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Philanthropy as If Democracy Really Mattered

June 05, 2014

Philanthropy could have far greater impact if government worked better. That's the conclusion of a recent survey of more than two hundred foundation leaders by the Center for Effective Philanthropy. According to the report based on the survey, "Foundation CEOs believe the greatest barriers to their foundations' ability to make more progress are issues external to foundations — particularly the current government policy environment and economic climate."

The more than 86,000 independent foundations in the United States make some $54 billion in grants every year in a wide range of areas, including education, health, environment, and the arts. Though rightfully proud of their accomplishments, the leaders of those foundations are far from satisfied. With a mandate to serve the public good, they want their foundations to have greater impact, and that requires the kinds of policies and government action needed to scale the many worthy programs piloted with philanthropic dollars.

Fortunately, foundation leaders are doing something about their frustration. Since 2011, more than one thousand American foundations have granted nearly $1.4 billion to organizations working to help American democracy live up to its promise. These data are displayed in Foundation Funding for U.S. Democracy, a new interactive data platform developed by Foundation Center with support from eight of America's leading funders: the Rita Allen Foundation, Carnegie Corporation of New York, the Omidyar Network's Democracy Fund, the William and Flora Hewlett Foundation, The JPB Foundation, the John D. and Catherine T. MacArthur Foundation, the Open Society Foundations, and the Rockefeller Brothers Fund. The platform defines what "democracy funding" means for philanthropy, establishes a baseline for such funding, and allows users to quickly grasp, in terms of both major trends and detail, who is funding what and where, across the nation.


The platform breaks democracy funding into four major categories:
  • Campaign and Election Processes
  • Governing Institutions and Processes
  • Information and Media
  • Public Engagement and Voting

Each major category is further broken down into sub-categories such as "Election Systems and Administration" and "Redistricting," while additional filters enable users to explore the different approaches used by foundations, as well as the geographic and population focus of their grants. This "data architecture" was developed by Foundation Center researchers working closely with program staff from the eight supporting foundations, additional foundations, and key affinity groups like the Funders' Committee for Civic Participation and Philanthropy for Active Civic Engagement. Grants were coded by the foundations themselves, and Foundation Center staff looked at grant descriptions and recipient organizations to determine the purpose of each grant. This labor-intensive process bridges the diverse program structures and terminology of multiple foundations to produce a coherent overview of funding for democracy in America.

What about partisan politics? Foundations are prohibited from engaging in certain types of political activity (like partisan voter registration and lobbying) under IRS regulations. Foundation Center itself is a nonpartisan, non-membership organization that strives to be an unbiased source of independent information on philanthropy. The new data platform includes information about foundations, grants, and grantees that some might be tempted to identify as progressive, liberal, libertarian, or conservative. Such labels are deliberately omitted from the platform, however, in an attempt to produce as complete a picture of democracy funding as possible.

As institutions that use private wealth for public good, foundations occupy a unique and privileged position in American society. What's more, they have supported democracy-promotion activities abroad for decades, and it is entirely appropriate they do so at home. While they possess only a fraction of the resources of government, their independence allows them to take risks, experiment, and pursue long-term strategies in a way that makes their dollars extremely valuable. The health of our democracy matters for foundations, as it does for all of us. We invite you to explore Foundation Funding for U.S. Democracy and see for yourself why philanthropy is such a vital part of the American experiment.

Brad Smith is the president of Foundation Center.

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Posted by Theodore Casparian  |   June 09, 2014 at 02:17 PM

If foundations really want to make a difference in 'Campaign and Election Processes', they should identify the companies in which they invest (endowment holdings) that are significant contributors to the political process. For example: Foundation A has holdings in Company K. Company K spent $2MM last year on lobbyists and campaign contributions to defeat a bill that would have advanced Foundation A's efforts in its mission. Choices include: divesting from Company K (and sending a letter to Shareowner Relations explaining why), asking Company K to change its position on the issue, or voting for (or introducing) a shareowner resolution asking Company K not to interfere with Campaign and Election Processes (Foundation A, as an owner of Company K, uses its voice to tell the Board of Company K not pay lobbyists or make campaign contributions at all.) At present, too many foundations spend 5% of their assets trying to repair the damage done by the other 95% (the destructive behavior of the companies in their endowment portfolio.)

Posted by Brad Smith  |   June 10, 2014 at 06:50 PM

In the larger, staffed, foundations the investment function is largely separate from programmatic, grantmaking functions. One side of the foundation invests the assets, the other uses the income to make grants. In my own experience working in foundations I have seen occasional instances of divestment around, for example, apartheid in South Africa, and some instances of using the shareholder voice to write letters to management. As you well know, there is growing interest in so-called mission-related investing by foundations, but I have not seen the kind of systematic analysis of the entire investment portfolio in the way that you suggest. Thanks for taking the time to read the blog and make a thoughtful comment.

Posted by Akwasi Aidoo  |   June 21, 2014 at 06:35 PM

This tool is spot on! To be able to clearly track and (hopefully) encourage increased funding for democracy promotion at home (in the US) can be undoubtedly game-changing for the better.

Going forward, it would be great to:

(1) Expand the data categories to cover one or two specific measurable internal variables that directly bear on the influence of the US on democratic developments outside its frontiers (the examples are aplenty); and

(2) Garner some qualitative information (not hard data) on funding commitments over say a 3-5 period, hopefully as a way of enhancing a longer-term perspective on, and prioritization of, an issue that's so vital for philanthropy impact.

And a dream question: Why not go global with this tool? For example, how great it would be if a tool such as this could also help begin the process of growing African philanthropic interest and appetite for funding democracy promotion!

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