Shaking the Foundations

Monday, December 11, at noon Eastern time

Joel L. Fleishman is a professor of law and public policy at Duke University, where he directs the Sam and Ronnie Heyman Center for Ethics, Public Policy, and the Professions and heads a foundation research program. He was president of the U.S. arm of Atlantic Philanthropies, a $3-billion grant maker with headquarters in Bermuda, from 1993 to 2001 and now serves on the board of the Markle Foundation, in New York.

A transcript of the chat follows.

Suzanne Perry (Moderator):
    Greetings, everyone! I am Suzanne Perry, senior writer for The Chronicle of Philanthropy. Welcome to this discussion with Joel L. Fleishman, who has just published a book about the need for foundations to let some sun shine on their operations--offering his insights as both a scholar and a former foundation insider. We'll be taking your questions for the next hour. All you have to do is click the link on this page that says "ask a question." We're very pleased to have you with us, Joel.

Joel Fleishman:
    Welcome, everyone. I'm delighted The Chronicle of Philanthropy arranged this live discussion so that I can try to answer any questions that you have. I'm looking forward to our discussion. Best wishes! Joel Fleishman

Question from Ernesto Stolpe La Capilla nonprofit:
    Why do the people running foundations feel they have so much they can teach the people in the trenches?

Joel Fleishman:
    I think it's because most people who work in foundations have strong mission commitments to helping those who need help in the areas with which their foundations work. In other words, their hearts are in the right place, and they want to do the right thing, but too often they don't listen enough to the people whom they are trying to help.

Question from Laurie, staff, anonymous foundation:
    I work on the staff for a foundation which gives anonymously, at the wish of the donors and trustees. Aside from not wanting any publicity for grant awards, I think we operate transparently and openly. What entities are requesting further accountability? How can one demand a Foundation Freedom of Information Act without demanding the same of grantseekers and recipients? Wouldn't it be more worthwhile instead for Congress to examine why foundations are so important now to American life, and how human and social services can not be supported by government funding alone?

Joel Fleishman:
    Having worked for 10 years at a foundation that operated anonymously, I empathize with the questioner. Many grant-seekers are already subject to Freedom of Information Act requirements if they receive money from governments. One of the main purposes of writing my book was to convince the public of the importance of foundations, and I would only move to a mandatory FOIA requirement if foundations failed to take the steps necessary to create greater openness.

Question from Lesa Lessard Pearson, Rappaport Charitable Foundation:
    What foundations (small and large, private and public) are doing a good job at measuring outcomes and holding themselves accountable to their mission? Why?

Joel Fleishman:
    The Edna McConnell Clark Foundation focuses its entire program on gaining agreement with grantees on outcome measures, and then uses the progress toward such agreed-upon measures as both grantee performance benchmarks and also performance by the foundation itself. Other foundations that do an excellent job include Robert Wood Johnson, the Wallace Foundation, the Packard Foundation, the Annie E. Casey Foundation, and the Lumina Foundation. Also the Robin Hood Foundation, which is not endowed but raises money annually.

Question from Janet Bornancin, Tree Research and Education Endowment Fund:
    How does a small foundation which is focused on funding research in a specific environmental area measure its effectiveness?

Joel Fleishman:
    The key to measuring effectiveness is to articulate precisely what it is that the foundation is seeking to accomplish. If the foundation sets up goals to achieve, and spells out how it will know whether it is achieving or has achieved such goals, it will be able to measure its effectiveness.

Question from Chris Vaeth, Greenlining Institute:
    In the Greenlining Institute's recent studies of diversity in philanthropy, we have consistently encountered a lack of transparency in the foundation sector. For example, 26 of the 39 major foundations we studied this year bluntly refused to share their diversity data or to respond whatsoever. How might your call for transparency and accountability of foundations also address the issues of diversity in grantmaking and governance?

Joel Fleishman:
    While the focus of my book is on foundation grantmaking initiatives, the argument for greater transparency is equally persuasive about issues of diversity in grantmaking and governance. The fundamental question is whether foundations, either themselves or through the various infrastructure organizations in the foundation sub-sector, can muster the courage themselves to be open or whether their failure to do so triggers government requirements.

Question from H.J. Macklin, small nonprofit:
    Why is there is a "fear" of donating to nonprofits who develop affordable housing? They normally need money for staff and purchase of sites, and can obtain money for construction from the banks.

Joel Fleishman:
    I have not detected any such fear. I know of many nonprofit organizations which do support the development of affordable housing. If there is any reluctance, it may have more to do with the greater attractiveness of other kinds of recipients of charitable dollars. Or it may be that some potential donors feel that housing is too much of a for-profit business for their taste. Certainly the great success of organizations that help finance the purchase of housing by less-well-off persons, such as Self-Help, suggests that there is a sizable population of persons interested in affordable housing.

Question from Ian Wilhelm, Chronicle of Philanthropy:
    Joel, what's your reaction to the Gates Foundation's recent decision to set a date for its closure? Any opinions on its other recent moves, such as agreeing to take donations from other people besides the Gateses and Warren Buffett and to set up a separate trust to hold its assets? Thanks.

Joel Fleishman:
    

Ian, I have mixed feelings about that particular Gates decision. In principle it is hard to argue with putting the money to work in the present rather than locking it up in an endowment, but I worry about the pressure of spending a great deal of money in a short period of time leading to wasteful and ineffective spending. In the case of Gates, however, the date is so far off--50 years after the death of the principals--that they have plenty of time to plan for the effective spending of the money so that is less of a concern.

I do worry about Gates' encouraging others to give it money to spend, as Gates already has much more money to spend than it has proven the capacity to spend well. I worry that the public and public officials will begin to try to put ceilings on the amount of money foundations have, and, with Gates already so decisively outside the size ballpark, it alone could tip the balance toward government regulation, which I believe would be a distinctly bad thing to happen. Moreover, the more money people give to Gates, the less there is to go into other foundations or entities yet to be developed, and I strongly favor more foundations controlled by different persons because that strengthens polyarchy and pluralism in the foundation sector.

Question from Katie Daudlin, St. Mary Mercy Hospital:
    When it comes to working with people who can help nonprofit organizations (in my case, on a Special Events Committee), what type of criteria do you use to find the best candidates?

Joel Fleishman:
    Honest, unpretentious, altruistic, and gregarious human beings who are respectful of others and enthusiastic about the cause.

Suzanne Perry (Moderator):
    Hello, everyone. We're about halfway through our chat and have plenty of time for more questions. Just click on the "ask a question" link on this page.

Question from Stacy Palmer, editor of The Chronicle of Philanthropy:
    Now that the Democrats are about to take control of Congress, do you expect the scrutiny of foundations to continue? How will the changes on Capitol Hill affect foundations, do you think?

Joel Fleishman:
    Stacy, I expect Congressional scrutiny of foundations not only to continue but to increase in intensity. Senator Baucus worked very closely with Senator Grassley and everything I know leads me to believe their partnership on this issue will continue. I expect [Grassley aide] Dean Zerbe to continue to play a significant role, too. On the House side, it's harder to see at this point. With Chairman Thomas gone, I don't know the answer, but I do believe that there are enough perceived irritants to trigger support for regulatory changes. As to the substance of the likely changes, it really is too soon to tell. Besides, I don't want to put wood on the fire because I am basically opposed to more regulation.

Question from Stacy Palmer, editor of The Chronicle of Philanthropy:
    You studied dozens of foundation programs to prepare your book. What did you learn about why some foundation programs fail?

Joel Fleishman:
    The main reason is that foundations too often do not think through carefully what it is that they are trying to accomplish. Their hearts are almost always in the right place, but too often they lose their heads and do not do the careful due diligence about the idea itself, about others working on the same idea, about the quality of potential recipient or partner organizations. There is a whole chapter in my book about some of the common kinds of mistakes that produce failure, and one of the most most frequently occurring is the failure to articulate a logic model, or theory of change, which forces the foundation staff to say plainly what they hope will happen, how it is supposed to happen, and how they will know if indeed it does happen.

Question from Kristine Steakley, Prison Fellowship:
    In recent years, it has become easier and less expensive for individuals to establish private foundations, and a number of organizations have sprung up to assist in this process. What do you think of this trend? Is it healthy? Will it continue?

Joel Fleishman:
    I think that persons who are contemplating the establishment of foundations need all the disinterested help they can get if they are to be able to do it right, including the advice NOT to establish a foundation but to use other vehicles for giving or to give directly to operating charities. So I am for more such help, but would like it to be of steadily higher quality. It is certainly likely to continue.

Question from George Penick, RAND Gulf States Policy Institute:
    Joel, every powerful institution that thinks it is beyond scrutiny or reproach eventually succumbs to temptation, and they or individuals in them abuse the trust that was given to them by the public. (For example, in recent times the political party that is too long in power, and the Catholic Church that for years protected deviant priests.) What can foundations do that is effective to make the sector more accountable if most of them are unwilling to be open about their own governance, operational practices, and decisionmaking?

Joel Fleishman:
    George, I believe that the infrastructure organizations of the nonprofit sector--Independent Sector, the Council on Foundations, the RAGs, the state and local centers on nonprofits, and so on--know that foundations must exert themselves to increase transparency and accountability. The IS Panel on Nonprofits Committee on Self-Regulation, which Rebecca Rimel and I co-chair, is grappling with that issue right now, and my sense is that there is beginning to be movement in the right direction but it is still too early to be sure. There are also a dozen or so foundations that have bitten the bullet themselves and are setting out on a course of greater transparency in much detail than ever before.

Question from Kristine Steakley, Prison Fellowship:
    Do you think Internet access has raised the expectation of accountability? How can foundations use the Internet more effectively to meet that expectation?

Joel Fleishman:
    Unquestionably, Internet access has raised both the expectation and the possibility of more foundation accountability. Many foundations have put up websites, some of them pretty good, but detailed information about foundation successes and failures, with enough detail so that readers can judge for themselves whether and why initiatives succeeded or failed, is still almost never available. Until outsiders are given enough objective information about what foundations do and how they do it in order to judge for themselves how well foundations are operating, there will not be adequate accountability.