Wednesday, April 11, 2012

Governance in the 21st Century

Remember the public pressure on the Komen Foundation that led the organization to change a board decision? I said back then this was a harbinger of a new expression for public accountability that foundations need to understand. It is an early edge of a new kind of governance capacity for which most foundations (and most nonprofits) are not prepared. If you think it's about a social media strategy, you're wrong.

The Gates Foundation is experiencing this right now. The Foundation provided grant funds to the American Legislative Exchange Council (ALEC). ALEC works on many policy issues. In the wake of the killing of Trayvon Martin ALEC's support for "stand your ground" laws has drawn outrage and calls for boycotts from many directions, including from a group called the The Progressive Change Campaign Committee (PCCC). The Gates Foundation has said it will continue to meet its current grant obligations to ALEC (which run over another 17 months) but won't make further grants.

Put aside what you think of Komen, Gates, ALEC, or PCCC for a moment. This is not about any of these organizations per se. It is about public pressure, organized and otherwise, on nonprofits and foundations, about their decision making. It is about making decisions that will be challenged, and striking the right balance between legitimate board governance and respecting people's right to agree or disagree with you.

The kind of organizing that led Komen to change its decision and that is now calling for change from Gates is easier than ever. It can be turned on in an instant and reach unprecedented scale at unprecedented pace. Boards of directors of nonprofits and foundations need to know this, they need to expect it, and they need to engage with both critics and supporters. They need, in other words, to govern in a new landscape in which each and every decision they make may be the one that transforms supporters into critics (see Komen) or turns educational policy grants into part of national outrage about gun laws and racial justice (see ALEC).

Is this about a social media policy? I don't think so. Is it about governance, engagement, conversation, accountability, structural consistency, clarity of mission, and a willingness to remain civil while participating in difficult areas of work riven with disagreement? Yes. Nonprofits are part of civil society which thrives only when it is filled with multiple points of view and diverse approaches to problem solving. The "public" will not agree with every decision a foundation or nonprofit makes and they have a right to express that disagreement. Foundations and nonprofits have a right (and a responsibility) to make their decisions and expect a public response to them.

What we need civil society organizations to do is discuss, civilly, their points of view, their decisions, and their goals. And to structure themselves to be able to do so. This requires thinking about the constitution and skills of their staffs, boards, and advisors, the way they provide access to their key decision makers, and the ways they engage with critics and supporters in the real context in which those things will happen, not in some nostalgic early 20th century institutionally-bound model.

Business has already learned that there is simply too much information for one organization to hold it all. As Bill Joy has said, "the smartest people are always going to work for someone else." The MIT Media Lab has an interesting chart to show the relationship between information and organizations.The point of these ideas is to encourage businesses to build networks that will be better able to manage information and generate new ideas. But the power of networks and permeable organizations applies not just to generating new ideas. In the case of nonprofits and foundations, generating ideas with the public, communicating ideas and theories and strategies with the public, and civilly debating with the public - especially the public that disagrees with you - is going to be a critical attribute in the future. See this article (pp 14- 15) from Darin McKeever of Gates Foundation on "embracing the scrutiny of the crowds."

This may involve new kinds of constituent representation on boards. It could involve an ongoing advisory board role or meaningful, regular discussion of issues with stakeholders. There are many forms and tactics that institutions can try to be more conversational.  But first, they need to recognize that the days of "broadcast" and "isolation" are over and structure themselves accordingly. What is at stake is not individual grant decisions, but public trust in and the legitimacy of these organizations as a whole.


Anonymous said...

Great thought-provoking piece. I'm certainly a transparency fan. But I wonder if these examples you raised will actually swing the pendulum the other way, at least for a while. If nobody knows where/how you give, it's hard to be blamed. SuperPAC's are just one example of seeing a society trying to be less transparent. Will foundations start looking for intermediaries to cloud their giving?

Lucy Bernholz said...

Great question - I was thinking about this also. Here's what is important to note - the information that led to these public responses was not "new" info in terms of transparency requirements. The ALEC grant is public info, basic compliance. The Komen decision became public when it did, as I understand it, because of a Congressional committee request.

So it's not as if any of the organizations involved were any more or less transparent than basic NPO reporting compliance has required since 1969. (Though Komen case is more complicated b/c it also involved information req'd by Congressional committee).

This says to me, it's not just the "acts of being transparent" - the acts of releasing information. It's the environment into which information is released, the heightened attention of the public and the power of the public as information sources, that is so different. That's why I think the key questions here are not about communications policies - they're about public trust, accessibility, and legitimacy.

There may well be an impulse to "share less" in this environment. However, if you see it (as I do) as being about trust and legitimacy, sharing less doesn't help. It weakens trust/legitimacy, increases "gotcha inquisitiveness" and will, ironically, increase the combativeness of the public rather than increasing the civility of different points of view.


Lucy Bernholz said...

Another thought - every effort to increase transparency - to decrease anonymity - is met with "innovations" that allow for it. This is the "whack-a-mole" game of campaign finance that we're in with campaign finance and SuperPACS - see this post

And this has been true with charitable giving as well - donor advised funds remain popular because of anonymity, fiscal agency, pooled funds - these all help "cloud" the connections between donor and grantee. The historical record on anonymous giving - touched on in the post above - is itself interesting.

I think the answer to your question is "yes." I also think the situation we are in, with nonprofits and charitable giving retaining the privilege of anonymity is going to be increasingly questioned as NPOs/political giving blurs and transparency as norm changes. It's a characteristic of philanthropy/charity that will be challenged.


Leonie Haimson said...

There is huge opposition in the stakeholder community to the policies being promoted by the Gates Foundation, and yet the Foundation is completely unaccountable to the public. They are driving ed policy in this nation and damaging and dismantling our public schools in the process. What can be done when a billionaire like Gates doesn't care what parents and teachers think, and openly admits that he funds efforts to extend mayoral control b/c it makes it easier to perform experiments on kids?

Chris said...


Great piece, and very timely for someone like me.

-Chris Williams
Gates Foundation

Bradford Smith said...

These are very timely and very important reflections on how the "public" in public good interacts with the "private" in private philanthropy. The endowments that most foundations enjoy is what gives them the freedom to take risks and stick with challenges for the long term. But these same endowments can also create the illusion of insulation from the kinds of pressures Lucy describes. Yet any foundation that has lived through a crisis of public opinion has realized that you cannot have it all ways: if your foundation wants to work on the kinds of issues people care about, often passionately, your desire for impact will put you on a collision course with demands for transparency. For any governance solution to be effective, transparency needs to be a cultural value within an institution, that starts with leadership, is shared by staff, and translated into daily practice. And the most important point about transparency is that it is pretty much inevitable: digital technology is turning institutions inside out. There are other arguments for transparency (like effectiveness) but most important of all, transparency builds trust for foundations, something they cannot live without.

Lucy Bernholz said...

I completely agree with Brad about the organizational cultural value on transparency. Coming from within, it is a strength and an asset for an organization. Imposed from outside it will be an act of compliance or pressure. Either way - as Brad notes - increased expectations of transparency are inevitable. If trust matters (beyond just the simple legal definition of endowments as funds held in the public trust) then that is a useful frame for guiding organizational actions - what is trust building? what is trustworthy?


Lucy Bernholz said...


Your comment speaks to the real challenge of public institutions. The opportunity here, in my mind, is for the public to take responsibility for our public institutions - to speak up for them, to fund them (with tax dollars), to get involved in their policy making (school boards, parent associations, etc), and to vote for leaders who represent our visions. Public schools are by and for the public - we must pay for them, guide them, engage with them, and make them work.

Those levers - voting, engagement, tax funding, election involvement, and direct participation in school policy making - are available to every concerned citizen. How and when our schools and cities seek out private resources is shaped by how we equip them with public resources (money, time, and expertise). Those are the tools we all have available.


Cat Fay said...

Great post Lucy - thanks. The big losers in this changing climate are those foundations not operating mission driven philanthropy (for good and for bad). Foundations who have given serious thought to what they are trying to achieve and the best partners to help them achieve it will be able to whether the storm of negative feedback.

Great comments from David and Brad. Thanks for sharing.

Christine Egger said...

General appreciation for this post and the comments, and specific appreciation for your reply to Leonie. Kudos for the reminder that individual citizens possess a tremendous amount of (potential, not always kinetic) power. Whether and how we wield it is up to us.

Lucy Bernholz said...

Thanks Christine. I've been involved in and writing about philanthropy in public systems for 22 years. There are huge questions here.

Two points of view always get my attention: 1) "Why does so-and-so philanthropist get to shape the X or Y health, education, whatever system?" expressed by a concerned member of the public and

2) "We don't have enough money to shape the system." Asserted by the philanthropist.

Both are true and both are false. What those of us in the public who don't have massive philanthropic fortunes do have, is our power as voters, activists, elected officials, small donors, = our actual power as the public. We often don't wield it to our own satisfaction. This includes power over the public institutions we care about immediately (schools, etc) but also the public power over the rules that guide philanthropy. Institutional philanthropy is, in the USA, a regulated industry and we the people have power and say over how it is allowed to operate.

In this age of increasing transparency and public movements, we also have the "power" to be attentive and call to account the institutions in our midst. We may not agree with their decisions, but we must participate in the process


Gregg Davis said...

Fantastic post Lucy - i am sharing it widely. I'm thinking about making that chart from Cesar Hidalgo my home screen!