[Editor’s note: The following is re-posted from the Center’s PhilanTopic blog. Bradford Smith is president of
the Foundation Center. In his last post for PhilanTopic, where this
post originally appeared, he wrote about philanthropy, morality, and politics.]
“So far as there is a justification — and I am sure there is —
for the existence of these institutions, it is that they serve the
public good. If they are not willing to tell what they do to serve the
public good, then as far as I am concerned, they ought to be closed
down.”
This statement — the kind that would strike fear into the hearts of
many foundation leaders — did not come from Pablo Eisenberg, the National Committee for Responsive Philanthropy,
or an overly zealous Hill staffer. Rather, those words were uttered in
1952 by a Republican banker, Russell Leffingwell, during his testimony
before the Cox Commission, convened to investigate foundations for alleged support for “un-American activities.” Leffingwell, who was also chair of the Carnegie Corporation
board, had an acute sense of how philanthropy’s preference for
maintaining a low profile could work against it: “…the welfare of
these great constructive foundations with which I am familiar, and
their opportunity for usefulness, are constantly threatened by a
confusion in the minds of the people about what is a foundation.”
It was out of the Cox hearings and the Reece Commission
that followed that the Foundation Center was born in 1956 as a
“strategic gathering place for knowledge about foundations.” The vision
of our founders can be summed up in the simple words of Leffingwell,
who told his Congressional skeptics: “We think that the foundation
should have glass pockets.”
With the launch of a new public Web portal, www.glasspockets.org,
the Foundation Center reaches back to its founding values. We believe
strongly in philanthropic freedom, the kind of independence that allows
foundations to be innovative, take risks, and work on long-term
solutions to some of the world’s most vexing problems. But the best way
to preserve philanthropic freedom is not to hide behind it; rather,
foundations increasingly need to tell the story of what they do, why
they do it, and what difference it makes.
Why transparency? Foundations use private wealth to serve the public
good for which they receive a tax exemption in return. While some have argued
that the tax exemption does not legally compel foundations to behave in
any particular way, foundations’ challenges are more perceptual than
legal. No sector — government, church, business, or charitable — gets
a free pass in the world of 24/7 media, blogs, YouTube, Twitter,
crowdsourcing, and digital everything. Why should foundations?
Collectively, America’s foundations control more than $500 billion in
assets, spend some $46 billion a year in grants and on programs, and,
in some localities and on some issues, are the major players. And as
foundations strive to become more strategic and effective, their impact
and influence will grow — as will the curiosity, praise, criticism,
and scrutiny they attract.
Glasspockets contains basic facts about the nearly 97,000
foundations in the United States, illustrations of philanthropy’s
impact on the issues that people care about, and information on the
many ways in which foundations are striving to become more transparent.
Sections like “What are foundations saying now” and
“Foundation Transparency 2.0” show which foundations are using social
media and how. “Who has Glasspockets?” features profiles of
foundations’ online transparency efforts according to the kinds of
information about governance, finances, grantmaking processes, and
performance metrics they post on their Web sites. Glasspockets is
intended to recognize foundations who are taking the lead in becoming
more transparent while encouraging others to do the same. Any
foundation that is debating about whether to create a searchable grants
database, initiate a grantee feedback mechanism, or get its feet wet
with social media will, on Glasspockets, find plenty of peer
foundations with whom they can consult about how to build greater
transparency.
The Foundation Center has been working on Glasspockets for over a year and we have learned a number of valuable lessons.
We couldn’t have done it without partners. Glasspockets was developed in partnership with the Center for Effective Philanthropy, Grantmakers for Effective Organizations, the Global Philanthropy Forum, the Communications Network, and the One World Trust
in London. Each of these organizations shared their own experiences,
suggestions, cautions, and content. As organizations that, to varying
degrees, are dependent on foundation funding, the delicate task of
positioning Glasspockets was first and foremost on everyone’s mind.
Their contributions have been invaluable and changed the direction of
the site at various junctures.
When it comes to transparency, one size does not fit all.
Many of the tools on Glasspockets measure online transparency, but
according to one Foundation Center survey only 29 percent of
foundations reported having a Web site or issuing publications or
annual reports. Communicating what you do, extensively evaluating your
projects and programs, using social media, or engaging in community
outreach takes people, yet in the same survey 76 percent of U.S.
foundations said they had four or fewer staff members. In cultural
terms there is a long tradition in American philanthropy of not drawing
attention to oneself and letting good works speak for themselves. There
is also the very real concern of many living donors with protecting
their own privacy and the safety of their children and grandchildren. A
considerable number of foundations told us that their contribution to
transparency was support for the Foundation Center, which takes data
from their tax returns and other information, adds value, and makes it
available to grantseekers. Transparency, it seems, is an ideal that
each foundation has to approach according to its values and means.
However, one thing seems certain: as the whole notion of privacy is
being radically transformed by digital technology, choosing not to be
transparent is an option whose days are numbered.
Transparency vs. Accountability. At the outset of
developing Glasspockets, we used these terms almost interchangeably but
soon found that while most everyone agreed on the definition of transparency there was considerably more concern about the notion of accountability.
Many foundation professionals associate accountability with government
control, particularly attempts that might go beyond the existing
regulatory framework to dictate what issues should be addressed and
which populations benefited from foundation dollars. We had been
thinking of accountability more in terms of the relationship of
philanthropy to its constituencies. For example, when a foundation
decides to send out a Center for Effective Philanthropy grantee
perception survey, that is an exercise in accountability, a strong
signal that grantees are stakeholders whose opinions count. When the
same foundation decides to display that report on its Web site for the
world to see, that is an expression of transparency. The One World
Trust was especially valuable in helping us sort through this issue.
Their own Global Accountability Report
ranks multinational corporations, multilateral government institutions,
and international NGOs according to four dimensions of accountability
— transparency, participation, evaluation, and complaint and response
mechanisms — often with surprising results.
Why not rate foundations? Everything today is rated
in one way or another, and most of us do not pick a restaurant, plan a
vacation, or figure out which appliance to buy without consulting some
kind of rating system, frequently of the online, consumer-based
variety. So why not rate foundations? Foundations are increasingly
funding organizations to analyze, evaluate, and, yes, rate nonprofits
on the assumption that donors of all types have the right to know which
are the highest-performing, most efficient, and best-managed
organizations out there. Shouldn’t that be a two-way street? Mario Marino
and others have argued that it is only a matter of time before
something like TripAdvisor comes to the foundation world. Indeed, when
we were describing our plans for Glasspockets, one foundation
encouraged us to jump into the deep end and devise an eBay-like user
rating system for foundations.
In the end we decided that the best way to encourage greater
transparency among foundations is not to rate them but to bring to
light the wide degree of experimentation and innovation they already
support. The “Who has Glasspockets” feature, a kind of transparency
profile, allows readers to compare and contrast foundations on a range
of criteria drawn from existing practice but does not issue scores or
rankings. And we have already heard from foundations interested in
suggesting new criteria and discussing how they might improve their own
profiles based on the examples of others.
In the old days, the Foundation Center would release a print
publication and then move on to the next project. With the launch of
Glasspockets, we are just out of the starting blocks. How the site
develops, in what ways, how it is used, and whether pieces of it spin
off into other media are all open questions. We want it to serve as an
important knowledge resource that can fuel the movement toward greater
transparency in philanthropy. We have been joined in this effort by
important partners and spokespersons such as Jim Canales, president of the James Irvine Foundation, and their ranks are growing.
Being transparent about what we do well, what we do poorly, where we
exceed our expectations, and where we fall short cannot but increase
the credibility of our institutions. Again, it was Leffingwell in 1952
who captured the essence of our profession:
“I think they [foundations] are entering into the most difficult of
all fields. They have gotten their fingers burned, and they are going
right straight ahead, knowing that their fingers will be burned again
and again, because in these fields you cannot be sure of your results,
and you cannot be sure that you will avoid risk; and you know that, if
the boundaries of knowledge are pushed back and back and back so that
our ignorance of ourselves and our fellow man and other nations is
steadily reduced, there is hope for mankind….”
Greater transparency is the best means to protect the freedom that philanthropy needs to pursue this noble mission.
— Brad Smith