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Clash of Cultures in the Foundation World?

By Tom Watson on May 2, 2007No Comment

Clash of Cultures in the Foundation World?








By: Tom Watson, 5/2/07

The question seems to be floating about all the philanthropy conferences and charity blogs: Can old-line traditional foundations compete in the changing world of philanthropy?

But the better question might be this: Should they compete at all?

Last week at the high-powered Milken Institute Global Conference, Don Randel, president of the Andrew W. Mellon Foundation, had some stunning advice for the well-heeled would-be philanthropists:

“Don’t go hire a bunch of foundation bureaucrats to run it for you…it gets to be a business of self-perpetuation, with more and more layers of hoops to jump through to provide every last grant. And then grant managers begin to think it’s their money.”

Coupled with the headlines generated by social enterprise and the results-oriented, big-ticket philanthropy of high tech billionaires from Gates to Skoll, Randel’s sentiment has almost become the conventional wisdom in philanthropy almost.

At the nation’s 10th largest foundation, grantmakers are resolute in not rewarding immediacy, but long-term results. In an interview with onPhilanthropy [see sidebar], MacArthur Foundation President Jonathan Fanton discussed the foundation’s grant-making policy, its long-term views on change, and its relationships with the programs it supports.

“All of these organizations have been around a little while; none of them are brand-new. It’s institution building for nonprofits who have reached an intermediate stage. So much funding comes tied to a specific project. Instead, we are saying ‘We have confidence in you; we know that you’re ready for unrestricted funds.’”

That kind of thinking was echoed in a striking op-ed piece by Ford Foundation President Susan Beresford in a Seattle Times op-ed piece during the Council on Foundations conference this week in Seattle.

“The emergence of a new generation of entrepreneurs-turned-philanthropists offering their fortunes to tackle pressing problems has prompted reports of a philanthropic divide — a generation gap between established foundations and their young counterparts. Such phrases as “venture philanthropy” and “social entrepreneurship” are in vogue. New foundations are said to be ambitious, strategic, entrepreneurial, innovative and focused on measurable results. Established foundations are said to lack those qualities.

As the president of an “old” foundation and a nearly 40-year veteran in the field, I am here to say this dichotomy does not fit reality. It does not capture the breadth of philanthropy’s scope and history, and it has the potential to damage our field. “

 Beresford suggested that “new” philanthropy does a disservice in holding that one model is more effective than another, or that the wave of change will sweep the foundation world from the philanthropic stage:

“When we fall prey to false divisions, we undercut that strength, by suggesting that some kinds of donors may be less valuable or necessary over the long run. That is plain wrong. The tough challenges before us demand that we draw upon many philanthropists’ skills, perspectives and experiences. AIDS and other diseases, the stubbornness of deep poverty, the ongoing struggle against ignorance, intolerance and oppression — there is no single way to conquer those, and no single conqueror.”

At Milken, Mellon’s Randel argued that public civility, an organized well-regulated society, and the rule of law expressed “a kind of trust,” a common belief that allows those in the society to believe in institutions.

“The culture of philanthropy rests on the same values that the great success of American business and free markets rest on,” he said.

Carl Schramm, president of the Ewing Marion Kauffman Foundation, argued on the same panel, however, that “foundations historically have been the most critical institution in the advancement of society.”

In Seattle, some top philanthropy bloggers are wading into the old-new fray. Blogger Lucy Bernolz  discussed the long-standing difficulty in the grantmaker-grantee relationship:

“Why do foundations and nonprofits struggle with each other so much? Who is more dishonest with whom foundations who raise unrealistic expectations about funding or nonprofits who promise unachieveable goals to get grants?”

“As the revenue markets for the social sector change, will some of these behaviors change? Social entrepreneurs, sustainability models, fees-for-service, corporate social responsibility and other forces are increasingly bringing market forces to bear on the social sector. But much of what the social sector works on is that which either markets have created or for which there is no commercial return.”

Can social networks and the inherent promise of “greater dialogue” really bridge the gap in the philanthropic world? In other words, asks blogger Sean Stannard Stockton: does “transparency,” one of the great buzzwords in modern philanthropy, really lead to change?

“What philanthropy is engaged in is an experiment. An experiment in how we can all make the world a better place. We don’t know what the right answer is. In fact, the “answer” is probably evolving as quickly as we can design experiments. But by being transparent, by sharing successful ideas and failed ideas, by judging ourselves not on the outcomes of each grant, but on the body of knowledge that we contribute to the field, we will truly transform philanthropy.”

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