Will the Council on Foundations Be a Change Agent or Just a Trade Group?

The Council on Foundations, the most prominent trade association in the grant-making world, has been in the doldrums for a long time, beset by weak boards, declining membership, a lack of clear values and mission, unsatisfactory services to its member organizations and a failure to stand for principles and ethics in grant making.

Over the past few years, the council has lost well over 200 members dissatisfied with the direction of the organization. And some of the remaining 1,585 members feel they are no longer getting much bang for the big bucks they pay in membership fees, amounting to $55,000 for the very largest foundations and averaging just over $6,000 for most members.

A growing number of community foundations are thinking seriously about quitting, and many family foundations feel they are being neglected. Vikki Spruill, who has led the group the past two years, is increasingly under scrutiny from people wondering what's next for the council.

In speaking to over 45 people who work at foundations and elsewhere in the nonprofit world, I heard a steady refrain of criticism about the council -- past and present -- its board, its structure and its programs. The most common included the following:

  • We're not getting the services we need.
  • We don't know what the council stands for.
  • The council does a poor job of representing foundations to the public and Congress.
  • The organization's finances are a mess.
  • The council doesn't collaborate well with other groups that represent key segments of the nonprofit world.

Yet despite their gripes, almost everyone I interviewed believes the council still has an important role to play and that if it didn't exist, it would have to be created.

They acknowledged that Ms. Spruill has a tough, challenging job in trying to transform the organization into a respected leader. Their reviews of her performance to date were mixed. Members of the council's board were enthusiastic supporters. Others felt she needed more time to accomplish the new strategies, and some were openly very critical, saying she wasn't doing an adequate job.

For years the council has struggled to define its mission and values, to decide, in short, what it wants to be. Should it be just a trade association that provides services to its members? Should it be more of a change agent, helping its members embrace better practices and needed philanthropic reforms? Or should it combine both of these goals?

Ms. Spruill inherited these tensions from her predecessors, and it is not yet clear how she and the council will resolve conflicting strains.

Ms. Spruill, former head of the Ocean Conservancy, took over after Steve Gunderson was fired from the job and the board had appointed Jeff Clarke, a former vice president of the Rasmuson Foundation, as interim leader. By all accounts, Mr. Clarke did an excellent job, and some people do not understand why he was not selected to become the permanent chief executive.

Soon after she was appointed, Ms. Spruill moved quickly to put her stamp on the organization and dismissed a large number of people on the staff, including all the people responsible for the council's conferences. Today the organization has 50 people, down from the 70 it had when Ms. Spruill took over, but she plans to add 14 more in the coming year. [Editor's note: The previous sentence has been amended to note that the council had 70 people, not 100, when Ms. Spruill was appointed.]

To handle the work of the departing staff members, Ms. Spruill hired expensive consultants and other freelance services that cost over $2.6-million in 2012 and almost $5.1-million in 2013. The council also has projected an expenditure for such costs of over $3.3-million for 2014. That spending actually placed the council in a deeper financial hole. The council's operating deficit in 2013 was $2.4-million. (Ms. Spruill said in an interview the council is strong financially already, noting that it has an operating reserve of $10-million.)

According to the council's own five-year strategy plan, a copy of which I obtained, the deficit will remain sizable until 2016, the year in which the council is supposed to reach financial stability.

Some of Ms. Spruill's supporters have painted the financial crisis as a leftover of past practices, and that may be true. But Ms. Spruill's own spending practices seem partly to blame; she could have closed the spigot more tightly.

The five-year plan, which was approved by the board in March but has not been shared with its members, is an ambitious blueprint to transform the council into a leadership institution for foundations with a strong public-policy voice, a growing membership and a network of affiliates, an organization that is financially viable and strong.

The plan calls for three measures to put the organization on a sound financial footing. The first is to add 100 new members over the next few years. The second is to restructure membership dues, lowering the top amount for the largest foundations to $25,000 and slightly increasing dues for other members. The third is to raise large grants from big foundations to carry out new programs. Those three measures all appear to be based on rather tenuous assumptions.

The plan also calls for building a strong philanthropic network; creating a strong leadership-development program; conducting an active public-policy effort, one especially targeted at Congress; and creating an organizational structure that can be more responsive to communications, fundraising and research needs.

One way to start being more responsive would be to share the plan with members, according to several foundation executives and others I spoke to, and I understand that in the coming weeks she plans to start sharing some details The failure to disclose it broadly is certainly not a way to inspire transparency and accountability within the organization.

But it is the effort to build new local networks that is drawing the most irritation. Representatives of the nation's 34 regional associations of grant makers, as well as family and community foundations, say Ms. Spruill has not done much to reach out to them and figure out what they need.

To become more familiar with the concerns of localities and regions, Ms. Spruill is placing at least six council staff members in the regions. The regional associations believe such a move is not necessary, since they say the council could get whatever information it requires from the associations themselves. While acknowledging the importance of the associations, Ms. Spruill says the council needs its staff members spread across the country to assess fully what is going on.

Similar, perhaps even greater, tensions seem to exist between the council and a large group of community foundations that don't feel the council is sufficiently dealing with their concerns, most notably growing calls to regulate donor-advised funds. Community foundations have already hired their own lobbyist in Washington, and some are threatening to cut ties with the council. They are also annoyed that after this year, the council no longer plans to hold an annual meeting focused on community funds and will instead put their concerns on the agenda of the organization's annual meeting for all grant makers.

Ms. Spruill wants the council to engage in the big policy issues about philanthropy with the help of other nonprofits. She also would like to work with governments on issues of mutual concern. (Among the praise Ms. Spruill receives is her appointment of Sue Santa to head government relations work at the council.)

Ms. Spruill cites the council's work with the White House on programs to help veterans and young minority men. Although Ms. Spruill says she is pursuing the goal of expanding the council's outreach to other groups that promote philanthropy and nonprofits, many such organizations -- including those that represent grant seekers -- say that they have had little meaningful contact with the council during the past two years.

The council's weakness in communication can be seen not just in how it talks to its members but also in its approach to talking openly about its basic operations.

When I asked the council for the current salaries of Ms. Spruill and the nine vice presidents, I was told that the organization was legally required to provide only the information included on the IRS form 990 for 2013.

After I pointed out that the salaries included in the 2013 form, including Ms. Spruill's then salary of $410,000, were some nine months out of date and that several of the recently appointed vice presidents were not on the staff in 2013, I received the same answer, namely that the council is not obligated to provide such information. For all its talk about transparency and public accountability, the council apparently is not willing to align its actions with its professed values.

The council's look to the future it not entirely without merit. Most notable in the five-year plan is the council's recognition of the need to develop strong foundation executives, both among current officials and among those of the next generation. Although plans for its career-pathway program are nebulous, such a leadership-development program is sorely needed in a field that, for the most part, has been an intellectual and innovation desert for the past decade.

Another way to stimulate insight and analysis about philanthropy would be to resurrect a publication like Foundation News and Commentary, a magazine the council previously published. Ms. Spruill was open to the idea when I suggested it, and such an effort might be a useful way to bring together donors and grantees to deal with some of the major problems philanthropy will face in the next decade.

But much more than that is needed to focus attention on the important matters of the day.

For instance, many people I spoke to were disappointed that the council remained silent after the recent disclosure that three Bremer Foundation trustees had fired their executive director and given themselves over $1.3-million in trustee fees, an action that placed all grant makers in an unfavorable light.

When I asked Ms. Spruill whether the council would be willing to take a position on major issues in philanthropy, she replied that the organization's role would be to gather its members and other players to discuss and debate the issues but not take a definitive position.

Is it not time for philanthropy to take a stand on the major issues that face both foundations and those they serve? For instance, it should take an active role in addressing the dwindling access to foundations that grantees find both frustrating and infuriating. The question is a matter of inequality and democracy, especially for institutions receiving large tax breaks.

Other issues that deserve attention include whether foundations are distributing enough of their assets and the problems created by the expanding number of megafoundations, which are often governed by just a small number of family members, and the lack of a reasonable oversight and enforcement system by federal and state governments.

Ms. Spruill has strong supporters, many of whom see her as visionary and a tough, determined leader. But she also has many detractors who believe she is following the wrong path and that her leadership is too defensive and top-down, rarely marked by efforts to consult colleagues and constituents.

The challenges Ms. Spruill and the council face are weighty: improving communications, reaching out more effectively to the foundations and nonprofits the organization serves, building a strong financial base and taking a stand on key philanthropic issues. Ms. Spruill, the staff and the board must take steps now to restore the credibility and performance of the council. If they fail to do so, this lost opportunity will damage not just grant makers but all who count on them to make a difference throughout America and around the globe.

Pablo Eisenberg, a regular Chronicle contributor, is a senior fellow at the Center for Public and Nonprofit Leadership at the Georgetown Public Policy Institute. His email address is pseisenberg@verizon.net.