The leaders of more than 20 nonprofits sent a letter last month to 1,400 foundations urging them to increase the sums they give to organizations that produce research, conduct advocacy, and take other steps crucial to maintaining and extending the overall health and vitality of the nonprofit world.
To enhance their argument, they cited the significance of America's physical infrastructure to the economy. In similar fashion, they wrote, nonprofits depend on robust and well-financed support organizations.
The comparison is inaccurate. Bridges, highways, electric grids, sewer systems, oil wells, and heating plants are the front lines of society, providing the services by which our citizens can live and prosper. Many nonprofit organizations might be considered much more akin to those frontline entities than the associations and organizations that serve them, such as the Council on Foundations, GuideStar, and Independent Sector.
Foundations and other grant makers must therefore take great care in deciding which organizations are worthy of financing. There are many demands for their money that are just as important than the infrastructure groups, if not more so.
Thousands of grass-roots groups that serve minorities and low-income people are starving for funds. Watchdog organizations that we count on to hold government agencies and business accountable rarely get much grant money. Organizing, advocacy, and activist nonprofits are in great demand to push policy makers to deal with America's most urgent challenges, but they, too, lack funds. And many social-service organizations deserve much greater support, as do nonprofits that work on crucial issues in education, the environment, and international affairs.
It's hard to justify taking money away from those groups -- all the more so given the ineffectiveness of the groups that are supposed to be providing crucial advocacy and research to the nonprofit world.
Take a look at America's foundations, for example. They are not dealing with crucial problems, which the Commission on Private Philanthropy and Public Needs -- created in 1973 to improve grant making -- called their primary purpose. More than 70 percent of foundations no longer permit most nonprofits access to their grant making. In their refusal to accept unsolicited proposals, they are making the philanthropic process increasingly undemocratic.
Foundation boards remain bastions of privilege, composed almost entirely of wealthy members from elite professions. For the most part, they still refuse to provide general operating support, which most nonprofits need to maintain their staff and flexibility. Moreover, only a relative handful give funds to organizing, advocacy, and activist organizations. Too many foundations are riddled with conflicts of interest and pay their trustees exorbitant fees. And their procedures are often antiquated and inefficient.
The large foundation support system has proved incapable of addressing these shortcomings.
Neither the Council on Foundations nor the Philanthropy Roundtable has demonstrated any vision or willingness to push members toward higher standards and better practices. For the most part, regional associations of grant makers are no better. The large number of affinity groups of grant makers focused on specific causes -- sometimes jokingly referred to as "infinity groups" -- have added cost to philanthropic performance but little else.
The same can be said for many of the organizations that are supposedly strengthening nonprofits. Foundations have spent a lot of money on Independent Sector, perhaps the most influential of these groups, yet it's hard to see the value of these expenditures.
While Independent Sector has established a useful set of accountability standards, it has spent an inordinate amount of its time and resources fighting to protect the deductibility of charitable giving rather than focusing on issues of greater importance to nonprofits.
The National Council of Nonprofits, which supports the more than 40 state association of nonprofits, has proved to be an effective advocate in statehouses across the country and a champion of important changes in how the federal government pays nonprofits for services. It has seemed reluctant to wade into tough issues like the scarcity of minority leadership among state associations or the challenges local groups face in getting philanthropic gifts. A little more money sent to that organization might help it take on these bigger issues.
Many trade associations, research groups, and think tanks also support nonprofits. So do many single-issue organizations, such as the Center for Community Change (which I used to run), the National Council of La Raza, the Center for Neighborhood Enterprise, the Industrial Areas Foundation, the Leadership Council on Civil and Human Rights, Common Cause, and the Project on Government Oversight.
They and hundreds of other organizations that can be said to form the nonprofit infrastructure deserve to be assessed carefully and objectively by the funding world. No longer is there sufficient money for foundation executives to just underwrite their friends and favorites in the nonprofit sphere. Grant makers need to focus on who's performing the best.
Here are some of the criteria that foundations should use as they decide how to spend scarce resources:
- Select only those organizations that have a track record of success in helping strengthen frontline organizations. Consult regularly and often with groups providing direct services to learn about their experiences.
- Focus not only on the leadership of such groups but on the depth and capacity of their staffs. Don't be fooled by charismatic leaders with little or no substance.
- Determine if the organization is absolutely necessary to the health and survival of those it purports to help. Too often, these groups are doing work that is of only tangential importance.
- Don't support organizations that pay their CEOs inordinately high salaries. Independent Sector paid its recently departed chief executive, Diana Aviv, more than $500,000. The Council on Foundations pays Vikki Spruill more than $450,000. Other groups pay their leaders sums in that range. You can hire fine people at far more reasonable compensation levels.
- Make certain that the groups you underwrite have strong, active boards that are involved in making certain that there is staff oversight and public accountability.
- Avoid granting money to organizations where your buddies or former colleagues hold staff posts or serve on the board, unless those groups meet the criteria of excellence.
Foundation money must be allocated with care and integrity. So let's encourage grant makers to give more scrutiny to their spending and not simply seek an increase in grants to the nonprofits that support the philanthropic world.
Pablo Eisenberg, a regular Chronicle of Philanthropy contributor, is a senior fellow at the Center for Public & Nonprofit Leadership at the Georgetown University's McCourt School of Public Policy. His email address is pseisenberg@verizon.net.