term results. Foundations are private bodies acting for the common good and they should show results to justify the public’s trust and their special tax status. Media people covering philanthropy understand this and increasingly seek evidence of success; and their time frames are short term. Business practices are influencing our field in this way as well – bringing in language of bottom-line, risk-reward thinking, benchmarks and the like. In many respects this pressure to show results is healthy and challenges us to be clear about markers of progress and outcomes when we speak to broad audiences. It also helps deflate puffery and jargon. Most fields have “insider” language and people with the prideful tendency to over promise. Ours is no exception. The new demands for results encourage foundation boards and staff to spell out what they are doing, why, and what near term practical changes will indicate they are moving toward those goals. These pressures make us stronger. On the other hand, too much pressure for short-term, easily measurable results can drive grant making out of types of work whose results can be difficult to gauge, such as leadership development, work on race relations, human rights education and other topics. In such fields, the changes we hope for often take time to emerge and have to be captured by “soft” measures. We must focus a portion of our energy and resources on serious and complex problems such as poverty and injustice or the nurturing of new leaders. Foundations can support innovation in these fields working with courageous change makers as they struggle against tough odds. To do so means ignoring the voices in our field calling for us to move away from work on root causes. These people, some among the Bradley Commission, urge us to get back to what they call traditional charity – the countable, visible actions like feeding the hungry, clothing the ragged, simply giving help. Charitable acts of this sort are important – as we see so vividly today in coverage of Kosovo and recent natural disasters. But charity can also include work on the underlying causes of human misery. The old adage of teaching a person to fish has meaning and importance in philanthropy. Philanthropic support for social experimentation and concern with root causes is even more critical now that the federal role in this work has diminished. Today, about two-thirds of the federal budget is earmarked for debt service, entitlements such as health care and retirement security, and other mandated spending. Only about one-third is available for discretionary spending programs, and virtually all of that goes for essential government services. Back in 1962, those figures were reversed -- a third of the federal budget was mandatory and two-thirds, discretionary, leaving more room for experimentation. So we must look increasingly to private, nongovernmental sources including foundations and other grant makers to support some of the experimental programs directed at our most serious social problems. To do this requires the long-term perspective and patient money that foundations often have. Our challenge is to accept calls for early demonstrable results where they are possible and to build sophisticated public tolerance for the longer time frame required for the trial and error learning process that gets at root causes. This leads to the third and last force I want to mention that is affecting our field. That is our increasing visibility. Today’s media analyze and evaluate philanthropic institutions to an unprecedented degree. The glare of publicity can be uncomfortable for grant makers long used to acting publicly in a private manner. So many convince themselves they can ignore the media. But the repeal of public privacy is here to stay. Philanthropy will be covered in the media as never before. Some of the reasons for these changes are very positive. One is the huge growth in foundation assets from the U.S. stock markets’ boom. Another is the entry of high-profile mega-donors. When Bill Gates gives computers worth many millions to schools and libraries, and when Ted Turner gives a billion dollars to the United Nations, it’s a story. This is generosity writ large and these are very interesting personalities. These actions help us as they express the very basic values of generosity, experimentation and freedom, and do so in vivid terms. Other benefits accrue as well from our new visibility. More people know about projects that work in society and are inspired to help them or adapt them elsewhere. Our young people here and around the world see examples of optimistic and successful public service in the nonprofit sector and are moved to join the nonprofit field. And, ultimately, the general public may come to appreciate the contributions of the third sector, which they now take for granted or see only dimly. But the new visibility of our field also reflects another U.S. tradition: a combined fascination with and uneasiness about wealth and the power it seems to confer. So we cannot ignore the new attention to grant makers. If we don’t tell our story well, others can be convinced we are “stealth forces” in society. They will be suspicious about us and never learn about the neighborhoods that have been rebuilt, the colleges and universities that have been strengthened, the fellowships provided and all the rest. As the Council on Foundations and others are urging, we have to make communications a priority in the large and small foundations. There's a need to be more forthright in taking our case to political, civic and business leaders, many of whom know very little about foundations and other grant makers. How many of you visit your elected representatives? How many make a point of reaching out to civic and business leaders in and around your boards or family circles to talk to them about key issues facing our field? How many have thought through what your basic messages would be in such situations – including knowing what those important and influential leaders care about that you may be working on? How many of us can tell a good story about a successful program in just a few sentences? We have to use the new technologies like Web sites, chat rooms and the like to reach broad groups. But we also have to think strategically about where we need to be heard and plan that approach carefully. Being a good communicator is a skill. We need advice in how to do it well, and we need ways to share our good and bad experiences. We need to be getting on with telling our stories well. If we don’t, someone else will describe us and we may not recognize ourselves, nor like what we see and hear. *** I believe we can look at the future with optimism and with confidence in each others’ abilities to adapt to the changes occurring around us. Through NYRAG and other organizations we will want to help each other in this process. We will not want to divide our selves. And I hope we will be wary of those people who want to restrict philanthropic generosity, experimentation and most of all, freedom. We can:

• envision a time when philanthropic resources are available all across the U.S., some for short term and some in perpetuity;
• produce and offer to those who are interested a body of knowledge about creative and strategic grant making;
• build inter-foundation structures that leverage administrative and program know-how;
• tell our stories in ways that inspire confidence in our field;
• support long-term problem-solving efforts all across America.

We have this opportunity now and we can take hold of it if we remember and communicate our connection to the core values of generosity, experimentation and freedom. Our story is not a tale of one set of beliefs, one generation’s ideas, or one way of doing business. It is a tale of our richly diverse people and the different views, ambitions and dreams they have expressed through their giving. In the new millennium, with its global concerns and realities, that diversity, ambition and imagination will be all the more important.