Lack of Criticism in Philanthropy Causing Failure

This is a guest post by Tony Wang, a current JD/MBA candidate at Duke University and former philanthropy researcher at Blueprint Research & Design, the William and Flora Hewlett Foundation, and Stanford University.

By Tony Wang

Tony WangEvery sector, including the nonprofit sector, needs transparency AND a healthy marketplace of ideas to combat corruption and inefficiency; transparency so that we can identify problems sooner and a marketplace of ideas to brainstorm solutions.  But as a myriad of corporate scandals demonstrate, the information marketplace, like any other market, is vulnerable to market failure.  What philanthropy and the nonprofit sector need are better policies to support critical discourse.

What is causing the information market failure?

Take for example the recent Three Cups of Tea scandal. I imagine staff members at Central Asia Institute (CAI) didn’t speak up because they worried how raising a fuss might damage their organization and their individual careers. Additionally, anecdotal evidence suggests several people were aware of the problems at CAI before the 60 Minutes exposé was released. The issue isn’t that we’re unaware of the problems, but rather, people aren’t speaking up.

Although our sector does have its fair share of discussion, I worry about who’s participating. Here on Tactical Philanthropy, for example, the majority of guest posts are authored by consultants and senior executives at foundations.

However, what I find most alarming is the trend of topics discussed here and elsewhere. Consultants and program officers tend to discuss topics like measuring impact, field building, and impact investing because these topics are less likely to offend and are important channels for business development for consultants and help program officers gain visibility for themselves and their foundation. Conversely, more critical and controversial topics like wasteful grants, abuses of power, dysfunctional feedback loops, and poor grantee communication are rarely touched on and do not receive the same level of attention.

In writing this post, I reviewed all 136 guest posts published here on Tactical Philanthropy since 2007. Only five were unequivocally critical of foundations.

Guest Posts Chart

(See the spreadsheet I built on Tactical Philanthropy guest posts here. I used my personal judgment to categorize the posts by their degree of criticism.)

In addition to a dearth of financial incentives, there are significant, personal disincentives for critical discourse. If a program officer raises her voice about poor practices in philanthropy, her colleagues will suspect, perhaps correctly, that her opinions draw from her experience at the foundation.

I’m familiar with this issue personally. As a consultant, I became deeply concerned whether current and potential clients frowned upon my blogging and how it affected the reputation of my firm, to the point I abandoned blogging altogether after strong encouragement to do so.

Despite First Amendment protections and the availability of Internet anonymity, feelings of institutional allegiance and desires to avoid conflict, especially with colleagues that we respect and work with every day, cause many of us not to speak up on controversial topics. And because of the unique structure of our sector, where foundations enjoy the power of the purse, criticism of our sector is even harder to come by.

How do we fix our sector’s information marketplace?

A number of actors do play a key role in covering philanthropy’s blind spots. My favorites include academics like Rob Reich and journalists like Stephanie Strom who often play the critic’s role. Philanthropy, in recognition of this issue, even funds watchdog groups like the National Center for Responsive Philanthropy. But all of these actors are external to the organizations that desperately need radical transparency and discourse.

In addition to the critical outsiders, we need the perspectives of critical insiders. We need to support and heed the voice of individuals with critical perspectives, lest philanthropy fall victim to mediocrity.

First, all organizations need to create predefined guidelines on permissible discussion. Instead of a presumption of secrecy that requires an individual to awkwardly ask for permission to express her view, we need a presumption of transparency that shifts the burden to the organization to request individuals not to disclose information and allows an individual to exercise her discretion. Foundations should also provide employees, grantees, and consultants with safeguards to ensure funding is not dependent on an individual’s views.

We also need to openly solicit feedback. Some of the most critical guest posts were in response to the Social Innovation Fund, which actively sought public comment. Sometimes, we also need to solicit feedback in a way that’s anonymous, untraceable, but verified to cover our blind spots. For example, we need forums like TheFunded where grantees are free to criticize foundations in their funding practices and forums that allow program officers to criticize nonprofits and their grant applications, to prevent repeats of Three Cups of Tea. And we need all members of our field, not just senior executives and consultants, to participate in discussion forums like Tactical Philanthropy.

But most importantly, we all need to embrace humility as a virtue, stop thinking we deserve immunity from criticism, and actively listen to those who have the courage to speak out on tough issues.

17 Comments

  1. David Lynn says:

    Too many foundations and funders seem to know they can’t stand up to anywhere near the scrutiny they put on their grantees. It would be wonderful if there was enough accepted transparency for funders to be able to say why they did or didn’t fund a given charity. Imagine the value of constructive feedback and shared information. However, the problem is most of them couldn’t tell you why in any systematic method that would hold up to questioning. As we all know, it usually comes down to the people, and whether that ED or Development Director elicited an emotional and personal connection in the funding decision-maker, not some set of quantifiable numbers.

    • Tony Wang says:

      Hi David,

      Thanks for being the first commenter! I agree that the potential feedback nonprofits potentially could receive from funders holds incredible value. Imagine not only what the nonprofit receiving that feedback could do with that information, but all the other nonprofits who might seek funding and all the other funders who might fund the nonprofit. Nonprofits could better tailor their grant proposals or spend less time on due diligence and funders could dive deeper into grants analysis more efficiently and effectively.

      On the other hand, I don’t share your cynicism of how funders operate, but my experience is limited to working with large foundations. The folks I know at large foundations are very professional and generally create pre-established criteria for grantees that they try to communicate to prospective applicants beforehand. While the strength of the connection with the applicant may come into play, it does so in a way that’s reminiscent of venture capital – individual leadership and strengths are as important to the funding equation as more readily quantifiable data on performance.

      Nonetheless, I’m sure, as you point out, that some funders couldn’t provide a solid answer that stands up to scrutiny on why they funded a particular organization. In researching this post, I took a look at who funded Central Asia Institute, and there were a lot of community foundations who provided grants, probably because of donors through their Donor Advised Funds. And I wonder, what would the donors say now?

  2. I very much appreciated the tenor of this post. I don’t particularly agree with the underlying analysis, although I may be suffering from confirmation bias.

    For example, when I saw your numbers, I looked at your spreadsheet, and I was surprised to find my guest post was categorized as “somewhat critical.” I wrote things like:

    “In preparation for the talk I started thinking about great examples of philanthropy catalyzing collectively intelligent systems. I couldn’t think of any. So I started doing some research. I still came up empty.”

    and:

    “I don’t need to rant about how slowly foundations move, or how they’re afraid to fail, or how they seem fixated on control and understanding at the expense of action. Foundations are experts at saying these things about themselves.”

    These feel pretty explicitly critical to me. :-) I looked at some of the other posts labeled “somewhat critical,” and I felt the same way.

    But that misses the point. Even if you lump all 13 of the criticals and somewhat criticals into the same category (and I really appreciated you sharing the raw data from your research), that’s still a tiny percentage of the guest posts here. But what does that really tell us? Is this really a good indicator that the field as a whole lacks or even disincentivizes internal criticism?

    I don’t think this data backs that up, but I also don’t have anything beyond anecdotal evidence to back up my belief: As I wrote in my guest post, I think foundations are great at criticizing themselves and the field. Stephanie McAuliffe at Packard Foundation calls this phenomenon “hairshirt philanthropists.”

    What foundations are terrible at are doing anything about it. The problem isn’t the lack of an information marketplace. The problem is the lack of an accountability marketplace.

    • Tony Wang says:

      Thanks for commenting Eugene! I remember your post well and remember wavering on whether to put it in the critical or somewhat critical category. The issue you raise reminds me of the recent comic Sean posted:

      http://www.tacticalphilanthropy.com/2011/07/the-problem-with-impact-organizational-analysis-in-philanthropy

      For me, the posts that I labeled as critical were unequivocally critical, by which I mean funders were clearly criticized for their practices and the authors were not holding back. For better or for worse, the posts that I labeled as somewhat critical, including yours, did criticize some aspect of philanthropy, but primarily focused on another topic or provided indirect criticism. And it’s hard to distinguish sometimes identifying an opportunity (would you count a post that says foundations could play a huge role in mission investing as critical?) to criticizing a practice. And yours gave me the overall feel that you weren’t out to strongly criticize funders, but to focus your post more on identifying an opportunity.

      In hindsight, and with oodles of free time, I might have articulated criteria beforehand, coded all the entries twice, reconciled for discrepancies, and solicited others to help with the coding process. But since the overall point I was trying to make was fairly simple, my thinking was that as long as I make the data publicly available so that others can scrutinize my findings and take questions on the fly, that would be good enough. So thanks for keeping me accountable!

      In response to your question of whether the data is a good indicator of criticism, I want to offer a couple of points. Tactical Philanthropy is the top online philanthropy blog according to comscore (you can do a Google search of the top philanthropy blogs and compare them in comscore), as long as you exclude the Chronicle of Philanthropy. And to my knowledge, it’s the only real online forum in philanthropy with active discussions. So the data, in my mind tells me that in the most widely read and discussed philanthropy blog, few guest posts are critical of foundations. Perhaps I could have analyzed all articles in the Chronicle, all the blog posts on Tactical Philanthropy, or of philanthropy bloggers more generally, weighted the posts by visibility, and determined what percentage of posts were critical, but analyzing 136 posts was enough for me. :)

      Although I recognize that foundations are often critical of themselves and the field, and the Packard Foundation is probably on the forefront of this space with its real-time evaluation programs and heavy social media emphasis, I still don’t think vulnerable topics like “wasteful grants, abuses of power, dysfunctional feedback loops, and poor grantee communication” are given enough time or attention as other initiatives (no data to back it up, but if you ask program officers what they spend the majority of their time thinking about, I doubt it’s any of the topics I mentioned). Furthermore, the vulnerable topics often require grantees to require input – but most grantees are too afraid to provide honest feedback to funders (unless you’re participating in a grantee perception report conducted by CEP).

      But let’s assume that the critical topics are getting enough attention. Then why are foundations making progress on some issues like field building and evaluation, but not so good at making progress on transparency issues? For me, it’s partly about discourse, professional incentives, and funder priorities. But I’d be curious to know what you and others think.

      Thanks again for the provocative comment and keeping my discourse accountable!

      • I’m glad you didn’t attempt more rigor in your data analysis. What you did was provocative, and so it served its purpose. :-)

        I think there’s also an interesting discussion to be had about how to be constructively critical, but I don’t really want to go there here.

        What really interests me is your question: “Why are foundations making progress on some issues like field building and evaluation, but not so good at making progress on transparency issues?”

        I really think it boils down to lack of structural accountability. I recognize the irony of claiming this, because investing in evaluation theoretically creates a starting point for structural accountability. However, even if people could agree on standards for impact evaluation (which in itself is a bit of a red herring), would simply having these standards be enough to hold foundations accountable? Would we see foundations get out of the foundation business due to lack of effectiveness? Would we see program officers or even presidents get fired?

        There are no perverse incentives for transparency in foundations, only positive ones. This hasn’t proven to be enough, because there is a culture of stagnancy within foundations, and there are no structures to counter this stagnancy. You can’t be punished for being safe or doing nothing, and foundations tend to be more interested in not looking bad than in not doing good. This results in a vicious cycle of inactivity.

        Is that critical enough for you? :-)

        Here’s where I try to get positive again. You can change culture. Structure is the best way to do this, and as Chas suggests, perhaps technology is accelerating this shift. But in the absence of structural shifts, you can still shift culture through personal commitment and practice, through courage and discipline, and by modeling all of these things transparently.

        Frankly, I think that’s why there’s been progress in field-building and evaluation — a lot of leadership and commitment from courageous, committed individuals. People in foundations really do care, and with leadership, these things will happen.

        It absolutely starts with frank, open dialog. I agree, there can always be more, and in the case of philanthropy, there should be more. But I think the biggest void is the lack of broad, bold leadership within the field, or at least a higher standard for what “bold” means.

        • Tony Wang says:

          A very critical comment Eugene. Thanks for playing along. :)

          I’m not sure how I feel about increasing structural accountability. On the one hand, I want foundations to change and restructuring accountability mechanisms – like providing one board seat to grantees or some sort of democratic supervision of foundation executives – is one solution that comes naturally to mind. On the other hand, I recognize that part of philanthropy’s role in society is to provide funding that is inherently unaccountable. We have governments that are democratically accountable and companies that are accountable to markets; philanthropy is designed as the cure to public and private sector failures. Like the Supreme Court, which was structured as an anti-majoritarian, elitist institution with limited power, unaccountable to the people or any other branch of the government, philanthropy was meant to be free from certain influences as a check to other sectors.

          If we accept philanthropy’s lack of structural accountability, which is unlikely to change, the only way to change behavior is through persuasion, which you alluded to. Leadership, by setting a positive example, is one method of persuasion. Jim Canales’ post on “Audacious Ideas” comes to mind and is a good example of a foundation executive exercising persuasive leadership on transparency, accountability, and authenticity issues:

          http://www.tacticalphilanthropy.com/2010/07/audacious-ideas-jim-canales

          How-to explanations are another – Hope Neighbor’s post on how to unlock the retail impact investing market is illustrative:

          http://www.tacticalphilanthropy.com/2010/07/money-for-good-120-billion-impact-investing-market-opportunity

          If one major foundation made a commitment to radical transparency and developed standards and do-it-yourself guides for other foundations – that would be a huge and amazing first step.

          But carrots aren’t always enough; sometimes you need sticks in your bundle of tools to change organizations. Public shaming, for example, is sometimes a necessary and also very effective tool. In this case, I wonder whether ranking foundations on their level of transparency, published in the publications they and their peers read, might work. Similarly, I wonder whether ranking foundations based on customer service rankings by grantees and publishing that information would yield change. Although CEP does conduct grantee surveys, and some foundations including Hewlett and Irvine have made their grantee perception reports publicly available, waiting for all foundations to voluntarily disclose such information without applying pressure may take several decades.

          In order to accelerate transparency, we need to shine the light on those organizations that are not transparent and have the courage to press foundations on this issue. I know plenty of folks have been advocating for foundation transparency and leveraging philanthropic knowledge for the better part of the decade. And the reason I think we haven’t seen real progress yet is because 1) consultants are the primary advocates for transparency, many of whom are afraid of causing significant discomfort to funders who are often clients and 2) no one has invested meaningful resources yet to develop standards of transparency from which we can measure foundation policies against.

          Advocacy around transparency requires real courage and real leadership – I find nothing particularly courageous about advocating for field-building or evaluation; to me, those are primarily intellectual topics that have little reason to cause discomfort and few barriers to participation, unlike transparency, which touches on the uncomfortable power dynamic that program officers exert over grantees and foundation executives exert over staff. It’s like being an RA and talking about what courses to take or which dining halls have the best food on campus versus socioeconomic inequality, sexual assault, and academic dishonesty – not all topics are created equally and some are much easier to talk about than others.

          In my opinion, there are always perverse incentives for transparency, whether you are an accountant at Arthur Andersen who is afraid of damaging your relationship with Enron, or whether you are a program officer who is afraid of whether grantee reviews of foundation customer service might affect how your boss views your performance. Transparency is uncomfortable and creates all sorts of uncertainty for those under the spotlight – and when those who have the authority to change policies do not consider transparency a top priority and those who would like transparency are too afraid to question that authority or even raise the issue, we have a problem. And please understand that I wholeheartedly agree that most people in philanthropy, including the people in foundations, really do care about these issues. But the way dialogue in our institutions is currently structured, coupled with the inherent discomfort in discussing certain topics, we have bottlenecks around certain areas of discourse that prevent progress on certain topics while others move full steam ahead.

          I certainly agree with you that it starts with frank, open dialogue – and we need a vision of what bold leadership around transparency looks like. But discussing a vision of transparency is virtually impossible if we don’t first remove the barriers to frank and open dialogue.

          p.s. There is a minor correction to my earlier reply: I used compete, and not comscore, to compare web traffic data of the top philanthropy blogs.

  3. Brigid says:

    I applaud your desire to get more information flowing, but you’ve entirely left out the most critical stakeholder here: the beneficiary of the intended programs. That’s first and foremost who we need to hear from.

    A recent example was Newsweek’s reporting on Clinton Fdn’s failure to provide adequate structures in Haiti. It was powerful and effective because the Newsweek told the stories of the Haitians. Still, their story was only heard because a MM international media org had the resources to get it from them. This is where the investment needs to happen.

    • Tony Wang says:

      Great point Brigid! I absolutely agree that we need to collect better data on beneficiaries too – because my post was focused on funders, who rarely deal with beneficiaries directly, in my myopia, I didn’t mention one of the most important indicators of effectiveness. In addition to forums that allow anonymous but verified feedback for funders and grantees, we should also strive to include beneficiaries. Thanks for pointing this out.

  4. Ashley Good says:

    I think the readers of this post, Brigid in particular, and all those longing to hear a bit more criticism, would enjoy watching the videos posted by Owen Scott, a volunteer with Engineers Without Borders Canada http://barefooteconomics.ca/2010/04/11/the-playpump-iv-playpump-vs-afridev/

    Owen’s playful criticism of the playpump project is balanced with a moving request by teachers at the local school where the playpump was installed.

    You can also read Owen’s genuinely self-critical story posted here http://www.admittingfailure.com/2011/03/owen-scott/ on AdmittingFailure.com, a website dedicated to supporting learning from failure in the development sector.

    The question to me is how do we create the environment where more development practitioners feel safe about being critical of their own work in an effort to improve it?

    • Tony Wang says:

      Thanks Ashley for sharing! I just learned of admitfailure through this post’s Twitter activity and definitely want to spend more time checking it out. We need more people like Owen and more forums like admitfailure.

      I also love your question – not only do we need accountability and transparency for interactions between organizations like funders and grantees, but we also need safe spaces to reflect on our own failures. I imagine, for development professionals, one big risk of transparency is loosing funding. What are some of the other barriers to sharing failure? And what solutions make sense? It’s possible that some of these problems have no natural solution – but it’s hard for me to believe there’s nothing we can do to improve the situation. Thanks again for sharing.

  5. Your post has fostered some insightful clarifying and probing conversations on your underlying assumptions and conclusions. I appreciate your candor and courageous efforts to get move the discussion forward.

    I agree that foundations should be encouraged to solicit public feedback.

    I also appreciated Eugene’s remark about the need for a enhancing the accountability marketplace. This is an area where social media such this discussion forum can lead the way to establishing the standards for guidelines in transparency as well as creating a safe environment for encouraging us to build “learning organizations” capable of learning from our own mistakes and weaknesses.

    • Tony Wang says:

      Thanks for commenting Chas. Your comment about standards for transparency reminds me of another project, the Law School Transparency Project (LSTP), which is unrelated to philanthropy, but quite similar. LSTP collects employment data, more detailed than US News & World Report, which is the primary source of such information, and disseminates that information to prospective students. I wonder what the foundation equivalent might look like – what kind of data would a Foundation Transparency Project collect and how would it attempt to influence change in a sector, as Eugene points out, is designed to be resistant to change. And who would provide the funding for such a project, if not a foundation? It’s an interesting idea to think through; thanks for the inspiration.

  6. James Salsman says:

    I think most charitable endeavors are very insular. An honest critic has to weigh the benefit of criticism against being shunned by their community, and the frustration of watching those who are unable to reason about their own actions delay responding until everything else has been tried. I have a lot of experience with this, and I am confident that things will get better, some day.

    • Tony Wang says:

      Thanks James for sharing. I think the critic’s cost-benefit analysis of criticism unfortunately weighs against criticism. Why risk your career and your relationships with colleagues to voice an opinion that ultimately may not change anything? Personally, for me, I was afraid for a very long time how writing this post might affect my potential career in philanthropy. It was only when I 1) made my peace with the worst-case scenario of not being able to work in a foundation or consulting firm that advises foundations for the rest of my life and 2) felt enough time had passed since I left the sector that my opinions shouldn’t drastically affect the relationships I have with my colleagues in the field, that I felt comfortable publishing this post. And I think if our sector’s culture were different, perhaps more similar to the entrepreneurship culture where transparency and critical discourse are the norm, I would have felt much differently about the costs and benefits of speaking up.

      I’m not sure I share your level of confidence that things will significantly improve, but I hope it will.

  7. Rachael Barrett says:

    Thanks for this posting Tony and all the comments. As a grant-seeker, this conversation is incredibly important.

    I have spent most of my professional career seeking funding from institutions and government to support a range of excellent work by different nonprofits. And, while I am thrilled to follow the Packard Foundation’s efforts and embrace Paul Brest’s commitment to owning up publicly to foundation failures, and deeply appreciate the storm created by Give Well in its start up phase….I do not believe that there is any space in the sector for grantees to be honest and open and transparent regarding the challenges of working collaboratively (or otherwise) with foundations.

    Perhaps this works on both sides, when we parse our words and cull the body language and facial expression of each other for secret meaning, either way, and getting back to the comment about the beneficiaries, both sides can lose sight of those folks we intend to help.

    No one wants to be called ugly, but we are all working in this sector because we believe a greater good can be achieved. Let’s set out a and find a way to accomplish this. Keep the conversation going.

  8. Tony Wang says:

    Thanks Rachael. I agree – there are a lot of well-intentioned foundations like Packard and Hewlett and groups like GiveWell that move forward the conversation – but we really do need, as you point out, a space for grantees to be honest and open and transparent.

    I wonder what would happen if someone out there proposed a project like “TheFunded for foundations” – a space where grantees could review foundations publicly, but anonymously. What would happen? How would a foundation like Hewlett, with its philanthropy program area, react to such a grant proposal? Would Hewlett publicly comment on such a grant proposal?

    I’m all for good conversation, but I also want to make sure that this conversation, while deeply edifying for many of us, doesn’t disappear into a black hole of inaction. I would like to see real change and real progress on this issue – and wonder what we can actively do to help increase transparency, criticism, and discussion in our sector.

  9. philippe says:

    Very interesting post I only discover today.
    Confronted in a project I was part of (for a very short time) with a huge resistance to any type of transparency I devised(after I had been let go) a transparency scorecard you can read about on the little blog
    I am not very optimistic about quick positive changes. Most foundations are too big to fail, and to be criticized. The negative consequences are very real and I can completely relate to your fear of publishing this post. Since I have protested I have been effectively blacklisted and unemployed.