| FORD FOUNDATION PRESIDENT SUSAN V. BERRESFORD ADDRESSES THE CHALLENGES OF PHILANTHROPY
On October 23, 2003, Susan V. Berresford, president of
the Ford Foundation, delivered a speech to mark the inauguration
of the Center for Leadership of Nonprofits, Philanthropy, and
the Public Sector at the Humphrey Institute of Public Affairs.
Below are her remarks.
I am pleased to join you to help inaugurate the Humphrey Institute's
new Center for Leadership of Nonprofits, Philanthropy, and the
Public Sector. Doing so, I want to join Nelson Colon in honoring
the memory of Bill Diaz and the philanthropic work he did here
and at the Ford Foundation. Bill was a friend, a colleague,
and a fine grant maker from whom I learned a great deal. It
is also a pleasure to speak to an audience that is knowledgeable
about philanthropy and the third sector, and to raise some of
the complex issues that confront us today. As "insiders,"
we can and must examine some basic questions about our work
and community.
The great potential of your Center encourages me to focus particularly
on a question often heard these days: Is support for the nonprofit
sector in the U.S. deteriorating? In the process, I hope to
raise some issues that need thoughtful analysis, issues that
may be fruitful areas for the Center's research.
It is disturbing to hear suggestions that support for non-profits
is deteriorating. We know that the third sector's work and its
institutional diversity are important in our lives and communities.
Our government relies heavily on it to deliver services and
goods. We praise the many ways the sector helps us each day,
while acting as society's conscience, innovator, and binder
of its social fabric. So we must pay attention to this question.
But it cannot be answered with certainty. There is little systematic
and nuanced research available. Opinion polls only capture the
broadest and crudest trends. More to the point, the public barely
recognizes the third sector as a conceptual or organizational
category.
At the same time, organizations in what used to be an invisible
sector are suddenly getting attention from government officials
and the media. Much of this attention seems to be negative or
questioning. Our sector is increasingly subjected to "noise"
or "static" in place of knowledge and comprehension.
Along with the normal good news, we hear charges of mismanagement,
even misdeeds, insider dealing and excessive pay and perks.
We in the nonprofit arena must respond.
I see three main causes of the "static."
First, it is a natural consequence of our sector's growth.
In recent years non-profits have grown bigger and more influential,
and that always attracts attention. The numbers of U.S. nonprofit
groups have doubled over the past decades. Much of that growth
came in the 1960's and 1970's, when social movements, often
led by leaders of non-profits, shaped public consciousness.
And you and I know that some of their work is controversial.
Local service organizations that help needy neighbors sometimes
also represent the views of local residents that can challenge
the status quo. Many voluntary organizations focus on specific
issues, such as the environment, human rights, and a multitude
of other concerns, some of which arouse advocates of opposing
views. Developments like the proliferation of family foundations
in the 1980s and 1990s attract interest. We see a similar explosion
in numbers and visibility of non-profits outside the U.S., where
they are a new force influencing policies and attitudes about
important issues.
Such growth in numbers, size, and influence attracts both positive
and negative scrutiny. Sometimes the media uncovers mistakes
and even misdeeds that make good stories. That helps root out
wrongdoers, but it can also generate public skepticism. In an
atmosphere of suspicion, regulators pay closer attention to
the third sector and lawmakers are tempted to gain political
mileage from helping fix what is or looks broken. So a good
deal of the "noise" around us is the inevitable result
of the third sector's new status as a major player. Sadly, the
sector's growth comes at a time of declining public confidence
in major institutions such as business, the church, and government.
So it's no surprise that nonprofit institutions are sometimes
suspect too.
A second contributor to "static" is the eroding social
safety net. As governments at all levels cut programs, many
people and communities suffer. Some believe our sector must
become more efficient so we can do more to make up for the cuts.
Others say wealthy nonprofit institutions should give a greater
proportion of what they have - hence the focus on foundation
payout requirements and on the relatively low payout rates of
university and college endowments. Ironically, sometimes the
loudest voices calling for higher payout to address social concerns
are those who advocate or make those cuts in public safety net
programs.
Fairly or unfairly and for a variety of reasons, the public
expects a great deal from non-profits in times of community
need. Thus, we may see renewed demands for spending by college
and university endowments and new demands on community foundations
that currently have no payout requirement. We may see more stories
about alleged excessive pay, perks, and wasteful spending in
our sector. And donors who want to create foundations in perpetuity
may find new barriers, even accusations that they are on ego
trips that ignore current suffering. So let us remember that
public policies cutting into people's sense of well being directly
affect perceptions of our sector's proper role.
The third factor creating concern is terrorism - domestic and
international. This may seem an obscure issue here in Minneapolis
tonight, but there is a good chance that it will grow and it
is now an element in some regulators' views of our field. That
is because a few U.S.-based non-profits have been accused of
raising and channeling monies to overseas terrorist organizations.
Some authorities believe nonprofit sector funding practices
must be carefully reviewed, and so the Treasury Department developed
guidelines intended to prevent charitable donations from reaching
terrorists. We are likely to see more of this kind of scrutiny
and rule making aimed at terrorist networks. And sad to say,
we also have nasty and violent hate groups among us, some organized
in volunteer associations. So we remind ourselves that being
a nonprofit does not guarantee goodness.
These three contributors to static around our sector: growth,
along with some misdeeds, public program cuts, and terrorism,
are likely to remain in the spotlight for some time.
What can we do about these challenges? We cannot simply sit
by as they generate skepticism about our field. I want to suggest
five positive steps we can take. I hope they at least suggest
some ideas for future work in this exciting new center.
First, nonprofit organizations need to take a hard look at
how they operate and address practices that can be perceived
negatively in today's environment. Our behavior must meet reasonable
public expectations of the charitable sector, and it must reflect
the fact that the bar has been raised. To ensure proper practices,
we should adapt to our own sector relevant recent corporate
governance reforms. We should be vigilant in complying with
legal requirements related to preventing funding for terrorism.
Auditing ourselves in all of these respects may well reveal
pay, professional conduct, and operational practices we should
modify, change, or make more transparent.
Second, we need to work with our regulators rather than seeing
them as the "feared other." Most agencies overseeing
the nonprofit sector are under equipped, understaffed, and underfunded.
Even if those conditions change, regulators cannot do the job
alone. Broad sectoral legal compliance requires organizations
in the field to adopt and promote high standards among its members
and police itself. This means rethinking the way the complex
infrastructure of philanthropy functions and developing strategies
that focus more energy and capacity on compliance issues. There
is much to do here. This is the time to make cooperation with
our regulators a top priority.
Third, our sector needs political champions. We have sometimes
mobilized people to contact decision-makers in state capitals
and Washington to prevent bad legislation. But we need champions
to go to bat for our sector on a positive agenda. That means
familiarizing people in state capitals and Washington with our
issues and engaging them in ongoing dialogue. Organizations
like the Council on Foundations and the Independent Sector can
play a key role in this area. But so can regional and local
associations of non-profits, university study centers, and other
organizations like grantmaker affinity groups that represent
significant slices of our field.
Fourth, we need to enhance public and media knowledge about
our sector. Unless people know more about how we function and
what we do, they are unlikely to support us in bad times. That
is a tough challenge since the public knows very little and
since we have yet to agree on the messages we want to project
and how we deliver them. Priorities and strategies must be set.
That means making choices. Do we want people to understand why
the nonprofit legal status was invented and how it has evolved?
Do we want them to understand the importance of the sector's
diversity? Do we stress the link between our sector and our
nation's democratic aspirations? Do we explain the difference
between giving for current need and creating an institution
in perpetuity? There are dozens of similar issues that we'll
need to sort out before developing focused messages.
Further, we need a reliable database, developed and assembled
in cooperation with reputable third parties. Believe it or not,
we don't have enough data and analysis about the composition
of organizations in our sector, what they cost, what various
models offer, and what boards do. This was obvious during the
House of Representatives' deliberations on the Charities Act,
HR7. For example, the IRS data was very skimpy and therefore
not a strong factor in ultimate policy deliberations. Most of
the data brought into the debate was produced by advocates and
shaped to make points rather than reflecting and evenhanded
reality. We need to determine what data should be collected
regularly and reliably, and who should be encouraged to do that.
The issues I have raised are important because of our sector's
vast potential for good and for creativity. We must not lose
that potential either to negative public opinion or to misdeeds
or misunderstanding. Our society draws much of its strength
and future potential from the third sector, so we must protect
and strengthen it. I particularly value the sector for its capacity
to strengthen democratic principles. It enables individuals
to act in their community's interest, to be heard as they speak
their mind, and it allows multiple forms of public interest
participation in decision-making, beyond the simple formality
of voting. These are social benefits available through our sector
for people at various age levels, all income and ethnic groups,
and all geographic areas. This means that the third sector is
at the core of our freedoms and treasured values.
Let me close with two of the many examples of how innovative
non-profits fulfill that potential and foster democracy and
development.
Last month I visited Oakland, California where the Unity Council,
a community development corporation, cut the ribbon on its latest
project. You probably know that BART is the Bay area's subway
and rapid transit system. The project stemmed from BART's plan
to encourage drivers to use rapid transit by creating a large
parking facility near a BART station in Oakland. People from
farther out could park in Oakland and take the BART further
in toward San Francisco or into the city itself. The Unity Council,
rooted in Oakland's Hispanic community, saw the proposal as
an opportunity to revitalize the area around the BART station.
They ultimately arranged for the parking facility to be located
elsewhere, but nearby. In its place next to the station, they
proposed and have now built a complex of commercial, residential,
and community use space. Now instead of an ugly parking lot,
the community has new housing, a public library, a seniors'
service center, a childcare center, a bank branch, doctors'
offices and more. This very ambitious development project, costing
millions, involved all three sectors, but was coordinated and
driven by a nonprofit, the Unity Council. No one else had the
ambition or determination to attempt it, much less to pull it
off on time and on budget.
A second, very different example: many people toss pennies
in a jar rather than carry them around, and wind up with piles
of pennies they don't know what to do with. So an ingenious
New York nonprofit called Common Cents, working with public
and private schools, organized a project called Penny Harvest.
Around Thanksgiving, children all over New York City collect
pennies from their neighbors. They bring them to school and
then they are taken to a central location where they're carted
to the bank. Last year more than $600,000 was collected. Each
school is credited with its collected amount and then the kids
in each school decide on the philanthropic grants they'll use
it for. After going out to see what might be made better with
modest funds, students allocate money to things like park cleanups
where playgrounds are littered with broken glass, for clothing
for needy families in the neighborhood, and for entertainment
for elderly shut-ins. These small grants express the students'
perceptions of the needs existing around them. The project,
organized by a nonprofit, nurtures children's moral and activist
development. It takes discarded money, untapped youthful energy
and altruism, and school systems' capacities to organize and
turns them into a community asset.
I could give many more examples. These come from the Ford Foundation's
grantee list and I am sure each of you could offer others from
your experience. I like those two because they are so different
- one nonprofit redirects a government department's decision
in order to revitalize a neighborhood. The other captures undervalued
currency and the undervalued moral force of children and redirects
them to family and neighborhood well being.
This is some of what our sector can do. This is why we are
so proud of its capacity and reach. And that is why we must
be sure that we win and hold the public's confidence. Thank you. |
