PhilanTopic

Weekend Link Roundup (May 18-19, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Data

We're big fans of data visualization whiz Hans Rosling, and so is Humanosphere blogger Tom Paulson. But, writes Paulson, Rosling "is strikingly upfront about the limitations of data. Sometimes, the problem is that different countries measure things -- like unemployment -- in different ways....In other cases, there are real uncertainties in the data that must be assessed: child mortality statistics are quite precise, whereas maternal mortality figures are not; global poverty measurements are infrequent and uncertain." And so on. Still, when it comes to telling stories with numbers, few can rival Rosling, as the video Paulson embeds in his short post well illustrates.

Education

In a post on the Huffington Post Impact blog, Chris Gabrieli, co-chair of the Time to Succeed Coalition and founder and chair of the National Center on Time & Learning, and Ford Foundation president Luis Ubiñas discuss the progress the coalition, which works to ensure that children in high-poverty neighborhoods have access to more and better learning time in school, has made since its was established a year ago.

Fundraising

On her About.com blog, Joanne Fritz gives a thumbs up to Future Fundraising Now blogger Jeff Brooks' The Fundraiser's Guide to Irresistble Communications. Among the things she liked, writes Fritz, is Brooks' admonition that "our biggest mistake in fundraising is thinking that what we like is what works. We're self-centered, rather than donor-focused. And, frankly, we are soooo off the mark."

International Affairs/Development

On the Mashable site, Casey Brown announces the creation of G-everyone, a "24-hour digital convening" that, on the eve of next month's G8 Summit in Northern Ireland, will unite local groups around the world to discuss the pressing issues addressed at the summit. According to Brown, "G-everyone will provide an open dialogue around the G8's core themes of 'Open Economies, Open Governments and Open Societies.' [And] Mashable will crowdsource the best ideas and thoughts from our community...and report back to the leaders at the [summit]."

Nonprofit Management

David La Piana draws some important lessons from a merger involving two Texas providers of adoption services that ultimately failed to save the weaker of the two organizations. The case, writes La Piana, "offers a reminder that merger is not designed to change the underlying market dynamics an organization faces. A good merger can strengthen management, improve strategic positioning, and bring needed scale, but it cannot move a marginal or declining operation into the black if demand is just insufficient or the economics of the activity don’t pencil out."

Philanthropy

On the GrantCraft blog, Rosien Herweijer takes a closer look at the newest GrantCraft guide, Foundations Moving On: Ending Programmes and Funding Relationships. As Herweijer notes:

All funders somehow have to deal with exits. Venture philanthropist and limited-life or spend-out foundations tend to be very deliberate about exits, but other grantmaking or operating foundations also change strategic priorities, leave fields, or leave countries. And on a smaller scale, project funding ends automatically or -- in rare cases -- has to be withdrawn. You cannot wait for all the complicated questions to pop-up once an exit decision looms. And once you make and communicate a decision to exit, you need a lot of answers....

Social Media

In the latest installment of her Social Good podcast, Allison Fine chats with Jennifer James, founder of Mom Bloggers for Social Good, a network of a thousand women bloggers using their influence to drive attention to a range of social causes.

Transparency

On the Keeping A Close Eye Blog, NCRP executive director Aaron Dorfman compares a three-decades-old report from his organization that ranked and scored more than two hundred foundations on their ability to meet a standard of transparency with a new report from the Center for Effective Philanthropy that surveyed 138 nonprofit leaders on what they'd like to see from foundations in the way of transparency. According to Dorfman, the old NCRP report found that "60 percent of foundations in the sample did not meet an acceptable standard of transparency," while findings in the new CEP report reveal that the more things change, the more they stay the same. "I see many parallel findings between that report and CEP's...report," writes Dorfman.

A full 33 years later, nonprofits are still clamoring for more information about how foundations make funding decisions and they want clear and open communication about priorities. They want to know whether it's worth their time to cultivate a relationship and pursue funding. And despite an explosion of glossy annual reports and fancy Web sites, leaders of grantseeking organizations are still highly frustrated by the lack of clear communication about a central element of foundation activity, namely how foundations decide which organizations to fund....

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a good week!

-- The Editors

Trouble at the IRS: What Were They Thinking?

(David Jacobs is director of foundation information management at the Foundation Center. In his last post for PhilanTopic, he blogged about an Open Data Master Class presented by the World Bank.)

Like many Americans, I was shocked to learn last week that the Internal Revenue Service had targeted conservative and Tea Party organizations applying for 501(c)(4) tax exempt status for additional review prior to last year's elections. And like many Americans, my shock turned to disgust this week as additional details -- including the alleged leaking of confidential donor information -- emerged, showing the scandal to be more serious than initially disclosed.

Regardless of whether you believe what happened in Cincinnati was an act of political malfeasance or just a case of monumental governmental ineptitude, the fact that it did happen should be sending shockwaves through the nonprofit sector. One of the bedrock principals of organized philanthropy and nonprofit advocacy in America is the idea that such activity should be tax advantaged, regardless of cause or political orientation, and that, when it comes to the nonprofit sector, the IRS should always operate in a fair and impartial manner. The thought that that might not be the case in every instance should bother and disturb all Americans.

Some apologists for the agency have tried to rationalize its actions by placing them in the context of the Citizens United decision:

The danger of this frame is that it will discourage the IRS from fully investigating all nonprofit groups spending money to influence elections. And it will distract from the core problem behind the IRS's mess: the post-Citizens United explosion of undisclosed electoral spending.

Before the Supreme Court's decision in Citizens United, only a limited number of nonprofit 501(c)(4) groups could spend money to influence elections -- those who did not take contributions from corporations or unions. But Citizens United lifted restrictions on corporate spending in elections, setting the stage for individuals and companies to funnel unlimited money through all corporations, including (c)(4)s and super PACs in an effort to help elect the candidates of their choice.

While no one questions the propriety of fairly vetting any organization applying for tax-exempt status, let's not get sidetracked and pretend that the issue here is beleaguered workers at the IRS who, in a presidential election year, found themselves swamped by new applications:

It's not like the IRS needs a way to flag the new groups that were created in the wake of the Citizens United decision. They have all the information they need to do that without any special filter. They can search for the date of the application. If what you're concerned about is that most of the new groups being created are in fact thinly disguised electioneering vehicles, then what you want to do is take a random sample of the new groups, review them, and see what percentage turn out to be self-dealing or otherwise engaged in inappropriate behavior.

Instead, the IRS method for dealing with the volume was to take an unrandom sample. And how did they decide that you deserved extra scrutiny? Because you had "tea party" or "patriot" in your name. Since the Tea Party was a brand-new movement in 2010, they couldn't possibly have had any data indicating that such groups were more likely to be doing something improper. So how exactly did they come up with this filter? There is no answer that does not ultimately resolve to "political bias."

One of the reasons I have chosen to devote myself to nonprofits and the nonprofit sector is because I see philanthropy and nonprofit advocacy to be quintessentially American activities. What could be more American, after all, than people gravitating to an issue or problem that concerns them and choosing to work to solve it by starting a nonprofit organization or making a donation to an organization that already exists for that purpose? Which is why I am deeply troubled by the thought that other people, including civil servants at one of the most powerful agencies in the federal government, value that freedom much less highly than I do.

While I realize the Tea Party isn't the most sympathetic or popular movement around, I hope that leaders of the nonprofit sector will speak out to condemn what happened in Cincinnati as strongly as they surely would if the IRS had decided to subject groups with words such as "progressive," "marriage equality," or "pro-choice reform" in their names to additional scrutiny.

What do you think? Were the actions of the IRS a case of political bias or just government ineptitude? And what shold the nonprofits and the sector do to let the Obama administration know that the agency's actions are unacceptable?

-- David Jacobs

Weekend Link Roundup (April 27-28, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

Our friends at the Communications Network have a nice Q&A with Lucas Held, director of communications at the Wallace Foundation, who, among other things, calls Diffusion of Innovations, a theory developed by the late Everett Rogers, "the most useful tool I have ever encountered for communications."

Data

In a long, fascinating piece in the May/June issue of Foreign Affairs, Kenneth Neil Cukier and Viktor Mayer Schoenberger look at the emergence of "big data" and how it's changing the world. "Using great volumes of information," they write,

requires three profound changes in how we approach data. The first is to collect and use a lot of data rather than settle for small amounts or samples, as statisticians have done for well over a century. The second is to shed our preference for highly curated and pristine data and instead accept messiness: in an increasing number of situations, a bit of inaccuracy can be tolerated, because the benefits of using vastly more data of variable quality outweigh the costs of using smaller amounts of very exact data. Third, in many instances, we will need to give up our quest to discover the cause of things, in return for accepting correlations. With big data, instead of trying to understand precisely why an engine breaks down or why a drug’s side effect disappears, researchers can instead collect and analyze massive quantities of information about such events and everything that is associated with them, looking for patterns that might help predict future occurrences. Big data helps answer what, not why, and often that's good enough....

Philanthropy

Kevin Bolduc, vice president of assessment tools at the Center for Effective Philanthropy, shares some lessons from the organization's efforts to scale up a data visualization tool called "Strategy Landscape" and the reasoning behind its decision, announced earlier this week, to pull the plug on the tool. "A few...in particular stand out," writes Bolduc:

The incredible motivation and interest of a few early groups of funders that really craved this kind of information led us to overestimate the demand and believe that examples of use would snowball and generate further enthusiasm. We were wrong. (We should have realized that earlier, and avoided turning a little bet into a somewhat bigger one.) We also didn’t accurately anticipate the level of technological flexibility the tool would need when, inevitably, groups wanted to use the tool differently than we had anticipated. We fell down on both of those counts....

We still believe that visualizing customized information about how grants across foundations roll up into common categories of strategy, geographic targeting, and tactics (policy, direct service, etc.) could be very useful as funders work to address common issues. But this just wasn’t the right tool at the right time....

On the GrantCraft blog, the European Foundation Centre's Rosien Herweijer chats with Luc Tayart de Borms, managing director of the Belgium-based King Baudouin Foundation, about Lucy Bernholz' annual industry forecast, Blueprint 2013, and how it relates to European foundations.

Writing on her own Philanthropy 2173 blog, Bernholz highlights a new Sunlight Foundation article in which the government watchdog argues that e-filing of 990 forms is important because "990 data helps to ensure that the system isn't being abused." Bernholz says there is another reason the data should be made readily available in machine-readable form: American patriotism and pride. "[T]he Canadians do it," she writes, so "shouldn't we?" Indeed, adds Bernholz, the Canadian company Ajah.ca offers both "both federal AND provincial open data on charities, government contracts, and foundation funding."

Social Media

Beth Kanter, co-author of Measuring the Networked Nonprofit, discusses a recent Twitter chat on social media measurement hosted by Zoetica Media and the Robert Wood Johnson Foundation. In her post, Kanter focuses on mapping your network to measure the engagement of network members. As Kanter explains, "Social network analysis maps are useful for helping you understand your network, developing a baseline visual, and identifying strategies for making your network stronger."

Social Media for Social Good author Heather Mansfield has some advice for organizations looking to make their press releases shareable. "I have no proof these tips will help your nonprofit get more media coverage," writes Mansfield, "but at the very least they will help your nonprofit’s press release get more exposure on the social Web." Among other things, Mansfield suggests organizations include their Twitter handle, a photo, and add social networking icons on press releases.

Transparency

Over at Transparency Talk blog, our Foundation Center colleagues share a number of videos from this year's Global Philanthropy Forum that relate to philanthropic transparency in a digital age.

Last but not least, Pablo Eisenberg, in the Chronicle of Philanthropy, and the National Committee for Responsive Philanthropy remember Bob Edgar, president and CEO of Common Cause, who passed away unexpectedly last week at the age of 69. "We are truly grateful that Bob Edgar served on NCRP's board," writes NCRP board chair Diane Feeney. "He was relentless in his work to clean up money in politics, but also to ensure that philanthropy benefited the underserved and marginalized. We will miss him sorely."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a good week!

-- The Editors

How RWJF Tackles the 'Social Media, So What?' Question

(Debra Joy Perez [@djoyperez] currently is serving as interim vice president of research and evaluation at the Robert Wood Johnson Foundation, the largest healthcare philanthropy in the country. The following Q&A was conducted by our colleagues in the Foundation Center's San Francisco office and originally appeared on Transparency Talk, the Glasspockets blog.)

Last year, after Steve Downs, chief technology and information office at the Robert Wood Johnson Foundation, shared a post on Transparency Talk detailing the foundation's social media strategy, we conducted a series of interviews (here, here, and here) with RWJF staff members that explored how social media and, more broadly, the transparency and participation they offer was adding a new, critical dimension to their work.

The latest Q&A in the series, featuring Debra Joy Perez, the foundation's interim vice president of research and evaluation, explores how RWJF's use of social media, which has become essential to its communication efforts, can be measured to reflect the impact of that work in the context of achieving the foundation's larger social change goals.

TT: Give us a quick overview of your work at the foundation in light of these new technologies. Why are social media metrics important to RWJF?

DJP: RWJF has a forty-year history of developing evidence-based programming. We're known for our research and evaluation work nationally and internationally. But as efforts to advance our goals in health and health care have become more reliant on technology, we've struggled with measuring success and accountability.

Since 2009, RWJF has been incorporating Web 2.0 technology into our everyday work, and with the September launch of our redesigned Web site, we now have more social sharing facilitation tools on the site. We're also doing more on on Twitter and Facebook to invite conversation about how to advance health and health care and are producing content to serve the needs of various online communities.

All that activity allows us to clearly see the present and future value of social media, which we believe can help us create social change and build movements around the causes we care deeply about. And, guided by the principles of openness, participation, and decentralization, we have learned a number of important lessons from that work. They include:

• Personal outreach matters;
• Responsiveness to requests for engagement is important;
• Criticism can lead to healthy dialogue;
• Engagement needs to be easy and simple; and
• Real engagement requires work and dedicated resources.

These takeaways underscore the importance of ongoing conversation about the policies and processes needed to achieve our goals. For instance, with each social media campaign, we have to be explicit about our expectations. Metrics are an essential part of that effort. Measurement allows us to see how we're doing against those expectations and to improve our use of social media to achieve our broader goals.

TT: What does an effective social media campaign look like?

DJP: Where to start? Well, you might start by acknowledging what you are already doing with social media and celebrating that. Do you have a Facebook page, an organizational presence on Twitter, a Tumblr? Conduct an inventory of what you are doing as an organization, as well as the level of engagement with your intended audiences. Are staff using social media to leverage their activities? Have they been able to extend the organization's reach? Do they regularly appear on relevant blogs?

As you conduct your inventory, you're likely to begin to realize how much you don't know. That's okay. It's important not to let the "not-knowing" paralyze you. Here are a few tips for doing that:

• Have an explicit dialogue with staff about your organizational goals, what you are trying to accomplish with your social media efforts, the purpose of tweeting something, the specific action or actions you want audience members to take, and so on. And remember, although click-throughs are not themselves an outcome, they are a process measure.
• Identify your networks. You probably already have more of a network than you realize. If you haven't already, read Measuring the Networked Nonprofit by Beth Kanter and KD Paine.
• Schedule a more formal discussion with staff about value proposition. Find out who on staff is adding value and who isn't. Don't expect everyone to tweet. Some people are natural long-form writers and might be better suited for blogging.
• Establish data points for measuring the impact of your efforts.
• Create unique URLs for product releases and then use AB testing to test them against each other to see which is more effective.

Most importantly, remember that social media is a tool, a tool to achieve larger goals. While it can be a very powerful tool, it shouldn't be mistaken for the end in itself.

TT: Do you have an expected ROI for social media?

DJP: As more and more people build trusted networks of individuals and organizations and engage with each other online, we believe social media can really help us extend our reach. It also makes it easier for us to provide our health and health care advocates -- also known as message evangelists -- with the information they need, when they need it. And by making data more accessible through interactives, data visualizations and infographics, we're able to illustrate and promote key messages in compelling ways and do a better job of building awareness.

All of that is worth measuring. But while there are a plethora of ready-to-use analytical tools on the market, the challenge is to avoid the "low-hanging fruit" trap of measuring activity instead of impact. If we do our job correctly, eventually we expect to be able to say what works and what doesn't, and to be able to distinguish our impact online from off.

TT: What's the state of play in terms of social media measurement? And where do you go from here?

DJP: The potential of social is undeniable, and we continue to look for ways to test our assumptions about what we are doing in the space. As the unit responsible for measuring the impact of our work, we regularly ask ourselves questions such as: What are we using social for? Who are our target audiences? (By the way, developing metrics that include audience demographics is an important part of that measurement effort.) What is the action/behavior we want to see? How do we measure behavior change? How can we go beyond measuring online activity -- page views, unique visitors, tweets, retweets -- to measure the impact of that activity on off-line action and policy change?

That is one of the key challenges for philanthropy today. As a foundation accountable to our board and the public, we have to establish goals and benchmarks for our investment in social media just as we do for our programmatic investments. We have to be able to answer the "so-what" question in terms of the investment of staff time and talent in social media. As a sector, we are becoming much more sophisticated in our use of strategic communications to advance our work. Figuring out how to measure social media activity should fit within that broader framework. Fortunately, social media, because it is digital and quantifiable, lends itself to measurement.

As I said, we really believe in this stuff and are working to produce a set of social media indicators in five foundation-focused areas:

• that we are viewed as a valuable information source;
• that we are viewed as transparent;
• that the lessons we learn are disseminated effectively, multiplying our impact beyond our traditional reach;
• that our social media efforts help to increase knowledge, advocacy, and action in key strategic areas; and
• that our social media efforts serve to strengthen and diversify our networks.

There are already some foundations doing great work in this space, and we hope others will join them and us in advancing the field of social media measurement. It's an exciting time.

Board Compensation in Grantmaking Foundations: Reasonable and Necessary?

(Mark Hager is associate professor of nonprofit studies in the School of Community Resources and Development at Arizona State University. This post originally appeared on the Foundation Center's Transparency Talk blog.)

Tradition dictates that board members work for free in most quarters of the nonprofit sector, but that isn't necessarily true for grantmaking foundations, especially independent ones. In a new paper (free access until late March) published in Public Integrity, the ethics journal sponsored by the American Society of Public Administration, Elizabeth Boris and I consider the question of what varieties of grantmaking foundations compensate their board members for governance duties. It reboots and reframes an earlier analysis conducted by the Urban Institute, the Foundation Center, and GuideStar.

In the paper, we point to several interesting examples, including a very large foundation's generous policy of trustee compensation spelled out in its organizing documents, another with seven-figure annual compensation paid to a bank to act as a very part time "institutional trustee," and another that underwent IRS investigation for eye-popping compensation that essentially amounted to trustees looting a charitable trust. These cases aren't typical, but they are part of the big picture of how work gets done in grantmaking foundations and how much insiders get paid to do it. In more typical cases, foundations might have justifiable reasons to compensate board members, including to ensure representation from beneficiary populations or to extend health insurance benefits to family founders. It's the extreme cases, however, that threaten to color all of philanthropy.

Compensation for governance duties is perfectly legal, so long as it falls under the IRS' broad standard of "reasonable and necessary." The practice is pretty rare in community foundations, partly due to the fact that they rely so heavily on public contributions and are therefore subject to public scrutiny. It also appears to be fairly rare in corporate foundations, but that may largely be due to the fact that many corporate foundation trustees get paid as corporate executives, making their compensation invisible on the foundation side. About one in five independent foundations, however, appear to report compensation of their board members for governance duties, as reported on Form 990-PF.

The practice is always concentrated in larger foundations. Of the ten thousand largest U.S. foundations that are the subject of the study, more than half compensate no one, including any staff. Most foundations are small and get their work done by family volunteers. Foundations that compensate staff members are more likely to compensate their board members. However, for the typical foundation, board compensation levels are eminently reasonable. The median individual board member compensation in independent foundations is only about $8,000. That's not an indication of a rampant problem.

However, a few bad apples always threaten to spoil the bunch. The median may be $8,000, but the mean was $15,700 due to a number of well-compensated apples. When a board member's one-year compensation reaches $200,000 (this happens), or a bank trustee is compensated $1,000,000 to spend a few hours a month managing investments (noted above), or aggregate board compensation in a given foundation exceeds its grants in a given year (this happens, too), we might rightly ask whether compensation has exceeded what is "reasonable and necessary." At the same time, $1,000 here and $100,000 there adds up to real money, to the tune of more than $100 million paid out to foundation board members in any given year. People hear that and start asking why that money isn't being allocated to community nonprofits instead.

Who is going to check to see whether board compensation is reasonable and necessary? For many organizations in the nonprofit sector, the general public is the first regulator. Service providers and advocates, especially those that rely on public contributions, reign in compensation and overhead costs due to public pressure. This is not the case with independent foundations, however, since they are not beholden to public contributions. Since the general public has no skin in the private foundation game, the public tends to ignore them.

A second regulator candidate, then, is government. Certainly, the IRS can prosecute private foundations that exceed the vague "reasonable and necessary" standard. Thing is, they don't, at least not very often. For one thing, identification of board member compensation is very difficult on Form 990-PF. For 2008, the IRS revamped Form 990 for public charities so that compensated individuals are identified as board members or employees. No similar revamp happened to Form 990-PF, where administrative and governance duties are conflated. Picking out board members working on governance duties is tricky; board compensation must be inferred from titles or numbers of hours worked, if reported. So, board compensation is not always obvious on the federal form. And even when unreasonable or unnecessary compensation appears evident, the IRS is often unwilling to take on community elites with deep pockets.

The third regulator, maybe, is private foundation executives and board members themselves. That's one of the ideas underlying the Foundation Center's Glasspockets initiative: private foundations will regulate themselves as their practices become more transparent. Private foundations certainly do not need to eradicate the practice of compensating board members for governance duties. However, when outliers cause observers (like me) to raise their eyebrows, the whole field can get painted as out-of-touch with community needs. Maybe Glasspockets can plant a stake in the ground on this issue to encourage foundation leaders themselves to openly disclose this information as a best practice. Voluntary and widespread disclosure of board member compensation, venues for discussion, and bright lights on questionable practices can help stem criticism of compensation that may or may not be "reasonable and necessary" for carrying out the exempt purposes of grantmaking foundations.

Everyone benefits when somebody, somehow, enforces the "reasonable and necessary" standard. Grantmaking foundations will keep better faith with their local communities. Regulators will be able to concentrate on more worthy offenses. And nonprofits will benefit from resources that are otherwise diverted into trustee pockets. Win, win, win.

-- Mark Hager

Weekend Link Roundup (February 16-17, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Arts and Culture

On the Foundation Center's Transparency Talk blog, James Irvine Foundation president and CEO Jim Canales discusses the foundation's new arts strategy, which has received both positive and negative feedback from the nonprofit community. "I admire those who have stepped forward to criticize aspects of our strategy, whether they believe it is wrong on its merits or they view it as yet another example of 'strategic philanthropy' gone awry, where we are dictating and imposing our solutions upon the field," writes Canales. "That is certainly not out intention.

What is different for us in our new Arts strategy is that rather than continuing with a broad-based approach that funded projects across multiple objectives, we made the strategic decision to direct our finite resources in a way that, in our view, will best position the arts field for future viability and success. In doing so, we are openly expressing a point of view about how we think the field must evolve to ensure its dynamism and relevance. Yet, we are very clear about our willingness to learn with our partners in this effort, to refine our approach accordingly, and to help to advance the field's understanding of the many ways to engage a broader cross-section of Californians (in our case) in the arts....

So, please keep the ideas, observations and critiques coming. It's the best way to ensure we can achieve the end we all agree upon: a vibrant, relevant and successful arts field....

Fundraising

The Mertz Gilmore Foundation and NYU Wagner's Research Center for Leadership in Action have issued a new report, Beyond Foundation Funding: Revenue-Generating Strategies for Sustainable Social Change (84 pages, PDF), that's designed to aid social change organizations, funders, and technical assistance providers in discussing and implementing different fundraising and revenue-generating practices.

Future Fundraising Now blogger Jeff Brooks has a few choice words for fundraising consultants who show up at sector conferences with slick PowerPoint presentations designed to shame attendees into contracting their services, but who never, ever reveal whether the campaigns they are so proud of creating actually worked or not.

Impact/Effectiveness

On her blog, Beth Kanter has a few tips for nonprofits struggling to measure "difficult stuff" like social media results and success. Among other things, Kanter suggests that organizations spend time "brainstorming the 'chain of events' of how your organization's strategic use of social media can be a pathway to your organization's overall definition of success or mission."

The Weakonomist reflects on a recent Wall Street Journal article from Bill & Melinda Gates Foundation co-chair Bill Gates in which Gates described how his foundation is working to improve measurement of the problems it has set out to tackle, which in turn improves its understanding of a problem. An approving Weakonomist notes that while "Measuring a problem is sometimes more difficult than finding the solution...this is where more work should be focused."

On the Center for Effective Philanthropy blog, Mark Russell takes issue with Gates' argument, which Russell says "reinforce[s] the myth that if only nonprofits would follow the business model, the world would be a better place." Russell goes on to point out that there are any number of measurements that businesses don't track, such as the chemicals used in the hydrofracking process and how those chemicals might affect local residents, and/or information that businesses don't share about the things they do track, such as "who pays for [the] data (and who benefits)." And he closes by reminding us why key stakeholders need to be involved in any measurement process:

In short, to be data savvy is to be a bit of a data skeptic. As [MathBabe blogger Cathy] O’Neill says, there's "power behind a data collection process." Part of that power is to choose what to measure, based on values, or biases, or simply limited resources. As Fay Twersky, director of the Effective Philanthropy Group at the William and Flora Hewlett Foundation, puts it:..."We cannot evaluate everything, so we choose strategically...."

And in a long piece over at The Nonprofit Quarterly, Rick Cohen argues that mission-related investing is "worthy of recognition and support not just by nonprofits managing large endowments, but by mainstream nonprofits concerned about maximizing the capital markets' support of socially beneficial investment opportunities."

Journalism/Media

On the Humanosphere blog, Tom Paulson weighs in with a thoughtful consideration of the Bill & Melinda Gates Foundation's "strategic media partnerships and concludes that

as journalists and news organizations come to depend increasingly on philanthropies like the Gates Foundation for financial support, it is even more important than ever that we stay focused on our main job -- arguably, pushing for critical analysis and accountability -- and tread carefully when asked to strategically partner with even the most well-intentioned humanitarian in promoting a cause...or solution.

Philanthropy

On the GrantCraft blog, Lisa Philp, the Foundation Center's vice president for strategic philanthropy, discusses the genesis of Next Gen Donors: Shaping the Future of Philanthropy, a companion piece to the just-released Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy(80 pages, PDF), which found that high-net-worth Gen X and Geny Y (Millennial) individuals are keenly interested in structuring their philanthropy around personal values, measurable impact, and hands-on engagement. A project of GrantCraft, the Johnson Center for Philanthropy at Grand Valley State University, and 21/64, the companion report highlights the "practical wisdom" and insights of next-gen donors with respect to their interest in engagement, new ways of learning, and making a difference sooner rather than later.

Transparency

On her Philanthropy 2173 blog, Lucy Bernholz reflects on two recent examples of a foundation confronting its critics publicly. In the first, Irvine Foundation CEO Jim Canales (see above) linked directly to bloggers critical of Irvine's new arts strategy. And in the second, the Knight Foundation said it regretted paying Jonah Lehrer, a journalist who was caught plagiarizing by his employer, The New Yorker, and subsequently fired, $20,000 to speak at a recent Knight-sponsored media seminar. Bernholz said she found herself

considering these two events from a few steps further back. We criticize foundations for being opaque, and mostly they are. Steps toward transparency aren't going to be easy (sounds real good if you say it real fast). Both of these examples involve foundations actually in conversation with publics they could (easily, legally, and rather comfortably) ignore. The more important question for all us may be -- why is that the case?

Water/Sanitation/Hygiene (WASH)

Over at the WASHfunders.org blog, our FC colleagues Nina and Seema share a three-minute video in which Water.org co-founder and award-winning actor Matt Damon pledges to stop using the toilet until more people take the issue of water scarcity seriously. "Aside from publicizing WASH issues, the video aims to inspire people to action," they write, "[and] directs viewers to a new web site, strikewithme.org, where they can learn more about the crisis, and donate their money and social media accounts to the campaign."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And enjoy the long weekend!

-- The Editors

Weekend Link Roundup (February 2-3, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Diversity

Writing on the National Committee for Responsive Philanthropy's Keeping a Close Eye blog, Owen Dunn shares highlights from remarks made by Karen Kelley-Ariwoola at a meeting of the Association of Black Foundation Executives in April 2012. In her remarks, Kelley-Ariwoola, a former vice president of community philanthropy at the Minneapolis Foundaton, describes her work with community groups to address racial equity issues in a region where many white people thrive while "low-income people of color suffer from disparities on every indicator."

In celebration of Black History Month, Center for High Impact Philanthropy program manager Autumn Walden chats with Sherrie Deans, executive director of the Admiral Center, about philanthropy in the African-American community, which, argues Deans, is an "important yet overlooked part of black history."

Gun Violence

Getting Attention's Nancy Schwartz suggests that nonprofit communicators can learn a thing or two from former Congresswoman Gabrielle Giffords' appearance before the Senate Judiciary Committee last week. Giffords, who was critically wounded by a deranged gunmen at a public event two years ago and has been fighting to recover from her injuries, slowly but clearly articulated her message that the time has come to address gun violence in America. "We must do something," Giffords told committee members. "It will be hard, but...[y]ou must act. Be bold. Be courageous, Americans are counting on you."

Nonprofits

In a post republished on Beth Kanter's blog, Beth Noveck, former U.S. deputy chief technology officer for open government, discusses findings from Information for Impact: Liberating Nonprofit Sector Data, a recently published report she co-authored with Daniel Goroff, program director at the Alfred P. Sloan Foundation. In the report, Noveck and Goroff argue that Form 990 data should be made available to the general public at no charge and in a format that lends itself to "doing aggregate analytics, creating visualizations and building analytic tools." In turn, writes Noveck, that "will enable more innovators, researchers, and entrepreneurs to use the data to benefit the sector."

To learn more about open data, the report, and the Aspen Institute's Program on Philanthropy and Social Innovation, which commissioned the report, check out this video of a recent panel discussion featuring the authors; Jonathan Greenblatt, director of the White House's Office of Social Innovation and Civic Participation; and Aspen's Jane Wales and Cinthia Schuman Ottinger. (Running time: 1:46:04)

Philanthropy

On her Nonprofit Marketing Blog, Katya Andresen shares findings from a recent report on "nex-gen" donors issued by the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University and 21/64, a nonprofit consulting firm. Among other things, the report, Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy (80 pages, PDF), found that high-net-worth Gen X and Geny Y (Millennial) individuals "care about impact and want to feel personally tied to the causes they support. Family heavily influences their choices of causes....[And they are serious]...about making real change and how heavily they use technology to engage with causes."

On the Council on Foundation's What Matters Now blog, Michael Bzdak, director of corporate contributions for Johnson & Johnson, applauds Bill Gates' call for a more thoughtful and holistic approach to measurement. "Implicit in Gates' essay," writes Bzdak,

is the fact that funders and grantees require the capacity and proficiency to set clear goals and design the means to measure progress. This shared responsibility creates an opportunity for meaningful dialogue and collaboration and could deliver the innovations in measurement that Gates suggests. Although measurement can be very complex and difficult, grantmakers have a responsibility to make it one of their core competencies....

For more on the emerging field of data-driven philanthropy, check out the remarks by self-described data wonk Lucy Bernholz at a recent Girl Geek Dinner. (Running time: 19:10)

Social Entrepreneurship/Innovation

Jane Chen, the CEO and co-founder of Embrace Innovations, a social enterprise that has developed a low-cost infant warmer that regulates the temperature of vulnerable newborns without the need for constant electricity, explains on the Harvard Business Review blog network why she decided to split the enterprise into two organizations: a nonprofit arm that would own the intellectual property for the technology, take philanthropic contributions, and build an ecosystem around which Chen and her colleagues could help promote newborn health; and a for-profit arm that would raise money from venture capitalists.

In her monthly "10 Great Social Innovation Reads" post, Social Velocity's Nell Edgington shares links to four different sets of predictions for the coming year, an article by Matthew Forti and Colin Murphy in the Stanford Social Innovation Review about what President Obama's successful reelection campaign can teach nonprofits about measurement, and a post by Foundation Center president Brad Smith about the unique freedom of foundations "not to forget" those whom society has forgotten.

Transparency

On the Foundation Center's Transparency Talk blog, Jacqueline Ackerman, project coordinator for the Million Dollar List at Indiana University's School of Philanthropy, explains why the list is useful to high-net-worth donors, nonprofits, the media, and the general public. "Perhaps the most significant benefit of the [list] is that it promotes transparency in philanthropy," she writes. What's more,

Donors have provided their own information to the [list] in order to help provide a clearer picture of patterns and trends in million-dollar gifts. At the same time, the [list's] transparency offers donors the opportunity to leverage and coordinate their giving in supporting particular organizations or causes....

Women and Girls

Finally, on the Impatient Optimists' blog, Melinda Gates looks beyond the 2015 target date for achieving the Millennium Development Goals to share the different hopes and visions of prominent activists in the space for 2030.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- The Editors

The Power of Sharing: Why VNA Foundation Joined the Reporting Commitment

(Rob DiLeonardi is executive director of the Chicago-based VNA Foundation and co-founder and former chair of the Association of Small Foundations, a national organization of grantmaking foundations holding over $60 billion in assets. In addition to his responsibilities as a grantmaker, DiLeonardi has a longstanding interest in foundation transparency and outcome sharing; VNA's Web site and annual reports have received eight Wilmer Shields Rich Awards for Excellence in Communications from the Council on Foundations. This post originally appeared on the Foundation Center's Transparency Talk blog.)

During the two decades I've worked for and with small grantmaking foundations, I've addressed problems ranging from healthcare access to domestic violence to homelessness. One of the most vexing problems I've faced over the years, however, relates not to the subject matter of my grantmaking, but rather to the results of it. Time and again, I've helped develop a grantmaking program to address a particular problem, only to find out after the fact that another foundation was funding the identical issue, often with a remarkably similar approach, in the same or a nearby area. We were addressing the same need, often via the same method, but doing so in blissful isolation. In short, we were reinventing the wheel, sometimes only a few miles apart.

Similarly, our foundation's board and staff have often wondered about latest funding trends. With only a limited number of dollars in our coffers, we want to spend them in the most effective possible way. It would be helpful for us to know exactly where other philanthropic dollars were being directed, both geographically and programmatically, as this knowledge would aid us in filling a gap or funding a complimentary niche -- a favorite strategy to maximize the impact of our grantmaking.

For these reasons, over the years I've tried many different approaches to ensure that the staff of the VNA Foundation is aware of other funders' work and that they are aware of ours. We subscribe to many electronic and hard-copy newsletters, periodicals, and reports. We attend local, regional, and national conferences and networking groups. We convene grantmakers and grantees around common challenges, and encourage dialogues about successes -- and failures -- in addressing them. And we work hard to make our Web site an interactive, timely, and appealing resource. Yet, despite these various efforts, both the grantmaking data we share and that which we receive is often either stale (months or sometimes even years old by the time it reaches end users) or lacking the key details to make it useful.

My interest, therefore, was quickly piqued when I learned of the Foundation Center-supported Reporting Commitment, and the opportunity for the VNA Foundation to become a participant in it. The Reporting Commitment finally allows foundations the opportunity, and the mechanism, to release grant information in a consistent, open, and frequent manner. Although the commitment's founding participants were large foundations, as soon as I became aware of the initiative I knew there would be value in participation by foundations of VNA's size. Small to medium-sized foundations are far more common in number, size, and grantmaking level than their larger brethren. In fact, small foundations account for approximately half of America's total foundation grant dollars, and often provide the kind of essential local support that impacts lives on a daily basis.

In addition, most observers judge foundations by their effectiveness, efficiency, and transparency, not their asset size. Participation by smaller foundations like VNA (foundation philanthropy being one of the few settings in which a $50 million bank account is considered "small") is key, in my opinion, to making the Reporting Commitment's impact felt in more than a handful of sectors.

I am delighted to say that the VNA board of directors immediately saw the value in our participation in the Reporting Commitment, and my colleagues at peer foundations are seeing the light as well. All across the country, every day, foundations large and small are working to bring about small miracles or serve as catalysts for systemic innovation. With the help of the Reporting Commitment, perhaps our field finally has a mechanism by which that work can effectively be shared with colleagues and the public alike.

-- Rob DiLeonardi

Weekend Link Roundup (January 26-27, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Diversity

On the Tides Foundation's What's Possible blog, Toby Thompkins asks some thought-provoking questions about African Americans and U.S. history to remind us that "Martin Luther King, Jr. Day is not just a day for or about black Americans; it is a day for and about all Americans."

Governance

On her Social Velocity blog, Nell Edgington shares five questions to get your board "moving." They include: Why do you serve? What do you bring to our organization? And what do you want to contribute financially?

Impact/Effectiveness

Are we on the threshold of a new economic movement "that will result in all investors -- individual and institutional -- committing at least some portion of their investable assets to social impact"? Lisa Hall, president and CEO of the Calvert Foundation, believes we are, and in an essay in GreenMoney she explains how impact investing is driving that paradigm shift.

In a guest post on the Forbes blog, Kayleigh O'Keefe, associate director at the Corporate Executive Board, shares a "three-step method for "converting passive support into lasting partners":

1. For each of your key stakeholder groups, define a specific desired behavior.
2. If a certain stakeholder group is not doing what you’d like them to, determine why.
3. Focus your efforts o n removing the barrier to the desired behavior change.

Philanthropy

In a deeply thoughtful piece on the Nonprofit Quarterly site, longtime Public Welfare Foundation board member Thomas Scanlon reflects on the benefits and pitfalls of "strategic" philanthropy. A must-read for anyone who works in the sector.

In a similar vein, Center for Effective Philanthropy president Phil Buchanan, writing on the Harvard Business Review blog, argues that capitalism, while good at lots of things, is pretty bad at many other things -- which is precisely why an advanced capitalistic society like the United States has a nonprofit sector. Another must-read for all who work in the social sector.

On FSG's Social Impact blog, FSG board member and Global Philanthropy Forum president Jane Wales takes a closer look at philanthropy in Asia and sees a sector that, while experiencing some growing pains, has unlimited potential.

On its Philanthropy Potluck blog, the Minnesota Council on Foundations shares highlights of an open letter released by the Minneapolis-based McKnight Foundation in which the foundation announced that it plans to distribute $79 million in grants in the coming year and will finalize an additional $25 million in grants -- part of a larger $100 million commitment -- in support of organizations working to address climate change and encourage the development of renewable energy.

Social Media

Following up on her post about twenty-nine nonprofit bloggers to follow on Twitter, Social Media for Social Good author Heather Mansfield shares a list of twenty-nine nonprofit resources to follow on the microblogging site.

Transparency

At the Foundation Center's Transparency Talk blog, Rob DiLeonardi, executive director of the Chicago-based VNA Foundation, explains why there is value in small foundations like VNA signing on to the center's Reporting Commitment initiative. Writes DiLeonardi:

Small to medium-sized foundations are far more common in number, size and grantmaking level than their larger brethren. In fact, small foundations account for approximately half of America's total foundation grant dollars, and often provide the kind of essential local support that impacts lives on a daily basis.

In addition, most observers judge foundations by their effectiveness, efficiency, and transparency, not their asset size. Participation by smaller foundations like VNA (foundation philanthropy being one of the few settings in which a $50 million bank account is considered "small") is key, in my opinion, to making the Reporting Commitment's impact felt in more than a handful of sectors....

Women

Forty years after the Supreme Court protected a woman's right to an abortion in its landmark Roe v. Wade decision, "a quick look at the recent past demonstrates the tenuous status of a woman's right to choose, in spite of the fact that a majority of our population supports the Court's decision," writes Niki Jagpal on the National Committee for Responsive Philanthropy's Keeping a Close Eye blog. Philanthropy can help protect a woman's right to choose, adds Jagpal, by stepping in "when groups such as Planned Parenthood come under attack from right-wing politicians or by supporting state groups like Reproductive Services.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!

-- The Editors

U.S. Foundation Archives: An Endangered Species (Part 2)

(John E. Craig, Jr. is executive vice president and COO of the Commonwealth Fund. Read the first post in this two-part series here.)

In an earlier post, I reported on the findings of a December 2012 survey by the Commonwealth Fund of foundations' current archiving practices. It is of considerable concern that no more than 20 percent of even large foundations (those with assets of $240 million or more) maintain archives, given the importance of historical records to researchers and helping to assure accountability and good management in the sector.

A review of the literature, the survey findings, and conversations with leading archivists and foundation officers suggest ways in which the state of archiving in the foundation sector could be improved. Here are a dozen for your consideration.

1. The number of foundations currently maintaining archives is far fewer than it should be, and foundation boards and executives should give more attention to the issue than they do now. Audit and compliance committees of foundation boards should ensure that at least the short-term records-retentions policy required by Sarbanes-Oxley is developed and enforced and should take an active role in seeing that the question of archiving important records is addressed at the board level.

2. Chief executive officers of foundations should see one of their responsibilities as assessing the foundation's need for archives and, if the decision is affirmative, delegating clear responsibility for their development and maintenance.

3. Boards and managements should see that resources are set aside as needed to achieve archiving objectives. The 2012 survey reveals that most foundations will find that maintaining archives, if done efficiently, is not a major expense.

4. Every foundation should have a stated archiving policy -- even if it is "none" -- to ensure that the question has been addressed. Policies should specify which records are to be preserved, archiving model to be pursued (in-house vs. outsourced), access guidelines and restrictions, and guidelines for paper and electronic preservation. Archiving policies should ensure that the intensity of the archiving effort varies with the potential value of materials to users. The policy should be reviewed every five years to ensure that it keeps up with advances in information storage technology.

5. Archives are a "glasspockets" issue, and the Council on Foundations should be encouraged to include maintenance of archives among its best-practice guidelines for foundations above some minimum endowment size.

6. Outsourcing the archiving function to an external archive center is a viable option that many foundations, including multi-billion dollar ones, should consider. The choice of external center, however, must be made with care and performance monitored regularly. Important questions include the following: Do the foundations or other organizations that are currently donating archival records to the external center share similar objectives and expectations? Does the external center have other significant collections that provide a valuable context for the foundation's archive? Can the center meet the foundation's expectations regarding the speed with which records are processed, provided with online finding aids, and opened to researchers? Does the archival institution have the capacity to manage the long-term preservation of digital records and to provide access to them?

7. Many foundations, especially small and newer ones, may find that their archiving objectives going forward can be met with cloud-based content management systems that can be adapted in various ways for use by external researchers.

8. Two-thirds of larger foundations were established after 1989, but youth should be no excuse for postponing the question of whether to archive or not. Indeed, young foundations are in the enviable position of being on the ground floor with respect to technology and often start out with state-of-the art information systems in which virtually all their records are kept digitally. Under these circumstances, archives are almost a natural byproduct of a good information system and entail minimal marginal cost.

9. Spend-down foundations are prone to establish archives, but they often confront the issue only as the date of their sunset becomes imminent. Ideally, the question should be addressed early in a foundation's life.

10. Information technology staff of foundations should have as one of their major responsibilities the development of systems within the foundation that advance archiving objectives. They should work closely with the external archive center, when the foundation uses one, to coordinate and promote IT initiatives.

11. An affinity group of foundation officers with responsibility for archives (in-house or outsourced) would greatly advance the spread of best practices in the sector. Foundations without archives reported in the 2012 survey that if there were a foundation-led group developing archiving standards and guidelines and providing information on consultants and experienced-based advice on technical issues, they would be better equipped to activate nascent plans for establishing archives.

12. Most importantly, consideration should be given to development of archive cooperatives by a consortia of foundations with common interests and archiving objectives. It is doubtful that existing archive centers have the capacity to take on large numbers of new foundation clients. Given the enormous number of foundations, inter-regional differences, and frequent commonality of interests at the regional level, multiple foundation archive coops might well be easier to launch and operate than a single national one. If the concept were to be judged promising, it could be piloted and capitalized by a few very large foundations in an "early adopter region" -- with replication of the model in other regions justified by the experience of the pilot.

In giving inadequate attention to the preservation of its historical records, the foundation sector is shortchanging historians and researchers of public policy, social movements, and important institutions and individuals who made a difference in their time. Above all, foundations are shortchanging themselves, by not ensuring that records exist for learning from experience and demonstrating their worth to society. It's time for the sector to address these shortcomings.

-- John E. Craig, Jr.

The Archives of U.S. Foundations: An Endangered Species (Part 1)

(John E. Craig, Jr. is executive vice president and COO of the New York City-based Commonwealth Fund, a private foundation that works to "promote a high performing health care system." A version of this post originally appeared on the Foundation Center's Transparency Talk blog).

A foundation's archives preserve records of the programs, activities, products, governance, people, and history of the organization that may have enduring cultural, historical, research, or institutional value. Yet despite the important role archives play in a field that focuses on investing in ideas, a recently released survey about foundation record management practices reveals that only a small minority maintain foundation archives. Clearly, there is a need to make a case for why foundations should devote resources to archive development and management. And there are at least six compelling reasons for why foundations should give their inactive files and historical records serious attention.

1. Historical Research on Social and Economic Developments and Influential Institutions and Individuals.
The late Paul Ylvisaker described philanthropy as "America's passing gear," and foundations serve this purpose in numerous ways: by helping to launch movements (such as civil rights, environmental protection, or health care reform); by developing new institutions and strengthening existing ones; by making society more inclusive through support of programs to improve the lot of vulnerable populations; by building up the knowledge base for social improvements and scientific advancement and, through the support of individual researchers, contributing to the nation’s intellectual capital; and by strengthening the social fabric and physical capital of the communities in which foundations operate. In the hands of good researchers, the records of foundations can provide guidance for future generations in tackling new and continuing social problems. For example, no history of the civil rights movement would be complete without access to the permanent records of the Ford Foundation; no history of the development of the "miracle" rice strains that sparked the Green Revolution, which helped transform Southeast Asian societies in the 1960s and 1970s, would be complete without the records of the Rockefeller and Ford foundations; and no history of the healthcare reform legislation of 2010 would be complete without the records of the Commonwealth Fund, the Kaiser Family Foundation, the Robert Wood Johnson Foundation, and other national and regional healthcare philanthropies.

2. Promoting Accountability in the Foundation Sector
The permanent records of foundations help foster accountability among this very privileged group of institutions. Foundations, given their exemption from most federal and state taxes, owe it to the public to provide clear and accessible records of how they have conducted their business and what they have accomplished -- records that enable rigorous independent assessments of the impact of foundations’ strategies and programmatic investments.

3. Protecting the Foundation Sector and Defending Institutions from Misinformed Attacks
Individual foundations and the sector as a whole periodically come under attack -- by regulators, elected officials, the media, or academics. In the absence of good historical records, foundations are at risk of not being able to make their case for being tax-exempt convincingly, or they may simply be caught flatfooted in being able to produce records of their accomplishments and actual behavior.

4. Facilitating Strategic Planning and Fostering a Learning-from-Experience Culture
Archival records enrich the research base for consideration of foundations' future directions and help ensure program continuity. The lessons from earlier experience that they hold can help prevent strategic and tactical mistakes by current and future foundation managers.

5. Ensuring Institutional Memory and Sense of Accomplishment
Permanent archives are also a primary source for the institutional memory that is vital to learning organizations, as well as for the institutional pride that ensures the strong staff morale needed to achieve high performance.

6. Good Management and Administrative Efficiency
Finally, the care given to archives is a beneficial operational discipline, with orderly archives being a reflection of efficient office practices and good management. Inactive records are not allowed to pile up and get in the way of current files and information from inactive files can be retrieved quickly when needed.

2012 Survey of Foundation Archives

As important as archives are for good foundation management, a confidential December 2012 survey of the three hundred largest foundations conducted for the Commonwealth Fund by Mathew Greenwald & Associates found that, even among very large foundations, no more than 20 percent maintain archives. (The survey findings are reported on the Commonwealth Fund Web site.) The surveyed institutions account for approximately 52 percent of the foundation sector's endowment assets, including private, community, corporate, and operating foundations. Among the responding foundations, those with larger endowments and staffs, as well as those that are older, were found to be more likely to maintain archives.

The survey revealed that only 37 percent of the non-archiving large foundations have formal short-term records-retention policies, as required for nonprofits under the 2002 federal Sarbanes-Oxley legislation -- suggesting worrisome laxness or informality with respect to institutional record-keeping within the sector.

The survey also found that most large foundations without archives warehouse their historical records, at least for a time (48 percent), and that many simply allow files to accumulate in their offices (Exhibit 1). While 20 percent of this group chose "doubt the importance of historical records" as a major reason for not maintaining archives, neither cost, privacy, nor confidentiality was identified as a major reason for not maintaining an archive. A sizable number of foundations cited their relatively young age as contributing to their failure to set up archives, explaining that the issue is either something they have not gotten around to or have not needed to address thus far.

For large foundations that do have archives, the survey found that two-thirds manage them in-house; 17 percent place their historical records with independent nonprofit archive centers; 9 percent place records with a historical society, museum, or research library; and 7 percent place them with a university or college archive (Exhibit 2). An example of a very large foundation that historically managed its archives internally but recently switched to the outsourced model is the Ford Foundation. In 2012, Ford selected as its repository the Rockefeller Archive Center, the independent archive organization most often used by large foundations, including, since 1985, the Commonwealth Fund.

In addition, many foundations that maintain archives indicated that they put all important records in them. Foundations generally follow traditional archiving practices in preserving program files, foundation publications, public relations documents, organizational records (for example, board and committee minutes), key administrative records, and, if they have them, photographs, documentaries, and videos. Most institutions do not archive declined proposals and no longer attempt to keep traditional archival material such as officers' calendars. External archive centers typically do not accept financial or human resources records, owing to lack of space and to processing priorities. Most foundations with archives (80 percent) are not preserving important e-mail correspondence, and over half are not archiving Web site information.

Most foundations restrict researchers' access to their archives, but nearly half will permit access if the research objective is deemed worthwhile (Exhibit 3). About a third (31 percent) routinely open their archives to researchers. The most common restriction is on access to administrative records.

The survey also found that the cost of archives varied with foundation size, age, and the nature of the foundation's work. For a 94-year-old, $650 million foundation with extensive intramural program operations and publications like Commonwealth, the annual cost of maintaining an archive is about $100,000. The mean annual cost reported in the survey was $60,000.

Like other institutions, foundations see their archiving system at risk of being overwhelmed by an influx of materials. Even so, foundations with archives seem to be keeping up with the paper flow relatively well: two-thirds say that at least 75 percent of records sent to archives have been processed. And many foundations with archives are using their own information technology systems to advance their archiving objectives, with some quite advanced in doing so. That said, over half of survey respondents say that IT system improvements could improve their archiving performance, while half expect that, over time, their archives will be primarily electronic (Exhibit 4).

Finally, most foundations with assets under several billion dollars find that outsourcing their archives to an external center is more efficient than attempting to build a professional internal archives unit. The survey found that half of foundations using external archives centers find the services, overall, to be "very good" to "excellent," while another 35 percent rate the services "satisfactory." Echoing challenges facing the archiving profession, the chief areas of concern among foundation officers are the timeliness of such centers in processing materials and their ability to use information technology to maximum advantage.

Clearly, the state of foundation archives is a neglected "glasspockets" issue in the sector. In a follow-up post, I will present some recommendations for improving the archiving practices of foundations.

-- John E. Craig, Jr.

“Beep, Beep”: The Sound of Philanthropy and the Social Economy in 2013

(Bradford K. Smith is president of the Foundation Center.)

"We will change what we do with and without institutions, and we will change how our institutions (funders, nonprofits, and others) work." So predicts self-described philanthropy wonk Lucy Bernholz in Philanthropy and the Social Economy: Blueprint 2013, a must-read roadmap available for the first time as a GrantCraft publication. "Beep, beep." Wile E. Coyote (me, nonprofit executive) has just been left holding a burning stick of dynamite while the Road Runner (Lucy, blogger extraordinaire) races headlong onto her next prediction. That is the true value of Blueprint 2013 for those who are busy running the institutions that make up the "social economy": Lucy has seen the future for us, and now we must struggle to adapt, respond, and innovate. The data- and technology-driven future she envisions is both exhilarating and a bit unsettling, but one thing is clear: the Silicon Valley credo is fast approaching the staid world of philanthropy: "Disrupt yourself or be disrupted."

The vast majority of today's social sector leaders grew up in a world where foundations were the funders and nonprofits were the doers. Blueprint 2013 lays out a vision of a social economy inhabited not only by traditional nonprofits, but also by social businesses, socially responsible corporations, peer networks, and institutional forms not yet invented. Donors in this economy have choices between well-known forms of charitable giving (like creating a foundation), impact investing, and political giving to bring out the change they desire.

Running throughout the social economy is the lifeblood of data. In 2012 alone:

• GuideStar and the Nonprofit Finance Fund released an online tool for comparing the financial health of nonprofits;
• 15 of the largest U.S. foundations teamed with the Foundation Center to launch the "Reporting Commitment," making their grants data available in open, machine readable form; and
• the China Foundation Center started rating more than 2,000 Chinese "foundations" with an elaborate Transparency Index.

These are but a few of the examples included in Blueprint 2013 to illustrate how "new data-driven insights will become a first step, an input, into the practical work of decision-making." Lucy notes that the "next step in using social economy data is for community organizations and funders to join in this ethos of using, sharing, comparing, and contrasting data and tools."

While fast-developing technology makes it easier by the minute to collect, access, analyze, and visualize data, unresolved issues loom on the horizon. "Nonprofits in the future will be defined by how they use their data for public good while protecting the personal privacy rights of all who contribute that data." Data use, ownership, and access rules will be as definitional for the social economy in the 21st century as the charitable deduction was for nonprofits in the 20th century. Blueprint 2013 urges the social sector to take the lead in setting standards for collecting, using, storing, and sharing individual data in ways that thread the needle between personal control and social good. The Worldwide Initiative for Grantmaker Support (WINGS), a federation of some hundred and forty philanthropy support organizations around the world is doing just that by promoting a global philanthropy data charter much like that already adopted in the field of health.

Not all of Lucy’s predictions are about the shimmering world of data and technology. Something everyone in our sector cares about -- the charitable deduction -- is also on her radar: "They (Congress) will set lower limits for charitable deductions." Others -- "Civic crowdfunding will grow and may exacerbate inequality" -- require serious debate and reflection. But among the rich density of Blueprint 2013, the most interesting thought comes toward the end in a section entitled "Glimpses of the Future": "We still need to think about what purposes we want served and what the right mix is of institutional and financial systems to accomplish those goals." Lucy laments that a narrow focus on maintaining the tax deductibility of charitable gifts will crowd out a much-needed and broader discussion about "the most effective ways to provide incentives for private involvement on behalf of the public benefit."

In this regard, perhaps philanthropy and the broader social sector cannot escape the largest question facing our global community -- what kind of world do we want? Data, technology, institutional forms, and regulation are tools to be used to create a better world. While no one expects a return to the failed welfare states of the 20th century, we still need a destination. Otherwise all of our networking, crowdsourcing, analytics, social entrepreneurship, and innovation will occur in a vacuum where change, though sometimes inspiring, will ultimately be retail. Aspiring to something greater requires the kind of thought and questioning contained in Blueprint 2013: a roadmap filled with tantalizing glimpses of where we might be able to reach. As the fuse grows shorter, defining the destination is our responsibility.

-- Brad Smith

No Truth or Consequences

(Mark Rosenman is an emeritus professor at the Union Institute & University and directs Caring to Change in Washington, D.C. You can read some of his other posts on PhilanTopic here, here, here, and here.)

Nonprofit leaders, as well as those in government and the corporate world, seem unwilling to accept responsibility for their decisions and actions. Recently, the founding president of Social Accountability International, a nonprofit that works to advance the human rights of workers around the world, failed to live up to her organization's name when she vaguely defended SAI's decision to award its highest certification to a Bangladesh garment factory that burned down just weeks after its most recent inspection, killing more than two hundred and sixty workers.

As in so many similar situations, instead of acknowledging responsibility for a mistake and accepting the consequences, leaders like the president of SAI are quick to lay that responsibility on others -- and then support only minimal consequences for those assigned the blame. The corporate world saw an example of this after one of the greatest environmental disasters in recent memory, the Deepwater Horizon blow-out that released nearly five million barrels of crude oil into the Gulf of Mexico. Executives of BP, which had leased the rig and owned the rights to the undersea drilling site, remain free while two employees who were on the scene have been indicted for negligence related to the disaster.

Similarly, when it comes to the 2008 financial crisis and subsequent economic meltdown, corporate leaders who contributed mightily to the collapse have escaped responsibility for their wrongdoing. Not one top executive of Countrywide Financial, AIG, Lehman Brothers, Bear Sterns, or any other Wall Street firm has gone to jail, even as millions of Americans continue to suffer the economic consequences of their actions.

Sadly, politicians in Washington continue to ignore the interests of the American public and scramble instead to do the bidding of lobbyists and campaign contributors. Conservatives are bent on preserving low tax rates for their wealthiest supporters while cutting entitlements and programs for the middle class and neediest among us. Rather than raise taxes on the top two percent of income earners, a move favored by a significant majority of Americans, they would rather send the country over the fiscal cliff -- a combination of tax increases and draconian across-the-board spending cuts scheduled to take effect on January 2 -- or play chicken with the economic chaos of national default by vowing intransigence in the coming debate over extending the debt ceiling.

Other politicians are unwilling to even acknowledge their positions when it would be unpopular to do so. NBC reported that not one of the thirty-one pro-gun members of the U.S. Senate was willing to appear on "Meet the Press" following the recent Newtown school massacre to share his or her views on assault weapons or to address the consequences of past votes on gun legislation. CBS also reported that the nonprofit National Rifle Association and pro-gun politicians refused invitations to appear and acted as if they had no responsibility to explain their positions on this critical issue or to accept accountability for them.

Nonprofit executives in general have been shamefully absent from the fiscal debates, working mightily to preserve the charitable tax deduction in its current form while remaining silent on the larger and more consequential fiscal battles before us. Even the last-minute statement in support of higher taxes by one infrastructure group betrays the fact that it and other organizations have steadfastly refused pleas to get off the sidelines and advocate for policies that benefit the less advantaged in society; instead, these organizations poured precious resources into keeping the deduction as is.

What are we to think when nonprofit CEOs fail to lead and instead embrace self-interest -- both theirs and that of their members. What are we to think when they seem to forget that the public interest is more significantly and effectively served by government funded out of the public fisc than by privately funded groups.

A similar dynamic of unaccountable self-interest allows nonprofit university presidents to remain unchallenged in their cupidity. Even in modest-sized institutions, many command eye-opening salaries and benefits. Indeed, over twenty percent of university presidents in America earn in excess of $600,000 a year, with better than seven percent pulling in more than $1 million annually.

These university presidents and other administrators draw large salaries while higher education employs close to 750,000 workers on below-poverty wages. And while they ostensibly lead tax-exempt institutions, those institutions routinely fail to provide an affordable education or opportunities for upward mobility to low-income kids who desperately need both.

Out-sized financial compensation at the executive level is also a characteristic of many large health and cultural institutions as well as some social service charities. It's as if the executives of our largest nonprofits are determined to "get while the getting is good" rather than champion the public good that their institutions are supposed to deliver. To whom are they accountable?

Occasionally, albeit infrequently, responsibility and accountability is imposed from outside the sector. New York State's attorney general recently forced the president of one nonprofit, Educational Housing Services, to repay millions in excess compensation and other benefits achieved through "self-dealing" while also requiring board members to pay $1 million for their "stunning" negligence.

Punishment may also be meted out to Graham Spanier, the former president of Penn State University, in the Jerry Sandusky case. Spanier was indicted last month, joining other administrative colleagues also scheduled to be tried, for helping to establish and maintain a "culture of silence" surrounding years of child sexual abuse committed by Sandusky, a former coach attached to Penn State's renowned football program.

But such consequences are the rare exception.

Far more common is the tendency to blame and perpetuate an amorphous "institutional culture" for wrong or misguided actions. Too often, we fail to hold individuals to account for their sometimes criminal and/or selfish decisions and actions. Rather than demand accountability from those with personal responsibility, we act as if faceless institutions and organizations somehow cause abuse without human agency.

It's as if banks do wrong, not bankers. Corporations, not CEOs. Congress, not elected legislators. Charities, not board members or executives. We even talk of a sector's culture as if people are powerless to do anything but acquiesce -- often to their own benefit -- to dysfunctional practices that profit the individual over the common good.

It's time for it to stop. America has a serious problem with abuse, self-dealing, and lack of accountability in some of its most important institutions, including charitable ones. And while many are affected by these sometimes calamitous actions, the responsible individuals appear to face few meaningful consequences. That is wrong.

Too many nonprofits allow, even encourage, practices that further victimize those they should be serving. This is even more true in business and in politics. We're much more likely to lock up a street criminal than a corrupt executive -- although in most cases it's the latter who causes the greater harm. We need to change that.

Charity leaders should encourage and support efforts to hold one another accountable for serving the common good over private interests. Those efforts must extend to elected officials and other public leaders and to corporate executives. We need powerful and effective new mechanisms, both voluntary and regulatory, to accomplish this.

If we, as a society, don't insist on holding individuals accountable for their bad decisions and actions, it will continue to be others who suffer the consequences. That may be in the interest of elites, but it is of little benefit to the rest of us.

-- Mark Rosenman

Demystifying Corporate Responsibility Rankings

(Emily Keller is an editorial associate in the Corporate Philanthropy department at the Foundation Center. In November, she reviewed Roger Thurow's The Last Hunger Season: A Year in an African Farm Community on the Brink of Change.)

Corporations have long collected data generated by and/or relevant to their operations –- everything from sales figures, to permit applications, to industry trends and customer behavior. Increasingly, however, regulatory and watchdog groups are demanding that companies provide information about the impact of their activities on society and the environment.

As the corporate social responsibility (CSR) movement has gained traction, indices and lists that seek to quantify and rank company activities according to sustainability principles have proliferated. Financial analysts, media groups, and independent consultancies today produce annual assessments of everything from the amount of carbon companies put into the atmosphere to the sustainability of their supply chain management and the diversity of their boards. Those metrics, in turn, are often used by customers, investors, and prospective job candidates to determine their level of engagement with a particular company.

Earlier this year, the Foundation Center added a CSR tab to the company profiles in Foundation Directory Online that highlights nearly two dozen of these corporate sustainability ratings lists and presents basic information from them in a user-friendly format.

But in an emerging field characterized by a multiplicity of definitions and standards, even simple numbers can be hard to make sense of. Using hundreds of data points and a unique methodology, SustainAbility, an independent think tank and strategy consultancy, has taken it upon itself to "rate the raters" in order "to better understand the universe of external sustainability ratings and to influence and improve the quality and transparency of such ratings." As the firm is quick to note, many of these lists have been introduced within the last five years and there's plenty of room for improvement.

With that in mind, here are a few of the more prominent ratings lists/indices:

Dow Jones Sustainability Indexes. The Dow Jones Sustainability Indexes, which are offered cooperatively by SAM Indexes and S&P Dow Jones Indices, were launched in 1999 to track the stock performance of the world's leading companies in terms of economic, environmental and social criteria. DJSI World tracks the top 10 percent of the 2,500 largest companies in the Dow Jones Global Total Stock Market Index, while DJSI North America tracks the top 20 percent of the 600 largest U.S. and Canadian companies. The evaluation process includes a survey customized for fifty-eight industry sectors covering governance, workforce diversity, disclosure of compensation, risk and crisis management, greenhouse gas emissions, waste generation, branding strategies and metrics, data privacy, talent attraction and retention, and other areas. According to the DJ Sustainability site, "The indexes serve as benchmarks for investors who integrate sustainability considerations into their portfolios, and provide an effective engagement platform for companies who want to adopt sustainable best practices."

Carbon Disclosure Project. Every year, the London-based Carbon Disclosure Project (CDP), in partnership with PricewaterhouseCoopers, produces a dense, chart-filled report detailing the progress of S&P 500 companies toward their greenhouse gas emission goals. Based on a detailed questionnaire (the data collection process is so complex that CDP runs a series of workshops around the world to help companies answer it), the 2012 report offers a three-tiered breakdown of GHG emissions totals by sector; a performance band from A to E assessing actions to promote climate change mitigation, adaptation, and transparency; and a disclosure score from 0 to 100 for the provision of data. Multiyear leaders in the rankings include Bank of America and Lockheed Martin in the performance category, and Cisco Systems, Gilead Sciences, and Spectra Energy in the disclosure category.

Newsweek Green Rankings. In contrast to DJSI's rankings of only the most sustainable companies, Newsweek ranks the five hundred largest publicly traded companies in the U.S. as well as the five hundred largest in the world, regardless of their sustainability record. And unlike the Carbon Disclosure Project's rankings, only 10 percent of the scores are based on disclosure, with the remainder split between environmental impact and management (a category that takes public controversies into account). The magazine (which recently was purchased by The Daily Beast site and is transitioning to an online-only format) includes more than seven hundred data elements in its survey of companies, including greenhouse gas emissions, solid waste disposal, water use, equity investment (companies are responsible for the impact of the companies they own), hazardous waste reduction, biodiversity protection, company operations, contractors and suppliers, and products and services. Based on a scale of 0 to 100, IBM (82.9) and Santander Brasil (85.7) topped the 2012 rankings.

The DiversityInc Top 50 Companies for Diversity. Consulting firm and magazine publisher DiversityInc, which launched its diversity rankings in 2001, bases its ratings on the responses it receives to a 300-question survey. As the organization explains in the methodology section of its site: "Ratios between key factors in diversity management, such as demographics of managers compared with managers who received promotions and demographics of the workforce compared with people promoted into their first management positions, play a significant factor in determining point scores." Companies are rated by industry, and the rankings include thirteen different top-five and top-ten lists. Topping the list in 2012 were PricewaterhouseCoopers, Sodexo, Kaiser Permanente, AT&T, and Procter & Gamble.

Corporate Responsibility Magazine's 100 Best Corporate Citizens. Corporate Responsibility Magazine and the Corporate Responsibility Officer Association (CROA) began publishing their list, which is 100 percent based on verifiable publicly available information, in 2009. The rankings are driven by companies' performance in seven broad CSR categories -- environment, climate change, human rights, employee relations, corporate governance, philanthropy, and finance -- with some three hundred and eighteen data points tracked across those categories. Carbon Disclosure Project and Foundation Center data are incorporated into the assessments.

And that's just a sampling. Indeed, the diversity and number of CSR ratings lists now available can be overwhelming at times -- for consumers and investors, as well as for companies, which feel pressured to respond to detailed surveys and questionnaires from dozens of groups and do not always understand the reasons they are selected or omitted from a given list.

In an effort to standardize the ratings process, Ceres and the Tellus Institute, founders of the Global Reporting Institute (GRI), recently launched the Global Initiative for Sustainability Ratings (GISR), which aims to establish best practices in the sustainability ratings field, with a focus on performance-based results, forward-looking indicators, relevance to market forces, integration of sustainability criteria into investment decisions, transparency of methodology, independence of raters, and an expansion in the scope of participating companies. The initiative hopes to release the initial draft of its standards in 2013.

In the meantime, the number and scope of CSR ratings lists continue to grow. Last year, the Center for Corporate Citizenship at Boston College, in partnership with the Reputation Institute, released its fourth annual list of the top fifty companies in the U.S. based on the public's perception of their corporate citizenship, governance, and workplace practices. And earlier this year, Bloomberg New Energy Finance and Vestas released their third annual Global Corporate Renewable Energy Index (CREX) report, which tracks voluntary demand for renewable energy among the world's largest companies.

Other entrants in the field include the UN Global Compact, which asks companies around the globe to embrace universal principles and partner with the United Nations in the areas of human rights, labor, environment, and anti-corruption issues, and A Billion + Change, which seeks to mobilize billions of dollars of pro bono work and skill-based volunteerism by the end of 2013.

Is any of this work making a difference? I believe it is and, having compared some of the largest lists against our corporate FDO profiles, can see that many corporations, here in the U.S. and around the globe, are beginning to walk the CSR walk. But from climate change to human rights to corruption, we -- and they -- still have a long ways to go.

What do you think? Is CSR a movement whose time has arrived? Are CSR ratings a useful tool for consumers, investors, and advocates? And if not, how can they be improved? Share your thoughts in the comments section below.

-- Emily Keller

Weekend Link Roundup (November 17-18, 2012)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

With the critical holiday fundraising season right around the corner, new reports from Charity Dynamics/NTEN and Blackbaud remind us that "Establishing emotional connections with donors remains paramount," writes Katya Andresen on her Non-Profit Marketing blog.

In a guest post on Beth Kanter's blog, Big Duck's Meghan Teich has some advice for nonprofit communications pros in the aftermath of a crisis or major natural disaster:

• Make sure your staff is kept up to date on your communications plan and that they have a clear understanding of your messaging.
• Strike while the iron's hot, but not so soon that it looks like you're capitalizing on the crisis.
• Don't use the crisis as an opportunity to do general fundraising for your organization (unless you have a particularly relevant mission). Instead, create a specific fund or give donors a tangible item or event to which they can donate.
• Reach out to other nonprofits, even those you view as "competitors," to explore how you might work together.
• Keep your supporters and donors updated on the progress you're making in real time via e-mail and social media.

"I urge you to take the steps necessary to make sure you are engaging the right people in the right ways to reach your marketing goals," writes Nancy Schwartz on her Getting Attention blog. "And to start today." Sounds like good advice to us.

Nonprofit Management

On the Social Velocity blog, Nell Edgington argues that for nonprofits looking or needing to change, merely wanting to change is not enough; certain key building blocks need to be in place. They include someone in a leadership position willing to be a champion for change; a clear statement of why change is necessary; a funder or funders willing to support the change process; and a "navigator" who can guide the organization through that process.

Philanthropy

In the first of a series of posts, the Association of Small Foundations' Andy Carroll argues that foundations, small foundations in particular, do not acknowledge the complexity of the problems they are trying to address "openly enough." Indeed, writes Carroll, "Many funders who keep asking how they can have more impact eventually come up against challenges that are too big for them to solve alone."

On the Philanthropy Potluck blog, Anne Bauers shares findings from a recent NCRP report which found that "foundation giving to support the general operations of nonprofits increased through the recent recession, but the share of foundation dollars classified as providing this vital type of funding remains the same, at about 16 percent." As the report explains, general operating support benefits nonprofits in a number of ways. For that reason, writes Bauers, funders should award more general support grants in addition to or in place of other types of support.

On the new Markets for Good blog, the Bill & Melinda Gates Foundations' Darin McKeever and Victoria Vrana, Brian Walsh, the executive director of Liquidnet For Good, and the Hewlett Foundation's Kelly Born share the first draft of a vision paper "that signals how and why we think that the sector needs to upgrade its information infrastructure. By that," they add,

we mean the architecture that helps to connect, organize and structure information so that it can be supplied and used more easily. We acknowledge that upgrading the information infrastructure will not change the sector's use of information overnight, and that other elements are needed to support the free flow of quality data in the social sector. But we believe that in order to move towards a more effective sector, powered by information, we need to begin by strengthening the core building blocks of data exchange....

It's buzzword time, which means Lucy Bernholz is collecting the words and terms that were on every philanthropoid's lips in 2012. But she needs three more to complete the list, so hop on over to Lucy's Philanthropy 2173 blog there and leave a suggestion or two.

Transparency

On the Foundation Center's Transparency Talk blog, Andrew Wolk of Root Cause and Wendy Yallowitz of the Robert Wood Johnson Foundation discuss the benefits of collaborative learning, which, as Wolk explains, is "an intentional effort between two organizations to exchange, analyze, and apply knowledge that will lead to better outcomes."

And on NCRP's Keeping A Close Eye blog, Kevin Laskowski commends the Foundation Center for its recently announced Reporting Commitment initiative, which, in an effort to help foundations more effectively address the many complex problems confronting our communities and the world, aims to develop more timely, accurate, and precise reporting on the flow of philanthropic dollars.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great Thanksgiving!

-- The Editors