I had the good fortune to attend a luncheon presentation at The Friday Forum* in Boston, by Jim Canales on September 23, 2016. Jim was appointed as president and trustee of the Barr Foundation in Boston in 2014 after spending two decades in a variety of roles at The James Irvine Foundation in California. The Barr Foundation, with $1.6 billion assets was founded by Amos and Barbara Hostetter, Jr.
Among the many topics Jim eloquently addressed, he spoke at length on the issue of transparency and how and why the Barr Foundation has evolved rapidly from a highly opaque foundation to a highly transparent one, and is funding projects to promote transparency. Hats off to Barr!
In research released in February of this year, The Center for Effective Philanthropy (CEP) found that both foundation and nonprofit leaders characterize transparency as “representing the values of clarity, openness, and honesty,” and 86% of foundation leaders surveyed believe transparency is necessary for building strong relationships with grantees. And yet, the report continues: “There is significant room for improvement in the degree to which foundations’ practices match the beliefs of their leaders about what is important to increase foundation effectiveness,” in particular when it comes to sharing how they govern themselves, manage their assets, assess their performance and respond to lessons learned.
The reality is that most foundations are opaque in their operation and grantmaking. Jim pointed out that (only) roughly 25% of foundations even have a website.
He also made the seminal point that the money in these foundations and the donors who provided it, also received tax benefits that we all pay for. Therefore, it is the obligation of foundations to shine a light on the entirety of their operations, just like they insist stake holder organizations do when applying for funds. This point is highlighted by the recent scrutiny of the Trump and Clinton family foundations.
Community Foundations are also at the center of this issue with regard to their donor advised funds. This is admittedly a pet peeve of mine. Community Foundations are not required to share the names of the holders of donor advised funds. Though more and more are publishing their list of donor advised fund names in their annual reports, there is no transparency regarding fund balances, recency and size of gifts made or grantees of those funds. These funds are established by philanthropists who receive tax benefits for their giving to the community foundation. The foundation then manages the funds and provides administrative services, and donors are not required to distribute the funds to nonprofit stakeholder organizations in any timely fashion, even over a period of years. All of this is with complete anonymity.
It is my hope, as it is for most advancement and stakeholder organization executives I know, that this push and movement toward more foundation transparency picks up momentum and eventually is embodied into law.
*Originally established as a speaker’s bureau, The Friday Forum has become a well established opportunity for senior development professionals, consultants and non-profit board members to hear presentations by thought leaders from many disciplines.