The nation’s “nonprofit infrastructure” can be a bit hard to perceive sometimes. But it would include trade associations such as the National Council for Nonprofits and Independent Sector; capacity-building organizations such as BoardSource, Bridgespan, and CompassPoint; research centers including the Urban Institute, Guidestar, the Foundation Center, and the Center on Philanthropy at Indiana University; and watchdogs like the National Committee for Responsive Philanthropy, Charity Navigator, and BBB Wise Giving Alliance. Another key component of this institutional framework is the Arlington, Virginia-based Council on Foundations, which functions as a trade association and lobby to protect the interests and prerogatives of institutional philanthropy in the U.S.
It was fairly big news then when the Council lost its CEO this summer with the surprise resignation of Steve Gunderson, the former Republican congressman from Wisconsin who had led the organization for six years. Foundation executive Jeff Clarke took over as interim president and CEO, and the Council is now searching for a leader to take the helm on a permanent basis.
As part of the search process, the Council is soliciting feedback from its members regarding what sort of CEO the Council should look for. That’s admirable as far as it goes, but we thought that the Council should also hear from nonprofits. So on the first of September—Clarke’s first day as interim CEO—I sent out an e-newsletter to subscribers that read in part,
I’ll guess that the Council would prefer input from Council members or foundations in general, not from regular old nonprofits, but wouldn’t it be great if the Council wanted to hear from nonprofits that receive support from foundations (not to mention nonprofits that don’t)? And what if the Council really incorporated nonprofits’ suggestions in its search process?
Tell us what you think the Council on Foundations should be seeking in a new president and CEO, and we’ll compile them for the NPQ website—and send them to our friends at the Council.
Even though one NPQ reader informed us that this was a “crazy idea,” we received many thoughtful responses. Overall, what operating nonprofits want in the new leader of the Council on Foundations is someone who will get foundations to remember whom they are supposed to serve and why. As one respondent suggested to us, “The philanthropic world is not always as responsive to / considerate of / in tune with the needs, expertise, and insight that grant-dependent organizations are eager to share.”
“Reach out and listen to what nonprofits have to say.” This was the overwhelming theme of the responses we received. Another reader suggested that the new Council CEO ought to “seek out the expertise and experience of those organizations that have front-line experience ‘doing the work,’” adding that this new leader could help the Council adopt a new posture that “attributes as much value to the work that grant recipients do [as it does] to the dollars that grantmakers distribute.” Nonprofits also want a Council leader who will be a reformer, someone who will make philanthropy work not just for foundations, but for the nonprofit sector as a whole. In short, nonprofits want a leader who appreciates how important the nonprofit sector is as the mechanism through which foundations fulfill their obligations to the broader society.
What else would our readers want the new Council on Foundations CEO to be able to do?
Know something about nonprofits
Humility is a popular goal for foundation leaders to say they aspire to, but it is one that is rarely achieved, at least according to the nonprofit leaders who answered our informal survey. Within philanthropy, calls for humility as a core part of foundation leadership are commonplace. Examples come from corporate grantmakers such as Ellen Sandberg of the First Data Corporation Foundation, from social-justice foundation leaders such as Trista Harris of the Headwaters Foundation, and from any number of family foundations.
But perhaps the best way for foundations to understand and absorb the concept of humility is to experience it, to practice it, to know it from the perspective of a nonprofit grant recipient. It would help the next Council CEO to understand nonprofits by walking in their shoes. One NPQ reader suggested that the new CEO might want to be really, deeply experienced in what it is like to be a nonprofit that has to deal with foundations. According to this reader, such a candidate would have to have:
A minimum of five (5) years of grant fundraising experience including:
- Prospect research: interpreting information
- Deconstructing RFP/guidelines and preparing proposal in strict accordance with instructions (12 pt font, 1.5 spacing, 1-inch margins, single sided, binder clipped not stapled, full set of 12 attachments for each of the 10 copies of proposal, CD or flash drive)
- Logic Models
- Evidence-based practices combined with innovation
- Reporting: quarterly, interim, final, etc.
- Understanding budget restrictions and/or allowable expenses (“What? No indirect?”)
- Properly expressing gratitude
- Public acknowledgement
- Repeating process over and over and over . . .
Some years ago, Ed Skloot, then with the Surdna Foundation, noted (PDF) that
philanthropy’s operating system is full of potholes, hidden curves and soft shoulders. What may appear rational to individual funders may, collectively, be nearly unworkable for grant-seekers. Further, philanthropy effectively throws nearly all responsibility onto the grant-seeker while retaining for itself the right to make and alter the rules.
The point is that perhaps a Council on Foundations CEO might want to know how philanthropy is experienced by its “customers,” so to speak, with a view toward making the experience somewhat more customer-friendly.
One nonprofit technical-assistance provider offered a perspective similar to Skloot’s:
I have been surprised at how confounded grant-seekers are by the priorities set by foundations, and by the apparent lack of interest, on the part of many foundations, to build stronger, more reciprocal and supportive relationships with the organizations they pay to carry out their vision. . . . [The Council on Foundations should] use this as an opportunity to shift the foundation’s gaze from one that serves the articulated interests of foundations to one that addresses the work of foundations as dependent upon the efficacy of the organizations and programs they fund. . . . How fruitful would it be if the perspectives of funders could be joined with the interests and concerns that stem from a solid background in active, engaged program operation and service provision?
This isn’t the kind of experience that would come from having been an “accidental nonprofit person”—someone who fell into the nonprofit sector at some propitious moment due to his or her position in government or business. Rather, the Council should look for someone who has put in some serious effort dedicated to the nonprofit sector, full-time, at the ground level.
Understand the importance of general operating support
Any new Council CEO who has more than a passing familiarity with the nuts and bolts of nonprofit life would know first-hand the crucial importance of general operating support. Nonprofits want the new CEO to be a leader in promoting general-operating-support grantmaking, someone who will fight “the culture of restricted funding [that] . . . severely undercuts a nonprofit organization’s ability to grow and support itself,” as one NPQ reader put it. After all, wasn’t the issue of foundation support for operating support “won” some time ago, when the likes of Paul Brest of the Hewlett Foundation; Stephen Heintz of the Rockefeller Brothers Foundation; Gara LaMarche, then of the Open Society Institute; and Ed Skloot joined together to challenge their foundation peers to view large increases in general operating support as absolutely necessary for nonprofits and for the foundations themselves?
Without debating the sometimes oddly restrictive versions of “unrestricted” general operating support that periodically emerge from certain foundation leaders, we can point out that despite a small increase in foundations’ general-operating-support grantmaking, it is hardly a routine practice for most of the nation’s leading foundations. The Foundation Center’s tabulations of grantmaking by “the largest foundations” (a pool of institutions selected by the Foundation Center that unfortunately changes annually, making year-to-year comparisons dicey) suggest that operating-support grantmaking as a percentage of both number of grants and grant dollars has been growing somewhat:
General Operating Support:
General Operating Support:
However, the fact that fully half of foundation grant dollars (not including capital grants, research grants, or student aid) are still restricted, along with the fact that average program-restricted grants appear to be larger than the general operating support grants, suggests that the incoming CEO of the Council on Foundations has a long way to go toward guiding foundations to be effective supporters of healthy nonprofits that are not hamstrung and choked by often counterproductive restrictions.
Could the right Council CEO encourage different kinds of grantmaking? Or is he or she supposed to be neutral and opinion-free—a follower and servicer of the Council’s member foundations rather than a thought leader? In recent years, CEO Gunderson was a passionate promoter of changes in foundation grantmaking behavior. Notably, he supported rural philanthropy (and negotiated a memorandum of understanding with the U.S. Department of Agriculture), encouraged foundation partnerships such as the Social Innovation Fund and the Promise Neighborhoods program with the Obama White House, and promoted the Council’s efforts to encourage workforce-development grantmaking by hosting a workforce development fund.
Support continuity in grantmaking
The overwhelming share of foundation support is in the form of annual grants. Once a nonprofit finishes its grant applications for one year, it starts them all over again. In some cases, nonprofits have to appeal to new program officers at foundations that have funded them before. For many nonprofits, each year is like starting from zero with their foundation grantors. One respondent offered two related notions concerning this issue:
The new [CEO] should have a vision that includes the need to sustain programs rather than simply promoting the creation of new ones to satisfy funding requests; [and] the new [CEO] will understand that simple one-year funding is neither practical nor helpful to nonprofits, unless it is for a specific item, a specific event or a short-term specific project.
Another reader suggested that the new CEO should have a “commitment to a balance between experimentation and durable commitments and a willingness to encourage that balance in grantors.”
Promote small(er), community-based nonprofits
It’s no great surprise to anyone that the institutions that get the larger, multi-year general operating grants are the bigger ones. After all, they are most like the foundations making the grants. It isn’t lost on nonprofits that the smaller the organization, the harder it is to even get in the foundation door, much less come away with a grant. Nonprofits want a new Council CEO to have grassroots experience in community organizations, not only for the possibility that that experience will help support a “preferential option for the poor,” but also because it leads away from the propensity of most foundations to lend their support mostly to “well-endowed and high-profile educational and medical institutions,” according to one reader. The suspicion among many nonprofits is that, as another reader put it, too many foundations devote “most philanthropic dollars . . . to wealthy zip codes and large institutions.”
A democratization of philanthropy would more likely be led by a Council CEO who helps grantmakers find ways of reaching out to the bulk of the nonprofit sector that is small, as shown in this table from the Urban Institute’s National Center for Charitable Statistics:
Organizations Filing Form 990, 990-EZ, 990-PF and, since 2008, 990-N
A. Less than $100,000
E. $1-5 million
F. $5-10 million
G. $10-100 milllion
H. More than $100 milllion
Taken from the IRS’s July, 2011 Business Master File, this table shows that 91.8 percent of nonprofits that filed 990s had total revenues of less than $1 million. How many of those sub-$1 million nonprofits get appreciable support from foundations? The new CEO might want to make sure that the foundation sector reaches those smaller nonprofits.
Open a closed system
A disturbing trend among foundations is that more and more smaller nonprofits might want to get foundation support but aren’t even allowed to submit grant proposals. As one respondent told us,
I am disappointed in the number of foundations that are stating that they are not currently accepting grant applications or they are in the process of changing their processes so check back later, or they are only accepting applications from existing grantees or . . . you get the drift.
Bradford K. Smith of the Foundation Center says that 60 percent of foundations do not accept unsolicited proposals. One of the reasons, Smith says, is that foundations are frequently designing their own strategies for maximizing their social impact or planning to implement programs themselves. He suggests that those foundations frequently “design these strategies . . . in collaboration with nonprofits and universities, so if you happen to be part of the process, you’ll most likely get a grant. If not, well, you’re just not part of the in-crowd.”
It may seem smart and strategic on the part of foundations, but to nonprofits, this practice comes off as foundations funding themselves. There are any number of foundation “initiatives” that are increasingly making purportedly grantmaking foundations resemble operating foundations. The philanthropic sector might not understand how much goodwill it loses in the nonprofit sector when in conjunction with big universities and think tanks, foundations see themselves, rather than the nonprofits on the front lines of community issues, as the preferred designers and deliverers of solutions to social problems.
Resist philanthropic fads
One reader said it would be a nonprofit victory if the new Council CEO has “no idea what the phrase ‘venture philanthropy’ means and couldn’t care less.” We doubt that the person was specifically attacking the Social Venture Partners network, but is rather raising a more fundamental question about the faddishness of some kinds of philanthropy. Philanthropic flavors of the month are often imposed on nonprofit grantees . . . until the foundations precipitously lose interest and move on to the next fad. These trendlets sometimes do not emanate from the foundations but instead from the consultant-industrial complex, which contains the occasional huckster or two with some philanthropic snake oil to sell. Nonprofits want the new Council CEO to be a bit less susceptible to fads and gimmicks, to old concepts repackaged as new insights, to new ideas promoted as tried and true, and to hero-worshipping that turns into messages to nonprofits along the lines of “Why can’t you be more like so-and-so?”
Put foundation money to work
With some nonprofits having had to cut back, lay off, or shut down because of the economy, one respondent offered this biting critique of foundation poor-mouthing:
When foundations are needed the most, they are concerned about their “bottom line.” I was at a conference not long ago and there was a panel representing foundations and all of them stated how much their investments got hurt with the economic downturn. They still have money in investment. Have any foundations laid off staff? Have they had to stop paying their executives? Are any of them going to food banks for the first time?
The nation is not facing a “double-dip recession.” Much of the nation never came out of the first dip. True, some corporations with improving bottom lines are sitting on mounds of cash earning negative real rates of interest, but 14 million people in this country are unemployed (9.1 percent of the workforce), and the number of long-term (over 27 weeks) unemployed is still six million—this group makes up 42.9 percent of all unemployed persons. The number of involuntarily part-time employed people has risen to 8.8 million, and the economy added zero net jobs in August. Foundations have an obligation at this moment in time to put their assets to work to address a very weak “recovery” that features job creation figures far below what is needed to simply accommodate a rising population.
It isn’t just a matter of increasing foundation payout percentages. It is the need for foundations to put their assets to work at nonprofits, making it possible for nonprofits to counter a recession that government clearly is ill-equipped and too politically hamstrung to address. Worrying about bottom lines and asset values should be demoted on the list of foundation priorities.
From the nonprofit perspective, an effective Council CEO would lead on this issue. One nonprofit leader with foundation experience responded to our call for suggestions this way: “Too often it seems that foundations are more interested in sustaining themselves [and] protecting their own interests.” Putting their money into the hands and budgets and programs of nonprofits could be considered, as another reader said, “a jobs stimulus, since it would generate many billions, not just millions of dollars that the nonprofit sector really needs.” The commentator added, however, that “it’s not likely to be a priority, but I would still be pushing for the payout increase.”
Philanthropy is not an island. It exists because of society’s willingness to allow private individuals—donors and their foundation trustees—to establish tax-exempt institutions to function for the common good. At this time, given the social and economic challenges this nation faces, a new Council on Foundations CEO would be someone who isn’t interested in playing along with the smug self-satisfaction of some foundation leaders, and nor would he or she focus on presenting foundations as all things to all people and always in the right no matter what.
Foundations have to step up to the plate and remember what they are, why they exist, and what they owe society at a precarious moment in the nation’s history. A new CEO for the Council would be someone who can hear the voices of over one million nonprofits regarding what foundations ought to be delivering to society now. This leader would be someone who can help craft strategies for the philanthropic sector that consist of more than lobbying for support on Capitol Hill or producing endless promotional brochures, videos, and press releases assuring nonprofits that foundations have their best interests at heart.