Are Foundations In Tune with Democratic Process?

Last week I saw a glimpse into the future of California philanthropy: big money and big commitments, the kind of which could literally change the course of how some California communities develop over the next decade.

Bob Ross, president of the California Endowment, a statewide foundation that has a health focus, held a roundtable discussion where he announced that the endowment will be allotting up to $10-20 billion to 10-15 different communities across the state, starting in 2010. These next two years will serve as the planning stage, determining who will receive funding and for what purposes over the course of a decade, and Ross is getting input from community based organizations on their perspectives early on in the process.

The influx of resources points to the increasing role private foundations are playing across the globe, whether it is Bill Gates’s foundation in developing countries, the California Endowment, or even the Community Foundation Silicon Valley in the South Bay. Whether a nation or a city, the process tends to be the same.

As government spending on public services such as health and educational needs decrease in certain places, the gap is often filled by philanthropic giving to nonprofit agencies that provide the needed services. The process serves many communities in need, but it has also changed the conversation of who a community goes to for assistance, who is deciding where resources go, and, consequently, who is determining the future of these communities. The foundation entity, although certainly helpful and necessary, is at times replacing the democratically elected state apparatus. From India to San Jose, foundation leaders have become de facto civic leaders due to the wealth they can inject into a community, and their ability to save failing schools, health care systems and societal infrastructures that people once looked to the government to fix. And so while it was incredible that Bob Ross asked community groups what the needs of California were going to be in the upcoming years, the point is he didn’t have to.

During the meeting, while different organizations were subtly trying to jockey for their respective communities to be a part of the multibillion-dollar windfall, Ross also asked a question we rarely even ask ourselves: “Is there another way to do philanthropy?” The room fell silent. As nonprofit organizations, we had all played the game of vying for a funder’s attention, but never questioned the framework of the game itself, at least while a foundation representative was sitting in front of us.

And the reality is, if foundations are going to continue to expand their role in terms of developing and sustaining communities, there should be another way of doing philanthropy—one that is accountable, participatory, and responsive to the changing needs of the populations it is investing in.

The California Endowment’s direction of how it will distribute its billions of dollars is already departing from traditional foundation grant-making. To begin with, it is valuing community building as a measurable outcome in and of itself. Many times, nonprofit organizations struggle to articulate the value of their work in terms of “measures of success”—hard, calculable numbers that often times do not speak to the real impact of the work, which is a community emboldened with a sense of agency and self-determination. Secondly, by investing in actual communities, it is an acknowledgment that people are more than one-issued problems, but, rather, complicated populations that exist in a broader political, economic and social context.

However, part of the changes in philanthropy also needs to be on the receiving end. One of the outcomes of the growth of the nonprofit industry is that there is a generation of young people who feel they need foundation money to start and maintain any community enterprise. The nonprofit/foundation era has unintentionally created a sense of dependency in community organizing. Invariably, the need to receive grant funding also dictates the decision making of many organizations, thus relinquishing the direction of the work to the foundations, rather than the agencies and the people they represent themselves.

And lacking from the foundation-driven economy is any built-in mechanisms of accountability—ones that even exist in the market economy, ones we learned here in Silicon Valley the hard way. The bursting of the dot-com bubble is an example of how detached, unaccountable spending, ultimately faces the reality that it must produce what it promised, or suffer the consequences. The foundation economy has no such inherent regulators, and is based on the subjectivity of the foundations themselves. As much as there are plenty of organizations that use foundation investments appropriately, there are also nonprofit organizations that are not doing what they promised, or even asked for by the community. They just have good grant writers who spin the work accordingly.

Today’s Mercury News piece on the 15-month evaluation of the merger of the Community Foundation Silicon Valley and the Peninsula Community Foundation makes the lack of accountability even more of a concern. That merger created a consolidation of grant-making resources: 1,500 donors with $1.9 billion. The monopolization of grant money essentially gives the Silicon Valley Foundation a major role in determining the future of our communities. One can make an argument that a decision maker at that foundation has more power and influence than some of our elected officials.

As our California communities expand, let’s hope that as the needs evolve, our delivery system for resources also grows with us.