(Beth Simone Noveck is director of the Governance Lab and a former U.S. deputy chief technology officer.  Andrew Young is associate director of research for the Governance Lab.  A version of this blog post first appeared in Governing.)

The way governments and many philanthropic institutions give out money to solve problems is stuck in the past.

Challenge.gov, which celebrated its fifth anniversary this fall, is a federal website that showcases requests by government agencies for the public to tackle hard problems in exchange for cash prizes and other incentives. Since its inception in 2010, agencies have run more than 450 challenges to help ameliorate problems such as decreasing the "word gap" between children from high- and low-income families or increasing the speed at which salt water can be turned into fresh water for farming in developing economies.

Certainly the time has come for innovation in grantmaking. Despite its importance, we have a decidedly 20th-century system in place for deciding how we make these billions of dollars of crucial public and private grant investments. To make the most of limited funding -- and help build confidence in the ability of government and foundation investments to make a positive difference -- it is essential for our government agencies and philanthropic institutions to try more innovative approaches to designing, awarding and measuring their grantmaking activities.

In most instances, grantmaking follows a familiar lifecycle: An agency describes and publicizes the grant in a public call for proposals, qualifying individuals or entities send in applications, and the agencies select the winners through internal deliberations. Members of the public -- including outside experts, past grantees and service recipients -- often have few opportunities to provide meaningful input before, during or after the granting process. And after awarding grants, the agencies themselves usually have limited continuing interactions with those they fund.

The current closed-door system, to be sure, developed to safeguard the legitimacy and fairness of the process. From application to judging, most government grantmaking has been confidential and at arm's length. For statutory, regulatory or even cultural reasons, the grantmaking process in many agencies is characterized by caution rather than by creativity. Much of this description of the grantmaking process is also true of foundation philanthropy.

But it doesn't always have to be this way, and new, more open grantmaking innovations might prove to be more effective in many contexts. Here are 10 recommendations for innovating the grantmaking process drawn from examples of how some government agencies, foundations and philanthropists are changing how they give out money:

The pre-granting process:

• Use "ideation" challenges.Institutions can use "the crowd" to help formulate the problem a grant would be designed to solve.
• Improve the quality of applications through matchmaking.Online tools, like the North Atlantic Tourism Association’s Project Matchmaking, can help connect grant applicants with complementary partners to strengthen applications.
• Prioritize bottom-up participation.To break out of the traditional top-down approach, agencies may consider making bottom-up participation -- a scientist engaging non-professionals in data gathering, for example -- a condition of funding.

The granting process:

• Create open peer review and participatory judging processes.More open judging can solicit public input at the outset to narrow a broad field or, later on, to select final winners from a shortlist.
• Mobilize evidence-based grantmaking.Greater openness in grantmaking processes has the potential to lead to the availability of more and better evidence as to what works in practice.
• Leverage expert networking, matching experts to opportunities.Advances in information-retrieval technology and the large-scale availability of relevant data about people's skills have made it possible to automate the process of finding the right applicants or judges.
• Explore open alternatives to traditional grants.Through crowdfunding, micro-payments and prize-backed challenges, government can use its convening power to harness more broad-based sources of funds.

The post-granting process:

• Open up data about grants, grantors and grantees.Allowing others to easily discover what activities are funded has the potential to avoid duplication of investment, decrease fraud and abuse, enable better analysis of impact, and create a marketplace of non-winning proposals.
• Standardize reporting.To make open grantmaking data more useful, it is important to develop more uniform reporting standards for grantors and grantees alike.
• Open access to grant-funded solutions.Increasing access to the work product developed as a result of a grant helps ensure that the public can benefit from the knowledge that grantees produce.

All grantmaking organizations could benefit by taking a long, hard look at their existing procedures and determining how best to modernize and improve them, especially by throwing open the doors to more and more diverse participation.

--Beth Simone Noveck and Andrew Young

(Melissa Moy is special projects associate for Glasspockets. For more information about Sheryl Sandberg and the other Giving Pledgers, visit Foundation Center's Eye on the Giving Pledge.)

This Bay Area philanthropist is passionate about gender equity and continues to “lean in” for women.

Sheryl Sandberg’s education and professional experience have helped cultivate her philanthropic interest in empowering women, global health and poverty, and the environment.

Through a recent public filing, we learned that the Facebook Chief Operating Officer, 43, has donated $31 million worth of Facebook shares to the Sheryl Sandberg Philanthropy Fund, a donor-advised fund at Fidelity Charitable.

Based on Sandberg’s giving interests, the majority of this latest gift will likely support women’s empowerment, particularly Sandberg’s own initiative, Lean In, and the Lean In Foundation, which are both committed to “empower[ing] all women to achieve their ambitions.” 

Spurred by the success of Sandberg’s bestselling, Lean In: Women, Work, and the Will to Lead, the Lean In Foundation seeks to inspire and support women through its online community, free expert lectures, and local peers groups called Lean In Circles.

Sheryl Sandberg:

• Facebook Chief Operating Officer since 2008
• Became first female board member at Facebook in 2012
• Author of Lean In: Women, Work, and the Will to Lead
• Founder of Leanin.org
• 2015 Forbes Magazine rankings: #16 America’s Richest Self-Made Woman; #8 The World’s 100 Most Powerful Women; #1741 Billionaires
• TIME Magazine’s 100 Most Influential People in the World in 2013 and 2012
• Board member: Walt Disney Company, Women for Women International, the Center for Global Development, and V-Day
• Resides in Menlo Park, California
• Personal net worth is $1.3 billion

Professional Path to Philanthropy

While studying economics as an undergraduate at Harvard University, she met her mentor and thesis adviser Larry Summers.  She graduated with honors in 1991, the same year that Summers became chief economist at the World Bank.  As Summers’ research assistant for two years at the World Bank, Sandberg worked on various health projects in India, including Hansen’s Disease, AIDS and blindness.  

After earning her MBA at Harvard, Sandberg again teamed up with Summers, who was now Deputy Treasury Secretary under President Clinton.  As Summer’s chief of staff, Sandberg focused on debt forgiveness in developing countries; she continued in her role when he became Treasury Secretary. 

In 2001, Sandberg joined Google, where she helped develop the tech company’s philanthropic work, while heading its advertising and sales operations. 

“We wanted to do things that matter, not that were easy…We wanted to innovate, and we wanted to be disruptive,” Sandberg said of Google’s business and philanthropic principles during an annual gathering of philanthropists. 

Sandberg expanded Google’s giving principles so that it extended outside typical philanthropic boundaries, where charity generally stays within communities.  By focusing on worldwide issues – such as global health and poverty and climate change – Google’s philanthropic work could have a greater impact.

“We wanted to do things that matter, not that were easy…”

Since 2008, Sandberg has been a tremendous force at Facebook, where she helped the tech company scale its operations and expand globally.  By 2012, Facebook made its initial public stock offering, and Sandberg became the first woman on the company’s board of directors.

In addition to overseeing sales and business development, marketing and communications, Sandberg also expanded Facebook’s philanthropy.  Under her leadership, Facebook also highlighted organ donation; the addition of the status button helped spike the number of organ donor registrations.

Philanthropic Work

With her strong background in global issues, economics and philanthropy, it’s not surprising to see the evolution of Sandberg’s philanthropic philosophy.

Sandberg and her late husband, David Goldberg, founder and CEO of SurveyMonkey, joined the Giving Pledge in 2014.  Like Giving Pledge movement leaders Bill Gates and Warren Buffet, the couple pledged to donate the majority of their wealth during their lifetime.

The couple frequently advocated for gender equity and openly spoke about their support for shared earning/shared parenting marriage, whereby spouses equally share financial, family and parenting responsibilities.

Goldberg passed away in an accident in 2015.  In a heartfelt letter, Sandberg shared the importance of men leaning into their families.  Even in her grief, her passion for gender equity is evident, and she points to the benefits of gender equity for both men and women.

Sandberg has regularly leveraged her passion and influence to support causes she cares about.  In the Bay Area, Sandberg is co-chair of the Stand Up for Kids campaign, which supports the Second Harvest Food Bank of Santa Clara and San Mateo Counties.

The Menlo Park resident sits on the board of directors for Women for Women International, which helps women survivors of war become self-sufficient through microloans and job training; Center for Global Development, a Washington, D.C.-based nonprofit thinktank focused on international development; and V-Day, a global movement dedicated to ending violence against women and girls.  Sandberg is also on the board of the Walt Disney Company.

In 2013, Sandberg’s Lean In Foundation gave $415,000, according to tax returns. The gifts included $250,000 to Women for Women International; $80,000 to Stanford University for the Michelle R. Clayman Institute for Gender Research; $50,000 to V-Day; $25,000 to support the Open Field Foundation’s publication of “The Truth About a Woman’s Nation: Powerful, but Powerless”; and $10,000 seed money for the Wellesley Centers for Women at Wellesley College, a gender-focused research-and-action organization.

Empowering Women

Sandberg’s engagement in gender equity issues dates back to her Harvard days when she co-founded Women in Economics and Government.  Today, she regularly speaks on gender inequities, from TED talks to the World Economic Forum in Switzerland.  In 2015, Sandberg addressed U.S. Air Force Academy cadets on gender bias in the military.

In 2014, Sandberg and Lean In sponsored the Ban Bossy, a TV and social media advocacy campaign dedicated to banning the word “bossy” due to its perceived negative impact on young girls.  Celebrities including Beyonce, actress Jennifer Garner and former U.S. Secretary of State Condoleezza Rice contributed to the campaign’s video spots.

With her growing portfolio of philanthropic interests, from Lean In to her Fidelity fund, Sandberg is well positioned to be a major voice on gender and economic equality and the environment for years to come.

In the spirit of openness and transparency, it will be interesting to see if Sandberg, like her boss Mark Zuckerberg, will open up about the how and why of her philanthropy.  Zuckerberg and his wife Priscilla Chan recently launched the Chan Zuckerberg Initiative detailing the couple’s philanthropic plans.

Given Sandberg’s passion for global change and empowering women, we look forward to seeing her next philanthropic milestones and how she continues to inspire others.  

--Melissa Moy

Real estate developer Robert Kogod and his wife, Arlene, have joined the Giving Pledge.

For decades Kogod served with his brother-in-law, Robert Smith, as co-CEO of Charles E. Smith Company - the firm founded by Arlene's father - developers of Crystal City, VA, the expansive commercial and residential complex across the Potomac River from Washington, DC.

Robert and Arlene Kogod
Arlington, VA

The Kogods are known for their support of Jewish causes including the Shalom Hartman Institute in Israel and the Jewish Federation of Greater Washington. The couple is equally known as a major contributor to public life in the Washington, DC area, including support for the arts center at Sidwell Friends School, the Kogod School of Business at American University (where Mr. Kogod received his BA in 1962) and the Kogod Courtyard at the Old Post Office, for which their $25 million donation was, at the time, the fourth largest gift ever received by the Smithsonian Institution.

Since its inception in 2010, the Giving Pledge, Warren Buffett and Bill and Melinda Gates' effort to encourage the world's wealthiest to commit the majority of their assets to philanthropic causes, has garnered 142 signatories in 16 countries with a combined net worth of more than $708 billion.

Learn more about all the pledgers in our Glasspockets feature Eye on the Giving Pledge.

-- Daniel Matz

(Melissa Moy is special projects associate for Glasspockets.) 

There has been no shortage of media coverage on David Bowie’s musical legacy and influence as an artist.  A few articles have also focused on his philanthropic activities, which we will summarize here since the world of celebrity philanthropy is often not as visible as the star at its center.

The late British singer and actor, who died January 10 of liver cancer, was  passionate about philanthropic work that supported HIV/AIDS research and treatment, children in poverty, and humanitarian assistance for developing nations, according to Forbes Magazine. 

Bowie, 69, used his celebrity and influence to raise awareness and money for HIV/AIDS research and famine in Africa for numerous charities at his concerts.  The New York resident and his wife, supermodel Iman, have been deeply involved as donors and advocates for HIV/AIDS research for more than 25 years – especially noteworthy because they helped raise awareness in the early days when little was known about the global impact of HIV/AIDS, according to the nonprofit The Borgen Project.

Bowie actively supported Keep A Child Alive Foundation, which was co-founded by fellow artist Alicia Keys.  The foundation works to end AIDS for African children and their families and provides healthcare for those who lack access to life-saving treatment.  Iman also served as the foundation’s ambassador.

Additionally, Bowie partnered with War Child, an organization that helps children and youth impacted by war through music therapy, education, health and emergency programs.  He also contributed to the Whatever It Takes campaign, which supports 21^st Century Leaders.    

Several of Bowie’s notable charitable concerts included a 2006 gala performance for Keep A Child Alive and the acclaimed 1985 Live Aid concert, a 16-hour concert fundraiser simultaneously held in London and Philadelphia that brought attention to Africa’s famine.  Bowie was a headliner at the event that featured a number of prominent singers and bands including Paul McCartney, Elton John, Bob Dylan, Queen and The Who.

New York City Mayor Bill de Blasio declared January 20 as David Bowie Day.  The proclamation was expected to be delivered at the curtain call of the final performance of Lazarus, the Off-Broadway musical that Bowie co-wrote and co-produced.  Chicago previously named September 23, 2014, as David Bowie Day.

David Bowie is survived by his wife Iman; the couple's 15-year-old daughter Alexandria; and his son Duncan Jones, 44, whom he had with former wife Angie Bowie.  Given Iman’s philanthropic track record, she is likely to continue the couple's charitable legacy.  In addition to the charities already mentioned, Iman also supports Save the Children; UNICEF Go – 2 – School Initiative / Somalia; Hope for Congo; and the Dr. Hawa Abdi Foundation, which supports healthcare, education, WASH and agriculture in Iman’s native Somalia.

--Melissa Moy

(This post first appeared in Philanthropy News Digest.)

The amount of so-called dark money, contributions to nonprofits and other tax-exempt entities that are not required to disclose their donors, backing various presidential campaigns in 2016 is expected to exceed the more than $300 million contributed during the 2012 presidential election cycle, the New York Times reports.

The troubling lack of transparency, the Times notes, is being driven by political advocacy groups that exploit a loophole in the tax code that allows them to avoid disclosing their donors while holding on to their tax-exempt status. Many of those organizations court special interest groups and wealthy donors who crave the influence that political contributions can buy but spurn any public accountability implied by those contributions. For example, almost 20 percent of the television ads touting the positions of Sen. Marco Rubio (R-FL) have been financed by dark money, the Center for Responsive Politics reports, with most of that coming from the nonprofit Conservative Solutions Project.

The biggest dark money spenders in this cycle, however, have been the U.S. Chamber of Commerce and Crossroads Grassroots Policy Strategies, a D.C.-based nonprofit organization that operates under the umbrella of the American Crossroads "super" PAC, which was co-founded by longtime Republican strategist Karl Rove. While the Federal Election Committee could force such organizations, with their heavy involvement in political campaigns, to register as political action committees, the commission hasn't shown any inclination to do so. Indeed, with Congress having effectively quashed, in the ominubus spending bill it passed at year-end, near-term efforts by the Internal Revenue Service to regulate these groups until after the 2016 election cycle and the FEC content to sit on the sidelines, the Justice Department is seen as the only federal agency that might attempt to shed some light on their activities.

Fred Wertheimer, the president of Democracy 21 and a longtime advocate of campaign finance reform, has asked the Justice Department to do just that, with an emphasis on political activities associated with Rubio's campaign. "Secret money is the formula for corruption," Wertheimer told the Times. "It's the influence buyer's dream."

Albert R. Hunt. "'Dark' Funds May Bode Ill in 2016 Election." New York Times 01/03/2016

(Krystian Seibert is the Policy & Research Manager at Philanthropy Australia and tweets at @KSeibertAu.)

Mark Zuckerberg and Priscilla Chan’s recent pledge to donate 99 percent of their Facebook shares to the Chan Zuckerberg Initiative (CZI) quickly became the subject of criticism from some quarters of the not-for-profit sector.

Some of this criticism focused on how Zuckerberg and Chan decided to establish the CZI as a “Limited Liability Company” (LLC), rather than as a traditional foundation.

There are some advantages to doing this – a LLC has much more flexibility to contribute to the common good by investing in for-profit companies as well as by donating to not-for-profits.

But because a LLC isn’t subject to the same regulatory requirements as a traditional foundation, in theory it could fund things which don’t necessarily further charitable purposes.

“Legitimacy is critical to philanthropy.”

Criticism has also focused on how such a massive pledge, combined with the use of a “less accountable” LLC, could lead to a further concentration of power in the hands of wealthy people such as Zuckerberg and Chan.

This debate has opened up an opportunity to have an important discussion about how philanthropy, particularly “big philanthropy,” relates to the broader community – and what kinds of actions can enhance this relationship in order to maximize both philanthropy’s social impact and the community’s support for its work.

In this context, the concept of a “Social License to Operate” is very relevant. This concept has received more attention within the private sector, particularly within the mining industry, but has received little attention within the not-for-profit sector.

It reflects an increasingly common view that private companies can’t just do what they want and ignore the needs of communities. 

Rather, they need to acquire and maintain a Social License to Operate – which is the level of acceptance or approval continually granted to an organization’s operations or projects by the community and other stakeholders.

Defining the Social License to Operate

It’s not a license in a formal sense – you don’t apply for it and if you tick the right boxes you get it. It’s something a company earns through its actions – it’s an intangible asset which a company builds up and must work to maintain, in a similar way to a company’s reputation (although it’s different to a company’s reputation).

Therefore, Social License is a type of “informal” or “soft” regulation, as opposed to “formal” or “hard” regulation which is determined and enforced by governments and regulators.

It essentially revolves around a question of legitimacy – whether a company’s actions are viewed as “right” – not just by their shareholders, but by stakeholders more broadly. It has various levels, as shown in the diagram below.[1]

It’s therefore equally relevant to philanthropy. That’s because legitimacy is critical to philanthropy – if philanthropy is not seen to be contributing to the common good, or acts in a manner which is inconsistent with community expectations and norms, then it will lose its legitimacy. Ultimately that means that philanthropy will stop being philanthropy.

Philanthropy’s Social License to Operate

That’s why it’s important for there to be conscious attention to what philanthropic organizations need to do in order to acquire and maintain a Social License.

Arguably, Social License is easier to acquire and maintain for smaller foundations – for them it could simply come down to adopting a conscientious approach to grantmaking which involves supportive engagement with grant recipients, and being responsive to the needs of the community as they change over time.

It’s particularly important in the case of “big” or “mega” philanthropy such as the CZI – and for these philanthropic organizations the bar will be set higher.

That’s because “big philanthropy” does vest a large amount of power in philanthropists to direct what outcomes are funded. Despite widespread apathy about government, government does still derive legitimacy from the ballot box – but “big philanthropy” isn’t subject to elections or term limits.

Because of its size, the actions of “big philanthropy” will be scrutinized by other organizations within the philanthropic sector, not-for-profits, the media, as well as the communities in which it operates. Therefore, if “big philanthropy” lacks a conscious focus on its Social License, its actions could result in a loss of legitimacy.

So what does acquiring and maintaining a Social License actually require of “big philanthropy”? There are no hard and fast rules, and each philanthropic organization which recognizes the importance of its Social License should examine for itself what it needs to do in its own particular situation.

Transparency

However, operating in a manner which is transparent and shares power would be particularly important in the case of the CZI and other large philanthropic organizations.

“The Chan Zuckerberg Initiative will need to both be open about its work and also share power.”

Transparency means being open about how a philanthropic organization such as the CZI is governed, what it funds, how it funds and what the outcomes are.

If the community doesn’t know what the CZI is doing, how will they be able to make an assessment of that work and its merits in terms of furthering the common good? If the community is unable to do that, then it’s impossible to establish and maintain legitimacy.

A culture of secrecy tends to breed skepticism. On the other hand, by being and transparent and open, a philanthropic organization such as the CZI can actively demonstrate its commitment to the common good, and establish a relationship with the community based on mutual trust and respect.

A good first step would be for the CZI to commit to meeting the full range of transparency measures which are set out as part of the Foundation Center’s Glasspockets initiative.

Sharing Power

The next step would be to think about ways to share power, which means directly engaging with the communities in which a philanthropic organization such as the CZI will be active. Engaging doesn’t mean just listening – it means working in genuine partnership with stakeholders.

Again, there are no hard and fast rules – but at one end of the spectrum, such engagement would involve consulting stakeholders and using their feedback to inform a foundation’s strategy and key decisions. At the other end of the spectrum it could involve more directly including stakeholders in the decision making process, which is what one small foundation in Indiana has done.

I would expect that the CZI will be trying to address some really complex and multi-faceted problems – to do this effectively, it will need to both be open about its work and also share power with subject matter experts, community leaders, not-for-profits and other philanthropic organizations.

Sharing power is an opportunity to leverage expertise, secure stakeholder buy-in and also share responsibility for outcomes.

Ultimately these are just two examples of how philanthropy can go about establishing and/or maintaining its Social License – however every philanthropic organization’s legitimacy will depend on a variety of factors. It’s something “big philanthropy” certainly needs to focus on, but also something which all philanthropic organizations should turn their minds to.

What do you think philanthropic organizations need to do to establish and maintain their Social License?

--Krystian Seibert

 [1] Adapted from: Ian Thomson, Robert G. Boutilier, Modelling and Measuring The Social License To Operate: Fruits Of A Dialogue Between Theory And Practice, 2011. This paper, along with other resources on the topic of Social License, is available at this website.

(Janet Camarena is director of transparency initiatives at the Foundation Center.)

As we begin 2016, it’s important to reflect on the progress and highlights from the previous year.  And here at Glasspockets, we are always looking for examples of how the field is opening its windows and giving us all a better glimpse of what is going on inside. So, here you will find a listing of the top ten moments, efforts, and singular examples in 2015 that stood out to me as serving to bring the great kaleidoscope of philanthropy into sharper focus. 

The Thought Leaders:

#10 - Fund for Shared Insight (FSI) shares baseline report, Feedback Loops and Openness: A Snapshot of the Field, in March.  One of the report’s most interesting findings was that the key barrier to foundation openness is organizational culture.  This could be seen as a lowlight rather than a highlight since culture is tough to overcome.  But this was an important finding and report to be commissioned and shared because FSI is not just another industry group out to improve philanthropy; it is actually made up of philanthropy professionals now representing more than a dozen leading foundations, so the opportunity for peer learning, influence, and momentum building is high. 

#9 - Philanthropist and Silicon Valley Thought Leader, Laura Arrillaga-Andreessen, advocates that philanthropy should adopt a "glass skulls" approach, encouraging donors to open up about the processes and strategies foundations use to think through grantmaking decisions.  In an August Transparency Talk blog, she explained that true transparency "provides a window into the brain of the foundation," and also elaborated on the link between greater transparency and greater impact.  The tech community has not exactly been lauded for openness around its giving. Since Arrillaga-Andreessen is particularly influential among Silicon Valley’s tech philanthropists, this is a hopeful sign that her peers may eventually recognize openness - as a better strategy than stealth - to attain social impact. 

#8 - Leading foundations opened up their processes and strategies via the blogosphere and other online engagement.  Some foundations have been blogging for a long time, but last year I noticed a couple of online missives in particular that I hope signals a new trend of foundations, including their own CEOs, more regularly engaging online with audiences-and more importantly, signaling that they are listening, informing strategies based on what they are hearing, and responding to feedback and questions.  A notable example is Ford Foundation CEO Darren Walker and his online letter in June, "What’s Next for the Ford Foundation?" Much has been written, and deservedly so, about Walker’s eloquent case for continuing to focus the foundation’s resources on inequality.  What stood out to me happened earlier in that letter, where Walker wrote about the responses he received when he asked stakeholders to assess his first year on the job: "Tell me the truth. That simple request drew more than 2,000 e-mails to my inbox. Some of them were profound and insightful. Others, lighthearted. But all of them were truthful. And I couldn’t be more grateful. In reading and reflecting on each and every response, I have become more aware of the ways in which we can improve our institution, and serve our mission."

In a field in which many grantees never receive a response to a completed grant report, hearing about a CEO who reads his emails is hard to believe were it not for how Walker proceeded to then openly share the kind of institutional self-awareness that is only possible from taking such an exercise seriously.

Another notable mention in this vein is the William and Flora Hewlett Foundation's "Work in Progress" blog, which counts CEO Larry Kramer as a regular contributor, and offers insights into foundation operation, strategy, and direction.  The blog, which just completed its second year, quickly gained attention when Kramer made it a key part of his foundation leadership to create a culture of transparency at Hewlett, and has consistently offered a window on a variety of leaders at Hewlett.  At a foundation with term limits, in which the cast is consistently changing, having this kind of frequent access to the humans behind the philanthropy machinery is important.  This was underscored in a blog Kramer wrote in September called Question Time in which he re-caps good questions that came up in "open forum" calls the foundation hosted in the summer to offer grantees a platform to ask the foundation about "anything and everything."  The questions and answers included everything from the foundation’s strategy to combatting climate change to preparing grantees for program staff transitions given the term limits, as well as future directions for funding. But the key message from the post and the Open Forum is that the foundation is listening and responding.

The Watchdogs:

#7 - Inside Philanthropy becomes a must read.  The world needs watchdogs, and in 2015, Inside Philanthropy became a must read for many insiders looking to see if they had been written about.  David Callahan used his journalistic chops and considerable knowledge about philanthropy to write compelling content about high profile givers and didn’t hold back on his assessments.  More than 30 of Inside Philanthropy’s blogs in 2015 either mention or focus on transparency, and in fact, he closed the year with a particularly detailed piece, Darkness Grows: Time for a New Conversation About Philanthropy and Transparency that shows why for those who find transparency a burden, it is definitely better to give than to receive.

#6 - NCRP’s executive director, Aaron Dorfman releases video footage of how difficult it can be to get an appointment with foundation executives. Philamplify, which is a project of NCRP, produced a report criticizing the opacity of the Hess Foundation and challenging it to evolve beyond "transaction philanthropy."  The only problem is they had no way to actually make sure the foundation ever saw the written report.  You can watch the video to see the lengths to which Dorfman went to try and deliver the unsolicited advice.  But the reason this is a highlight and not a lowlight is that the video and Philamplify have a sphere of influence beyond just the foundation in question, and it served as a cautionary tale here to others about why the "don’t call us, we’ll call you" approach in philanthropy is part of the problem and not a solution.

Philanthropy-Not Business as Usual:

#5 - While some foundations are still debating the merits of sharing grants data publicly on websites or external databases, one foundation executive director devoted significant real estate on the JRS Biodiversity Foundation website to showcasing the full story of each funded project. In a March Transparency Talk blog post, Don Doering outlined the JRS Biodiversity Foundation’s commitment to transparency in service to greater philanthropic impact.  The online "Grant Portfolio" section of its website reads like one might expect an internal board docket would look.  Visitors to this area of the website can quickly get up to speed on: the background of each grant; key objectives and activities of the grant; planned outcomes and outputs; progress reports; lessons learned; and notes from JRS staff about the project in question.  When colleagues ask me what my hopes are for the future of transparency in philanthropy, it often looks a lot like what the JRS Biodiversity Foundation website already has to offer. 

#4 - In late November our CEO Brad Smith wrote a blog post that appeared in PhilanTopic and Transparency Talk on the growing and troubling trend of foundations accepting applications by invitation only. In fact, he cited that only 28 percent of foundations in our database appear to have a responsive grantmaking process, and asserted that isolating a foundation from the outside world is not a best practice and concluded with some practical suggestions for how the field can open the door, "even if it’s just a crack."  Well, we heard back very swiftly from one foundation CEO, Jim Canales of the Barr Foundation, who immediately took the advice to heart and took the time to add language to the foundation’s website explaining the various ways in which one can get invited to apply.  The page outlines the often mysterious process of things like trustee-directed grants, staff initiated grants, and how to introduce foundation staff to a new idea or organization. Since taking the helm of the Barr Foundation, similar to what I stated earlier about Kramer at Hewlett and Walker at Ford, Canales has made improved transparency a priority at Barr and a signature of his leadership strategy. I hope this signals a trend of foundation leadership transitions that actually do lead to, well, leadership.   It may seem a small thing to add language to a website, but to those on the outside looking in, explaining the process of securing an invitation shows sensitivity toward inclusion, as opposed to the growing tendency toward exclusion.

#3 - Throughout 2015, a number of high-profile foundation CEOs wrote about the importance of tracking and sharing diversity data.  Business as usual in philanthropy often can mean a double standard applies, with high expectations for transparency with grantee organizations, and a completely different yardstick for foundations.  So it was refreshing to see the foundation executives who were stepping forward to make these declarations do so with their own data in hand.  Dr. Robert Ross, CEO of The California Endowment (TCE), wrote about why diversity is important enough for philanthropy to measure in a Transparency Talk blog post last month, and he reflected on the impact the TCE Diversity Audit has had.  Ross states, "The Diversity Audit has helped us strengthen the culture and authorizing environment to express our values through our policies, practices, processes." In case you’re wondering, TCE is one of a very few foundations that conduct and publicly share transparency data.  According to our "Who Has Glass Pockets?" transparency assessment tally: of the 77 foundations that have taken and shared their assessments, only six publicly share head counts of this kind publicly, so TCE’s example here will perhaps serve as a framework for others. 

Another initiative, Green 2.0, has been pushing for similar transparency among environmental organizations, including environmental funders.  According to its latest chart, 12 of the top 40 environmental funders are sharing diversity data, and eight have made public statements about its importance. So the net positive here is not just the individual sharing of the data, but the movement building among peers that has the potential to influence how foundations approach inclusivity and diversity in the future, and perhaps more importantly, expand the spectrum of individuals who might consider philanthropy as a viable career path.

#2 - One of the great philanthropic strategy success stories happened in 2015 with Marriage Equality officially becoming the law of the land.  Through the work of the Civil Marriage Collaborative, philanthropy learned that when it works collectively and engages in storytelling about its beneficiaries, it can accelerate the pace of change.  Changing public opinion on gay marriage was key to the decision. In a break from business as usual in philanthropy, a collective of funders came together to support advocacy efforts, and stuck together over 11 years, investing $153 million to change hearts and minds.  Key to this was a willingness to invest in media campaigns, as well as to think broadly about the beneficiaries who would benefit from this investment, and then to humanize the case by showcasing stories featuring the voices of parents and grandparents of gay children as part of the effort.  The Civil Marriage Collaborative also gets extra kudos for sharing the lessons learned over those 11 years, the successes as well as the failures, with a case study and video titled appropriately, Hearts and Minds: The Untold Story of How Philanthropy and the Civil Marriage Collaborative helped America Embrace Marriage Equality.

#1 - Mark Zuckerberg and his wife, Priscilla Chan launched the Chan Zuckerberg Initiative in December, and in so doing, also launched a global debate that put philanthropic transparency in the spotlight like never before.  Some may be surprised to see me list the Chan Zuckerberg Initiative as a transparency highlight, but what gave me hope is not the Initiative on its own, but the attention and visibility it gave to the importance of philanthropic transparency.  Suddenly topics usually reserved for the geekiest of foundation geeks--tax code, philanthropic vehicles, and the difference between traditional philanthropy and the LLC approach -- were being covered by everyone from The New York Times to San Jose Mercury News.  Committing Facebook shares currently valued at $45 billion to "advancing human potential and promoting equality" was bound to make a splash, but the ripples of the splash had more to do with the structure the couple chose for its largesse, rather than their eloquently written letter and the couple’s desire to make a positive difference. 

Unlike private foundations, LLCs are not required to provide details on giving, are able to fund both for profit and nonprofit entities, and there is no transfer of funds to an entity that is regulated to serve the public good.  However, on the positive side, with the launch of the Initiative,  Chan and Zuckerberg didn’t just write a moving letter; as one might expect, they developed an extensive and actually very informative Facebook page that includes a detailed timeline going back to the Initiative’s inception in 2009 through to the present, outlining key milestones and investments.  There are many foundations that don’t go to this extent.  However, at least with a private foundation, eventually all grants must be disclosed on the 990pf form, and there is no telling whether whatever information the Initiative provides is comprehensive.  So, is a Facebook status update really enough for an Initiative of this scale? It is a fair question to ask whether the public is really going to be served if there are no public disclosures actually required. And the win here is that perhaps enough people globally raised this question that it will inspire greater affinity for more transparent vehicles. 

So, what am I missing?  The drawback of a list like this is that inevitably something that should be included gets left off.  And we want to continue to use this space to highlight excellent examples of transparency at work in philanthropy, so please share any thoughts, self-promotion, or suggestions below.  We have a whole year of blog content ahead of us to fill and welcome audience input.  Happy New Year!

--Janet Camarena

In case you missed it - and just in time for Christmas - the Giving Pledge added two more signatories; both making their fortunes in health-related fields, but with widely different interests and approaches to philanthropy.

Kiran Mazumdar-Shaw established herself as one of the wealthiest women in India at the helm of biotechnology and pharmaceutical giant Biocon India, and now works to improve access to healthcare for India's rural poor.

Dr. Herbert Wertheim, founder of Brain Power Incorporated, the world's largest manufacturer of ophthalmic instruments, and his wife, Nicole, focus their philanthropy on building and sustaining major institutions in South Florida including medical and nursing schools.

• 
  Kiran Mazumdar-Shaw
  Bangalore, India
• 
  Herbert & Nicole Wertheim
  Miami, Florida

Since its inception in 2010, the Giving Pledge, Warren Buffett and Bill and Melinda Gates' effort to encourage the world's wealthiest to commit the majority of their assets to philanthropic causes, has garnered 141 signatories in 16 countries with a combined net worth of more than $707 billion.

Learn more about all the pledgers in our Glasspockets feature Eye on the Giving Pledge.

-- Daniel Matz

(Rick Cohen is the National Correspondent for Nonprofit Quarterly (NPQ) and the editor of NPQ's Cohen Report. Prior to joining NPQ, Rick was executive director of the National Committee for Responsive Philanthropy, vice president of the Local Initiatives Support Corporation, and vice president of the Enterprise Foundation. A version of this blog appeared in NPQ.)

Editor's Note: As the year draws to a close, it is natural to remember and reflect on those whom we have lost.  Last month, philanthropy lost one of its strongest voices for change with the passing of Rick Cohen. A prolific writer, Cohen was known for encouraging philanthropy to extend its reach to marginalized and underserved communities. Seeing the weaknesses of a closed door culture, Cohen also frequently wrote and spoke about the need for greater foundation transparency and the potential for improving philanthropic practice by increasing stakeholder participation and influence. In honor of Cohen, Transparency Talk is closing out 2015 by revisiting a two-part post Cohen authored for Transparency Talk in 2012 on the case for enhanced foundation transparency, and his recommendations for improved transparency standards.

Rather than simply arguing for more or less transparency, a better strategy is to consider the public purposes that might be served by better, proactive standards of disclosure. I suggest the following: 

1. A better story: Spruill’s charge to the sector is still the ultimate reason, to explain what organized philanthropy is and does, but it is so much more credible when it emerges from the analysis of independent analysts and the public. The glossy annual reports whose cost of writing, design, and printing exceeds many nonprofits’ budgets are not persuasive. They look more and more like corporate advertisements. If philanthropy has a strong story to tell, it should be one that can be told by independent observers examining the data.
2. Civic engagement: Foundations themselves are relatively unified, regardless of their political leanings, in favor of increased civic engagement, not just in the public arena of government, but in the engagement with communities, in the overall pursuit of community and societal betterment. If foundations are part of a sectoral commitment for advancing the public good, one means is to make more foundation information available, to make citizens and policy makers better “consumers” of foundation products, just as foundations want to help citizens be better consumers and participants in the processes of government and business. 
3. Foundations in public policy: Increasingly, foundations have been moving into the public policy arena, not simply through their grantmaking, but their direct participation. Foundations partner with government at various levels, notably a recent spate of foundation engagements with the federal government in programs such as the Social Innovation Fund at the Corporation for National and Community Service and the “Race to the Top” in the Department of Education. In some cities, notably Detroit, where local government has taken a turn toward the dysfunctional, foundations are developing and running programs that in some ways are taking the place of the public sector. As foundations become direct players in the public arena, not simply supporting nonprofits to do so, foundations should be increasing the transparency the public needs about their operations.
4. Increased accountability: At this time, there is a parallel debate going on about increasing the transparency of government data. Virginia Senator Mark Warner has introduced the DATA Act which would create standardized formats for reporting and publication of government spending data. The Act, as the Sunlight Foundation commented, “could help eliminate much government waste, fraud, and abuse, and make spending oversight much easier.” Better, expanded, standardized data makes oversight easier, it’s that logical.  But so much of the data reported in 990s is not particularly standardized and, when it comes to data on foundation investments, virtually uninterpretable.  That isn’t a reason to drop the data requirement.  It is to improve the reporting and formatting of data so that the public—and oversight agencies—can figure out what it contains. 
5. Abuse of 501(c) confidentiality:  The nation faces an explosion of organizations—and money—seeking the 501(c) confidentiality for the only purpose of keeping the identities of the players pulling the levers of the political system secret.  Television commentator Dylan Ratigan suggests that “our political system has become an auction in which the highest bidder wins,” but the identities of the bidders are increasingly under wraps.  In other arenas, public agencies such as municipal governments and state universities are creating affiliated nonprofits and foundations with a purpose of reducing or removing a slice of their operations from public scrutiny and oversight.  If this nation is going to pursue greater freedom of information, we will, as Senator Warner suggests, need to have better mechanisms with which to “follow the money.” ( We have to better follow foundation moneys, too. 

Let’s face it that there is no discernible Congressional appetite for playing with the laws and regulations facing foundations right now.  Since foundations are overseen by the Internal Revenue Service—and in some measure by a number of states that have provided at least a semblance of staffing and support for charity oversight functions usually in their AG offices, though state attention only sporadically ever nears private foundations—not much is going to happen. 

If there is more money for the Internal Revenue Service, it is logically going to go to expanding its capacity for dealing with its new responsibilities under the Patient Protection and Affordable Care Act, not for oversight and enforcement activities regarding charities.  In general, there’s no money to be made by the IRS for chasing nonprofits and foundations, and like a sports agent looking for a contract, the IRS wants to be shown the money that it can generate through stepped up enforcement. 

Moreover, the IRS is not generally among the more popular of federal agencies.  The outcry against Maine Governor Paul LePage’s denunciation of the IRS as new Gestapo caused him to apologize to Jews, but not to IRS agents who might have been offended, and few in Congress stepped to the plate to defend the IRS.  Ways and Means Committee hearings into IRS operations have been held,  prompted in part by the complaints of Tea Party groups believing that their applications for 501(c)(4) social welfare status were being subjected to politically motivated IRS reviews. 

--Rick Cohen

(The late Rick Cohen was the National Correspondent for Nonprofit Quarterly (NPQ) and the editor of NPQ's Cohen Report. Prior to joining NPQ, Rick was executive director of the National Committee for Responsive Philanthropy, vice president of the Local Initiatives Support Corporation, and vice president of the Enterprise Foundation. A version of this 2012 blog appeared in NPQ.)

Editor's Note: As the year draws to a close, it is natural to remember and reflect on those whom we have lost.  Last month, philanthropy lost one of its strongest voices for change with the passing of Rick Cohen. A prolific writer, Cohen was known for encouraging philanthropy to extend its reach to marginalized and underserved communities. Seeing the weaknesses of a closed door culture, Cohen also frequently wrote and spoke about the need for greater foundation transparency and the potential for improving philanthropic practice by increasing stakeholder participation and influence. In honor of Cohen, Transparency Talk is closing out 2015 by revisiting a two-part post Cohen authored for Transparency Talk in 2012 on the case for enhanced foundation transparency, and his recommendations for improved transparency standards.

It is nearly impossible to think about transparency in the world of philanthropy without putting philanthropy into a societal context. Philanthropy is not a world unto itself, but one that is engaged in extensive interactions with other sectors of the economy and society, particularly important in an era of increasingly crippled institutions and practices of democracy in the U.S.

The political context concerns the flows of secret moneys into the electoral process, obviously an activity prohibited to private and public foundations, but one that increasingly shapes the perspectives of the American public toward nonprofits—and, if they knew what foundations were beyond the television portrayals of philanthropoids as white glove socialites—foundations too. Secret money is the lifeblood of American political campaigns, perhaps brought to a level of self-parody when comedian Stephen Colbert points out that Karl Rove is giving anonymous political money to help keep political giving anonymous. The calls for breaking through the wall of secrecy in political spending are increasing, notably in the District and Appeals Court decisions in Van Hollen v. Federal Election Commission. 

And so it is with foundations and the calls philanthropic leaders face for increased transparency. As Vikki Spruill, the new leader of the Council on Foundations, noted in what appears to be one of her first official communications to the Council’s membership, institutional philanthropy faces “its most critical moment…right now. At a time when our world faces a storm of converging challenges with dwindling resources, philanthropy’s positive impact remains a mystery to far too many…[W]e must seize the imperative to help society better understand philanthropy’s impact and contributions.”   

It is a frequent refrain from foundation leaders, the admonition that foundations have to do a better job at telling their story. But that isn’t transparency. At best, it is managed transparency, telling the story that foundations want public policy decision-makers, the general public, and their specific stakeholders to hear and understand. Transparency, however, is not managed through public relations firms. Can you imagine if the Federal Elections Commission were only to make available the information it thought would tell the story of its “positive impact?” For as miserable and partisanly hamstrung as the FEC is today, the story telling wouldn’t be worth the physical effort of a computer click on “download.”

Transparency empowers the users, the recipients of information, to hold powerful agencies of government, well-heeled donors to political campaigns, and institutions without direct levers of official accountability to the public somewhat more accountable. When you stage manage transparency, it simply isn’t. Of course that doesn’t mean simply opening the doors of foundations and inviting the public to rifle through file cabinets, but it does mean trying to find ways of making essential information more accessible and reviewable by outsiders. 

How Public Should Private Philanthropy Be?

In the foundation world, the debate du jour is how public private philanthropy is, that is, to what extent the tax exempt dollars of private foundations should be considered in some ways open to public scrutiny. It is an argument that ultimately boxes everyone into a corner. The philanthropic impulse occurs with a donor willing to put some of his or her excess capital to work for what is hoped to contribute to the public good. But in this nation, that occurs with the benefit of the charitable deduction, applicable to the small scale donations of this nation’s generous working people and to the much larger donations of affluent people who create foundations. 

OK, so the funds aren’t quite public dollars—aggrieved constituents cannot ask foundations for administrative redress, they cannot vote foundation trustees out of office, and in all but an incredibility limited number of cases do they even find themselves with standing to litigate a foundation’s grant decisions. And they aren’t quite fully private dollars, else they would be taxed and their managers wouldn’t be filing 990PFs, following IRC rules for executive compensation and self-dealing, or fretting whether President Obama’s annual call for capping itemized deductions including the charitable deduction will depress charitable giving and philanthropic grantmaking.

The Dichotomous Nature of Foundations

Even in their quasi-public identities, foundations have feet planted in two worlds or two cultures, one the private world of a donor, the other a public world of resources afforded a special status by the American public and its elected representatives. It shows in foundations’ postures toward transparency. 

In recent history, the advent of the 990 is one example. Commissions on the future shape and substance of philanthropy have all included encomiums of one sort or another in favor of increased transparency, but statements and actions can sometimes differ. Prior to enactment of the Taxpayer Bill, many foundation leaders were opposed to the liberalization of public access to 990s, and when the law was passed, foundation leaders attempted to find ways of divorcing 990PFs from the public access the law required to nonprofits’ 990s and then worked to delay the applicability of the law to foundations.    

In practice, a similar dichotomous identity occurs, best exemplified by the foundations’ crisis response to the California legislation that would have required a handful of large foundations to simply report on their grantmaking to nonprofits headed by people of color, not make more grants for communities of color, and report on their own staff and board demographics. Foundations fought the bill, known popularly as AB624, tooth and nail, though many of the same foundations are strong supporters of the racial disclosures required of banks in the Home Mortgage Disclosure Act, have supported nonprofits demanding similar disclosures of utility companies in front of the state’s Public Utilities Commission, and fought strenuously against California’s Proposition 54 initiative which would have generally banned the state from collecting race and ethnicity data. 

Another dimension of foundations’ split thinking on transparency is in their relationship with “stakeholders.” This is more than just a fancied up description of grant recipients whose opinions on how well they are treated by foundation program officers are now solicited de rigeur. Stakeholders are different than insiders such as donors, board members, and staff. The Denver Foundation describes “external stakeholders” as “people who are impacted by your work as clients/constituents, community partners, and others.” Lauren Tulp of the Gordon and Betty Moore Foundation suggested grantees, community residents, and external experts as potential stakeholders. In some foundation examples, stakeholders have been recruited to participate in foundation grantmaking processes, including the Bill and Melinda Gates Foundation and some of the health conversion foundations.

This is now common parlance in the foundation world. Stakeholders with a “vested interest” in the foundation’s work merit inclusion in efforts to assess what the foundation is and should be delivering for various communities with what impact. The concept of stakeholders is common in foundation circles—except when it comes to discussions of transparency, when the circle for inclusion becomes distinctly narrower. Foundations have to come to grips with whether the notion of stakeholders is real or simply a rhetorical device meant to convey a transitory sense of inclusivity.

--Rick Cohen