Thursday, May 12, 2005

No More Excuses

[This was one of those fetal posts. I don't know about the tone, but the general idea is right: as much as some people talk about how hard it is to quantify what it is that we do, what impact we have, it seems that the sector almost deliberately relies on incomplete research. Whatever research has been done on the sector, the sector has had to carry it out and fund it itself, so if there isn't any one place for objective, rigorous information, it's because we haven't done it or simply don't want it. Whenever research comes out that we don't like, the National Committee for Responsive Philanthropy's research on HR 7 or a study on trustee fees, for instance, people tend to come back with what those foundation reports leave out. If they're not telling the whole story, please fund nonprofit sector research and tell the whole story yourself. More often than not, though, I think we don't want it because it would deprive us of our excuses. If we do bad research and it tells us something good, we can sing the praises of the philanthropic sector. If we do bad research and it tells us something bad, we can dismiss the results. We do it on purpose, and that has to stop.]

In September 2003, a study on trustee fees came out of The Center for Public and Nonprofit Leadership at Georgetown University. The authors, Christine Ahn, Pablo Eisenberg, and Channapha Khamvongsa, examined the 1998 990-PF reports of 238 U.S. foundations, 176 of the largest foundations and 62 smaller foundations.

Some fun facts from their survey of foundation behaviors:

  • In 1998, the 238 foundations surveyed paid a total of more than $44 million in trustee fees.

  • 14 of the larger foundations paid their trustees more than $100,000. This includes $750,000 and $747,000 to Kay and Ben Fortson of the Kimbell Art Foundation, and $500,000 to Walter Annenberg of the Annenberg Foundation.

  • 5 of the smaller foundations paid their trustees more than $100,000, including $232,619, paid by the Ira and Doris Kukin Foundation.

  • There's a whole lot more: people getting paid $250,000 a year for a whole two days' worth of work (see the part about the May and Stanley Smith Charitable Trust on page 13), potential conflicts of interest (Stewart Kwoh, same page), and foundations stonewalling the researchers by referring the researchers to their accountant but then refusing to give them his contact information (see page 14).

    I was shocked. Wow, this is nice work if you can get it, and I took this to friends. I'm new to the sector, and this was nuts. Unfortunately, when I talked to a few colleagues about this study, I got the same response: "Now you know that's not the most representative or scientific study in the world." Hemming and hawing followed: "Not that I don't agree with you, but you have to put that into context."


    First of all, this is a clear insult to the intelligence of anyone who actually read the report. The authors of the study contend on page 4: "This study is not intended as a definitive study of trustee fees." It has to be evaluated for what it was - a revealing look at how some, not all, foundations behave. I'm all for more rigorous research in the sector, but really, if the picture isn't pretty, please don't blame the researchers, and please don't make excuses, especially when foundations were given a chance to explain, and they arrogantly elected not to do so.

    Second, this study came out amidst a firestorm of criticism, brought on by excellent investigative reporting in the Boston Globe, San Jose Mercury News, The Chronicle of Philanthropy, and in other sources. To say that abuse isn't widespread is to ignore a good amount of evidence to the contrary. Furthermore, the fact that abuse is happening at all is an incredible breach of public trust, which is the only thing that keeps the government from taxing the sector into oblivion.

    One of the things I would like to see come out of the work of the Senate Finance Committee and Independent Sector is more scientifically rigorous research in the sector. [Or maybe you could just pay somebody, I don't know, the IRS maybe, to acutally look at the 990's? It's amazing to me that most, if not all, of these abuses are already illegal, and we're going through this fantastic rigamarole when the simplest thing to do would be to fully fund IRS enforcement.]

    The fact remains that most of these abuses were uncovered because reporters started sifting through 990-PF reports. It is a matter of public record where our grants go, whom we pay, and how much. The information is there, and we've only just begun to start looking through it. My question is: why haven't we been looking? I almost think that we have studies like the incomplete Georgetown study on purpose.

    Why? Because what would happen if a representative sample turned up a decadent culture of arrogance, deceit, and greed that cloaks itself in charity? What would we say then?

    What would happen, if instead of inferring malice where incompetence will do just fine, we found a jarringly rampant lack of self-awareness in a sector that preaches accountability and effectiveness?

    For that matter, what are we going to say when the Foundation Center, Guidestar, and the Urban Institute finish their study of the 990-PF reports of the top 10,000 foundations? (And when is that coming out?)

    Prepare your talking points now; "that's not a representative sample" isn't going to cut it.

    It is time, as some have argued, for a peer-reviewed journal of philanthropy. From the Aspen Philanthropy Letter:
    Philanthropy will remain a "cottage industry and primitive craft," and its practitioners will continue to be unrecognized for and a bit insecure about their contributions - not to mention those of their colleagues - if the field remains without a peer-reviewed journal, according to two philanthropy observers. Frank Karel, formerly vice president for communications at both the Robert Wood Johnson and Rockefeller foundations, argued at a Duke University foundation research seminar earlier this year that the sector needs a refereed journal incorporating the best features of other similar journals, such as Science, Health Affairs, and the Harvard Business Review. More expansive than the Stanford Social Innovation Review, this journal should present scholarly studies as well as offer independent, investigative journalism and share information from academic presentations and discussions, according to Karel. His prepared text can be requested from the author by email, with "Request for Duke paper" as the "subject" line.

    Peter Karoff of The Philanthropic Initiative made a similar recommendation in his chapter of TPI's recently released book, Just Money: A Critique of Contemporary American Philanthropy. For Karoff, a "Journal of Philanthropy" would incorporate reflective pieces and discussions of practice in the field, and would be equivalent in value and influence to the New England Journal of Medicine or Foreign Affairs.

    Karel echoed his call for greater information about philanthropy at a May gathering of Florida philanthropy leaders organized by the University of Florida's Askew Institute on Politics and Society. He also called on philanthropy to help "reduce the anger, hostility and contentiousness that so mars public discourse in our society." A summary of Karel's keynote speech, as well as other speeches and recommendations from the gathering, has just been published in a report from the Askew Institute.
    It is time that, instead of making excuses for the inexcusable, instead pointing fingers at everyone but ourselves, researchers and reporters sifted through the 990's, asked the hard questions, published the results, and forced foundations to take a good, hard look at themselves. The Stanford Social Innovation Review is an incredible step in the right direction. I wonder why more people aren't doing this. If the sector is as great as we all believe it to be, fund the research that will tell us that.

    Now I don't want to take away the freedom of foundations to make creative, innovative grantmaking choices.

    I don't want to take away the ability to reasonably compensate competent, indeed visionary, board members and staff.

    I want the sector's self-serving privacy, its insularity, its arrogance, its greed, its indifference.

    I want this sector's excuses because the only flaw I found with the Georgetown study was that it let us keep them.

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