A Veteran Foundation Board Member's Advice on Grant Making

When Tom Scanlon stepped down from the board of the Public Welfare Foundation this fall after 40 years of service, he could have gone quietly.

After all, for the previous five years, he had been heavily criticized by his fellow board members for speaking out too forcefully about his opposition to the way they were running the large national grant maker.

Or he might have unleashed a public attack to punish those who had criticized him so fiercely.

Instead, he let his love and loyalty for the foundation triumph and wrote his colleagues a thoughtful letter that made clear where he felt the organization had gone wrong. In the letter, excerpts of which were published last week on Nonprofit Quarterly Web's site, he offered what he called "sweet grapes" -- citing the many things he enjoyed and steering away from what might have sounded like sour grapes.

He also offered a blueprint that other foundation and board members should take to heart, in particular those grant makers that have stopped accepting unsolicited proposals and giving small sums to innovative organizations.

Mr. Scanlon's experience at Public Welfare also offers a cautionary tale of what can happen when board members fall for the latest fads in grant making and ignore what staff members and nonprofits say would do the most to promote change.

During many of the years that Mr. Scanlon was on the board, Public Welfare earned a well-deserved reputation as a risk-taking and innovative institution that empowered poor people, helped new groups get off the ground, nurtured aspiring nonprofit leaders, and supported important advocacy efforts.

It boasted an excellent staff, led by its president, Larry Kressley, and a hands-on board with members like Mr. Scanlon who infused the foundation with a spirit of caring and activism.

But in 2006, after 11 years on the job, Mr. Kressley resigned and things changed. The board chose a new leader, Deborah Leff, who was bent on changing the foundation's priorities and the way the board and organization operated.

Without much consultation with either staff members or grantees Ms. Leff garnered support from a majority of the board to wipe away decades of outstanding grant making and replace it with three new grant-making priorities. Public Welfare, she said, needed to join the growing number of foundations that practice "strategic philanthropy."

Gone was the emphasis on poor people, low-cost housing, organizing, and aid to new groups. With one vote, the foundation eliminated money for the grassroots environmental movement it was instrumental in starting. And it no longer was willing to accept unsolicited proposals, thereby denying promising groups and new ideas a chance to receive money from the foundation.

Not surprisingly, a staff exodus resulted.

Mr. Scanlon did not favor Ms. Leff's appointment, nor did he approve of the grant making adopted by the foundation. He was unjustly accused of leaking information to me when I wrote a critical opinion article for The Chronicle about the new directions at Public Welfare. Not that I didn't ask him for an inside scoop, but he refused to give me any information about what was going on inside the organization.

For his vocal opposition to the new priorities, he was heavily criticized by fellow board members. Ill feelings reached the point that a vindictive element tried to remove him from the board. He survived this ordeal by a margin of one vote. Throughout this painful experience, he maintained his composure and loyalty to Public Welfare.

In his valedictory statement to the foundation, he urged board members to reflect on their role, saying they had become too passive. He also asked them to review the changes that had been imposed five years earlier -- which he says were both unwarranted and unwise. He urged them to restore the values and reputation that once made Public Welfare one of America's best foundations.

He justified his decision to remain on the board after 2007 because of the foundation's long track record, including an increase in the foundation's assets from $11 million to about $500 million during his tenure, and urged the new board of directors to be good stewards of the organization.

He asked the trustees to become once again an involved and active board that assures high standards of performance and public accountability, and urged them to heed the call of James Canales, president of the James Irvine Foundation, to "banish the culture of deference that is too often found in our board members."

Mr. Scanlon acknowledged the benefits of the strategic-philanthropy approach Public Welfare adopted, such as a deep focus on a few causes and an emphasis on evaluation of whether a grant worked. But he also bemoaned its weaknesses, such as a lack of flexibility and the loss of grantee involvement, an emphasis on bigger and few grants, and a focus on proven groups rather than those that are new and community-based.

"The adoption of a strictly strategic approach hampers what has been the most often-cited and salient characteristic of PWF grant making," he wrote, "the responsiveness to new ideas put forth by new organizations."

He went on to urge the new board "to give openness, responsiveness, and opportunism an equal place on the scale of values that drive grant making of the Public Welfare Foundation."

He ended his memo with a passionate plea to the board to restore two of the foundation's past grant-making priorities: empowering the poor through support of grassroots efforts and international grant making.

As an example of why those approaches matter, he cited Public Welfare's award to the Vietnam Veterans of America Foundation in 1991. The grant was the first the organization had ever received from a foundation, and the continuation of support through the years helped the organization grow so successful that in 1997 it won a Nobel Peace Prize for its global campaign to ban landmines. That's the kind of return strategic philanthropy many hope for but few achieve.

The Public Welfare Foundation lost its heart and soul five years ago over the objections of Tom Scanlon and a couple of other board members. The foundation's leadership destroyed a remarkable legacy Public Welfare had built over time. It is now time for the foundation to rebuild its reputation as a champion of social and economic justice and community change.

The organization's board and staff members should listen carefully to Mr. Scanlon's advice. It is an enormous challenge, one that all of us will be watching. Let us hope that, in Mr. Scanlon's words, the result is sweet, not sour grapes.

Pablo Eisenberg, a regular Chronicle contributor, is a senior fellow at the Georgetown Public Policy Institute. His e-mail address is pseisenberg@verizon.net.