June 16, 2016
The tranquil world of America's foundations is about to be shaken, but if you read the Center for Effective Philanthropy's new study — Sharing What Matters, Foundation Transparency — you would never know it.
Don't get me wrong. That study, like everything CEP produces, is carefully researched, insightful, and thoroughly professional. But it misses the single biggest change in foundation transparency in decades: the release by the Internal Revenue Service of foundation 990-PF (and 990) tax returns as machine-readable open data.
Clara Miller, president of the Heron Foundation, writes eloquently in her manifesto Building a Foundation for the 21St Century: "the private foundation model was designed to be protective and separate, much like a terrarium."
Terrariums, of course, are highly "curated" environments over which their creators have complete control. To the extent that much of it consists of interviews with foundation leaders and reviews of their websites — as if transparency were a kind of optional endeavor in which foundations may choose to participate, if at all, and to what degree — the CEP study proves that point.
To be fair, CEP also interviewed the grantees of various foundations (sometimes referred to as "partners"), which helps convey the reality that foundations have stakeholders beyond their four walls. However, the terrarium metaphor is about to become far more relevant as the release of 990 tax returns as open data literally makes it possible for anyone to look right through those glass walls to the curated foundation world within.
What Is Open Data?
It is safe to say that most foundation leaders and a fair majority of their staff do not understand what open data really is. Open data is free, yes, but more importantly it is digital and machine-readable. This means it can be consumed in enormous volumes, at lightning speed, directly by computers.
Once consumed, open data can be tagged, sorted, indexed, and searched using statistical methods to make obvious comparisons while discovering previously undetected correlations. Anyone with a computer, some coding skills, and a hard drive or cloud storage can access open data. In today's world, a lot of people meet those requirements, and they are free to do whatever they please with your information once it is, as open data enthusiasts like to say, "in the wild."
Today, much government data is completely open. Go to data.gov or its equivalent in many countries around the world and see for yourself.