March 26, 2012; Source: Philantopic

Longtime NPQ colleague Laura Cronin is in the latest issue of Philantopic with an interview of one of the more thoughtful foundation CEOs in the U.S., Doug Bauer of the Clark Foundation.  She poses five questions to Clark, whose answers stimulate five more questions on our part:

Bauer notes that some aspects of performance-based contracting with nonprofits, now the vogue in some New York State government circles, is likely to mean that nonprofits won’t be getting the entire levels of reimbursements that they had expected or hoped. Government apparently describes the gap as a “private match,” which Bauer characterizes as “the emergence of an expectation—implicit or explicit—that private philanthropy is going to start filling some of these gaps.” Bauer knows that this philanthropy-gap-filling strategy isn’t just an expectation of New York’s government leaders. If foundations don’t believe they should be filling human service delivery funding gaps, how are they organizing to get that point across, and how are they defending themselves from legislators and nonprofits who might see foundation grantmaking as impractical and inadequately connected to human needs?

Talking about the fundraising challenges of small and medium-sized nonprofits, Bauer suggests that “smaller groups tend to be at a fundraising disadvantage simply because they don’t have the development capacity of larger institutions. As you track where public funding is going, and you think about how the social safety net is being restructured, I have to believe that larger nonprofits are going to be in a much better position to figure out what that restructuring ultimately looks like and how they fit in.” Bauer asks whether “we end up with a nonprofit sector version of—the analogy isn’t perfect—‘battleships’ and ‘motorboats.’ Are we going to end up with two types of nonprofits—large eight- and nine-figure organizations doing most of the work and a bunch of social entrepreneurs and social enterprises that focus on innovation and figuring out new ways to deliver services?” Bauer’s concern is framed as relating to service providers, but what are the implications of a future of nonprofit battleships and motorboats for the role of the nonprofit sector in public policy advocacy, community organizing, and democracy?

Bauer is rightly proud of Clark’s practice of making 80 percent of its grantmaking in the form of general operating support. Can Bauer explain, after years of studies that attest to the importance of general operating support, why so many of his foundation peers still hew away from general operating grantmaking and why, even when they make general operating grants, those grants are sometimes hamstrung by restrictions that reduce an organization’s flexibility?

A realist, Bauer says he doesn’t dictate management training, technical assistance counseling, and other solutions to the financial and programmatic problems of his nonprofit grantees. He lauds the creation of the New York City Merger, Acquisition and Collaboration Fund (NYMAC) to support and facilitate management transitions of nonprofits involved in mergers, acquisitions, and collaborations. There has been much talk of the need for mergers and funders like Bauer have often expressed enthusiasm for mergers, even while acknowledging the practical difficulties and the negative consequences of funder-promoted “forced marriages.” Can Bauer explain why the nonprofit sector hasn’t turned to mergers in greater numbers? Is it really a financial issue—such as the transitional cost dilemma that NYMAC is supposed to help solve—or is there something in community empowerment dynamics that make mergers so rare in the nonprofit sector despite the sector-wide financial crunch?

Cronin lauds Bauer and the Clark Foundation for their collegial relationship with grantees. Bauer explains, “the funder-grantee relationship has to be a partnership, and a free flow of information is critical if the partnership is to be successful.” But can foundations really partner with nonprofits? What does partnership mean between a grantmaker with the ability to make or withhold grants and a nonprofit grant applicant or grantee that understands the power is all on one side of the partnership?

We suspect that Doug Bauer might actually be able to answer these questions.—Rick Cohen