News and analysis
March 23, 2015

Council on Foundations Venture-Capital Style Contest Sparks Ire

The Council on Foundations is provoking controversy by holding a session at its annual conference next month that features nonprofit leaders answering rapid-fire questions about their plans to improve the economy.

The council says the approach is an ideal way for charities to hone their ideas and grant makers to decide what merits to support, but other people in the nonprofit world say the session will be a humiliating exercise that resembles a reality television show rather than a thoughtful approach to improving the world.

In the contest, the nonprofit that receives the most votes from an audience at the council’s meeting in San Francisco will walk away with $40,000 in grant money.

The disagreement over the contest format, which borrows from a practice often used among venture-capital firms to sort through technology start-ups, lays bare the disconnect often felt between charities and the foundations that keep them afloat.

William Schambra, a senior fellow at the Hudson Institute and a Chronicle columnist, is among the critics. He said the contest represents the "wholesale adoption of the language and practices of the marketplace."

"Pitting nonprofits and their foundation sponsors in this sort of Roman circus is degrading, demeaning, and patronizing," said Mr. Schambra. He urges charities to avoid it: "I hope nonprofits organize a boycott.

Applications are due April 9. Judges — whose names have not yet been announced — will name three finalists who will pitch at the meeting.

Ideas Into Reality

Jesse Salazar, a spokesman for the council, defended the approach.

"The challenge is an opportunity for people with good ideas to find a way to turn those ideas into reality," he said. "This is a way for grantees and grantors to walk in each other’s shoes and understand the experience from both sides."

The event has received support from the Kresge Foundation and the New Hampshire Charitable Foundation’s entrepreneurship program; staff members from the New Hampshire group will coach the finalists before they make their pitches in San Francisco.

Kresge officials did not respond immediately to a request for comment.

Offering a public challenge allows nonprofits and grant makers to quickly generate and share new ideas, said Katie Merrow, vice president for community impact at the New Hampshire Charitable Foundation.

"We can’t do that in a written, eight-page grant application," she said. "This is a chance for nonprofits to get in front of donors who care about their mission."

The New Hampshire fund has held challenges since 2010 and expects to make $75,000 in grants this year using the competitive format.

A ‘Spectacle’ for Support

Some nonprofit experts say contests can offer benefits. For instance, by pitching in public, nonprofits can compare how they present their plans to grant makers with others competing for the same money, said Jan Masaoka, chief executive of the California Association of Nonprofits.

But that’s not enough to counterbalance the downsides of the contest, which she views as a "spectacle" and a cross between the vintage television show "Queen for a Day" and the more recent "American Idol," she said.

Ms. Masaoka said she could understand why a nonprofit would participate, but she will not encourage organizations to apply.

"For the Council on Foundations, which always promotes thoughtful, strategic grant making, this seems contradictory at best," she said.

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