Foundation leaders often tout the importance of reporting the results of their philanthropy to the public. But when it comes to actually sharing the pitfalls and failures of the programs they support, only a small share say they live up to the ideal of full transparency, according to a report released Tuesday.
Grant makers could become more effective if they revealed publicly what works and what doesn’t, suggests the report by the Center for Effective Philanthropy, which is based on a survey of 145 foundation chief executives.
A key barrier to greater openness, according to the study: a shortage of staff time and money devoted to such efforts.
Ninety-four percent of the foundation leaders surveyed said transparency is important. However, three-fourths say their organizations are not open enough. Even though 61 percent of the leaders say being more candid about how they assess their own performance would help them become more effective, only 35 percent say they share their self-assessments.
The level of openness online was even skimpier. Just 5 percent of foundation websites contained information on unsuccessful projects. However, the researchers found no correlation between information provided on a foundation website and a grantee’s perception of a grant maker’s openness.
Owning Up to Mistakes
Ellie Buteau, a co-author of the study, hopes foundations shed the notion that they have to share “anything and everything” and focus instead on providing information that will help others.
Grant makers are more credible if they own up to their mistakes, she says. “Nobody believes every grant or every program is successful. Why not share more about what you’re learning so other foundations don’t repeat those mistakes and waste resources?”
Among the report’s other findings:
- Only 7 percent of foundation CEOs said they believe there is a consensus definition of transparency. Fifty-one percent said transparency means sharing grant-making information; 43 percent believe it means being “clear, open, and/or honest”; and 38 percent believe it means sharing financial information.
- Nearly one in four of the CEOs said nothing limits their ability to become more open, but nearly one in three said their staff did not have the time to invest in becoming more transparent.
- In many cases, leaders of community-foundation felt more of a need to be transparent than those at private foundations, including providing information to journalists (67 percent versus 46 percent), government policy makers (76 percent versus 57 percent), and the public (72 percent versus 45 percent).
Advantages of Privacy
Sometimes, a low profile has its advantages, according to a foundation leader the Center for Effective Philanthropy interviewed but who chose to remain anonymous. The leader said many of the fund’s grantees work in dangerous places, so keeping mum on the details of its work can be a matter of life and limb. The foundation, which has assets totaling more than $25 million, doesn’t have a website, and its employees do not identify the fund at meetings. Maintaining such privacy, the foundation chief said, reflects the desire of its original donors to approach their philanthropy with humility.
While such a degree of secrecy can make it hard to share its results and discuss ideas with others, the leader acknowledged to the survey researchers, such opacity sometimes gives it a unique vantage point when visiting with potential grantees.
If people don’t know how large your foundation is, “they tend to be more authentic rather than saying what they think you want to hear,” the leader said in the report. “That is helpful in terms of truly understanding the issues at play and the needs of nonprofits.”
The lack of a common definition of foundation transparency contributes to confusion over how open grant makers should be, said John Tyler, general counsel at the Ewing Marion Kauffman Foundation and a board member of the Philanthropy Roundtable, a donor membership organization.
Mr. Tyler, who said his comments didn’t necessarily represent the views of those organizations, says foundations are under no obligation to provide more detail about their operations than is legally required under Internal Revenue Service rules. But, he says, grant makers have a responsibility to question whether being more open can help — or hurt — a foundation’s program effectiveness, reputation, grantee and donor relationships, and expertise in the fund’s chosen field.
“I believe in the value openness can provide to a foundation when it is done with objectives in mind,” he says. “It is too often presumed transparency is an end unto itself.”
A ‘Moral Imperative’ for Openness
The Center for Effective Philanthropy’s study will help guide future grants made by the Fund for Shared Insight, an effort by eight foundations to encourage grant makers to gather feedback from grantees and other philanthropies, says Fay Twersky, co-chair of the fund and director of the effective-philanthropy group at the William and Flora Hewlett Foundation. The fund has committed nearly $20 million in grants over three years and supported the center in its research.
Being open with grantees and others working on similar issues forces foundation officers to communicate in a clear, lucid manner, Ms. Twersky says. Doing so often requires discipline and technical expertise to sort through program data and present it in a way it can be understood.
That hard work can improve programs, whether they are providing early education or minimizing the effects of climate change, she says. But beyond results, Ms. Twersky says it is incumbent on foundations, which are tax exempt, and donors, who can deduct charitable gifts from their taxable income, to provide the public with a thorough understanding of their work.
“We have the privilege of being able to give away charitable dollars that benefit the common good,” she says. “There’s a moral imperative to be more open than the minimum legal requirement.”
‘Build the Muscle’
Ms. Twersky suggests that foundations that want to become more transparent start by examining how candid their staff members are with each other so they can “build the muscle” to open up to outsiders.
That’s exactly what the Baptist Healing Trust, a health-care grant maker, did beginning in 2010.
The trust ranked among the top 5 percent of foundations rated on overall transparency, according to a previous survey of grantees conducted by the Center for Effective Philanthropy.
Cathy Self, the Baptist groups’ president, says she was surprised by the high ranking; no one at the trust ever discussed a formal plan to become more transparent
Instead, the foundation began by fostering more communication within its walls. Despite its small staff — only seven employees — Ms. Self says the trust’s workers rarely engaged in dialogue with one another about the organization’s broader mission. She began holding “listening” meetings with grantees throughout the central Tennessee region served by the trust. Over the course of those meetings, Ms. Self says, staff members became more attuned not just to the health-care needs of grant recipients but also to the challenges faced by their co-workers.
The meetings culminated in a set of “guiding principles” that Ms. Self has hanging on her office wall. The principles offer guidance on how to treat other employees, telling them, for instance, to “listen with soft eyes” and “in truth be kind." "
Ms. Self hopes such internal directives “spill over” into how the foundation communicates with grantees.
When a grant application is turned down, for instance, applicants are invited to get direct feedback from program officers about how to improve their applications.
Still, there are limits to what the foundation can share, Ms. Self says.
She’d like the grant maker’s website to include lessons about programs that haven’t worked. But, wary of publicly shaming grantees or airing the foundation’s own “dirty laundry,” Ms. Self says, the foundation has not developed a policy on what to publish.
“We can’t become a repository for information,” she says. “We don’t see that as our role.”
Note: A previous version of this article said that the Fund for Share Insight had already given nearly $20 million. It should have said that it has committed that much.
