Michigan Foundations Short-Change Underserved Communities

(Clean water protesters. Residents of Flint Michigan were let down when public water was horribly contaminated due to institutional neglect).

From 2003 to 2013, Michigan’s 66 foundations – including some of the largest in the nation, such as The W.K. Kellogg Foundation, McGregor Fund, and The Kresge Foundation – gave $10.3 billion to programs based in the United States. During that period, the U.S. was at war and was in the midst of the worst economic recession since the great depression. In a word, It was a period of great uncertainty for many.

Yet only 31% of that $10.3 went toward programs that benefited lower-income people and other disadvantaged communities and vulnerable populations, including people of color, children, domestic workers, immigrants and refugees, the incarcerated and formerly incarcerated, the LGBTQ community, people with disabilities, people with HIV/AIDS, sex workers, and women and girls who have been victims of abuse.

Support for advocacy, citizen engagement, community organizing, and long-term solutions to inequality faired even worse. Finding solutions to global income inequality can’t even begin when, here at home, we put forth limited resources for finding solutions to inequalities in our own neighborhoods.

So far, the year 2017 has brought rapid change and nonprofits will undoubtedly look to foundations for support and direction over the next decade. The election 2016 fallout has led many funders to change course.

Groups of people previously passed over for by funders have become top priorities, and programs previously considered ineffective because of their grand social visions are receiving renewed attention. Upcoming grant cycles will most likely see an influx of funding for nonprofits dedicated to underserved populations and social justice issues.

Discover more information on funders and nonprofit organizations by reviewing their information available online through the Foundation Center.

Jennifer and Peter Buffett: Power Shift Key to Social Change

(Peter Buffett, left, is both an accomplished musician and famed philanthropist)

Jennifer and Peter Buffett – daughter-in-law and son of the billionaire investment expert Warren Buffett – penned an intriguing op-ed for Time early this week that fits in with the philanthropy zeitgeist. On the heels of the Ford Foundation’s announcement that it will begin focusing on systematic change that empowers underprivileged communities, the Buffets (who head the NoVo Foundation) seem prepared to follow suit.

The Buffetts write:

Over the last decade, we have been on a journey, at once both global and deeply personal, toward a deeper understanding of the economic, cultural and political systems that shape our world and what transformative change really means. And if anything is clear, it’s that true change will always require challenging conversations about “us”— not a monologue about helping “them.”

In our work around the world visiting NoVo grantees, we started to see how philanthropy often thinks that it knows what’s best for communities rather than the other way around. Social progress was seen as something that should be driven by experts from outside, with new “solutions” and technological innovations that could drive “impact” in communities who needed help from others. We came to recognize philanthropy that dictates solutions top-down to communities as patriarchal at its core, even when it’s intended to help women and girls.

How we give is therefore intrinsically linked to why we give. Form and function have to align. A philanthropist from on high will never reach down and “empower” a girl in Sierra Leone. That girl is inherently full of power and potential, and we should start by asking what stands in the way of her having a strong voice and influence on the decisions that shape her life and her community.

Whether or not this rhetorical shift lends itself to future NoVo operations that genuinely offer empowerment solutions versus one-off fixes remains to be seen. It is, however, welcome that yet another high-profile grant-maker has come to see some of the contradictions and inefficiencies of token philanthropic wisdom.

Click here to read the whole op-ed.

Los Angeles Nonprofits to Receive $1 Billion in Grants

To honor its hundredth year, The California Community Foundation has announced that it will distribute a whopping $1 billion to Los Angeles nonprofits within the next ten years.

The foundation is leveraging its wealthy supporters as well as discretionary funding it has acquired over the past decades to make the new push, which represents a sizable increase over recent activities. Over the last decade, The California Community Foundation dispersed $700 million dollars to support a wide variety of nonprofits.

In order to execute on its promise, the foundation will actually have to kick into fundraising overdrive. According to staff, however, the added work will permit the organization to pursue its mission and principles.

The California Community Foundation’s President and Chief Executive Antonia Hernandez told reporters that the organization is prepared to accomplish this formidable project:

For us, it’s a stretch and we will have to go out there and work more with our donors, but we feel that we will be able to meet that commitment. We didn’t want to make a statement or commitment where we felt it was not doable.

It is unclear whether or not the foundation will follow in the footsteps of other high-profile grant-providers, such as The Ford Foundation and The Chicago Community Trust, which have both shifted their priorities to tackling inequality, as well as to providing more overhead funding that gives nonprofits breathing room to cultivate staff and capital assets.

In the past, The California Community Foundation has awarded funding to all sorts nonprofits, including arts groups and basic needs assistance organizations.

Nonprofits and individuals can apply for grants on the foundation’s website. Applications are reviewed by a 20 person advisory board that makes the final decisions on which applicants will receive funding.

Detroit: Leader in Philanthropy Innovation

Detroit’s economy has long been in the doldrums. The slow decline of the city’s once-great auto industry – along with the deleterious effects of the housing bubble and 2007 economic crash – rendered Michigan’s largest metropolitan area perhaps the poorest of its size in the United States.

Adversity, however, can breed innovation. With a little assistance, Detroit is quickly becoming a laboratory for community empowerment and grassroots organizing. The city’s nonprofits are benefiting immensely from these trends, and could point the way to the future for the nation’s philanthropy sector in addition to revitalizing this great U.S. city.

The Ford Foundation – the nation’s largest grant-maker and beneficiary of Michigan’s historically dominant economy – made waves earlier this year when it announced that it would revamp its guiding principles for awarding grants, directing all of its efforts toward combatting economic and racial iniquities as well as committing more funding toward nonprofits’ overhead as opposed to programmatic funding. This underutilized funding methodology itself could revolutionize the way that nonprofits succeed. With actual investment and the ability to acquire capital assets, nonprofits can hire, develop, and retain staff as well as grow operational capacity without having to worry about rigid line items delineated by myopic grant conditions.

The Ford Foundation’s scope, while including Detroit, is national. Detroit-focused foundations and initiatives are also similarly rethinking the game, and are generating an innovative philanthropy climate as a result.

A collection of stakeholders called Detroit Future City offers an exciting vision: unity between business, community, and philanthropy groups working to produce a just environment that improves quality of life and increases economic opportunity. The ad hoc organization grew out of the technocrat-authored Detroit Future City Strategic Framework. The document explores what assets the city of Detroit has, and expounds on possible ways to utilize them with the ultimate goal of pulling Detroit and its citizens out of the morass of economic depression and urban blight.

According to the group’s website, Detroit Future City is predicated on a holistic approach to addressing the city’s ills:

It’s not based on a vision of only how the city looks, but also how it works. It is based on a realistic understanding of current resources; is flexible enough to respond to changing needs and opportunities; and can evolve over time as it’s used and conditions change.

A look at the organization’s list of chartered initiatives yields an impressive array of ongoing and completed programs ranging from small business development to neighbood solar initiatives. A number of foundations – including The Kresge Foundation, The W.K. Kellogg Foundation, and The John S. and James L. Knight Foundation – have pooled millions of dollars to distribute to the various initiatives, which involve nonprofit, business, and community partners working together.

Looking to grow both businesses and community groups through joint charters, Detroit Future City heralds an interconnected local economy that strives toward the greater social good. This trend may be catching on, evident in Philadelphia’s pro-start-up climate. In the City of Brotherly Love, new businesses can defer certain taxes by contributing to local nonprofits. These initiatives spread the benefits of economic development, grow local philanthropy cultures, and create essential ties between private and nonprofit entities that benefit the community.

A number of businesses from the private sector are also stepping up to help nonprofits improve the quality of life in Detroit. This month, J.P Morgan Chase announced that it would continue offering its support to a number of area nonprofit organizations. Twelve managers from different sectors of the company’s operations – divided into four teams – will assist four organizations in their areas of expertise. The recent round of advisors will assist Eastern Market, EcoWorks, Greening of Detroit, and TechTown.  Executives from J.P. Morgan Chase have committed to sending two sets of teams to assist Detroit nonprofits per year through 2018.

While there is still a great deal of hard work to do, Detroit is making great strives towards revitalization. Part-and-parcel with this process is the growth and success of the city’s philanthropy sector – a fact that is not lost on those leading the charge for Detroit’s rebirth.

The Chicago Community Trust Follows Ford’s Lead

(The Chicago Community Trust President Terry Mazany)

The Ford Foundation appears to have struck a nerve.

Following the grant-making giant’s announcement in June to provide more funding for nonprofit operations support, other groups are following suit. Terry Mazany – president of The Chicago Community Trust – announced that his organization will begin offering grants from between $35,000 to $300,000 to Chicago’s “anchor organizations.” The grants are designed to explicitly fund operations budgets.

Mazany acknowledged the shortcomings of hitherto applied grant-making criteria in a speech at his foundation’s “State of the Community” event:

As foundations, we have been rightfully accused of creating too much administrative work that takes nonprofit resources away from their mission and establishing grant requirements that distort a nonprofit’s mission in order to satisfy funder priorities. Some of the things we do actually undermine your ability to be successful.

It may take years before this new framework proves its worth, but the logic behind it is predicated on basic business concepts. When invested with unrestricted capital, businesses can grow dynamically. Nonprofits, however, have long been bogged down by onerous requirements attached to their funding. The results-based, programmatic approach that demands concrete reporting on the progress of carefully delineated line items does not typically give nonprofits flexibility.

No-strings-attached funding provides nonprofits with breathing room, allowing them to accrue staff, make technology improvements, and increase overhead with the goal of improving overall efficacy as opposed to supporting individual projects.

Mazany also announced that, like the Ford Foundation, the Chicago Community Trust will begin focusing inequality and social justice causes. In strong words, he remarked: “We must stop kicking the can of racism down the road for the next generation to resolve.”

Key Elements Group LLC will continue reporting on this trend in grant-making.

Targeted, Nonprofits in Russia Flee

A number of high-profile nonprofits in Russia are fleeing, as the country’s governing elite moves to ostracize and persecute international NGOs.

Russia’s upper house of parliament has constructed a “patriotic stop list” that includes a host of international NGOs that Russian authorities feel either pose a threat to their hegemony or are antithetical to Russian principles. A number of renowned organizations face scrutiny, including Amnesty International, Human Rights Watch, Carnegie Moscow Center, the MacArthur Foundation, and the C.S. Mott Foundation. The latter two organizations have already announced plans to cease operations in the country.

Russian legislators have paved the way for fines and jail time for individuals caught violating laws barring certain nonprofits from pursuing their organizational missions.

This is not the first instance of nonprofit groups running afoul of overbearing authorities under Putin’s reign. Environmental groups and LGBTQ rights organizations have long faced persecution at the hands of the nation’s security apparatus.

What the exodus of international foundations from the country means for Russian citizens and culture remains to be seen. Organizations such as the MacArthur Foundation elevate intellectual and artistic genius to the international stage. With the grant-making organization’s departure, Russian citizens will be deprived of invaluable grants promoting Russian art and thought. Furthermore, the absence of human rights organization will only further obscure the plight of marginalized communities in Russia, such as the nation’s LGBTQ community and Central Asian immigrants.

Philanthropy Supports Struggling Greece

As Greece scrambles to produce a list of economic reforms to satisfy its creditors, it is still unclear whether or not the Mediterranean nation and its primary negotiating partners will reach an agreement that keeps the Hellenic Republic in the Eurozone.

The country’s debt crisis has proved intractable. Following the onset of the 2008 recession, Greece has struggled tremendously. A list of austerity measures – including privatizations and pension reforms – has left much of the population reeling financially.

Economists initially projected only a few tough years before the economy rebounded. Instead, unemployment rates are currently higher than those of the United States during the Great Depression of the 1920s and 1930s. Some fear that an exit from the Eurozone will leave a collapsed economy, and an exacerbated humanitarian crisis that could threaten the population’s access to basic needs items.

Strict credit controls have limited the amount of cash available to Greek citizens. As the nation quickly depletes the remaining bank reserves, the future – no matter which way it goes – promises to be difficult.

Outside of the economic effects that a “Grexit” would have on the philanthropic sector, there is another charitable angle to the crisis: foundation and nonprofit support for struggling Greek citizens.

A number of philanthropic entities have sought to mitigate the social effects of the great recession. The Stavros Niarchos Foundation (SNF), for example, initiated an ambitious three-year program in 2012 aimed at alleviating the worst effects of Greece’s economic crisis. After spending $130,000 million on 200 grants – primarily on social welfare, but on arts and education as well – the program benefited nearly 500,000 individuals, or 4.5 percent of the nation’s population. The grants also sustained 3,000 jobs, and is believed to have doubled the economic impact of the grant monies issued.

But the SNF initiative and the work of other smaller philanthropic groups in the extensive Greek diaspora still fall way short of the support needed by a population without opportunity and a diminishing social safety net.

The country’s path over the seven years following the global recession has been rocky, painful, and socially devastating. Greece’s economy has retracted by 25 percent since 2009, and its unemployment rate hovers around 25.6 percent. Its youth unemployment fares even worse, sitting just shy of 50 percent. Those without work are increasingly less likely to find it – 75.3 percent of the country’s unemployed were without work the preceding year. Greece has seen a 35 percent suicide rate increase since the initiation of harsh austerity measures in 2011.

The problems that Greece faces are variegated and require comprehensive relief efforts from government institutions, foundations, and nonprofits. While many media reports choose to focus on the mere economics, the real human impact is jarring. Some generous individuals, however, are beginning to take notice, and are making charitable gestures that could compel others to act.

A tragic photo that emerged this week depicted an elderly Greek pensioner crying outside of a bank. James Koufos, an Australian business man, recognized the gentleman as an old school friend of his father’s. Moved by the photo, Koufos requested that anyone in the Greek public with the man’s contact information step forward, offering to pay his pension. He stated that he “will never allow to see a fellow Greek proud hardworking man starve.”

As the human toll becomes more apparent, other philanthropists and donors may come out of the woodwork to help citizens bogged by depression, betrayed by the nefarious and disingenuous dealings of their country’s political and economic elites, and deprived of the resources they spent their working lives to secure.

Philanthropy and the Greek Debt Crisis

Following the break-down in talks between Greece’s political leadership and the country’s creditors – also known as the “troika,” including the International Monetary Fund, the European Commission, and the European Central Bank – Greece’s financial crisis has entered its eleventh hour.

While the drama is still playing out, it is all but guaranteed to have an impact on the global economy – including the philanthropic sector. 

Last minute attempts on Tuesday from Greek Prime Minister Alexis Tsipras to secure a third bailout faltered, as German Chancellor Angela Merkel indicated that there would be no further negotiations until the results of Greece’s July 5 referendum on the current bailout package become known. Leaders across Europe argue that the referendum is a de facto vote for Greece to either remain in the Eurozone or leave.

On Tuesday evening, Greece has become the first developed nation to default to the IMF, missing a €1.6 billion loan repayment, entering insolvency and quickly approaching bankruptcy. The country also has the distinction of being the first European Union member to default on its creditors.

The global effects of the crisis are already taking shape. In Asia, stock markets fell 3 percent on Monday, while Europe dipped 4 percent in anticipation of the Greek default.

International turmoil this year has had little effect on U.S. markets. In fact, the U.S. exchange has gone through the longest post-recession stretch of time without a 5 percent sell-off. Additionally, the United States has little direct economic interest in Greece; the nation amounts to less than 1 percent of U.S. trade.

The real threat is the spillover that would occur from European markets, which would take a serious hit following a Greek default and a “Grexit” from the European Union. The biggest fears rest on the potential backlash, which could involve investors pulling money out of struggling Eurozone countries including Italy, Spain, and Portugal, as well as potential bank runs in those nations.

If the more pessimistic projections prove correct and the default and “Grexit” rattle global markets, the result could be a huge blow for the philanthropic sector, which is just now enjoying a return to pre-recession levels. Indeed, the sector broke a new record last year, raising $358.4 billion. This extraordinary feat – which defied predictions that it would take ten years for philanthropy to recover – was aided significantly by increased giving from corporations and foundations, which outpaced the rate of growth for individual giving.

As a Stanford report details, foundation and corporate giving are heavily influenced by stock market trends, and dip accordingly when markets take big hits. This means that, should the United States fall victim to the financial fallout of “Grexit,” the fastest recovering segment of philanthropic giving would face a hurdle to its robust rebound.

Nothing is certain yet. The referendum on creditors’ bailout demands is this Sunday, and a yes vote may pave the way for further talks that will mitigate Greece’s technical default and generate a plan to continue pumping Greek banks with funding in order to return the nation to solvency. But pending these compromises and deals, the philanthropy of corporations and foundations could face the detrimental effects of a sliding market. 

Ford Foundation: Inequality, Operations Spending Represent New Era

The Ford Foundation – the second largest grant-making organization in the United States – made big news on June 11 when it announced a major shift in its grant priorities and funding strategies. Last year, Ford Foundation president Darren Walker surveyed grant recipients on their most pressing issues and concerns, compiling over 2,000 responses from today’s most active nonprofits.

This pulse reading has resulted in what could end up being the decade’s most significant and influential sea change in philanthropy.

Under Walker’s leadership, the foundation has announced its new priority to focus exclusively on fighting global inequality. In addition, it will also dedicate a full 40 percent of its funding for no-strings-attached operational support.

The new focus on inequality breaks down into six areas where nonprofits are fighting to improve people’s lives: civic engagement, racial and gender equality, inclusive economies, internet freedom, creative pursuits, and educational opportunity. This rhetorical revolution has big implications, as the language of social justice emerges from the margins and becomes a mainstream language used to describe positive social change.

In an op-ed penned by Walker, the foundation’s president explores the overarching importance of acknowledging – and tackling – inequality, and how it relates to virtually all of today’s most urgent problems:

We have affirmed that inequality extends far beyond the wealth gap. Inequality is political, social, and cultural in nature. It contributes to deficits in democracy and discrimination along racial, ethnic, and gender lines. It is reflected in rising extremism, acute poverty, and even in the consequences of climate change.

As part of the “grand bargain” for revitalizing Detroit, the Ford Foundation has taken a leading role in promoting the arts. With the new shift in focus, artistic grant applicants will now have to focus on the discourse of inequality and social justice. Furthermore, nonprofit organizations that contextualize their work within the global context of inequality will stand a better chance of receiving one of the foundation’s highly coveted grants.

This is immensely significant. As research has shown, younger generations care passionately about issues revolving around inequality. Whether it’s racial, gender, or economic, inequality is at the forefront of younger generations’ mindset. Not only is the Ford Foundation’s change in priority reflective of the cultural zeitgeist in the United States, it will also contribute to this evolving mentality, and in turn generate a movement to strike at inequality’s root causes.

The second big piece of news from the foundation’s announcement is that it will dedicate 40 percent of its funding toward operations. Nonprofits – with thinly stretched resources and staff – are often expected to spend their funding on short-term projects. With pressure from donors to produce results, nonprofits often adhere to a fire sale model in which they sponsor many short-term projects at the expense of cultivating well-structured institutions. 

This model, however, precludes the kind of comprehensive, long-term planning that the private sector values and that often sets successes apart from failures. Uncharitable – the influential (and controversial) book by Dan Pallotta – explores these themes by discussing how to strengthen the philanthropy sector and equip nonprofits with the resources they need to make real, positive change. According to Pallotta, nonprofits need investment just like any other institution to grow and be successful. In order for this to happen,  he argues that the nonprofit sector needs to move past its insistence on demonstrating high programming expenditure and low overhead.

The Ford Foundation’s move toward operational spending is a bold step toward a growth mentality. By investing in operations, nonprofits will see assets and value grow, and will be able to organize for long-term successes. Indeed – should other foundations follow suit – we may be entering a new era of nonprofit funding, one that will produce more efficiency and able institutions.

Success – however – is contingent on patience and diligence. The Ford Foundation’s experiment will be meaningless if, after a short time, the philanthropy switches back to its old model. To see whether operational investment makes the profound difference its proponents claim it will, the model has to be set in place for years. As exciting news as the Ford Foundation’s announcement is, it’s significance will largely be determined by the foundation leadership’s commitment to this visionary framework.

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