Monday, May 21, 2007

"See(ing) through" philanthropy

I'm paraphrasing a paraphrase here: "There is nothing proprietary in philanthropy." Charles Schwab said something along these lines in the early days of setting up his family foundation. Of course, the line should read: "There should be nothing proprietary in philanthropy."

The comments that follow are my draft thoughts for a European conference on transparency in philanthropy. Here are six reasons why we will "see through" more of philanthropy in the future.

First, the demand for impact. No one philanthropic entity* has the money to solve the problems the entity claims to care about - Hunger. Education. Sustainable growth. Better foster care. AIDS. No foundation can achieve their own chosen goals by themselves. Those who set out to solve social problems and those who set up funds to support these efforts want to succeed. They are not satisfied with "feeling good," they want to do good. As they struggle to achieve their lofty, oft-hyperbolic, but well-intentioned goals, they are recognizing what those who have been doing this work for centuries also know - they need others, they need to work together. Doing so requires sharing ideas, tactics, resources and strategies.

Second, if you believe that what you are trying to do matters (see list above), enlisting the support of others is in your own best interest.

Third, the digital age has radically transformed our cultural expectations about transparency. Because we can find information so easily, we expect to find it. This is mostly true for the generations that have adapted to the digital age. It is the norm for those born into the digital age.

Fourth, markets demand transparency. Philanthropy is increasingly and publicly in the mix with markets, whether it be
  • the marketplace of solutions (NGOs, individuals, entrepreneurs),
  • the marketplace of philanthropic options (foundations, advised funds, commercial investments) or
  • the marketplace of ideas (X prize, research, competitive grantmaking processes)
Fifth, choices. NGOs and philanthropists have more choices now than ever before. Choice in funding partners, choice in funding strategies, choice in impact. NGOs can more efficiently seek lots of small gifts. Foundations can find NGOs more easily. Donors can find partners. The latent competitive nature of NGO funding and funder activity are becoming increasingly explicit as individual entities act on these choices. These choices will be driven by information access (transparency) - choice will increase the demand for information, information will increase the enaction of choice and the cycle will spread and deepen.

Sixth, (in the US) the tax benefits of philanthropy apply to all of the dollars in an endowment. The public sector supports private philanthropy by exempting the entire corpus, not just the dollars paid in grants or those invested in certain ways. The tax benefit itself isn't what it is important here - what matters is what that benefit represents - the public support for private philanthropy. And that support is granted to the entire entity - and all that it does. The public structure effectively says "there is a public benefit to the endowed dollars, the administrative dollars, the dollars used to fund research, the dollars used in grants, the dollars used in evaluation, etc." That public benefit is best served (and best protected) by, in fact, being public - or visible.

The conference where I must present some remarks starts today, my session is tomorrow. In the interest of transparency, I'll update these thoughts as the conversation unfolds.

*In fact, as I've said repeatedly, no one sector has the money to solve these problems, but more on that another time.

1 comment:

Bruce Trachtenberg said...

Call me simple, but it seems to me the underlying truth of what you are saying is that those who practice philanthropy should be guided by a desire to get the job done, and as such, use all means and opportunities available to it. Check egos at the door...forget all the other stuff...and stay focused on the task.