What were we thinking?

There's no better time than the present...to think about the immediate past. Three major search engines Google, Yahoo, and Lycos have all published their year-end stats on what we searched for in 2002. You can find these amazing sites at http://www.google.com/press/zeitgeist.html, http://yir.yahoo.com, and http://50.lycos.com.

Go ahead, look back at what the web-searching world cared about in 2002. Draw your own conclusions.

Grantmaking in real time

What is the right time frame for foundations and other philanthropists to use when determining the impact of their giving? If its $10 for a meal, the result is immediate. If its $10 million for improving public schools, the result may be...later.

Since most American foundations have "in perpetuity" somewhere in their charters, they are well-positioned to work with very long term horizons. Long term to most foundations seems to be about ten years. Sure, ten years is better than "three years and your out," but why ten? Ten years in school reform is too short - its not even as long as your child will spend in the K-12 system. In medical research, on the other hand, two years can be a lifetime - quite literally, when you consider the pace of research advances regarding some terminal illnesses.

Perhaps philanthropic investments should be made - and results sought - in line with the issue at hand, and not with regard to organizational policy, the ease of collecting evaluation data, or the convenience of the reporting cycle. This is one way to rethink how giving is done - perhaps pooling funds across individuals and organizations to focus on common issues and desired improvements, and jointly setting realistic benchmarks and timeframes for achieving results. Lets put the dollars where the impact is (or can be) and view our work in real time - the time it takes for real change to happen.

Standards of quality

Philanthropic foundations and nonprofits are too polite. They hate to say no, they don't like to criticize others' work, and they try to operate all "under the big tent" more often than not. There are many reasons for this, and it has many effects. One effect is to make judging quality very difficult. The industry lacks performance ratings, metrics of quality, even commonly held operating standards for assessing operations . None of the existing players wants to put a stake in the ground and say " these are our criteria for quality, this is how we assess it, this is what currently qualifies and what doesn't, and we'll be back to assess again in 6 months or a year." Of course, just because foundations, grantmakers, and nonprofits won't speak the above sentence, doesn't mean they don't employ criteria and pass value judgements all the time.

By acting as if the creation of meaningful, public standards was a bad thing, the industry does itself a disservice. New entrants into philanthropy can't turn to independent ratings services, indices of performance, or credible media sources as standard bearers. Philanthropy lacks these industry supports partly because of its long-standing refusal to admit to the role of competition in the field. Ironically, the result of the resistance to independent standards and monitors may just be purely market-based decisions.

Positioning philanthropy

Philanthropy - in its most highly evolved institutional forms - exists at the whim of the public sector. Foundations, donor advised funds, charitable remainder trusts are products created by the tax code. A couple of swift kicks to the tax code and we could see some fairly significant changes in the philanthropic and financial services landscapes. A permanent repeal of the estate tax could "result in a decrease in giving through charitable bequests of between $1.5 to $5 billion, based on 1999 levels." (independentsector.org/programs/gr/estatetax.html). Many of the financial service industries' recent product and service developments for high net worth Americans are based on predictions of their likely charitable giving due to the predicted intergenerational transfer of wealth. Change the laws, change the giving, change the financial products/services offered to manage the giving.

Philanthropy - as we know it - exists as a byproduct of markets and public policy. Why then is it (organized, institutional philantrhopy) generally so reluctant to engage proactively with either business or government?

Not like other industries

We've made a big point of defining philanthropy as an industry (see our publication "Industry Excerpts," (available at www.blueprintrd.com/publications) and, for the most part, foundation executives, commercial gift fund vendors, researchers and others seem to be on the verge of agreeing with us. But we know that two key charactersitics of any industry, competition and regulation, play slightly irregular roles in philanthropy. For example, while there is significant competition between purveyors of giving products - commercial financial advisers, banks, community foundations, other foundations - for managing philanthropic financial assets, the need to pool funds and work together is also critical if these dollars are going to make a difference. So alliances and partnerships are as important as competition.

Regulation, on the other hand, is a powerful shaper of philanthropic action, and an area that the industry as a whole seems hell-bent on ignoring as a tool for improvement. Other industries - everything from toys to technology - recognize the influence they can have on the regulations that matter to them. They actively support everyone from their chamber of commerce to their industry trade assocations to their political action committees to ensure that regulators know their positions on issues. Philanthropy, on the other hand, prefers to keep an arms length from most policy actions regarding the industry. At the state level in particular, organized philanthropy is woefully unorganized when it somes to proactively monitoring, recommending, and working with policy issues vis-a-vis giving and nonprofits.

How do these two elements of industry - regulation and competition - and the odd nature of them in philanthropy, help us to understand the nature of the whole beast, and how might we focus on them as levers of improvement? Any ideas? email lucy@blueprintrd.com

Is health care next?
Today's New York Times reports that the National Academy of Sciences has notified the Bush Administration that the United States' health care system "...is in crisis." The report notes that "The health care delivery system is incapable of meeting the present, let alone the future, needs of the American people." (NYT, November 20, 2002, A1)

Almost 20 years ago, a similar report alerted the American people to a crisis in our public schools. The 1984 report, "A Nation at Risk" noted the "rising tide of mediocrity" that marked the state of American schools. Two decades later, countless new state and federal policy acts, billions in public money, millions more in philanthropic dollars - the school crisis seems ever whith us. Is health care next...?

This question is quite pressing for several reasons. The obvious ones have to with the health of our poorest, frailest friends, family members, and neighbors. But the question is also indicative of the new faces of America and the impact current demographics are likely to have on public policy and perhaps private philanthropy as well. The average age of Americans is now 34, "the oldest ever" according to an analysis of the 2000 Census commissioned by the Surdna Foundation. As we age our medical needs increase, our individual contributions to public revenue coffers through payroll taxes and other structures decline, and our demands on those services and protections rise. If the system is in crisis now, what will it look like when today's 34 year olds are 64?

How will we as a nation care for ourselves over time? How will public and private systems work together to meet the basic health needs of all our people? How will we act now to avoid looking back in 2022 or 2032 and wondering how the walthiest country in the world failed to both educate its children and care for its elderly?

Philanthropy and new capital markets
Organized philanthropy is profoundly unorganized. Those who fund start-ups don't work with those who fund established organizations.Individual donors, who provide the sustaining funds for most nonprofit enterprise (along with the public sector), are disaggregated, poorly organized, and rarely considered as strategic partners by institutional philanthropy.

The attached book outline is a work in progress, focused on how the disparate elements of the philanthropic resource pool - from foundations to individuals - could work together in more effective ways. The roles of knowledge sharing, network building, new infrastructure, and new mechanisms are all discussed. The possiblity for deliberately evolving the philanthropic financial markets is emphasized. A new vision of coordinated philanthropic markets is presented for comment and disagreement. It may not be perfect, but it is a viable alternative to the current system and one that stands to better use the trillions of new dollars anticipated in the sector over the next decades.


Philanthropy and public policy
The philanthropic industry is scared of regulation. Foundations have shied away from proactive relationships with legislators and regulators at the federal level, and they continue to act this way at the state level. This non-strategy is going to cost the industry when the time comes - once again - for regulatory review of philanthropy. We have every reason to believe some policy maker is soon going to "discover" philanthropy as a ripe source for investigation - with the corporate governance scandals of late, the crisis in the Catholic Church, regulatory concerns raised over September 11 giving, public disenchantment with nonprofit action in the wake of September 11, and the continuing growth of endowed, tax exempt funds as public budgets shrink, it is only a matter of time. We strongly believe that the most important regulatory moves will be made at the state level, and that foundations in most states are woefully unprepared to speak their truth to the legislators and regulators who matter.

Its not that we think new regulation or oversight is a bad thing. In fact, we believe there is a lot of positive change that new regulations could make happen. We also believe that the interest groups within philanthropy - foundations, financial service firms, individuals, and others - are at very different places when it comes to working with legislators and regulators to make the industry work to their advantage. So when the time comes, those interests that have built relationships, proposed legislation, and worked the policy machine will be at a distinct advantage. Their advantage, not necessarily the advantage of all institutional philanthropy.

A strong network of informed policy analysts and advocates working on behalf of philanthropy is needed. At the state level in all fifty states. National resources can assist by providing access to technology that can make tracking legislation asier. But local relationships and access matter more. These must be built at the state level before hearings are called or a scandal emerges. Philanthropy in America exists by virtue of government sanction - its high time the industry actively participated in the system that maintains those sanctions.

Welcome to the Philanthropy 2100 blog. This site is produced by Lucy Bernholz, Founder and President of Blueprint Research & Design, Inc. We'll use it to keep you informed of our latest thinking, provocative ideas, and questions about the directions and actions of philanthropy around the world. We intend to foster conversations and community among philanthropists, consultants, social change agents, nonprofit leaders, public sector thinkers and actors, and anyone else who works in or cares about the philanthropic industry.