Foundations: Fleas or Elephants?

“I still believe in our ability to make change, but it’s about making change with, not to, a community.”

Pam, what have you learned about philanthropy since coming to it from government?

When I first came to work in philanthropy my first impressions were “No accountability, no urgency.” Particularly compared to the multiple layers of public oversight and transparency in my old job, the differences were striking. And, although I’m no longer a philanthropy novice — in September I will have been at the Haas Sr. Fund for eight years — I remain struck by the lack of external accountability, urgency, and transparency in the field.

What I’ve found in this arena is that there is tremendous accountability to the trustees, and rightly so, but the only external accountability is what you yourself bring to the table. What mitigates this harsh picture is the depth of caring and commitment that so many trustees and staff bring to the work. I’ve been profoundly impressed with the thoughtfulness, intelligence, and heart that so many in philanthropy demonstrate, but the fundamental lack of external accountability is problematic.

Well, government isn’t exactly famous for accountability and transparency, is it?

There’s a whole lot more than most people realize. Local government gets a bad rap on this. When you call someone they usually return the call. They know that if they don’t, you can go figuratively and sometimes literally upstairs to an elected official. If government doesn’t award a grant or contract to your nonprofit, you can demand an explanation and usually file one or more appeals to ever higher bodies of decision makers. Government also has to publish the criteria for its selection process, the application deadlines, and the date by which a decision will be made.

That’s not to say that politics doesn’t play a role in the decision making. Who doesn’t know an unworthy organization or individual that’s received government funding for political — not merit — reasons? And although government is visible on cable TV, open meetings, transcripts, and the opportunities for personal testimony, government can still find ways to be opaque. But, compared to philanthropy, it’s much more transparent.

And government often must bring a sharp sense of urgency to its work. For instance, when the state suddenly closed down a childcare center in a low-income neighborhood for misreporting financial data, we in local government had to figure out where those kids were going to go tomorrow so that their mothers weren’t dinged by welfare-to-work requirements.

When a nonprofit drug abuse clinic imploded, my colleagues in the public health department had to somehow maintain those services. It didn’t matter that the nonprofits’ troubles had nothing to do with local funding or oversight… it had to do with the fact that the people impacted were San Franciscans with minimal resources, and local government is the safety net, as imperfect as it might be. A key underlying difference is that local government has real responsibilities for the community; its failure to act responsibly and timely has real-life impact.

In most of philanthropy we aren’t responsible in the same way. So, for example, even if a foundation had a grant to that same childcare center, it wouldn’t necessarily feel responsible for making sure those parents had a place to take their kids the next day. It’s not that philanthropy should be the same as local government. I get that we play different roles. But philanthropy definitely has things to learn from its public sector counterpart.

With less accountability, shouldn’t foundations be more willing to take risks than government?

Yes! The implication is absolutely that we should be more willing to take risks. Part of my old job was running a community development loan fund, and I learned the importance of balancing risk in a portfolio. If every business we made loans to was successful, then we knew we weren’t reaching the people who most needed our community development money, that we probably weren’t making loans to all of the right people.

From what I’ve seen, most foundations don’t usually look at risk in balancing their grants portfolios. As a sector, we are more risk averse than our governmental counterparts, and yet have less reason for being so.

A notable exception is in the arts, where nonprofit arts organizations rely far more on philanthropy (both individual and institutional) than do health, human services, or education. Foundations — including ours — often explicitly invite high-risk work in the arts where governments (NEA, et al.) shy away from anything controversial or risky.

I get that most of us rarely want to tell the trustees that a grant hasn’t worked out, as it somehow may reflect on the quality of our due diligence. But this aversion to risk disadvantages a lot of great organizations from getting philanthropic funding. It certainly ends up working against grassroots organizations taking on important work in their communities. These organizations may have real traction, real relationships, a great strategy, but “success” may be elusive. In our search for impact, I worry that we often don’t calibrate the metrics we use to gauge success with the enormity of the problems we’re trying to address. So our time frames are too short, our expectations unrealistic, and our capacity for risk too low.

And even though we know from our own lives how much can be learned from failure, we have a hard time being open about it in philanthropy. We forget that failure doesn’t necessarily equal a mistake; sometimes you have to mess up a few times before you figure out the right path. Though there’s more conversation about sharing our failures than in the past, it’s still not the norm in philanthropy. As a result, I think we miss out on the ability to learn from our own and each others’ work, and we limit our effectiveness unnecessarily.

In the San Francisco Bay Area, if you add up the grants made from their own funds by the four community foundations (San Francisco, Silicon Valley, Marin, and East Bay), that combined amount is about 10% of the amount spent by just San Francisco’s Health Department. How do you think about the huge difference in scale between government and philanthropy?

The analogy that jumped into my head my first few months on the job was the flea and the elephant. Philanthropy could be a smart flea on the government elephant, biting it to move a little this way or that. The problem is when philanthropy forgets that it’s the flea, and thinks it is the elephant.

My particular pet peeve, given my background in community organizing and community development, are foundation-driven “comprehensive community change” initiatives. Philanthropy puts a couple million dollars over a few years into a neighborhood and expects transformation. Look at the total of public (government) resources going into that same neighborhood for schools, clinics, buses, Medicare, social security, and everything else. What percentage of funding is added by that foundation? How important is it to the neighborhood, truly? What is the partnership with the public sector? You need to understand the real drivers of change and the real dynamics in a community before you can figure out the right role for philanthropy.

An example?

One that comes to mind is a very diverse and very low-income neighborhood that a large private foundation decided, admirably, to focus on. But, separate from the philanthropic resources, a lot of other factors were at work. The neighborhood was divided along racial lines, and the existing nonprofits were weak and ineffective. Deep gang rivalries rooted in some horribly deteriorated public housing led to high levels of violence, traumatizing and destabilizing the neighborhood.

Attempts to build nonprofit capacity in this setting, and adding some social service and economic development programs to the neighborhood mix proved largely ineffective. What did start to change the neighborhood was when public transit was reconfigured by the local authority to provide more direct connections to the downtown core: something completely out of the realm — and budget — of the philanthropic approach.

Sadly, I find that comprehensive community change initiatives driven by foundations are rarely that because they don’t address the full complexities of the neighborhood or work effectively with local government. It’s a classic flea/elephant dilemma.

You sound wary of philanthropy’s ability to drive community change.

I am, but I wouldn’t be here if I thought philanthropy couldn’t do a thing. Philanthropy is critical in supporting community change, social change. But, and I know some of my colleagues won’t agree, I don’t see philanthropy as the driver of change. I see philanthropic resources — both intellectual and financial — as incredibly important, but when we forget we’re the flea, not the elephant, philanthropy can make tremendous miscalculations.

Philanthropy can also miss the boat when, in the quest for doing something it can own or brand, it doesn’t build on existing infrastructure and knowledge.

Look at public education. There’s a lot of agreement in the field that having effective principals and teachers is key to improving academic outcomes. So you’d think we’d start working together to resource the organizations already doing great work developing and supporting principal and teacher effectiveness. Instead, way too often, philanthropy is driven to craft brand new initiatives and fund new organizations, rather than investing in the people and organizations already doing good work in an arena.

So what should philanthropy be doing?

First, if we’re serious about community change, we can’t do it without the community.

And the community is political, messy, personal, complicated. We have to be willing to work with the messiness and complexity if we’re serious about supporting real change. This means we have to be willing to take risks and to fail. We also need to understand and build on the existing infrastructures in communities wherever possible, rather than just ignore or overlay them with new ones.

Second, we need to have effective relationships with government, particularly on the local level. Usually we in philanthropy see government as a grantee at best. And government, proving our worst fears, often sees us as a checkbook. We need to invest time and money into partnering with government, understanding its issues and challenges, challenging it where need be, and supporting its most promising work with both human and financial capital. We can indeed be really smart fleas and figure out when to bite the elephant on the ear.

And, yes, part of our role should be R&D: supporting innovation when it really adds value, helping make good work great, investing in leadership and strengthening organizational infrastructure. What we have to remember is to ask of those on and near the frontline: What would be helpful? What would be meaningful? Too often we predetermine answers to those questions only later to bemoan the ineffectiveness of our interventions.

What if a community doesn’t have a strong infrastructure? For instance, if the nonprofits there are mostly small and weak?

It’s a challenge; there isn’t a silver bullet here. As funders, we have very, very limited ability to support change if we can’t identify grantees doing great work in our areas of focus. Yet, we [foundations] don’t really know how to build capacity in communities that don’t have strong nonprofits. It’s not that we don’t try, we’re just not very good at it.

And, in the absence of strong nonprofits, we usually don’t have the patience to invest in promising individuals and informal networks that might, over some period of time, become great and effective. But that is what we often need to do: take risks with people and nascent organizations.

And, most important, we need to be real: about what our role is, about the relative impact of our grantmaking given the broader conditions and context, about how long it may take to see signs of change, about the ups and downs that will probably occur in the process. We need to be real with ourselves, with grantees, and with our trustees. Overpromising is damaging, and can end up making us even more risk averse.

Last comments?

Honestly, I often think we [philanthropy] shouldn’t be allowed to develop our own initiatives, at least as they relate to community change. Foundation-driven initiatives can be beautifully crafted, and have their own internal logic. But they are often based on a fundamental mistake: that philanthropy can be the prime mover of community transformation. It’s all about understanding our role and relationship — to nonprofits, to government, to community.

We in philanthropy can effectively support social change, and effectively support the community leaders and organizations that are change agents, but we can’t substitute for them or invent them. At heart, I guess I’m still a community organizer. I still believe in our ability to make change, but it’s about making change with, not to, a community.

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In support of the mission of the Walter & Elise Haas Fund, and her goal to be a smart flea, Pam is currently sitting on the steering committee of Hope SF, a public-private partnership to rebuild some of the city’s most distressed public housing. Overall, the Haas, Sr. Fund brings a civic engagement frame to its work in the areas of the arts, public education, economic security for the working poor, and Jewish life. You can learn more about what they do at www.haassr.org. At right, Pam “organizes” Frances and Clancy.

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