Peter Frumkin on Philanthropic Engagement

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2007-02-06T13:51:00.000-08:00

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Conclusions

2006-10-31T09:37:00.000-08:00

Engagement is a critical part of the style defined by a donor. It has implications not only for the overall fit and alignment of the giving strategy, but it also has very clear implications of the nonprofit organizations that are on the other side of the table.

Finding a level of engagement that both satisfies the donor and that adds value to the recipient organization is not always easy. Sometimes there will be a misalignment between a donor that wants a lot of publicity and a cause or organization that simply cannot mobilize the attention that is sought. Other times, donors will want a relatively low level of engagement, but end up funding an organization that continuously seeks to draw the donor into the organization’s governance.

Engagement levels are thus like many other elements of the strategic puzzle in philanthropy: They are variable and contextually defined by the interplay of public purposes and private values.

Engagement is something that must neither be declared by donor fiat, nor postulated by a recipient. Instead, engagement needs to emerge from communication between the two parties and should aim toward finding a level of fit and alignment that will satisfy both sides of the philanthropic exchange.

Notes:

Christine W. Letts and William P. Ryan (2003: 26) focus on high engagement philanthropy, which they define as “a performance-centered strategy where alignment, reliable money and strategy coaching are used together to convert a grant-making relationship into an accountability relationship that uses power to improve performance.”

On the trend toward disintermediation in philanthropy and higher donor engagement, see Frumkin (2000).

Careful selection of grantees can reduce the need for heavy engagement later on. For a short list of what grantmakers need to consider before making a grant, see Lurie (1988).

Reading and interpreting financial statements requires practice and skill. For an introductory guide, see Stevens (1989).

For a landscape of philanthropic support of the arts, see Wyszomirski (1999).

Engagement is often constrained by institutional identity. A discussion of the way leaders and boards negotiate roles can be found in Center for Effective Philanthropy (2004). See also McFarlan (1999).

Corporate philanthropy: low engagement level

2006-10-24T09:35:00.000-07:00

Contractual relationships are frequent in the world of corporate philanthropy, where gifts are conveyed often with relative detachment, but where there is some assumption of alignment between values—or at least interests.

Companies that give are reluctant to get too closely connected to the organizations they support for a range of reasons. Chief among them is the fear of exposure to negative publicity should charitable programs backfire or fail. While executive may want to see their employees involved in community volunteer projects that aim to rehabilitate buildings or clean up beaches, they may not want to get too deeply involved in designing a community program aimed at tackling a tough problem such as crime or drug abuse.

Moreover, the focus on the arts funding that is often present in corporate philanthropy makes engagement more difficult, because there are few real opportunities for company executives to help design an exhibition or design a theater production—although there are ample opportunities at each to fly the corporate banner.

The engagement level of corporate donors is generally lower compared to other donors for another reason: Few company foundations have large enough staffs to really do more than process requests and focus on making sound grant decisions.

Real engagement requires a substantial commitment of time, resources, and people that are not always available in the context of corporate philanthropy. Many corporate giving programs are more set up to negotiate and structure issues related to profile and recognition than they are to rigorously intervene in the work of nonprofits.

Large gifts and low level of involvement

2006-10-17T09:35:00.000-07:00

There are many examples of gifts that move away from deep personal engagement to a more delegating relationship in which values are aligned, but in which the donor simply does not have the time nor the inclination to really get involved in operational details.

One of the largest gifts ever recorded fits this description and it turned out to be also one of the most controversial. Media mogul Ted Turner shocked many when he announced that he was giving $1 billion to the United Nations over ten years. The gift provoked both admiration for its size and scope and ridicule for focusing on an agency that some argued had a reputation for bureaucratization and inefficiency. Still, for Turner, the gift represented a fulfillment of his commitment to international cooperation. For years, he had flown the UN flag above the offices of CNN and had sponsored the Goodwill Games at a time when international tensions were running high.

After its initial announcement, Turner’s gift went through a number of changes. First, Turner created the nonprofit UN Foundation to receive some of the shares of TimeWarner stock he acquired following the sale of the TBS broadcast company. The UN Foundation was not a foundation, but rather a public charity that would solicit outside funds to help support its activities. The gift was not limited only to the United Nations but was also directed at “UN causes,” which include the UN Commission on Human Rights, a range of nonprofit environmental and advocacy organizations. The exact amount of the gift would also depend on the performance of TimeWarner stock and would be capped at $1 billion, or less if the stock performed poorly.

Regardless of these changes, the gift sent a major shot across the bow of philanthropy by virtue of its size and ambition. To run the UN Foundation, Turner chose former U.S. Senator Timothy Wirth, an experienced actor in international politics. Interestingly, Turner pondered a different use of his philanthropic funds before settling on the UN Foundation: He inquired into paying off the UN membership dues of the United States which were in arrears, but decided against it.

At the other extreme of engagement approaches are donors that do little other than monitor progress, review financial statements, and ensure that the terms of the grant agreement are fulfilled. Depending on how closely values are aligned, this can produce a respectful contractual relationship or a more tense auditing relationship. These auditing models often arise in smaller foundations, where large numbers of small grants are made. Unable to do more than a cursory monitoring of grantees, these under-resourced foundations are led to simply set a group of procedural hurdles in place designed to maintain some semblance of accountability. Nonprofits must submit to these periodic audits and remain in compliance.

Since it is far easier to monitor financial matters than mission fulfillment, it is no surprise that much of the auditing that goes on in philanthropy is over the expenditure of funds and the accounting that accompanies this process. To really audit mission fulfillment or the production of public benefits, donors need to go to far greater lengths and expenses to collect information. Little surprise, therefore, that more attention is paid to getting budgets and expense reports filed than to meaningfully and creatively assessing the mission performance of grant recipient organizations.

Modest financial scale but intense personal involvement

2006-10-10T10:27:00.000-07:00

Collaborative relationships need not be based on large gifts. The financial scale can be modest while the personal involvement can be intense.

Rebecca Berman is a retired New York City schoolteacher living in Teaneck, New Jersey. Not wealthy but frugal, Berman has pursued her philanthropic passion of helping children and families in the poorest areas of Guatemala. A 69-year-old widow and three-time cancer survivor, Berman first went to Guatemala through an exchange program in 1992. Though she had always been committed to public service and philanthropy, the opportunity to make a difference in Guatemala was striking.

On her trip, she heard that $1,000 could build a school. Following the trip, she raised money from friends to build three schools in remote areas of the country. Her commitment, however, is about more than raising money and writing checks. Berman has visited Guatemala nearly every year since, bringing everything from basketballs to books as well as money raised for new schools and health care.

Back home in New Jersey, Berman convinces friends, stores, and hospitals to donate goods that she brings to Guatemala. She seeks out deals at yard sales, and takes goods that others might throw away. She has found or been given clothing, wheelchairs, and school supplies at little to no cost. In Guatemala, she is connected with the schools, clinics, and families, which allows her to target her efforts to the needs of the communities. Giving across national boundaries creates cultural challenges and requires more than check writing.

Berman’s small-scale approach to giving allows her to meet these challenges by engaging very directly and deeply with the schools she has founded and supported.

The four types of philanthropic relationships

2006-10-03T09:25:00.000-07:00

When these two dimensions are joined, four types of philanthropic relationships emerge (see figure below):

• contractual relationships in which donors and recipients simply give and get under narrowly circumscribed terms and then go their own way
• delegating relationships in which donors delegate responsibility freely to those doing the work
• auditing relationships in which trust is low and oversight is extensive so as to monitor the precise use of grant funds;
• collaborative relationships in which the two sides work together closely to achieve a set of mutually agreed upon goals.

Forms of Philanthropic Relationships

What do these different engagement strategies look like in practice? When writer James Michener came to Texas in the early 1980s to research the novel he was writing that would eventually bear the state’s name as its title, he was given tours of the biggest ranches, an office at the University of Texas, and special attention from the governor. Michener came to love the state and bought a house in Austin.

He volunteered, in his words, as a “teaching assistant” in the graduate fiction workshops at the university. Michener worked closely with students, commenting on their work, encouraging when necessary, and giving them career advice. In 1988, he gave $1 million to create an interdisciplinary master of fine arts degree at the university, which would provide students with training in fiction writing, poetry, playwriting, and screenwriting. The goal of the programs was to develop multi-dimensional graduates who could work across a range of writing professions.

Michener was not an absentee donor. Instead, he worked with the students and helped set the direction for the center. Within a couple of years, he made another gift of $3 million, followed by a $15 million contribution to fully fund the new Texas Center for Writers, including fellowships for writing students. Michener was very involved with the program until his death in 1997.

Collaborative relationships involve not only the gift of money but work together based on shared values and mutual interests.

Two critical dimensions

2006-09-26T08:35:00.000-07:00

As they become more and more comfortable with giving, donors come to define for themselves an engagement style that fits somewhere between totally hands off to deeply engaged. For nonprofits, these decisions about style can have significant consequences.

High levels of donor engagement may mean access to resources and talents of great value to the nonprofit. It may also entail a tremendous amount of extra work, as donors need to be handled and satisfied. For this reason, some nonprofits prefer to receive general operating support with as few strings attached as possible. Over time, however, almost all nonprofits learn to work with the different engagement approaches of their donors and understand that considerable variation is to be expected.

In thinking about the question of philanthropic engagement, two critical dimensions to any relationship between giver and recipient impose themselves. The first dimension is the one just described: the level of donor engagement, which can vary from very light oversight to heavy-handed control. The level of engagement will vary not only based on the style of the donor but also on the nature of the work being carried out by the recipient.

Some work, such as scientific research or the arts, makes it hard for donors to be engaged directly in the funded work because it simply requires a certain amount of independence. Other kinds of projects, such as youth programs and scholarship funds, are far more wide open to donor involvement and even reengineering. After all, everyone has an opinion on how to help young people, but few people know enough about genetic research to get deeply involved.

The second dimension is simpler and only describes the level of congruence or match between the values and intentions of the donor and the recipient. In some situations, donors and recipients think alike and share common aspirations, while in other cases, the two parties are very far apart, even if this is not apparent at the time of the grant. In either event, it is possible to view congruence, overlap, and coincidence in outlook and underlying values between donors and recipients as central to the formation of a strong working relationship.

The balance between high and low engagement

2006-09-19T09:37:00.000-07:00

Why would a donor seek a high level of engagement with a recipient organization, rather than simply maintain a more traditional and distanced philanthropic relationship?

The high engagement donor may want to get involved because they are reaching for the highest rung on Maimonides’ ladder: helping others to help themselves and gain independence. Or they may seek a high level of engagement simply because they believe that they know better than others how to manage a project, even if they lack the specialized training and experience of the leaders within the recipient organization.

This impulse to micromanage and meddle can be a product of years of managerial work in the business sector, which may have led to substantial wealth creation and success. It is often just a small—though sometimes unwise—leap to assume that these patterns will lead to success in philanthropy. It is also possible that the drive to engagement can be related to vanity, overblown self-confidence, or a desire to impose their will on others.

On the other extreme, an increasingly smaller number of donors are happy to withdraw from the grantmaking process and to let recipient organizations do their work as they see fit. Such deference may stem from a recognition that in many cases it is the nonprofit that truly understands the problem at hand. It can also be the painful result of experience in attempting to be highly engaged, leading only to the recognition that nonprofit managers prefer to have plenty of leeway in how they operate their programs.

There are other reasons to resist jumping too quickly into the philanthropic fray. Low engagement has been justified in the name of professional detachment and as a necessity for maintaining objectivity. It is also far easier and less time demanding to limit the scope of the giving relationship to pre and post grant evaluation, rather than to expect the donor to take partial responsibility for the execution of a program or for the recipient organization’s performance. In fact, the more engaged a donor is with a project the harder it may be to exit or terminate the relationship, if the facts so dictate.

Engagement can muddy the philanthropic waters by placing the donor into the program that is being funded, a position from which it is hard to render tough and objective judgments about quality and impact. For this reason, there are cases in which donors need to actively resist the temptation to throw themselves into the fray and get their hands dirty.

Philanthropic disintermediation

2006-09-12T09:14:00.000-07:00

In assembling a plan for giving including an engagement strategy, donors need to think carefully about the question of who will carry out their philanthropic work and how this work will proceed.

In some cases, donors will seek out the advice and counsel of family members, friends, lawyers, and consultants when executing their giving. These parties may be brought in to assist with planning or implementing a philanthropic agenda.

A trend toward philanthropic disintermediation has, however, emerged in recent years: Younger donors increasingly have decided to cut out all philanthropic middlemen, and instead look to themselves as the principal agents of their own philanthropy. This do-it-yourself turn is, of course, the simplest solution to the agency question in philanthropy, one that removes the threat of deviation from the donor’s intent that delegating responsibility can create.

Engagement styles range from very hands-off approaches, in which nonprofit autonomy and expertise are privileged, to a more deeply engaged approach, in which the donor and recipient work together on program development and problem solving. There are donors who are involved in all aspects of their giving and with the work of the organizations that receive their funds. Often stemming from a sense that philanthropy must be about more than check writing, involved or engaged donors want to feel a connection and offer advice and input above and beyond funds.

This may lead the donor to talk to and toil alongside the inner-city community activists as they weed out a plot in the community garden that has gone unattended so as to understand the community better. It may entail listening in on a board meeting of an organization that is attempting to overcome a challenge and offering some suggestions where appropriate. It may involve the regular introduction of independent evaluators into the program to advise both the organization and the donor on the strengths and weaknesses of the program design and implementation. There are many ways that donors can and do more than just send checks.

The important question is why do donors at times become engaged and how do they go about adding value through engagement?