Barbs, Jabs, and the Roles of Community Foundations

Phil Buchanan

Articles about foundations aren’t typically as full of barbs as Marc Gunther’s long piece on the Silicon Valley Community Foundation (SVCF) in the most recent edition of the Stanford Social Innovation Review. That makes it an entertaining read, but the underlying debate — about the role of community foundations — makes it an important one.

Some of the tough talk comes from Gunther, who harshly critiques SVCF CEO Emmett Carson and his apparent unwillingness to guide donors to focus on pressing issues in the local community. Carson, Gunther asserts, “has done nothing that could be called bold or innovative.” Gunther faults SVCF, which has grown dramatically and now has more than $8 billion in assets, most in the form of donor-advised funds (DAFs), for “how little this seemingly huge foundation reflects the ambition and spirit of Silicon Valley.”

Carson, meantime, isn’t having it, and gets in plenty of jabs of his own. He defends the foundation’s approach and its facilitation of giving globally and across the country, as well as in the local community. He says the merger a little more than a decade ago of Penninsula Community Foundation and the Community Foundation of Silicon Valley to form the foundation he now leads has been a skeptic-defying success story.

“The smart money said we couldn’t do it. The smart money said it would fail. The New York Times ran an article that said my days were numbered,” Gunther quotes Carson as saying. But, Carson tells Gunther, “we have exceeded everyone’s expectations on every metric you can have.”

Boom.

Carson goes on to speak less than glowingly of those who came before him, too, telling Gunther, “The predecessor foundations spread money around in ways that were not impactful.”

“What about the Poor Kids in East San Jose?”

Gunther and Carson have totally different takes on the impact of the foundation Carson leads. I, personally, have no clue which one is closer to the truth, and of course part of the challenge is that they define success — and impact — very differently.

The crucial question Gunther’s piece raises relates to the roles a community foundation should play.

In light of the increasing array of choices for how donors do their giving, what is the right stance of community foundations today and in the future?  Should they adapt by seeking to be more like the other options in this new marketplace? Or should they double down on their community focus, seeking to provide leadership and guide donors toward addressing key community challenges? Or does the answer differ based on local context?

In his comments to Gunther, in his writing, and in remarks I heard Carson make at an Independent Sector conference a couple of years ago, it’s clear that Carson rejects the idea that a community foundation’s chief asset is its community focus and expertise — and he balks at the notion that a community foundation should seek to use its local expertise to influence donors’ giving. At the Independent Sector session I attended, he said, essentially, that it was foolish to think it was even possible to do so in an era of easy access to information and expertise.

Instead, Carson defends an approach in which the foundation he leads projects a sort of agnosticism about where their donors’ dollars go — both geographically and in terms of issue areas. He presents his views not just as what is right for SVCF, but as more broadly relevant to the nearly 800 community foundations across the country.

Writing in 2013 in SSIR, Carson declared that the success of SVCF “raises profound questions about whether traditional definitions of place and community can or even should remain constant in a century when people are increasingly global citizens and issues come in and out of relevance.”

“Philanthropy is intensely personal,” Carson is quoted as saying in Gunther’s piece. “The fact that I think housing and transportation are critically important, does that mean hospitals aren’t important? Does that mean the arts aren’t important?”

Contrast this with the view of Sterling Speirn, who ran one of the “predecessor foundations” that Carson called “not impactful” (before going on to run the W.K. Kellogg Foundation). “What about the poor kids in East San Jose?” Gunther quotes Speirn as asking. “Wouldn’t you like to think that their lives are markedly different because they live in the same place as the Silicon Valley titans?”

Fair question.

“Not a Door They Know How to Open”

And, indeed, similar questions about the obligations of Silicon Valley donors and the institutions through which they do their giving were raised last year in an important and impressively comprehensive report by Alexa Cortés Culwell and Heather McCleod Grant of the consulting firm Open Impact. (Disclosure: Culwell served on the CEP Board of Directors, rotating off due to term limits in 2010.) In the report, titled The Giving Code: Silicon Valley Nonprofits and Philanthropy, Culwell and Grant write:

All the wealth being created in Silicon Valley right now is driving enormous increases in new philanthropy. … To be sure, many of these givers are directing some of their funds to local issues and causes. However, our data shows that a larger portion is being directed toward nonprofits based locally — primarily private schools, universities, and hospitals — but not necessarily to nonprofits serving local community needs. In this last category stand thousands of community-based organizations working to address not just immediate needs in the region, but underlying systemic problems that are complex and pernicious, such as homelessness, poverty, and faltering public schools. … These nonprofits are struggling to keep pace with exponential increases in demand for their services, lack the capacity and the funding to gain real traction, or are themselves in financial distress. … The support they need to have more systemic impact is often right next door, but it is not a door they know how to open.

SVCF, perhaps more than any other single institution in Silicon Valley, is well-positioned to bridge the divide that the Giving Code documents.

Evolving Views

What’s fascinating in all this — and missing from Gunther’s otherwise thoroughly researched piece — is that Carson’s views stand in stark contrast to his own past stance, when he ran a different community foundation.

A decade and a half ago, during his tenure as CEO of the Minneapolis Foundation, Carson wrote that “community foundations are facing a profound identity crisis because of the recent emergence and rapid proliferation of commercial gift funds. … At the heart of this crisis lies a choice between two different approaches — one that focuses on catering to donors’ needs, the other that focuses on community needs.”

Arguing that the latter was the better choice, Carson worried that “donor-focused community foundations will likely avoid controversial topics.” He cautioned against being responsive to the desire of donors to create donor-advised funds, arguing that community foundations should seek to build unrestricted assets with which to focus on the most pressing community needs.

“The real lesson to be drawn from burgeoning donor-advised funds is that the community-building roles of traditional community foundations have enormous value — a value that commercial gift funds and donor-focused community foundations are incapable of replicating,” Carson wrote in 2002.

In essence, Carson made the same argument that Gunther makes today: that if community foundations don’t embrace their community leadership role, they forfeit their unique asset relative to donors’ other options (such as national gift funds).

Carson is entitled to change his mind, of course. But it’s remarkable that the very community foundation leader who was perhaps the most forceful advocate against community foundations losing their focus on community impact now champions the opposite approach. Perhaps that is because he now runs a foundation that has only a tiny proportion of its total assets — $216 million, according to Gunther — in endowment funds; the rest are in DAFs.

Effective Altruism Versus the Pull of Place

And yet it’s too easy, I think, to just slam SVCF for adopting such a wide-open stance about where people give. While many of us feel a deep pull toward our local communities, there is a credible argument to be made that increased international giving — through whatever vehicles — is a positive development.

Some go so far as to suggest that the urge to give locally is misguided, morally.

No one has argued that case more effectively than Princeton philosopher Peter Singer, the founder of the “effective altruism” movement. In his books The Life You Can Save and The Most Good You Can Do, Singer argues that, if you value human life equally, you’d give internationally to the poorest parts of the world, where you can save or significantly improve a life for a relatively small sum of money.

To Singer, donors have a moral obligation to think about where they can do the most good, regardless of proximity. Inevitably, he argues, the answer — if judged on a cost per life saved or affected basis — is outside the U.S. Singer and the movement he spawned have many followers among the Silicon Valley ultra-wealthy. He would probably applaud Carson’s encouragement of donors’ global giving.

But people live in communities, of course, and to most of us, it feels important that we take care of our communities.  Notwithstanding all our global interdependencies and the connections technology enables, community for many of us is still very much about place. And, in this country, community foundations have played a crucial role in connecting those with resources to opportunities to make a difference in their communities.

Culwell and Grant argue that, in Silicon Valley, there is an acute need for this kind of connection because of the differences in experience, and even language, between the worlds of the ultra-wealthy and the often small nonprofits working locally to help those in need. “We would argue that Silicon Valley has a unique opportunity to address this challenge,” they write in The Giving Code. If that region could “break the old economic model and build a new one,” they argue, “it would be the ultimate disruption and the ultimate creative triumph.” They believe it would be a powerful signal to others, too, with the positive effects of success rippling far beyond Silicon Valley.

Harbinger or Anomaly?

The issue isn’t so much about whether giving internationally or locally is better — both are clearly needed. It’s about what role community foundations are best-positioned to play, now and in the future.

Carson sees Silicon Valley as a harbinger. “We see the future today,” he told the New York Times in 2015. “You all see the future tomorrow.” It’s pretty clear he feels that the community foundation he leads is charting the path of the future, and that others would be wise to follow.

I’m not convinced. My view squares more with that of the nonprofit CFLeads, which supports community foundations and describes them as “vital partners in building communities where all residents are prosperous, healthy, and secure.”

Gunther quotes CFLeads President and CEO Deborah Ellwood, who argues that, “At their best, community foundations are local organizations that are using a whole toolbox to strengthen their communities. … They have local knowledge. They create and disseminate local information. They can also, of course, engage residents. … They’re also working across sectors. They can fund advocacy, and they can lobby. They are trusted, so they can be even-handed contributors.”

Examples abound of community foundations doing just the things Ellwood describes, in the specific ways that make sense given their particular local contexts. Take the work of the Community Foundation Serving Boulder County to coordinate relief work in 2013 following severe flooding there. Or the efforts of the Community Foundation of Greater Birmingham to create Railroad Park and a nearby light installation called LightRails, which has helped bridge the divide between the south and north sides of the city. In his SSIR piece, Gunther highlights the work of the Greater Buffalo Community Foundation to form a coalition aiming to “radically improve” public education, which has generated some impressive results.

I talk to a lot of community foundation leaders, and if there is a trend I see, it’s toward more focus on leadership in their geographic communities. It’s about more of an effort to inform and influence donors, and to connect them to opportunities for local impact, not less. The growth in interest in CFLeads, from 25 foundations providing support in 2009 to 78 in 2016, according to Ellwood, also suggests that Carson’s vision of community foundations may, in fact, be more anomaly than harbinger.

What Donors Value

And, as it turns out, community leadership is what community foundation donors want. In analysis conducted for our 2014 report, What Donors Value: How Community Foundations Can Increase Donor Satisfaction, Referrals, and Future Giving, CEP analyzed the views of 6,086 donors of 47 community foundations to understand the drivers of donor satisfaction. What we found is that there were four elements that predicted the majority of variation in donor satisfaction ratings — in this order of importance (with the first two roughly equal):

  • Responsiveness of foundation staff when a donor has a question or needs assistance
  • The extent to which the foundation is making an impact on the community
  • Satisfaction with the foundation’s leadership in the community
  • Satisfaction with the foundation’s financial practices, in particular
    • Investment strategy and performance
    • Administrative fees and costs

Simply put, our research at CEP shows that community foundation donors value community foundations for their community impact and leadership.  That is the role they want them to play!

Perhaps Silicon Valley donors are different, fundamentally, from all other donors. But I doubt it.

The desire for community impact is, presumably, why donors give to community foundations — whether through direct contributions or the establishment of DAFs — in the first place.

My view is that community foundations should focus on what they are positioned to do uniquely well, as the 2002 Carson argued so well, rather than seeking to compete with national gift funds by emulating them. It’s almost always wiser, in my view, to evolve to be the best contemporarily relevant version of what has historically been your strength than to seek to become something entirely different.

After all, different institutions play different roles, and it’s a good thing that donors have choices. They can choose the institution that’s right for them, given their values and interests and priorities and philanthropic goals.

Ultimately, community foundations should aim to strengthen their communities and work to make them places where every citizen has access to meaningful opportunity. How, exactly, community foundations do this will change as times change and the context and available tools evolve. And it will vary in its particulars from community to community.

But, to me, this is what community foundations should be about.

How well they do that — much more than their asset size or growth — is the measure of their performance that should count the most.

Phil Buchanan is president of CEP. Follow him on Twitter at @philxbuchanan.

SHARE THIS POST
, , ,
Previous Post
Legacy Foundations and Risk-Taking: Different Approaches to Empowered Philanthropy
Next Post
Returning to Relationships

Related Blog Posts

Menu