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March 22, 2012

Nonprofits in danger, foundation leader warns


Emmett D. Carson, CEO and president of the Silicon Valley Community Foundation, spoke at the University Club March 13.

A lack of transparency, aversion to controversy and failure to participate in dialogue in the face of the nation’s changing social contract are putting the future of charitable organizations in jeopardy, said the leader of one of world’s largest community foundations.

Emmett D. Carson, CEO and president of the Silicon Valley Community Foundation, had some challenging words for foundation leaders in his March 13 talk titled “Philanthropy’s Opportunity for Leadership,” part of the Graduate School of Public and International Affairs Philanthropy Forum speaker series.

He told his audience that he preferred his earlier, admittedly less-uplifting title: “Philanthropy’s Declining Moral Leadership,” adding, “For our field to address the challenges we have in front of us, we have to get more candid in calling it like we see it.”

Noting that an extended financial downturn has forced state and local governments nationwide to face stark budget challenges — either raise taxes or cut services — “It’s a discussion now about the social contract,” Carson said, what things the government will provide with tax dollars.

Despite the importance of the issue, the nation’s foundations — some 75,000 strong with distributions of $45 billion in 2009 — “have been largely absent from those discussions,” he said.

Through the financial downturn, the philanthropic field, for the most part, remained silent, he said. “By and large, philanthropy didn’t make any radical changes to its programmatic work. It went on as it always did.”

However, what started out as a tepid economic downturn turned into a recession, then morphed into a discussion of the social contract in America.

“State and local governments nationwide are faced with stark budget challenges: Either raise taxes or cut things out that people care about,” such as education, senior citizens care, nutrition, health care or early childhood issues. “We haven’t been involved in those discussions,” he said. “You’d think that a set of institutions that gave away $45 billion dollars, trying to find the best, most innovative ideas, that bills itself as the risk capital, the idea network, would just be all over the opportunity to try to reform education, to talk about how to deliver better early childhood services, talk about job training and how to do it most effectively, how to do economic development. And yet, on discussion after discussion after discussion, we’ve been silent,” he said.

While philanthropy has the opportunity to engage and to prove its worth and value in American society, “I think our window, sadly, is closing for that opportunity for leadership,” he said. That is not because the problem has been solved, but because “people are no longer looking for philanthropy to play that role,” Carson said, adding that he foresees “devastating negative consequences.”

Studies by the Philanthropic Awareness Initiative have shown that 62 percent of people surveyed could not name a foundation on their first try. Only 20 percent could name a foundation that was having impact on their community or on an issue they were concerned about. As of January 2009, 81 percent were unaware of a foundation response to the economic downturn. Fifty percent thought that foundations had enough money to fix problems that government no longer could afford to fix, he said. Eighty-seven percent believed that foundations’ financial systems and process should be open and accountable to the public and 68 percent said they believed they were not so.

“Think about all those foundations that don’t have a web site, don’t have a P.O. box, nobody responds to calls. … That’s the majority of foundations,” he said.

Ninety percent of respondents believed foundations should be publicly accountable on how and why they chose the programs they work on; “54 percent thought we are not accountable in those ways,” he added. “Ninety-two percent believed that foundations should make a positive difference in society; 48 percent did not think we were making a positive difference,” Carson said. “That’s how the public of engaged people see how we do our work. … That then has consequences,” he said, citing as an example the philanthropic community’s support for a 2010 Florida law that said no foundation in the state can be required to share any diversity characteristics about its board members or diversity criteria about who received the organizations’ grants.

“Last time I checked, we exist to carry out public trust, private dollars for public good. Somebody got a deduction for us to do the work that we do. Imagine banks saying ‘We’re not going to tell you the racial identity of who got loans.’ …The banks are more private than we are, and yet our actions are very consistent with the data I just shared with you.”

In California, he said, some colleagues in the industry kept sunshine requirements for foundations from becoming law. “That’s very consistent with the public perception … What’s the consequence to that? … Today for four years in a row we have a president who was a community organizer, served on a foundation board in Chicago, who has suggested lowering the charitable deductibility. Implicit in that is that he feels it’s not helping American society.”

Carson asked: “Can we say as a field we have been verbal in trying to help people deal with the greatest crisis since the Great Depression?”

No, he said. Instead, the community has taken action to reduce its own transparency and accountability.

“We are in a deep crisis and deep denial,” Carson said. “We exist as a result of laws that allow us to exist. Laws get changed,” he said, noting that the tax code will be up for grabs in 2013 after the next presidential election. “What will be our argument as to why we should say we should not be affected? What have we done to show we are a value-add?” he asked.

“Our window is closing. Yes, we have that opportunity for leadership as a field of 75,000 institutions that grant $45 billion. [But] we’ve got a lot of work to do and a short time in which to do it.”

In response

Lucille Dabney, of the Program to Aid Citizen Enterprise, and Grant Oliphant, of the Pittsburgh Foundation, responded.

Dabney said the conversation about what donors think often moves from the field of philanthropy to the nonprofits themselves. “There’s somebody missing in that equation and there’s somebody missing in that conversation,” she said. “I would say that’s the community. What does the community need? What is the community owed? I think that as we talk about trying to increase philanthropy’s role in pushing public policy … we also need to think about how we engage the people themselves in what we are talking about.”

Oliphant, who labeled the talk “appropriately depressing,” said he agreed with Carson’s assessment. The issue must be put into the context of a broader, decades-long decline in public trust in institutions, and politicized attacks on institutions of all kinds that are spreading to nonprofits, Oliphant said. “It’s more than foundations stepping back. It’s also a field under attack and really being hopelessly ill-equipped to know what to do about it.”

In addition, Oliphant said, it is part of a “wholesale attempt to muzzle independent institutions that are either contrarian in nature, offering different political views, or just viewed as dangerously independent.”

Of the accountability language in the foundation sector, Oliphant said, “When it comes from the right, the language is really about how to rein in these contrarian opinions that are not considered popular. Those who wage this attack wish the foundations would not be in a position of being able to operate independently. What you are seeing is a deliberate attempt to muzzle the field and I think that it is working brilliantly” by intimidating foundations.

He said it’s not purely because foundations didn’t see this coming. “It’s because we’re truly now a house divided. Foundations once upon a time in their golden age were seen as representing a coherent, progressive philosophy about change in our society. Now views cut across a wide range. We’re really a divided field. That’s not entirely unfair or bad, that’s a legitimate aspect of our own diversity and growth,” he said.

He added, “One of the reasons we are so ill-equipped to deal with these factors… is that there really is a difference between perception and reality.”

Oliphant said, “There is a tremendous amount of good work being done on the ground by our colleagues here and around the country. … The reality is, we aren’t even close to being in the game of managing perceptions,” being outdone by “the forces who are really out to muzzle us and really out to miscast the work that we do.”

—Kimberly K. Barlow

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