Truth in Giving

Back in 1996, Tikkun published my essay, “Let Them Eat Pie: Philanthropy à la Mode.” Fourteen years later, I still get messages from people thanking me for it.

I’d like to think that’s because my analysis of philanthropic power relations and their discontents wowed readers with its brilliance. But I’m pretty sure the essay’s biggest thrill was that I dared to write it at all. There aren’t many truth-tellers in the world of charitable giving, on account of pervasive fear that biting the hand that feeds could endanger one’s economic well-being.

No doubt. But if you care about accountability, reciprocity, and other social goods, then the harm done by silence will be evident. There are many individuals and some foundations doing much more than the minimum to introduce accountability and some democratic spirit into philanthropy. I know program officers who are up nights agonizing about the huge burden nonprofits now bear as a result of corporate financial crimes, lax public oversight, and their impact on endowments—who arise each morning in dread of that day’s news of lost jobs and lost opportunities.

But that doesn’t change sectoral realities, which reinforce the antidemocratic spirit of these giver-receiver relationships, where potential receivers are expected to expose themselves to unbounded scrutiny and givers are entitled to ask without being required to answer. If truth in giving were mandated for foundation guidelines the way health warnings are required on cigarette packs, many of the more than 1.2 million foundations registered with the IRS as of last year would have to carry this notice (most of the rest are small family foundation that exist to give a few grants to pet projects):

---

---

Before You Apply

The IRS requires us to spend at least five percent of our endowment every year, some on expenses and most on grants. Like almost all foundations, we want to be here in perpetuity, so we don’t give more than the minimum requirement. We’ve lost money on our investments, so our total giving has dropped. That means it’s even harder than usual to get money from us. In fact, if we don’t already have a relationship with you, it’s twice as hard. There’s no way we are going to support even a quarter of the good and worthy projects that come to our attention, so we’ve put a lot of effort into finding ways to pre-reject applicants. If you decide to apply anyway, be sure you do everything we ask, but remember, most of you will be rejected anyway.

---

If you interact with the philanthropic world, this will come as no surprise. Without exactly specifying why, quite a few foundations have taken a pause from grant-making recently. The leaders of other foundations feel a responsibility toward long-term grantees that leads to rejecting almost all new applicants, without making that publicly known as policy. Most of the rest are just giving less—fewer grants, smaller grants, or both.

All of this must be considered just the breaks in a disintegrating economy. Foundations aren’t violating any laws by keeping their giving to the legally mandated minimum and keeping their workings private. Federal policies allow wealthy corporations and individuals to escape taxes by giving money to tax-exempt organizations; implicit in these policies are the property and power relationships that have shaped our entire economic system, valorizing donors’ right to do as they please, without comparable consideration for the taxpayers who enable their largesse.

Today, as when I wrote “Let Them Eat Pie,” the system’s least attractive features occupy the foreground, and I find myself wanting to speak up for those who feel constrained to speak for themselves. The big picture is much the same as in 1996. But foundations are a faddish bunch, and the new fads that have replaced some earlier enthusiasms bear mentioning.

I refer in particular to three bits of new orthodoxy stuck like shreds of spinach in the present-day foundation lexicon: best practices, logic models, and theories of change.

“Best Practices” entails collecting and sharing information about what is deemed to work in a particular field or sector, as a guide to future giving. As the Foundation Center’s Web site puts it, “Those engaged in philanthropy need to learn what is working, or not working, from others in their field.” The underlying idea is simple: figure out what works best, and save your money to replicate that. It acquires added force from donors’ aversion to risk, to looking foolish: if you bet on certified best practices, you are more likely to be a winner.

The problem is that the subject is human beings, not widgets. When you are working with measurable substances, it’s easy to define and locate best practices: which ways to heat a house cost less, spend less energy, produce the most heat with the least environmental damage, and so on? But this doesn’t apply to people. What seems to work in one location with one group isn’t necessarily transferable to a very different context. Believing so leads to a lack of openness and imagination, to dumbing everything down.

There are certain best practices one can safely call universal, but they are values and relationships, not methods or models: attend to ethical considerations, treat everyone with equal respect, tell the truth, avoid imposing strictures or ideologies on people who hold less social power than you, avoiding humiliating others, keep your promises, question your assumptions, stay awake, pay attention, stay curious, and so on. Every one of these entails remaining present to actual human individuals, organizations, and communities in all their particularity. None of them can be circumvented by deciding in advance what models or techniques work best and using “best practices” as a knife to pare away everything else.

The best philanthropic investment will always be in people, not models: find those who hold these universal best practices close, and give them what they need to do their work. Be brave enough to take that risk, even investing in unproven approaches.

“Logic Model” and “Theory of Change” are simply two different ways to package the same contents. Both describe devices for reducing the aims, assumptions, and activities embodied in a particular project or program element to a chart. Here’s the first page of visuals you get googling “logic model” and “theory of change.” They’re kind of pretty, aren’t they, resembling nothing so much as facing pages of placemats in a mail-order linen catalog? In fact, requiring one of these charts as part of a grant proposal bears about as much real relationship to community organizations’ work as would asking each to weave a placemat as their ante into the grant-getting game.

To be sure, the warp and woof are commonsense questions about applicants’ work: what do you want to accomplish, what is required, what short- and long-term outcomes are anticipated? But the task of boiling the answers down to colored bars often wastes days, compressing most of the useful meaning out of the inquiry. People invest the effort because a funder (or a consultant working for a funder) requires it. Most never look back at the charts until it’s time to tweak them to meet the next funder’s requirements. And after the charts have served their purpose of separating compliant applicants from the rest, few foundation officers make meaningful use of them either.

If you came up (as I did) in our culture of private property as the highest value, you may now be saying, “What’s the big deal? They have to spend some time on paperwork to get money for free? Without foundations, they’d have nothing.”

Note that I’m speaking out for greater respect and accountability—for caring that recognizes the realities of power—not against foundations. But in this charged climate, for some people, they amount to the same thing.

But what principle makes donors sacrosanct? There really isn’t any moral high ground in escaping your fair share of taxes (which after all, underwrite all public expenditures, those we adore and those we abhor) in exchange for the right to direct your money where you think it will do the most good. As progressives constantly point out, that same system has fueled the right’s powerful network of think tanks and organizing and communications systems. The massive right-wing philanthropies—the Scaifes and Olins of this world—benefit greatly from our policy of devolving social investment to those whose single qualification is having (or having forbears who) amassed a fortune, and they are a lot less fastidious than liberal foundations about using it for their own political ends.

The tax exemption is a simple quid pro quo—something for something—predicated on an underdeveloped public sector. We spend plenty of tax money on war, incarceration, bank bailouts and industry supports, and far less on promoting health, making communities livable, creating beauty and meaning, and other social goods. Instead, we let foundations and other donors underwrite such work, carried out by mostly underpaid and overworked folks like community organizers and community artists. In our system, without question, it is far better to incentivize charitable giving than not.

But there’s plenty of room for improvement. Right now, after decades of financial foxes guarding our economic henhouse, the independent sector—already under remarkable stress—is hurting badly. A constant complaint is the vast amount of time foundation fundraising takes in proportion to the results, more so as many foundations cut back on giving to invest in their own futures. And for too many funders, the less they give, the more hurdles they erect to discourage applications.

In practice—regardless of how lofty or pragmatic the stated reasons—the primary function of every philanthropic fad is the same: to winnow down the pool of grant applicants. If it was your job or mine to say “No” to half or two-thirds or three-quarters of the perfectly good proposals that came across our desks, perhaps we’d be doing the same. But I’d like to think not.

I’d like to think that I’d be one of the funders who responds to the current situation by distributing more than the minimum required by law, who cares more about helping now than preserving my fortune for posterity. I’d like to think I’d be one of the funders who requires a simple letter of intent before putting applicants through the ordeal of a full proposal (preferably without placemats). I’d even like to think I’d be one of those visionary types who, facing these circumstances, substitutes a lottery system for pre-qualified applicants for the extensive rituals of supplication that so distort the giver-receiver relationship.

But we don’t always live up to the self-image we’d like. Along with accountability, transparency is one of the virtues foundations often prescribe for their grantees. (For themselves, not quite so often.) Who knows if you or I, sitting in the big chair, would voluntarily make the choices that embody the most respect and consideration for applicants?

As insurance, then, in a philanthropic universe as comfortable dictating requirements as the U.S. charitable sector, I’d like to recommend a healthy start of practicing what is preached. Let’s require truth in giving. What do you think?