Notes
“DREAMING OF FLYING” BY ALEXANDER SENIN / WWW.STPHOTO.SMUGMUG.COM

Editors’ note: The following, originally published on NPQ’s website on January 25, 2013, is an edited and abridged version of a memo, titled “Sweet Grapes,” to the board of the Public Welfare Foundation. The memo was written by Thomas Scanlon, on the occasion of his leaving the board after forty years of service, including twelve years as board chair. According to its website, the Public Welfare Foundation “supports efforts to ensure fundamental rights and opportunities for people in need [and looks] for carefully defined points where [its] funds can make a difference in bringing about systemic changes that can improve the lives of countless people. The Foundation has an endowment of $450 million and, in its sixty-five-year history, has distributed nearly $500 million in grants to more than 4,500 organizations.” This article is featured in NPQ‘s blockbuster summer 2013 edition: “New Gatekeepers of Philanthropy.”


Reclaiming Opportunistic Grantmaking as a Critical Part of Our Portfolio

Five years ago, the Public Welfare Foundation (PWF) made numerous changes in its governance and grantmaking that undercut many of the traditional qualities and values that have characterized PWF since its founding, in 1947. These qualities had gained for PWF a reputation as an innovator, open to opportunities, and supportive of new ideas as well as fledgling organizations that went on to play important roles in our society and the world.

But in 2007 we wiped the slate clean of many of the Foundation’s traditions, values, and culture in a way that was, in my opinion, both unwarranted and unwise.

In 2007, we were told that we suffered, as many traditional foundations did, from “scatteration”—that is, too many projects in too many areas of interest. We were urged to focus on carefully defined programmatic objectives, and “to identify and frame problems and to determine whether systematic changes have been set in motion.” Management called on us to set program objectives and ask potential grantees how to reach those objectives.

There was truth in this analysis. There had been mission creep over the years, and our funding was dispersed throughout too many program objectives. In the end, however, I think we went too far. We threw the PWF baby—and many of its best qualities—out with the bathwater.

Essentially, we embraced the new philanthropy: strategic philanthropy. To understand this trend, and some of the misgivings about it, I want to quote from some outside experts here. Stanley Katz, writing in the Chronicle of Higher Education earlier this year [2012], gave an apt description of this new thinking. He wrote:

Foundations have tended to reduce the number of program areas in which they give funds, to be more precise and detailed in their program objectives, to restrict project time frames, to establish benchmarks for continued financing, to evaluate grantees in a more precise manner, and to form partnerships with grantees in managing their projects. Paul Brest, the very able president of the William and Flora Hewlett Foundation, has summarized the new position: “The fundamental tenets of strategic philanthropy are that funders and their grantees should have clear goals, strategies based on sound theories of change, and robust methods for assessing progress toward their goals.” 1

There are certainly benefits to strategic grantmaking, and the present program of the Public Welfare Foundation illustrates them. We are identified with several unique funding niches as we work to reduce the number of persons incarcerated in our country, stop unnecessary detention of juveniles, and advance worker rights.

My own personal view is that we are overconcentrated in these areas and that we could have a real impact with grants that are fewer and smaller in size. Our advocacy of healthcare reform, for example, especially at the state level, was highly effective (and was considered the most effective by Grantmakers in Health), and yet it never crowded out the possibility of making grants to deal with other social problems or to assist new organizations or community groups.

The Foundation does allow for “Special Opportunities” in its program guidelines, but this does not open up the possibility for new initiatives as much as I would like. Our guidelines prohibit organizations from submitting “unsolicited” ideas. Criteria for use of these limited funds has become highly restricted and limited to the Foundation’s “mission”—that is, strategic objectives. I hope you support many more initiatives in the years ahead, and that many suggestions for new initiatives come, as was the case in the past, from board members themselves.

Susan Berresford, former president of the Ford Foundation, has pointed out some of the limitations of the strategic approach. She did this in an article in the Chronicle of Philanthropy and in a speech delivered at Duke University’s Fuqua School of Business, in 2007.2 Among the pitfalls of strategic philanthropy that she saw were:

  1. That it could “miniaturize ambitions” (i.e., settle for small, measurable, short-term results);
  2. That it could create outsize expectations or an impatience for results; and
  3. That it could turn applicants into contractors, who position their programs in ways to meet objectives set by foundations rather than pursue their own ideas and goals.

Most importantly, however, she pointed out that it could stifle creativity on the part of the grantees and the foundation:

In the same spirit, I think we should be careful about too many foundations shifting the way they operate to designing and driving all the work they fund—again, the venture model. When I look back on my now forty years in philanthropy at Ford, I see that half of the results I am proudest of came from ideas we might describe as “hatched at the foundation.” But fully 50 percent came from ideas others brought to us because they needed money to make them happen and they took their chances with us. If too many donors seem to shut off openness and readiness to support ideas from outside our walls, we will cut off a source of creativity and undermine one rationale for our existence: being an R&D resource for the innovative ideas that spring from diverse populations.

Ms. Berresford contrasted the new or “strategic” philanthropy with the old. She concluded that the new/old effectiveness dichotomy should be abandoned. The “old” donors (I accept the sobriquet for the “old” PWF) were indeed interested in goals and results, and we should not say that they weren’t. Too much emphasis on the “new approach,” she stated, “has the capacity to damage our field. We should appreciate, rather than disparage, charity.”

The adoption of a strictly strategic approach hampers what has been the most oft-cited and salient characteristic of PWF grantmaking: the responsiveness to new ideas put forth by new organizations. As I wrote in the introduction to Seeking the Greatest Good, my greatest satisfaction over the past forty years of being a director has been to hear from important institutions, time and time again, that we were the first or one of the first foundations ever to give them a grant.3 Funding the first hospice in the United States and spreading the hospice movement around the United States was not something we planned to do; it came to us as an opportunity, and we seized upon it.

Over many years, the public reputation of PWF has largely been based on our ability to be “risk takers.” I have used that term to describe us many times. On writing this memo, however, I began to think that “risk taker” was not the proper term. It did not take much of a risk, for example, to provide $2,000 to Sesame Street in its earliest days so that TV sets could be made available to low-income children. It was not much of a risk to be among the first to support Bob Greenstein at the Center on Budget and Policy Priorities, or John Adams at the National Resources Defense Council, or Joe Eldridge and Bill Brown at the Washington Office on Latin America. In retrospect, I believe that we were not so much risk takers as believers—believers in individuals, believers in a dream, believers in an idea whose time had come. We were, to use my favorite phrase, philanthropic opportunists. I urge you to give openness, responsiveness, and opportunism an equal place again on the scale of values that drive the grantmaking of the Public Welfare Foundation.

 

Restoring Direct Service and Empowerment of the Poor

For several decades, the key operating principles of the Foundation were a commitment to direct service, advocacy, and empowerment of the poor. In 2007, we walked away from two of these three key elements of our program.

I cannot recall when the board explicitly ruled out support for direct service, and can find no mention of this decision in the