Foundations Face Insulating Properties of Great Wealth

Tactical Philanthropy is currently covering the Grantmakers for Effective Organizations conference with the help of a blog team. This is a guest post by Clara Miller of the Nonprofit Finance Fund.

By Clara Miller

From the GEO blog team, several terrific posts. The two that got me going at the beginning of the conference were Phil Buchanan’s post, “Has Anything Really Changed,” and Barbara Kibbe’s self reflective post asking, “what does it take to remain a servant to the field,” and cautioning against the “insulating properties of great wealth.”

Some things are constant in philanthropy and the social sector: the impulse—learned or hard-wired—to do good; an unflagging optimism (required!); and willingness to apply money to solving big problems despite daunting odds. And all are here in force at the conference.

Yet at the macro level, we don’t have much to self-back-pat about these days, even though we all need encouragement.

And that’s where the field experience that Barbara cites and the current practice in philanthropy diverge. Where philanthropy experiences, to a greater or lesser degree, the “insulating properties of great wealth,” the field—and the public–is experiencing the opposite. Whether it’s social justice organizations or dance companies, the field is on the front lines of economic dislocation that has been fifty or more years in the making. And while insulation is a good thing sometimes, in our current situation we need we need to push much farther outside our comfort level to achieve the real effectiveness that Phil is concerned about.

Here are some suggestions:

• Let’s stop making grants “special.” Think outside the grant, outside the grantee and outside the sector, just for starters. We are part of the economy, and individual grants, popular opinion to the contrary, are not hermetic projects, they are part of the overall revenue picture of a small enterprise that converts money into program execution. It exists in the larger economic context. Don’t despair. Call fellow funders, understand the enterprise proposition of grantees and wield money and enterprise as tools to achieve mission.
• Let’s hold our own feet to the fire (insulation tends to keep us comfortable, so if we don’t, nobody else will). Compensate and promote grantmakers at least in part on the basis of how well their grantees are achieving their goals. I know this is controversial, with much worry expressed about, “but then we won’t take risk. ” Focus unwaveringly on the risk to the public. We will do our jobs better if that’s the risk we’re managing and sharing. And it’s empowering.
• Learn about social sector finance and capitalization. Use this understanding to guide your grantmaking. Really. Trusts, estates and tax compliance are important, but they’re not finance. Rules of thumb about overhead rate, fundraising rate and budget compliance may be simple to understand, but they’re not finance (and they reliably hurt organizations we’re trying to help). Hand-wringing about general operating support may seem cutting edge, but it’s not really a substitute for “whole enterprise finance.” New practices around enterprise finance are emerging. Go get ‘em!

It’s time to take off the insulation and join the field.