News and analysis
March 25, 2014

A New Guide Helps Foundations Become More Transparent

Foundations seeking to meet demands for greater transparency have some help in the form of a new guide.

“Opening Up: Demystifying Funder Transparency” was produced by GrantCraft, an arm of the Foundation Center, which provides resources to grant makers.

The guide offers concrete steps on how foundations should decide what information to share and how to share it “in an easily accessible and timely way,” says Jen Bokoff, GrantCraft’s director.

In a recent GrantCraft survey, three quarters of respondents reported a greater demand for foundation transparency during the past five years.

But deciding exactly what transparency means for all foundations is problematic, according to Ms. Bokoff. “We can’t advocate a one-size-fits-all approach for transparency because there isn’t one,” she says. Instead, it’s more about “a mind-set of openness.”

This is GrantCraft’s first guide to address the issue. Janet Camarena, a director at the Foundation Center, says the need arose from the center’s Glasspockets project, which examines the openness and accountability of foundations using 23 criteria.

It discovered that many foundations never broach the subject, Ms. Camarena says.

Sharing Grants Information

A common way foundations share information about their grant-making strategies is through online databases.

The Robert Wood Johnson Foundation has an online searchable index that includes more than 23,000 grants made since the foundation’s inception. The database, which is featured on the home page, accounts for 12 percent of the foundation’s website traffic. It’s updated daily and is available free to browse or download.

“We consider ourselves to be a learning organization,” says Fred Mann, a vice president at the foundation. “If we’ve got good and relevant information, we want to make it as easy to get as possible.”

When foundations post the types of grants they award, they attract savvier applicants, according to Earl Whipple, vice president for the John Templeton Foundation. “The more we put out there, the greater resonance we have in potential applications. ... We’ve seen the number and quality of our applications go up.”

Of the largest 25 foundations by assets, 15 have online grants databases, seven of which update their grants listings daily or weekly.

Although Ms. Camarena says she wouldn’t characterize grants databases as more important than other resources foundations can provide—like performance-assessment reports from grantees about their experience with the foundation—she agrees that grant seekers find these databases useful.

“People like to follow the money to see what kinds of ideas are getting funded,” she says, “and for grant seekers, it helps them understand if they are a good prospect.”

Grantee Feedback

Improving communication with foundations is a key concern for many nonprofit organizations, according to Ellie Buteau, a vice president at the Center for Effective Philanthropy. Nonprofit organizations are keen to learn about foundations’ processes and decisions and the implications those have for the nonprofits’ work, Ms. Buteau says.

“Nonprofits are looking for information about how they are going to be assessed by foundations and how foundations assess their own performance,” Ms. Buteau says.

The David and Lucile Packard Foundation posts reports on its site that give grantees’ anonymous assessments of the foundation’s application process and responsiveness and charities’ overall experience with the grant maker. Their website even offers an opportunity to provide feedback to a company acting as an independent ombudsman that collects comments from anyone who visits the site, whether a grantee or not.

The effort started in the mid-1990s at the urging of Packard’s board, says Carol Larson, the foundation’s president. “We contracted with an outside third party to send out a survey to provide anonymous feedback both for grantees and denied applicants.”

“We want feedback at any step of the process,” she says.

And the foundation listens. After receiving criticism from grantees that its internal operations were hard to understand, the foundation added a “How We Operate” section on its website, Ms. Larson says.

A Mind-Set for Openness

The William and Flora Hewlett Foundation is shifting its strategy this year to foster openness and transparency and collaboration” between foundations and among their grant recipients, says Larry Kramer, Hewlett’s president.

Mr. Kramer says he is asking that staff make the sharing of information the default. If there isn’t a good reason to keep a document internal, it should be shared, Mr. Kramer says.

As a result, Hewlett’s website provides access to all of the foundation’s grantee-perception reports, offers easy ways for grant recipients to give feedback (including anonymously), and provides multiple ways to examine its grant making.

Such efforts could positively influence transparency practices at other foundations, Ms. Camarena says, where the reverse mind-set is the norm. “The default is to keep internal,” she says.

Low-Cost Help With Tools

Some foundations lack the resources to post their grants online in searchable databases, while others lack any presence online at all. Part of the Foundation Center’s mission is to provide low-cost website-development services to foundations, which can include hosting the site and building a grants database.

The Kresge Foundation has used those services to make its grants public, and the result is an interactive database that is searchable and includes a map showing which states and program areas receive money from Kresge in a given year.

Says Cynthia Shaw, a spokeswoman for the foundation: “The most valuable aspect is, it provides another level of education on what we are doing for the grant seekers.”

Doug Donovan and Anu Naranswamy contributed to this article.

Send an email to Sarah Frostenson, Doug Donovan, or Anu Naranswamy.