Bruce Trachtenberg runs The Communications Network, which says on its website “Formed nearly 20 years ago as a volunteer group, the Network today operates as a stand-alone 501(c), dedicated to helping advance, promote, and encourage the adoption of effective communications practices in philanthropy.” As I wrote earlier today, Bruce attended the Philanthropy Media Panel and wondered in a follow up blog post why foundations are not considered by the media to be worthy of routine coverage.
[This is a long post, so I’ll get right to the punch line: Why do you think that foundations are not considered by the media to be worthy of routine coverage? Leave your comments below.]
This is a really interesting question and one I’ve thought a lot about. After my podcast with her in September 2007, journalists Cheryl Dahle posted the following comment on why she thought foundations didn’t get more coverage:
Cheryl Dahle wrote:
I would probably write about foundations more frequently if I more commonly stumbled across innovation among their ranks. In the almost ten years I’ve been covering social entrepreneurship and the non-profit sector, I can name very few potentially game-changing innovations that have come out of foundations: venture philanthropy, venture funds (a la Rockefeller’s ProVeNex Fund or Google Foundation), and more broadly the movement toward investing endowments to eliminate the hypocrisy of funding non-profits to fight social and environmental ills while buying the stocks of companies contributing to those problems.
The number of foundations engaged in these practices is pretty small. The bulk of the sector seems content to be:
- Completely unaccountable for the “social returns” on its donations. How many foundations develop sound metrics for the progress they’re accomplishing — without a wrongheaded transference of the burden onto the non-profits in which they invest?
- Completely unresponsive to their “customer base” of non-profits. The cost to non-profits of chasing money – because the sector has not made a significant enough effort to streamline grant application, share information, or cooperate in any meaningful fashion – is shameful. Add to that the degree to which foundations tug organizations off mission to satisfy internal agendas, and you begin to see how much damage foundations actually cause.
- Unaccountable for the overhead they spend to find and make investments. I know of no other industry that re-invents the wheel with such relish. How about sharing some due diligence? Anyone?
- So afraid of failure that they continually play small, hide unsuccessful investments (which could produce great lessons learned) and virtually conspire to overlook terrific opportunities for collaboration.
- More interested in building their own brands or bolstering their own flavor of the month approach to investment than in building great non-profits that can scale. (The whole movement around investment in capacity building is an antidote to this.)
Here’s what I’d like to write about:
- A coalition of foundations who decide their next big thing is to choose the best solutions in three areas — homelessness, early education and climate change –- and then pool their fund behind common metrics and organizations. These would be big bets…at least $50 mil grants.. and organized much the way that so-called non-profit private placements have been set up. Find the proven solutions. Scale them. Fail gloriously in some cases so we can figure out what to try next.
- More spend-down foundations. I would love to see more foundations incented by making the boldest change and biggest leap forward they can in a short period of time than a fleet of organizations motivated to stay in business by playing small.
- Rampant socially responsible investing (SRI). In an age when so many hybrid organizations and for profit organizations with social missions are languishing for lack of capital, it’s criminal that foundations manage their endowments as they do.
I responded with the following comments:
I think very highly of Cheryl. She understands the evolving field of social enterprise very deeply and speaks fluently about philanthropy and the challenges that face it.
Howard Marks is the founder of Oaktree Capital Management. In a 1993 article in the Financial Analyst Journal, Marks discussed non-consensus forecasting (predicting a future that is different from conventional wisdom). In the article, he wrote:
“…being too far ahead of your time is indistinguishable from being wrong.”
I think Cheryl is deeply wrong in her opinion about the state of private foundations… or too far ahead of her time. Much of what she wants will come to pass, but the trends she wants to see are still emergent.
In her rant, Cheryl suggests that foundations do not get more press coverage because most foundations do not engage in innovation. We currently live in a society that celebrates innovation very highly. Certainly, I agree that innovation is a worthy topic for press coverage. But what Cheryl is missing is that we have a robust business media culture, even though the bulk of for-profit companies are not innovative. An “innovation” is defined as “something new”. For something to be new, most people must not be doing it.
In the for-profit world, successful innovation generates higher sales, the company grows and over time, the innovators come to dominate their market. Think Google, Starbucks and Apple. What happens when a foundation is successfully innovative? The social return on its grantmaking goes up. Since foundations don’t fundraise, generating higher social returns should be met with higher payout levels (the foundation giving out more of its endowment). Over time, this will drive the foundation out of business. Ironically, one of the “innovations” that Cheryl calls for in her rant is more “spend-down foundations”. While there is a very legitimate argument for foundations to not exist in perpetuity, it must be recognized that from a Darwinian standpoint, this “innovation” would quickly decimate the ranks of innovative foundations.
Much of Cheryl’s complaints rest on the idea that foundations are unaccountable and unresponsive. What she is missing is that there is not a market or regulatory framework to encourage foundations to act in the way she would like. While it is all fine and good to complain about people not being the best they can be, her rant really boils down “if people would just be better people, the world would be a better place.” And if everyone was more polite, thoughtful, caring and ate their fiber the world would be a better place too. Rather than complain that foundations aren’t striving to be the best they can be, let’s encourage them to reach for that goal through the mechanism of societal appreciation of the actions we desire. In other words, press coverage!
The media continuously focuses their attention on the biggest grants and the biggest endowments. In the for-profit world, this focus would be similar to Exxon, General Electric and AT&T dominating the business press because they happen to be some of the largest companies.
Why isn’t the mainstream media spending more time covering NetSquared, The Packard Foundation Nitrogen Project, The Peace Primary, the Nonprofit Primary Project, B Corporations, Paul Brest’s call for an online information marketplacefor philanthropy, the Robert Wood Johnson Foundation’s experimentations with video games and health care, the work of the X Prize Foundation, The MacArthur Foundation’s conference in Second Life, the transparency of the Irvine Foundation, xigi.net, the F.B. Heron’s deep commitment to mission related investing, the Ford Foundation’s hiring of a business consultant as their new president, the Case Foundation’s “citizen centered” focus, and the Edna McConnell Clark Foundation’s work in venture philanthropy?
If every foundation was engaging in innovation it wouldn’t really be a news story would it? But there are tremendously exciting trends bubbling in the foundation and broader philanthropic community. I hope Cheryl continues to cover them and that editors can get over their view of philanthropy as a “do gooder” beat that a reporter shouldn’t want to cover.
The flip side of all of this is reflected in an email I received from another reporter who covers philanthropy. Responding to Cheryl’s comments, the reporter told me that the issues that Cheryl raised were reasons to cover foundations, not to ignore them.
So my question to readers is the same as Bruce’s: Why are foundations not considered by the media to be worthy of routine coverage?