As the presidential election season roars on, so, too, does the media and public's scrutiny and criticism of Hillary Clinton and Donald Trump's roles in their respective philanthropic foundations. The landscape of foundations, however, is much broader and more complex than what the media currently projects. As Michael Wyland at The Nonprofit Quarterly writes in Clinton and Trump: A Tale of Two Foundations, "Unfortunately for the nonprofit sector and those who advocate for its beneficiaries, most of the stories printed about both foundations have been negative, not only injuring the reputations of the foundations and their founders, but also harming the credibility of the nonprofit sector as a whole."
Although the election news cycle is creating a cloud of suspicion around the two high-profile foundations, the value proposition of foundations as a whole remains vital to U.S. society--they provide aid and push for progress where government, corporations, and individual citizens do not have the wherewithal or directive. The Council on Foundations (COF), the most prominent association of grantmaking foundations and corporations in the U.S., has flagged the need to reinforce the value propositions of foundations in the past, and explain how they operate. I recently moderated a panel at COF's Endowments and Finance Summit with Jean Case, CEO of the Case Foundation, Randall Lane, Editor at Forbes, and Vikki Spruill, President and CEO of COF. We talked about ways foundations have been innovating, among other topics. Based on my research in the fields of management and leadership development, I have identified a few trends that both reflect the times and help foundations in their ongoing drive toward progress:
1. In a knowledge economy, many foundations understand that integrity and trustworthiness need to permeate everything, particularly their underlying legal structure, governance, and financial practices.
We live in a knowledge economy where the average citizen can access vast amounts of information and gain knowledge--not just privileged elites. As a result, there's a growing expectation that organizations--public or private--be transparent. This expectation exists on a scale never experienced before, and affects foundations that need to prove their effectiveness and trustworthiness to donors, the government, and a host of other stakeholders. The election news cycle may be focusing on the potential skirting of laws by non-government giving, but for many foundations, the key to thriving is demonstrating their integrity and ability to adhere to standards bound by federal and state regulations, as well as commitments to stakeholders.
Because of this trend toward transparency and the need to adhere to tax and other laws, Columbia University's School of Professional Studies, where I am the Dean, has had to respond. Our program in Nonprofit Management sees nonprofit professionals and emerging leaders come to Columbia seeking greater understanding of regulatory and governance standards. Our program's curriculum reflects this and covers areas such as: "Legal Landscape for the Nonprofit Sector," "Nonprofit Governance," "Nonprofit Financial Management," "Ethics in the Nonprofit Sector," and "Nonprofits and Government." These courses prepare students to develop, manage, and work effectively, within legal and ethical confines.
Not only students, but also donors, experts, and faculty that I interact with daily understand that in order to deliver on foundations' value proposition--to fund charitable work where government, corporations, and most citizens cannot--the means to the end are important. The trend today is about transparency and trust--it is not enough to do praiseworthy work, the process of getting there must hold up under statutory and public scrutiny.
2. Foundations' strategic planning and operations are increasingly rooted in data and efficiency.
A new trend we have seen across many industries, including the philanthropy world, is that data analytics and metrics analysis are becoming a part of business at a rate and level of sophistication never before seen. While it should be noted that metrics evaluation methodology in a mission-based environment is not always obvious nor agreed upon by stakeholders, we see that, in both principle and action, foundations see promise in analytics-based strategy and analysis.
For example, foundations are setting measurable goals for the outcomes of programs that receive their grants, and thinking about how to use data and analytics in grantmaking. This is happening both on the front end (i.e., evaluating where there is most need, which programs to fund) and on the back end (how programs are performing, determining success based on the data). Big data and performance management are also propelling new models of crowdsourcing, social, local, and participatory funds. Identifying, quantifying, and minimizing risk are also more in play. Finally, financial competency, including cash-flow analysis, budgeting, fund accounting, cost accounting, and tracking marketing and communication efforts are still key for foundations to operate and grow.
Unlike what the media may be portraying as a result of the election news, many foundations do not value secrecy and opaque dealings, but instead use data in conjunction with transparent communications to help clarify where they can fill in the gaps that other sectors of society can't, and hold themselves accountable to meeting objectives and adhering to strategies that drive progress on issues that affect people across the globe.
3. Foundations are wielding strategic financial portfolios, and can partner with governments, corporations, and communities for leverage.
There's a strong trend around maximizing impact in philanthropy circles. There are several ways that foundations are doing this. The most basic and well known is mastering financial strategy. This is reflected in Columbia's Nonprofit Management master's degree curriculum, which was designed based on input from foundation and nonprofit leadership. Courses cover the investment environment for nonprofits, return and risk, the time value of money, modern portfolio concepts, how to analyze stocks and stock valuation, fixed-income securities, portfolio management, and endowment basics, like strategy and policy. Graduates are set up to take a foundation's assets and grow them in the market. Their goal is to make charity financially sustainable over a long period of time, or deeply impactful in the moment, or somewhere in between.
There are programmatic ways to maximize impact as well. One way that Jean Case highlighted at the COF panel is by partnering with organizations that share the same mission, such as government entities or corporations, as well as communities. Public-private partnerships are vital to combine resources and get initiatives off the ground. The Case Foundation works with strategic partners that are aligned on their goals, as well as like-minded for-profits and nonprofits on one-off, specific campaigns. For example, the Case Foundation's Giving Challenge in 2007 was launched in partnership with Parade Magazine and Facebook--and leveraged these partners' media reach and technology to raise giving participation and spread the word about the campaign. More and more foundations are looking for ways to maximize the size of their impact without necessarily increasing the size of their own resources and efforts.
Partnering for leverage, ensuring integrity of operational processes, and investing in analytics-based approaches--these areas are increasingly essential in the charitable world. These trends are catalyzing philanthropic innovation. We must continue to support these areas as foundations continue their pivotal work and move past the elections. The push for progress by America's foundations is too important to be derailed by seasonal headlines.