The Four Fundamental Questions of Philanthropy

The Ford Foundation, the second largest foundation on the planet, with assets of $12 billion, is about to hire a new CEO.  What will the new CEO do with all that money?  How, among all the possibilities available to her, will she decide to focus the foundation’s grantmaking?

The new CEO will want to honor the foundation’s previous commitments.  She won’t want to make any sudden moves.  But having exercised the necessary prudence, and having consulted her board, toward what star will she steer her course?

Granted, if you took all the giving in one year of all the foundations in the United States—approximately $34 billion—the sum would barely equal three percent of all nonprofit operating expenses.  In fact, it wouldn’t even cover the expenses of the 70 largest nonprofit hospitals (and there are 3,000 nonprofit hospitals in the United States).*  Nevertheless, with an annual grantmaking budget of $600,000,000, the new Ford Foundation CEO will be able to move the needle significantly on any number of issues.

Imagine that it fell to you, dear reader, to invest $600,000,000 each year in charitable work.  How would you do it?

I can’t imagine anybody doing this successfully without first attempting to answer the Four Fundamental Questions of Philanthropy:

1.  What are we living for?  What does human flourishing look like?  What is my vision of the Good?  Is it the greatest happiness for the greatest number?  When does the Categorical Imperative trump the Greatest Happiness Principle?  Is life little more than moving things from one place to another until we die?  Is it simply a long series of credit card purchases marked by some poignant, half-remembered moments with friends and family?

2.  How do I understand (social) justice?  What’s our responsibility to one another in a complex, industrial society?  How much suffering at “the bottom” should be tolerated if the overall statistics look pretty good?  Is the notion of a social contract at all coherent?  If so, who gets to shape it and how?

3.  What is the role of a foundation in society?  What is the appropriate role for private (viz., foundation) capital in addressing social needs?  What’s the proper mix of public and private funding for social goods like the arts, job training programs, health care, or education?  Should foundations take up the slack when, under pressure to reduce taxes, governments cut funding for social programs?  What should be the relation between a foundation and other institutions? between a foundation and individual citizens? 

4.  Apart from my board, the legal authorities, and God Herself (not necessarily in that order), to whom should I be accountable and in what ways?  Are things getting better or worse, for whom, and how quickly?  When should a current need trump a possible future need?  How did we get into the current mess in the first place?  If “systemic” issues are involved, how far can or should we go in attempting to change the system?  Is it my foundation’s responsibility to keep the issue—whatever it is—from becoming an issue again?  To what extent should I risk great failure in an attempt to obtain a great social good?  What’s the received wisdom** I need to question?  Do I know the history of my own field well enough to say what counts as failure and what counts as success?  Do I understand what contributed to these failures and successes? 

_____

* According to nonprofithealthcare.org.

** E.g., ‘The primary purpose of education is to prepare young people for the work force,’ ‘A nation’s health is measured by the growth of its GDP.’

Comments

This is really quite unfair. You go away for a long, long time, and in your absence, we are all lulled into a sense of complacency -- sort of a la-dee-dah state of being. Suddenly you reappear asking questions like these. Have you no shame!!

At the same time, thanks. And welcome back.

[PB]

You forgot the fifth and most important: How can I win that damn award from the Council on Foundations? Welcome back.

[Albert Ruesga]

Thanks. Wasn't it Jack Benny who said, "I don't deserve this award, but I have arthritis, and I don''t deserve that either"?

[owen paine]

"Should foundations take up the slack when, under pressure to reduce taxes, governments cut funding for social programs? "

the third sector
in particular
the granting foundations
the backers of the rest of the third sector so to speak
as a total are way too small
to sub for the state
particularly so
on any social mission
involving mass relief

but big
state funded social programs
need innovation
and
new paradigms

bold venturing is not the state's forte

anymore then corporate giants are

funding bold venturing
while seeking
leverage max
off uncle's purse
seems the best use
of such limited resources
as the third sector foundations have

in fact
of course
lobbying guv directly
should be a major
third sector activity
identifying
and
begging the state
for funds for the righteous needy
leads
to more effective final results

state programs are nott only non self sustaining

but non self correcting

it takes foundations
to "show " the possible
to gubmint

and to counter
the social budget slashers ???

again the indirection
the leverage the tapping of the donor class
requires rivaling the other gift seekers
nothing is necessarily
wasted
simply because its costly
to compete for

then trying to directly
come up with
such huge sums of money

[Albert Ruesga]

Thanks for the comment, Mr. Paine. Government wants the Third Sector to do more and more with less and less (hence the push for total cost reimbursement in the health care field, for example). Perhaps if nonprofits were given the power to levy taxes?

[Scruggs]

Albert, my understanding is of his comment is this:

Given that the government wants to push responsibilites on the third sector, AND wants to defund it, a change of strategy and tactics is in order. If I'm not mistaken, foundations already know how to set up small scale, scalable models of how things can and should work. These, then, should become part of their own bully pulpit, in a more directly confrontational relationship with the Babbitt individualists and Gantry conservatives in government. The foundations need a broadly based partisan constituency. I may be taken to task for this, but get a copy of the recent Harpers and take a look at the article on Hezbollah. I am not, I hasten to add, suggesting foundation personnel learn how to use RPGs or AK-47s.

[Albert Ruesga]

Foundations seldom challenge government policies or behavior directly. When they do it at all, they do it through their grantees. You understand foundations well enough to know the kinds of things that stand in the way of their using the bully pulpit in the way you describe. By challenging public policies, foundations invite the scrutiny of policymakers and the media, and most foundation boards and CEOs shrink from the limelight. While public charities can engage in a limited amount of lobbying, private foundations (among the largest foundations in the United States and certainly the most numerous) face very strong lobbying restrictions. And I wish it were true that foundations have a good sense of what can and should work in education, health care delivery, and other areas. I think this is true in some domains. We have a very good sense--thanks to the efforts of many outstanding nonprofit advocacy and research organizations--of how to end homelessness in a given region, to take one example. But overall, there are huge gaps in our knowledge.

This is one of the reasons I'm grateful for new institutions like The Grantmaking School. We've not done a good job of capturing and teaching what it is we think we know.

[Phil]

Albert you do a great service in bringing your personal knowledge of the foundation world to those of us who lack it. These "inside truths" are very hard to obtain from outside the firewalls. Even the smallest hints you let drop about the prevailing foundation ethos is very helpful. And to my ears it comes across with deep respect for established philanthropies. You are simply asking the sector to live up to its own ideals and potential for good.