It’s January again, time for forward looks (and a backward glance or two). In this post, I do some of both. In a similar post at the beginning of 2022, I noted that others looking at the coming year were cautiously avoiding predictions, given the uncertainties in our world. That uncertainty dominated 2022. Perhaps 2023 will be no different.
So, for 2023, rather than predictions, I suggest new hopes and reluctant fears for the work of philanthropy, building on what I suggested in early 2022.
My starting point for these hopes and fears is the belief that philanthropy is an act of relationship. Not just a handover and hand-off but a mutual exchange. Not a choice between trusting or controlling but a productive combining of assets.
I share this belief with Phil Buchanan of the Centre for Effective Philanthropy. Towards the end of 2022, he described his hopes (and some fears) for grantmaking philanthropy in the United States in a long public essay. This essay summarizes very effectively the questions posed by changes in the philanthropic landscape over the last three years. Buchanan puts his finger on an important question provoked by the calls for less control by funders over their grants. Many of these calls suggest that funders should simply trust their grantees and give with no conditions. This did not consider the need for ongoing and mutual accountability, so necessary to relationship.
Must there be a choice between trust and accountability? No, according to Buchanan. “Thoughtful donors and foundations”, he says, “reject the notion that there need be a dichotomy between strategy, assessment, evidence, and learning on the one hand and trust, listening and flexible support on the other. They recognize that trust develops over time. They embrace mutual accountability. They realize that, while the knowledge and expertise of those closest to issues should be respected, foundation staff and donors do often possess useful knowledge, too.”
The key to this is the assumption that there is value in ongoing relationship between funder and fund receiver. In the Canadian context we too hear calls for more trusting, more flexible, more responsive philanthropy. The overlapping crises of the last three years have lent urgency to these calls. Many funders have responded by providing more general and unconditional support and by relaxing their reporting requirements. These changes should endure. But there is more to do if funders are going to build more effective relations with a broader range of communities and partners.
In that vein…. I hope in 2023
I fear in 2023
A Wild Guess
Last January 2022 I guessed that the federal government would act to reform the Income Tax Act and guidance restricting the ways in which charities grant to non-charities, in Canada or beyond borders. And the government did indeed move toward change in this area, after enormous advocacy efforts by the charitable sector. My hope for 2023 is that the federal government (through the Canada Revenue Agency) will put out guidance that truly responds to the sector’s needs for clarity and flexibility and that expands accessibility to funding. A wilder guess is that the federal government will agree to have an open dialogue about the wider definition of charitable purpose, with a goal of modernizing our regulations.
Final Note: You will find many more examples of foundations changing their strategies and building more effective relationships in my new book From Charity To Change: Inside the World of Canadian Foundations, out now from McGill Queen’s University Press.
This is a more personal post than usual. It’s about Canadian foundation philanthropy, as may of my posts are. But it is also sharing some of my personal reflections as I look forward to the publication at the end of November of my book From Charity To Change: Inside The World of Canadian Foundations.
Why did I write a book about Canadian foundations? It’s something that I have thought about for fifteen years, although the writing took only two. Over those fifteen years, I have seen a lot of change in the foundation world. Some of it was driven by outside events. Some of it built on the connections and inspirations provided by the growth of personal and digital networks. Some of it has come through internal change as foundations have learned from their own experiences. There has been enough change to make an interesting story that I thought worth telling.
This book is based on stories of individual foundations. But it is also a story about a story itself. One of the reasons I felt compelled to write was that I had been working on telling a good story about the role of foundations for many years. Of course, I should say immediately that generalized narratives about foundations founder quickly on the diversity of foundation behaviours and actions. It’s difficult and inaccurate to say that all foundations play a specific and similar role beyond that of provider of capital for social good.
But in the absence of details or data, stories are built around assumptions. Narratives are built around what can be seen, such as foundation grants. Or about what is not seen, such as how foundations make decisions or what their motives are. There is a public interest in what foundations do and why because there is a public investment in them, through tax subsidies offered to donors. But there is also a default to suspicion in the absence of information, or in the presence of wealth for public benefit without public input on its distribution. In the worst Interpretation, foundations are institutions used by wealthy people to impose their own priorities or to subvert public priorities around social change, while maintaining their own privilege.
I had a motive to develop a more positive story about the role of foundation philanthropy. As the leader of Philanthropic Foundations Canada, it was my job to craft it. I was also more than curious about the unique role that foundations could play in our society. Over the years, I worked on various stories about the roles of foundations, ranging from social investor to strategic risk-taker, to social R&D funder, to convenor and catalyst of change and to community partner. What I understood as I learned more about the realities of foundation philanthropy was that no one description was going to fit. Foundations themselves were changing their missions and roles.
This is what I wanted to capture in a book. I chose to write about foundations in Canada who are generally independent and run by autonomous boards, whether connected through family or not. In talking about foundation philanthropy, I did not focus on public foundations which fundraise for their institutions or communities, although many do extraordinary work. I also chose to write about foundations whose work has evolved over a period of 20 years or more, because this provides a track record of change. And I chose to write about foundations who already understand the importance of communicating what they do and how and why. So, my twenty-plus foundation stories are not representative of all foundations or even of a majority. But they are stories that I hope provide a richness of detail which will nuance the prevailing narrative on foundations. I hope to dispel the mystery, to show that foundations are run by serious people who have humility about their roles and curiosity about their communities, who are willing to change course and to learn from their actions, who are committed to working and sharing with others.
It could be said that I chose only the most positive stories. But I am not uncritical in the book. I am well aware that foundations in Canada are being reproached, as they are in the United States and elsewhere, for not moving quickly, for not responding to the needs of the present, in a world of rapid climate change and increasing inequality. Foundations, just like other organizations, must focus more on equity and inclusion. And they need to be more transparent. That means sharing data more proactively, not only because the regulators ask for it. To show themselves accountable, foundations need to explain what change, what social impact, they seek and how they are going about it. The foundation leaders who I interviewed know this. And many others who I haven’t included directly in the book but to whom I have spoken know it too. Younger generations of families on boards, new leaders of recently-created foundations and donors who have emerged in the last decade are responding to the world of 2022 with creative strategies for deploying capital for public good. A book written five years from now may well include them.
What I wanted to show in this book was that while foundations may vary in their missions and roles, there are common characteristics shared by those who have grown in their social impact over the years:
These are what make the stories in this book relevant beyond Canada. Yes, this is an insider account about Canadian foundations. But it is informed by, and I believe, important to the work of foundations in the United States, the United Kingdom, and other parts of the world. Foundations in all these places are doing the work that I describe in Canada: strengthening communities, building fields, advancing public policy, confronting climate change. What I hope is that by giving some depth to the story of what these foundations do, I also have shown why foundations matter and why we should care. I am as curious and eager as ever to find out what happens next.
In a recent blog on philanthropic accountability I noted that accountability can take many forms; in philanthropy it often takes the form of accountability for achieving results (mostly successful results).
In this blog I want to focus more on the question of accountability for philanthropic learning. What happens when you don’t get the results you expected? Who decides when and how a philanthropic project is a failure? And more importantly how might one hold accountability for learning from failure?
We know it’s easier (and more appealing) to claim accountability for success than it is for failure. Both funders and fund recipients want to know that philanthropy has “succeeded” in its purpose. And they tend not to want to talk about when it doesn’t work. As I noted, accountability in the form of measuring results tends to predominate in discussions of accountability for both funders and nonprofits. This can be as straightforward as confirming that the funds were received and spent as agreed, with no reference to outcomes. Or it could include some accounting for numbers of beneficiaries reached and services provided, again without reference to outcomes. Failure might then be a failure of control but not of outcomes.
But what if philanthropy were accountable as much for learning as for controls or even for outcomes? What would that look like and how might it change the relationships (and accountabilities) between funders and fund recipients? These questions aren’t original. They come up most often in discussions about learning through evaluation. Many funders understand the value of evaluations, and even set aside some funds for it in their grants to charities But, as Caroline Fiennes, a UK-based consultant and director of Giving Evidence, has pointed out, “most charities shouldn’t evaluate their work”. She notes that charities are best at implementation not at evaluation, and that it is a waste of their time to ask them to use research skills they don’t have to produce information that may already exist elsewhere about the merits of their interventions.
So, what should funders do? Fiennes is a believer in practicing rigorous, evidence-based philanthropy. But she suggests that funders learn by seeking out sources of reliable evidence on what works from evaluators and researchers. Where reliable evidence doesn’t exist, this may be an indication of a gap that a funder can fill by supporting new research. In doing so, a funder is amplifying its own learning and acquiring reliable evidence that can help shape its funding decisions, without asking the charities themselves to supply the needed evidence. A funder can in this way take accountability for its own learning.
Today, many funders are being told to leave accountability for success or failure in the hands of the people who know the context and the beneficiaries best. This may be a fair statement to make about rebalancing power in relationships between funders and charities. But it doesn’t mean that funders should retreat from the opportunities to learn that could be offered through funding relationships. This point was well-made in a recent special feature of Alliance Magazine on Learning from Failure. Donika Dimovska of the Jacobs Foundation, guest editor of this feature, points out the advantages of systematic and proactive learning in philanthropy. She also points out “the disconnect we often find between how funders and their grantee partners set expectations and hold each other accountable not only for outcomes but also for learning.” Dimovska wonders “how often do you hear a grantee asking the funder: what did you learn, let alone what and how did you learn from a failure? ‘Failures’ are almost never the result of individual players but are rather the result of the interplay of actions, behaviours and attitudes of several actors operating in complex systems, which is why… engaging in transparent, intentional, evidence-based learning together with our grantee partners can be very powerful.”
There are many ways that funders can engage in (and demonstrate accountability for) systematic learning. They can fund the rigorous gathering of evidence, as noted earlier. They can engage in evaluations, especially developmental evaluations which can help them adjust their own strategies and thinking, using emergent learning approaches. They can be disciplined about testing their own assumptions and hypotheses about the work they want to pursue. They can structure learning among groups of their partners by giving them opportunities for sharing learnings with each other. They can use Pause and Reflect approaches and techniques to systematize their learning and do it collaboratively with grantees. They can create learning agendas. There is no shortages of examples and tools for philanthropic learning. What is needed is a learning “mindset”. Such a mindset is not common in philanthropy. As Donika Dimovska says ruefully, “learning how to learn is the ultimate frontier for many of us”. Yet there are examples of foundations in Europe, the United States and Canada who are adopting this mindset and whose leaders are highly committed to learning. Metcalf, Lawson, Hallman and Bombardier are just four of the Canadian foundations who have accelerated their learning approaches through the pandemic crisis as shown in Approaches to Learning Amid Crises: Reflections from Philanthropy. It’s even more important that these leaders and their colleagues share their learning about learning as widely as possible. When accountability for learning becomes as important as accountability for results, the conversation about the role of philanthropy can begin to shift from exercising power to deploying wisdom.
Who sets the standard for philanthropic “success”? And who is accountable to whom for that success (or lack of success)? Hard questions to answer for everyone involved in philanthropy, as givers, receivers, partners or critics. But more people are asking them now. I notice thoughtful public conversations happening about “being accountable” in the philanthropic sector. Two recent reflections on this topic really got me thinking about the differences in the understanding of “being accountable”... by whom to who and for what?
Being accountable means taking up or accepting responsibility to oneself and others. Being accountable also means being able to control or manage what you are doing. Not necessarily the same thing. Nancy Pole has a thoughtful article in The Philanthropist Journal on measuring and accounting for “success” in the nonprofit sector. She makes the point, rightly, that accountability in the minds of funders and fund recipients has been equated with control and with risk management. This is particularly true of government funders but has also been true of private philanthropic funders. The accountability goes from fund recipients back to funders. It puts the emphasis on the control of the funds awarded, not necessarily on the purposes and uses of those funds. Evaluations focus on measurement and management of performance rather than on stories of challenges, innovations and unexpected outcomes. In this situation, there are few incentives for accountability around innovation and around impacts on community or beneficiaries, beyond specific and quantifiable results. Fund recipients have every reason to prove to funders that they can get the results wanted by the funders, and little reason to show funders that they are learning and experimenting (along with or even instead of achieving targets).
Hopefully, the accountability conversation is changing. Pole notes examples from Ontario and Quebec of initiatives that feature more flexible approaches to assessing the value of philanthropic actions. These broaden the understanding of accountability to include funders in a system that holds funders accountable to their community partners. This mutual accountability can take the form of exchange: partners sharing information about their outcomes, and funders sharing grants data and aggregated outcomes, building shared knowledge about “what works”. Foundations have a trove of information, especially if they have been around for years and have made many grants. They can use this information for accountability to others…here is what we are learning… as well as for their self-accountability…how are we doing?
The more you consider philanthropic accountability, the more you see that it is not a simple act of accounting. It is a more nuanced action of “giving account”. Funders are accountable to regulators as registered public benefit entities. As organizations they are accountable to their boards and donors. As supporters they have a moral accountability to their partners. As social change agents, they should give account of their goals and strategies to the public more broadly. And as learners, they can give account to others in, as Pole puts it, “a collective undertaking of understanding, sharing and communicating our real successes and failures”.
Accountability came up again in a podcast conversation between Senator Ratna Omidvar and Liban Abokor, one of the founders of the Foundation for Black Communities. They discuss the question of how foundations as public benefit organizations can be held more accountable for their responsibility, or “duty of care” to Canadians. Abokor suggests the need for a mechanism for philanthropic accountability mandated by government. He says that such a mechanism would measure whether foundation boards “are making the right judgments and disbursements on our capital”, arguing that tax exemptions and tax incentives to donors for gifts to foundations mean that the capital of a foundation should be considered public wealth. Abokor believes that a “useful, relevant and impactful accountability mechanism has to be introduced to Canadian philanthropy…that will ensure…that we’re always thinking about who we’re giving to and how that giving is having an impact.” While Abokor did not have time in the conversation to elaborate on why he thinks a new mechanism is needed to mandate accountability, he is clearly impatient with the lack of urgency across the philanthropic sector to assume a broader accountability for creating public benefit.
Foundations that are registered charities report their revenues and disbursements, as well as the names of their directors, to the Canada Revenue Agency and the public. There are ways in which this mandated accountability to the public could be expanded. For example, a lively debate is happening in the nonprofit sector around ways to increase diversity on boards of charities, partly through mandated diversity data collection and disclosure, as a way to demonstrate accountability to a more diverse Canadian population. The federal government is considering recommendations for changes to the Canada Not-for-Profit Corporations Act, which might include similar disclosure requirements on diversity as currently apply to for-profit corporations in Canada. There have also been calls by the Advisory Committee on the Charitable Sector and others to increase the mandated collection of information on charity investments in the annual charity reporting form (T3010). But Abokor is going further and suggesting that a mechanism is needed to ensure that “we’re doing the things we’re supposed to”. He wants transformation, not incrementalism.
I don’t dispute the need for more transparency, for a greater sense of urgency, for more inclusive and equitable philanthropy. The conversation about accountability must go beyond avoiding risk and managing charitable dollars prudently (even though our legal and regulatory requirements as charities push us in that direction). I am less sure that change in philanthropy can be forced top down or mandated externally. One of the great public benefits of thoughtful philanthropy is its ability to take leaps, to fund what is risky or has unknown outcomes, to provide models and learnings for social change. Government commissions aren’t known for their promotion of risk or transformational impact. Let’s agree on a broader and more inclusive accountability that encourages philanthropy to learn, to evolve, to do better, and to do so in relation with a more diverse community.