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Philanthropy’s Unanswerable Question(s)?

February 08, 2012

(Bradford K. Smith is the president of the Foundation Center. In his last post, he wrote about Occupy Wall Street and the Giving Pledge.)

Q: Exactly how much do America's foundations spend each year to benefit Hispanic and Latino populations?

A: We don't really know.

FC-HIP_ReportAs president of the Foundation Center, I should have a better answer, especially for an institution that just published a study entitled Foundation Funding for Hispanics/Latinos in the United States and Latin America. That study concluded that over the past decade U.S. foundation funding explicitly designated to benefit Latinos has remained relatively steady as a share of total foundation giving, averaging 1.3 percent. It also showed that foundations maintained those levels of support despite the 2008-09 recession during which their overall giving declined by 12 percent. These findings came with a strong disclaimer about the limitations of the data and the methodology: "However, these data do not capture all giving by sampled foundation that may benefit Hispanics/Latinos."

That study was commissioned by Hispanics in Philanthropy (HIP), a transnational network of more than six hundred grantmakers whose mission is "to strengthen Latino communities by increasing resources for the Latino and Latin American civil sector." The report's headlines are being used by advocates to encourage philanthropy to do more on behalf of Hispanic and Latino populations. That advocates advocate and tend to downplay the disclaimers should come as no surprise.

But a number of foundation leaders have expressed their concerns about the study, and their critiques speak to the nature of philanthropy, its role in furthering the public good, and the growing challenge of transparency in a digital, data-driven age. The study's foundation critics fall roughly into two camps. There are the friendly critics that strongly embrace diversity and explicitly communicate that their funding helps Hispanics/Latinos, African-Americans, and other ethnic or racial minorities. They want more credit for this than the study gave them and feel the Foundation Center did not capture all their giving.

The second group of foundation critics tends to see their funding, often because of donor intent, as benefitting the population at large or the poor or disadvantaged without any stated priority for particular ethnic or racial groups. These foundations feel that such a study does them a tremendous disservice by creating the impression that they do not care about Hispanics and Latinos when, in fact, many of their grants (for example to public schools or food banks) do benefit those populations. The individual foundations know this. Their grantees know this. But the wider public, researchers, or anyone else interested in philanthropy may not be aware.

A brief word about methodology. The Foundation Center gathers its data on foundation funding from diverse sources but still relies heavily on the 990-PF tax returns filed by foundations, which include -- for every grant made -- the name of the recipient organization, a description (hopefully) of the purpose, and the amount. Some seven hundred foundations now send their grants data to the Foundation Center electronically according to a standard that comprises twenty-three fields of information, one of which is "population served" -- though it and "geographic area served" are fields for which specific information is least likely to be provided by foundations. To "count" a grant as specifically designated to benefit Hispanic/Latino populations, we look for whatever relevant coding a foundation might have provided with its grant information, evidence within the grant description itself, and at the mission and activities of the grantee organization.

This is a very conservative methodology that has been consistently applied by the Foundation Center for more than a decade. Additional studies in states such as California and Oregon have supplemented this methodology with other techniques to reveal greater levels of foundation giving for communities of color. For example, the Philanthropic Collaborative, working with Foundation Center data, concluded that "68% of health grant dollars in 2005 to 2007 benefited minorities, the economically disadvantaged, and other underserved groups."

But beyond the limitations of data and methodology, the biggest challenge to answering the question at the top of this post is inherent to the nature of American philanthropy itself: a sprawling industry made up of more than 76,000 endowed institutions, each with its own mission, goals, and program priorities. It can be difficult enough to understand what individual foundations do -- only 26 percent have Web sites -- and far more difficult to grasp their contribution in the aggregate. But as foundations continue to multiply and seek greater impact, people understandably are becoming more curious about their work. Foundations are private institutions, but like other private institutions producing social benefit, they find themselves increasingly subject to public scrutiny.

The Foundation Center listens to its critics and is building enhancements into its databases that will improve our ability to address this question and others like it. Still, the most important source of information will continue to be foundations themselves. The questions will not go away because they are difficult or uncomfortable to answer. By providing better and faster data, foundations can help insure that the answers do their work justice.

Determining who benefits from foundation dollars and how is fraught with the kinds of methodological challenges that give researchers sleepless nights. But if we truly value what makes America's foundations unique -- their freedom to experiment, take risks, and innovate in the service of the public good -- then we must try. An informed, data-driven debate led by foundations themselves is the best way to protect that freedom. Ultimately, it will help to improve the overall quality of information about philanthropy and promote better understanding of the many contributions of American foundations to building a better world.

-- Brad Smith

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Posted by Lucy Bernholz  |   February 08, 2012 at 12:58 PM

This is a great reminder that it's not as easy as 1-2-3. Data, as they become more ubiqituous, need to be better understood by all of us. Being clear on the methods used and the constituencies involved is a key part of thinking critically about data, the industry from which they come, and the uses to which they can be put.


Posted by Prentice Zinn  |   February 11, 2012 at 09:10 AM


You nailed it. We don't really know.

What is important about the survey is that it asks a great question about the relationship of philanthropy and 38.7 million people - accounting for the majority of population growth in 33 states.

It also scratches at a very well grounded hypothesis that a) a huge funding disparity exists and b)there is a systemic disconnect between philanthropy, nonprofit organizations and the Latino community.

Suppose for a moment that we can indulge ourselves in a fantasy where the methodology of data collection is perfect and we tally the numbers with indisputable precision.

The funding disparity may shrink or grow but it will still be a mind-boggling disparity during a demographic shift that is transforming America.

I really appreciate your point that we often get stuck in a narrow conversation centered on a methodological critique when we should be asking much bigger questions.

We should celebrate the fact that the report, flaws and all, opens the door to a vibrant discussion that philanthropy has ignored.

Posted by Bradford Smith  |   February 14, 2012 at 10:52 AM

Lucy, you managed to pack a lot of ideas into a brief comment. Quality of data and what it takes to guarantee it are often overlooked in the push to make any and all data open and free. Data can help ground debates, but the debates themselves will be carried out by a variety of constituencies. Prentice, you nailed it! The questions exist in society and have their constituencies. Methodologies will always have limitations. But the kind of data and information required in trying to answer them will help people understand the true value of philanthropy while assisting foundations themselves to collaborate, work at scale and be more effective.

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