Reshaping the Business of the Board: Grantpickers or Strategic Thinkers?
If the job of the foundation board is to oversee strategy and determine the effectiveness of the organization in achieving its goals, isn’t it also the board’s job to pick the right grantees?
For large foundations that want to achieve big audacious goals, selecting individual grantees is probably not the best use of their wisdom. Therein lies one of the strange dichotomies of foundation board governance—a tension that has to be carefully managed by foundation CEOs.
When I started my career in philanthropy, all the foundation boards I knew of reviewed dockets—lists of staff-recommended grants for that quarter. (It’s interesting that philanthropy borrowed the word ‘docket’ from the legal profession, where it is ubiquitously used to refer to ‘cases to be tried,’ as well as calendaring.) Back in the day, those boards discussed each grant and gave a thumbs up or down based on whether the staff write-up was sufficiently compelling. The board’s main job was to approve grants.
But times are changing.
The Center for Effective Philanthropy’s recently released report, Benchmarking Foundation Governance, offers a small peek into the changing nature of governance at foundations. Improving strategy, measurement, and effectiveness requires that foundation boards conduct their business differently. Most still adhere to a traditional calendar of four meetings per year (at an average of four hours per meeting, for a total of 16 hours of full board face time). But discussions about theories of change, adaptive evaluation, and strategic planning, which are at the center of thought leadership in the field, may be taking a greater share of time in foundation boardrooms.
Slightly more boards report a focus on foundation strategy (77 percent) than on approving grants (67 percent). Clearly boards do both, but I suspect the balance has evolved over time.
I was pleased to see that 59 percent of foundations delegate some grant decision-making to staff for grants below a certain dollar level. Even more positive is the finding that the median dollar max was an impressive $125,000. This approach to board work is both a wise time management tool as well as a demonstration of trust in staff expertise. Focusing board discussions on strategy and reserving grant discussions for those above a certain threshold prioritizes board time on the big questions and the big bets. Individual, large-scale grantpicking is a time sink that strategic boards can ill afford.
But boards also cannot get too far removed from the business of the enterprise. Since most foundations achieve their goals primarily through relationships with external organizations, how can boards be divorced from the task of selecting the right grantees?
The fact that 39 percent of large foundations have board discretionary funds from which individual board members can make grants with little or no staff involvement may be another tool that helps manage the tension. Board members may use those discretionary accounts like mini-venture funds to go toward smaller organizations they identify that may not yet pass rigorous due diligence. Or they may select grantees working on longer term issues in fields in which the board member has particularly deep content knowledge. Practically speaking, discretionary funds might also serve as a release valve, allowing board members to exercise their grantpicking impulse without having that activity take up too much of those precious 16 hours of face time.
In any case, more study of philanthropic governance would provide insights on how organizations manage these tensions between grantpicking and strategic thinking. How do foundations get the best out of their boards? Behind closed doors, interesting innovations in governance may well be occurring.
Together or Alone: Can Philanthropy Effectively Tackle Systems?
‘Kids are the canaries in the coalmine. Where kids are doing well, communities are doing well. Where kids are not doing well, communities are not doing well,’ came the challenge from an audience member.
‘True, but many foundations decide, for example, that education is THE answer to community improvement. That’s like saying, “If only the canaries were smarter …”’ responded John A Powell, director of the Haas Institute, in a breakout session on inequality at the Center for Effective Philanthropy’s 2015 conference in San Francisco on 19–21 May. The purpose of the canary, he stressed, is to tell us what’s wrong with the environment, with the system that surrounds us.
This exchange captured a theme that ran throughout CEP’s conference—the importance of understanding systems, not just symptoms, in order to drive philanthropic impact and effectiveness.
Van Jones, who received a standing ovation for his remarks, challenged the more than 300 foundation leaders to consider systemic bias and not just individual outcomes. He gave as example working to close prisons rather than just treating individual offenders. The latter is certainly important, but the former is an upstream, system change that has the potential to shift the trajectory of the problem, not just outcomes for x number of individuals.
Jones, a CNN correspondent and non-profit leader who worked in the Obama White House, encouraged foundations to step outside of their comfort zone to build allies for change, citing his current prison reform initiative in partnership with Newt Gingrich. ‘Turns out you can work with people you disagree with, on the issues you agree on.’
Further encouragement to push past business as usual was delivered by Henry Timms, founder of #GivingTuesday and exec director of 92nd Street Y, one of the largest social service non-profits in NYC.
Henry put the crowd through exercises to uncover their understanding of what he and Jeremy Heimans in their much-discussed Harvard Business Review article coined ‘new power’ and the way it will transform how people engage in good works.
The power to do good will no longer be concentrated in the hands of large incumbent organizations filled with professionals, but will likely be more distributed through technology-enabled networks where messages are not centrally controlled and brands will be co-created by aligned publics.
Echoing themes of partnership and alliances, Barbara Kellerman of the Harvard Kennedy School challenged our current fixation on what she called ‘the $50 billion leadership industry’.
Why, she asked, have we created a culture where following is seen as less than and inferior?
A terrific challenge for our times as we see foundations with giant communications budgets and branding strategies that trumpet their leadership and distinctiveness from others.
Maybe she’s on to something.
This theme of followership and partnership also appeared in breakout sessions highlighting foundation collaboration, co-creation and examples of shared impact.
Overall, the conference seemed to succeed in challenging current thinking while also providing tools and ideas for improving foundation effectiveness. New research by CEP showed the disconnect between foundation talk about social investing vs the actual work being done in this area.
Perhaps most fascinating was the success of a nine-person panel—which seemed like a terrible idea but actually worked because it showed the breadth of approaches foundations are taking to achieve their work.
Clara Miller from Heron pushed foundations to stop being ‘hedge funds with a tiny philanthropy office on the side’ and put the other 95 per cent of assets to work.
And Sylvia Yee shared the Haas Foundation’s experience of funding marriage equality from the early days of the movement to current successes—describing the donor commitment necessary to see through the many failures and setbacks along the way.
Do conferences change foundation practice? Perhaps yes. Certainly so if participants left with Lynn Perry Wooten’s opening remarks in mind, ‘A good leader’s role is not just to serve, but to enable others to act.’ CEP’s conference provided tools, if foundations want to take action.
Looking Forward, Looking Back: Conference Report from Philanthropy in Asia 2014 Day One
The Philanthropy in Asia 2014 conference launched on 20 October in the chambers of Singapore’s Old Parliament Building, the wood-panelled halls where the city-state was founded. Prime Minister Mentor Lee Kuan Yew’s worn leather seat bears his name etched in a bronze plaque on the headrest.
The historic site was purposely selected by Patsian Low, conference organizer at the National Volunteer and Philanthropy Centre, in order to evoke the economic progress that supports increasing levels of philanthropy – and the uneven distribution of wealth that calls for it.
Current affairs played a role in the conference proceedings. Attendance at the swearing-in ceremony of Indonesia’s newly elected President Joko Widodo prevented Mr Tahir of the Tahir Foundation (and recent Giving Pledge signatory) from delivering the keynote, and teatime hallway discussions included many questions to Hong Kong participants about the ongoing protests. Yet the focus remained on the future.
The keynote was ably delivered by Audette Exel of Australia’s ISIS Foundation who described the lessons learned from her long-term philanthropic work with children in remote villages in Uganda and Nepal. The ISIS Foundation (which will soon undergo a name change) is funded entirely by ISIS Asia Pacific, her niche financial services corporation where all profits go towards funding the non-profit foundation. ‘I’m not a successful businessperson now turning to doing good, I am a social activist who figured I needed to learn about business.’ She talked about the importance of ‘purpose’ for all employees, not just those in the social sector, and the fact that more financial services firms need to take up social engagement.
Prapti Upadhyay and I shared highlights from the Lien Centre for Social Innovation’s report Levers for Change: Philanthropy in Select Southeast Asian Countries which outlined key public policies that can encourage strategic philanthropy in the region. These include creating clearly defined charitable legal structures, improving tax policy, encouraging more community philanthropy, building philanthropy advisory services, mandating greater transparency and data collection.
Following that, a plenary panel entitled ‘Windows to the Future: A Networked Philanthropy’ featured Naina Subberwal Batra, director of Asian Venture Philanthropy Network, moderating a discussion with representatives from Twitter, Microsoft, the Bill & Melinda Gates Foundation and the Lien Centre for Social Innovation. Parminder Singh from Twitter described the power of Twitter as a platform for social change and fundraising, citing the spontaneous response to the Jammu and Kashmir floods that resulted in the creation of #JKfloodrelief (and subsequently JKfloodrelief.org). This entirely volunteer-run response, in the first week following the floods, used Twitter to coordinate the delivery of 15 tons of food and 4 tons of life-saving medicine and opened a critical communication platform for emergency relief coordination. Most of the organizers have still never met in person, but they nonetheless created a powerful volunteer team.
In a breakout session on collaboration, Veronica Colondam of the YCAB Foundation in Indonesia described the ways in which lack of a legal structure to incorporate social enterprises is limiting their ability to expand their services to at-risk youth. In the same session, Rob John of the Asia Centre for Social Entrepreneurship and Philanthropy at NUS Business School shared his research on the rise of giving circles in Asia as a means of philanthropy, donor education and community building.
As participants boarded buses to diverse themed dinners, discussions were lively and debates engaging. The gathering provided a great setting for plotting the future course of philanthropy in the region.
This post was also published in Alliance Magazine’s online edition.
It’s Not (Just) About the Money
Elegant and well-heeled would be the best way to describe them. I smiled at these two women of indeterminate age who I had just met at the launch of the UBS-INSEAD Study on Family Philanthropy in Asia. As I moved to introduce them to one another, they both laughed and said, “We’ve known each other since…” putting the flat of their hands forward at small-child-height.
“ We were neighbors,” the petite Chinese woman said.
“Our apartment was here, and their apartment was there,” said the smiling Indian woman, pointing her finger in the upward diagonal.
“Didn’t you play marbles?” One asked the other with a mischievous grin.
“Oh yes, all the time. And with the boys!”
“And every day your mom—rest her soul. She was a real force of nature. She would go to the market over there on…”
“And my father, he’s not well now, but we take care of him at home…”
“Yes, we knew each other.”
“ But it’s not like that anymore.”
“ No nothing is like that anymore.”
There was silence as I imagined them thinking about all the changes—education, jobs, marriage, kids, and clearly wealth—that had happened since those long-ago days. For a brief moment I could almost see the bustling apartments these women described, in the brand-new nation Singapore was 30 or so years ago. Where families knew one another, children played in empty lots, and what bound everyone together was that they were all strivers.
We drifted apart as the 150+ person crowd wandered into the auditorium to hear the current state of family philanthropy as described by the recently completed study. Despite the fact that we are all living in the midst of Asia’s economic engine, the stats were still mind-boggling.
- China now has over 1 million US dollar millionaires.
- In recent years, Indian households have witnessed the highest absolute gains in wealth in the world.
- By the end of 2009 there were some 3 million Asian Pacific high net worth individuals, equaling the number in Europe for the first time, and their wealth totaled US $9.7 trillion.
But the rising tide has not raised all boats.
- In sheer numbers the region is still the largest locus of poverty and deprivation in the world. In 2005 there were over 660 million people in India and China alone who lived on less than US $1.25 per day.
- In India, the wealthiest 5% of the population control 40% of the country’s wealth.
All of these statistics from the report were only the prelude to the substance of the discussion. Through 200 quantitative surveys and over 100 in-depth interviews, the report’s author Mahboob Mahmood, Adjunct Professor of Entrepreneurship and Family Enterprise captured themes on motivations for giving, priorities, and philanthropic approaches.
The image that emerges is a charitable sector led by closely held family businesses with a strong entrepreneurial ethos, complex intergenerational relationships, delicate succession and legacy challenges, and a deep awareness (particularly on the part of the patriarchs and older generations) of the power of education to change the course of lives in a single generation. Philanthropy is a useful mechanism for reinforcing shared values with the goal of supporting family cohesion and harmony.
Education is by far the largest area of investment, with poverty alleviation and health distant seconds and thirds. Arts/culture (4%), the environment (4%) and civil rights (1%) were small also-rans.
Among the challenges cited was lack of experienced staff, the perception (and sometimes reality) of a limited number of high-impact NGO partners, and difficulty in finding philanthropic co-investors who are aligned in mission.
The incredibly generous families who participated in the study are to be lauded for their leadership. They are impressive fonts of giving but as yet there exist few networks of strategic philanthropy that can achieve what the authors called, “sustained transformational impact in Asia.”
I was struck by the words of panelist Laurence Lien, CEO of Singapore’s National Volunteer and Philanthropy Centre and a member of one of Singapore’s most philanthropic families when he said, “The most important use of philanthropy is social innovation and social change. Charity is important, but there is much more to do.”
His comments took me back to the conversation I’d had earlier with those two elegant, well-heeled ladies. Money provides privilege to those who possess it but it also changes everything. It can create fractures in families, as well as in societies. It can disconnect people from their broader community. And the relentless drive for economic growth can take a deep toll on cultural traditions as well as our physical environment.
The challenge ahead for philanthropists in Asia, indeed philanthropists everywhere, is to engage with communities in developing solutions. Charity is usually top-down, highly transactional and rarely transformative. It is important, but not enough. Transformational impact can be achieved by moving beyond charity with strategic analysis, community engagement, and emphasis on our shared vision and common destiny. Networks and collaboration are required. Civil society can play an essential role in reweaving the fabric of society. But it requires more than charity. It requires vision more than just money.
The title of this post was at least partially inspired by the Jesse J. song my kids adore which is on a regular loop in our house…