LEGACY, LEADERSHIP AND GROWING UP THE FAMILY FOUNDATION

September 2nd, 2010

In honor of the Hill-Snowdon family foundation’s 50th anniversary since being established and the 10th since launching its strategic grantmaking program, the National Center for Family Philanthropy has collaborated with Ashley Snowdon Blanchard, foundation president, to produce a history of the family’s turns and transformations.

When I talked to Ashley some time ago, her view of the role and growth of the foundation was intimately allied with family matters and engagement. Her smart stewardship of the foundation’s growth provides a role model for succession and impact.

As some of us are all too keenly aware, parents and their kids don’t always think alike. And when it comes to passing on the values, mission and financial control of a family’s giving plan, things can get especially tricky.

Ashley, a philanthropy consultant in New York, seems to have jumped the hurdles of passing on a legacy through steady perseverance.

In 1959, her great-grandfather Arthur Hill established the family’s Hill-Snowdon Foundation, now based in Washington D.C. He had built up assets as an executive at Johnson & Johnson by receiving stock options in lieu of salary during World War II. Still, “we didn’t really have that much money until the enormous rise in J&J stock in the 1990s,” says Blanchard.

She recalls family members sitting around a kitchen table each year to decide where the foundation’s grants would go. “Everyone had their own particular organizations and causes. It wasn’t thought-out.”

By the turn of the century, after the rapid increase in assets, Blanchard began attending foundation meetings as a young adult. “What had worked for people around the table didn’t make sense for the next generation, and we brought a critical view to the status quo. “We could put forth ideas without dipping into anyone’s pot.”

In the meantime, Ashley had graduated from Stanford and studied nonprofit management and social welfare policy at UC-Berkeley. “I came of age when welfare reform was a hot-button social issue. The other huge issue was women’s balancing act and the ‘second shift’ they worked at home. It was clearly a myth that women could do it all. Ultimately, that led me to social change and philanthropy.”

It was time for the 40-year-old foundation to grow up.

To help with the transition, the family worked closely with consultants from the Tides Foundation, based in San Francisco, which counsels families and individuals about charitable plans. Within a few years, Blanchard had become president of the board, working, along with a small staff, to make the foundation strategic and focused on a consistent mission of social change and economic justice.

Nowadays, the Hill-Snowdon Foundation, with an endowment of roughly $30 million and annual grants of about $2 million, is on “cruise control.” Ashley works with the executive director to set agendas and keep the family informed and engaged. She has begun mentoring the next generation, including cousins who have become trustees.

“We learn by doing,” says Ashley.

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IF YOU HAD A $1 MILLION TO GIVE AWAY, WHERE SHOULD IT GO?

August 18th, 2010

Trying to choose your cause is not particularly well served by hunting for that supremely special, really deserving organization. In truth, there are thousands of them.

Or, put the other way round, no totally perfect group exists.

The most honorable, effective, dedicated, and ethical organizations also make some mistakes and suffer glitches. How could they not? Like every human endeavor, nonprofits are prone to the exigencies of time and circumstance—and, no doubt, also to some incompetence and bad actors. In addition, charities take on the world’s toughest, longest-running problems and, as you well know, such challenges throw up stubborn obstacles that will not be cleared either this year or the next.

Solving social ills, supporting a talented arts group, or sponsoring a promising student takes work and commitment. To further complicate matters, nonprofits are proliferating so fast that many groups now have overlapping missions and focus on similar issues. For example, consider the universe of funding directed at finding a cure for breast cancer or AIDS. An online search for “AIDS charities” turns up some 36,000 results. It’s hard to know where to begin.

As a result, for the majority of would-be donors, figuring out where to engage and whether they can or will have an impact is, at best, confusing and, at worst, downright discouraging.

Katherina Rosqueta refers to this predicament as “the million-dollar question.” In other words, if you had $1 million to give away and wanted to make the biggest possible difference, where should you put it?

As executive director of the Center for High Impact Philanthropy at the University of Pennsylvania, a research group founded in 2006 by a few alumni of the university’s Wharton School, Rosqueta and a staff of six are looking into “smarter philanthropy.” That is, the practices and methods of philanthropy that will work best. The center has targeted education in the United States to study, because Rosqueta and many advisors believe that’s an arena where strategic philanthropy can do the most long-term good.

Inarguably, investing in education has proved to yield enduring dividends for individuals, communities, future generations, and society at large. So since launch, the center’s staff and associates have been surveying schools, programs, and charities around the country to come up with objective measures and facts about what effectively improves outcomes for disadvantaged kids—what truly creates positive results?

On the face of it, then, the center’s innovative work would seem a keen resource to tap when kicking off the quest for that million-dollar donation. With its rigorous, well-funded, well-focused mission, you’d think its executive director would be eager to tell us exactly where to make our contribution to education in order to get the most bang for our buck. But she isn’t.
Sure, says Rosqueta, they can point to some high-level things that work and some other things that don’t. The Center can offer advice about addressing education’s deep challenges, including the role of competition, the need for better teachers, the pros and cons of school vouchers, and so on.

But in the end, says Rosqueta, categorically, “There is no silver bullet. The one place to spend a million dollars doesn’t exist. These are difficult problems and if you really want to have an impact you have to learn and keep learning relentlessly.” In lesser ways, the dilemma holds with $1,000 or $100, too

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KICKING ASS AND GIRL-ING OUT

August 16th, 2010

In the “We’ve Come a Long Way” department, Prudential has recently released its latest women and money research, a 10th anniversary edition.

Results? It would seem, dear ones, that we the American women are simultaneously kicking ass and girl-ing out.

Take a cruise of the findings from the “Financial Experience & Behaviors among Women, 2010−2011 Prudential Research Study”:

- More than 9 out of every 10 women (95%) in households with annual incomes of $50,000 or more say they’re part of the financial decisionmaking. A quarter are even the primary decisionmakers.

- Nearly seven in 10 of those surveyed are employed, and nearly three-fourths have college degrees.

Swell.

And on the flip side:

- Fewer than two in 10 women feel “very prepared” to make wise financial decisions. Half say they “need some help,” while a third need “a lot of help.”

- Only a third of women have a comprehensive financial plan. Among younger women, ages 25-34, that drops to only one in 10.

The “long way” looks be winding, indeed.

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WHY THE PROFIT MOTIVE WILL PUSH MULTINATIONALS TO ENFORCE HIGHER SOCIAL AND ETHICAL STANDARDS

August 9th, 2010

As we all know, growing profits at a company boils down to a simple equation. Boost sales while holding prices and cutting costs and the profit margin widens.

For multinational companies, a preferred route to doing just that is to rely on volumes of scale. If you make and sell more products more cheaply and distribute with greater cost efficiencies, you gain bigger bucks.

With that in mind, a just-released report, “Shaping the Future: Solving Social Problems through Business Strategy,” from the Committee Encouraging Corporate Philanthropy (based on research by gold-plated McKinsey & Co.) finds that global companies nowadays are being called to account not only for their own ethical and social behavior, but also for the actions of all third-party suppliers and vendors that work with them around the world.

Or in corporate speak, across the value chain.

More than nine out of 10 (94%) of the CEOs polled at the CECP’s February 2010 Board of Boards conference felt they were “increasingly being held responsible for their entire supply chain on social issues.” So, says the report, “large multinational companies will need to enforce their high companywide standards not just within their companies, but among all vendors and suppliers system-wide.”

Now, if just one market for a multinational’s goods or services sets a high-level standard for environmental or ethical operations, the company is bound to implement that topmost standard as a model across all markets and supply chains worldwide. Why? Volumes of scale.

It’s way more cost-effective to standardize policies than to adjust on a market-by-market basis every time you ink a deal or finalize a transaction. If you must meet the standards of one demanding market, you might as well use that as your benchmark everywhere — even in places that don’t require such top level operations. Because – and here’s the key — it doesn’t pay if you don’t.

For starters, just consider the dollars it would take for the additional employees and their training and the herds of compliance lawyers and oversight and IT security costs and on and on. Easier to set the benchmark as a turnkey op and walk away to do more deals.

Right now, it’s fear driving such decisions. Multinationals are afraid of a PR disaster, claims the report. What used to be a local story can today go viral and turn into a nightmare. Missteps or misstatements that once blew over now blow CEOs (Hewlett-Packard’s Mark Hurd), government officials (Agriculture chief Tom Vilsak vis-a-vis Shirley Sherrod) and international companies (BP) totally out of the water. Companies that do not comply may, says CECP, “incur the public-relations risks that occur when a supplier fails to enforce standards, triggering product recalls.”

Marilyn Carlson Nelson, Chairman of Carlson is quoted, saying: “Business’s role has always been to identify needs and to fulfill those needs in a competitive, efficient way. That role has been expanded to include the expectation that business will work in an environmentally and socially friendly manner, and to hold our suppliers to the same standards. It has become a competitive differentiator.”

The likely result will be that over the next several years, multinational companies and all their suppliers and vendors will VOLUNTARILY decide to operate in greener ways, forging partnerships to set better standards for using natural resources. They might even lobby governments and international regulators to set clearer and universal standards for carbon use, water conservation and greenhouse gas emissions so there’s no question of compliance.

All because of the profit motive. Pretty cool.

To get there, all we, the world’s voters and consumers and citizens, must do is set the bar high enough.

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WHY FOR-PROFIT COMPANIES WILL DO THE RIGHT THING

August 1st, 2010

Several years ago, Socially Responsible Investing maven Peter D. Kinder, then president at KLD Research & Analytics (KLD) in Boston, and currently Strategic Advisor to ESG Analytics, wrote a white paper called “Values and Money.”

His stated goal was to trace the history of SRI and to provide some real definitions, context and metrics about investing with a socially or environmentally conscious agenda. He wrote:

SRI emerged in the 1960s from two intertwined, but distinct motivations.

First, it sprang from a desire to change the way corporations interacted with and affected society. This impulse found expression largely through shareholder activism in support of political efforts. The first shareholder action (1967) focused on Eastman Kodak’s minority hiring practices.

Second, it arose from a desire among investors to have their investments be consistent with their ethics. The Pax World Fund (1969) allowed investors to avoid military stocks at the time of Viet Nam.

I think we’re now seeing a third factor surfaciing: Consumers, investors, shareholders are more and more willing to vote with their dollars and to hold corporate boards accountable, just as donors are holding nonprofits accountable. Google and Bill Gates and all the social venture capital partners out there now are backing for-profit companies that seek to do good by doing well because they believe it’s a smarter model for social transformation. And while there are pros and cons to such widespread adoption of for-profit social giving, it certainly does do away with the constant need to fundraise and therefore keeps the focus on the mission. (I’ll look at some of the cons in another blog.)

As a result, boards and CEOs at big, global and established corporations will find themselves hard-pressed to ignore the profile, the purpose and, best of all, the sustainable profits that flow from such socially conscious enterprises. In order to continue to build their companies and attract shareholders and preserve both the planet and their future, they will ultimately be bound to follow the SRI model. They will need to match their operations to socially conscious values. And we, the shareholders and consumers, will win.

Or, as Ivan Seidenberg, chairman and CEO of Verizon, puts it in a just-released report about the coming society challenges from the Committee Encouraging Effective Philanthropy (which boasts Paul Newman as a founder): “Our belief is that corporate philanthropy expands the business. If you do the right thing over time, you expand the capabilities of your customer base, business, and society.”

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THE ELEPHANT IN THE NONPROFIT CONFERENCE ROOM

July 10th, 2010

Amid all the current third sector challenges, including how to fundraise in this climate, how to sustain programs, how to maintain the endowment, staff shortages, how to measure and demonstrate impact, how to advance diversity, how to grow the mission, and so on—amid all these concerns and more—I foresee a much bigger crisis coming down the pike.

That’s how nonprofit organizations’ money is invested. Why? Because scarcely any nonprofit invests in a way that’s aligned with its mission. Understandably, most organizations outsource investment management to a financial services pro.

The nonprofit financial officer or executive director then oversees that management. Yet we know from the Madoff horrors that such oversight can often be very lax indeed. Few organizations engage in day-to-day investment choices. More to the point, even fewer require its hired investment management firm to make choices based on the organization’s values or mission or programs.

So what? Well, that means, for instance, that a nonprofit dedicated to helping kids might be making the money for such terrific programs from companies that profit from child labor. Not a pretty picture, is it?

In the age of transparency and accountability for the third sector, this rarely mentioned and frequent disconnect—that’s the polite word, of course—is turning into the elephant in the nonprofit conference room.

We need to open the doors and let the air in. We need to leverage the billions of dollars of nonprofit investment power to effect change with our money not just our muscle in the field.

Next installment: “SRI” or socially responsible investments and ESG or environmental, social and governance investments and how they work for change.

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WHY FUNDING PUBLIC SCHOOLS WITH PRIVATE MONEY IS A SCARY IDEA

June 14th, 2010

I’m feeling an ominous wind about the proliferating for-profit intrusions into public education.

With schools hurting bad across the country and state revenues dropping like stones, the supposed heroes riding into the arena are private-sector companies and ideologues with agendas. Actually, I agree with some of those ideologues – like Bill and Melinda Gates. But then there are others I want to run from, like a Baptist church in a Florida town that sees its recent donation to a local school as a ticket—bought and paid for—to recruit students’ parents to Jesus. What happened to church and state?

So the best policy would be to keep everyone and anyone with a political or personal or religious or moneymaking agenda out of the way. You can’t vote for Bill Gates, whether or not you want to. But you can vote in or sweep out your local school board, state legislators, US Senators and so on. Let’s not trade our voice or citizen power for a few easy dollars while times are hard.

I believe we’re on the bleeding edge here. The supreme thing that maintains democracy in the U.S. is a free and uncompromised quality education for all kids. I know the present system is not working. I know many teachers are bad apples and many more are complacent and not performing well. I know that money and resources stream toward affluent communities and millions of kids and families are underserved. I don’t have the answers to how to fix that.

But calling in the Price Is Right crowd is not the answer.

The generations after us are at risk. We need to fight for public education. Maybe we need to move our priorities around and funnel some money from the defense department or from the millions going to test homeland security technology that doesn’t work.

Public education defines and distinguishes America. Let’s not sell it out.

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HOW TO RAISE KIDS WHO CHOOSE TO GIVE BACK

May 22nd, 2010

I’ve been doing some research to talk about raising kids amid abundance and it’s dawned on me (not for the first time) that the two areas of education most critical to raising independent, self-sufficient kids who demonstrate both self-esteem and responsibility are (1) financial literacy and (2) philanthropy.

That is: kids who can comfortably manage money and are engaged in giving back to the community, however community is defined.

Yet those two arenas of knowledge are never remotely covered in any school course or curriculum, from kindergarten through graduate school.

Wouldn’t it be a good idea for parents to provide their offspring with lessons in both the emotional and transactional reach of money and giving, right alongside the stream of piano lessons and gymnastics, soccer and Little League?

As an example of the kind of rewards such lessons can yield, there’s philanthropist Ann Lurie in Chicago, who regularly appears on the Chronicle of Philanthropy’s annual list of the 50 most generous Americans.

Ann told me: “Long before I had a checkbook for what’s described as ‘transformational philanthropy,’ I learned at a young age that being helpful in some way to someone who needs help can produce a lot of personal gratification.”

She talked about losing her mother when she was only 21 and how her mother’s death had a bearing on her philanthropic outlook. “My mother said I should do a good deed daily, and she gave me some examples. So I started doing that at a fairly young age and I kept track of what I did. It was the high point of my day.”

To this day, says Ann, who walks a lot, she often sees tourists on Michigan Ave. wringing their hands over a map. So she walks up to them and says she lives in the city and offers guidance. Just as she did when she was a kid. She says, “I get so much gratitude from pointing people in the right direction, just like righting things on bigger scale.”

The two powerful lessons about engaging kids at a young age are:

• he or she learns in practical and tangible ways how to be helpful on a daily basis, even as a young kid without power or money; and

• he/she discovers and experiences firsthand the joy and personal gratification that comes with helping others.

It’s the best way to engender purpose, self-esteem, independence, caring, empathy.

Helping others and doing good deeds then turn into lifelong habits.So with a little bit of attention and effort, a parent can accomplish more for a child than most adults ever learn.

Ann says: “Being able to be helpful in some way to someone who needs help, even a simple thing, can produce a lot of personal gratification. It doesn’t mean giving a lot of money.”

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WHAT NONPROFITS NEED TO LEARN FROM FOR-PROFITS

May 6th, 2010

At last, volunteering is getting some of the respect it deserves.

In its just-released seventh annual Volunteer Impact Survey, Deloitte reports a significant shift in corporate attitudes toward workplace volunteerism.

Seen in the past by companies as little more than an employee perk, volunteerism lately is being dressed as a serious tool for social change. “The business community sees its promise and, in fact, has very high expectations for what volunteerism can accomplish,” concludes Deloitte, based on online interviews of 303 executives at companies with 1000+ employees. More than eight in 10 companies (84%) believe that volunteerism can help nonprofits accomplish long-term social goals.

In the silver lining category, we can pretty much chalk up this corrective leap to the recession. Nonprofits need more support than ever as funding dwindles and need keeps climbing. Volunteer help is more essential than ever. Smart stewardship in the form of skilled board members, invariably volunteers, is likewise key to navigating the tough times. Corporations are intent on appearing helpful and virtuous. In point of fact, greed is now bad, very bad, indeed. For-profit companies are taking great pains to polish their image as a company that cares about the community and gives back.

Certainly, the proliferating challenges burdening nonprofits these days are dreadful and scary. But at least this adjusted attitude toward volunteering is one outcome of the New Normal we can applaud.

The prevailing notion that volunteers STILL are wealthy ladies who lunch or bored grandmas who don’t know how to fill up their days is laughable. The group that volunteers the most hours and the most often in this country is working moms, who, arguably, have the least amount of discretionary time than any other demographic.

In 2009, volunteer time was estimated to be worth $20.85 per hour, a jump of 60 cents over the year before, according to Independent Sector, a nonprofit lobbyist and association. And since, as research tells us, women volunteer more than men do, both in frequency and in number of hours, we know women are contributing billions of dollars in talent and time that is woefully undervalued and underappreciated.

The fact that so many nonprofit organizations do not recruit, train or even thank volunteers is thoughtless and, in many cases, obnoxious. Nonprofits also need to readjust that old chestnut that advises, “If they give money, they won’t give time.” Nowadays, donors give both.

Nonprofits must rearrange their attitudes and their practices when it comes to respecting volunteers. If Deloitte is really onto a big shift here, maybe nonprofits ought to start taking lessons from the for-profit world.

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LET’S TRY REAL CAPITALISM INSTEAD OF THE SOCIAL KIND

April 18th, 2010

“We need to stop separating investment decisions from philanthropic giving,” writes Alexander Friedman, in an opinion piece in the “Financial Times.”

Huzzah! At last! Someone has actually named the bridge that should have been built long ago.

Friedman, who recently stepped down as CFO of the Bill and Melinda Gates Foundation, and who also was an investment banker at Lazard, clearly is a serious radical — a lot more of a freethinker than many social activists I’ve met.

Can you imagine a greater giving game-changer than having major donors and foundations commit a percentage of their endowments and investment choices to organizations and businesses that support social change? Vote with your dollars, I say. Few foundations, large or small, are making that decision. But it’s definitely where we need to go.

“The world’s problems cannot be solved either by unfettered markets or by limited pools of philanthropic dollars,” advises Friedman. Clearly, these two adversarial factions need to figure out that they need each other. They must find absolutely new ways to align, combine and partner.

Bill Gates walked away from the idea of the so-called “ethical investing” movement by announcing last January that his foundation would focus on grant making, not on the social impact of its investments. Yet the Gates Foundation –under Friedman’s leadership? — earmarked 1% of its endowment for investment instruments like bond guarantees, securing donor aid and equity funds in developing countries. Maybe it just needs a bit more time.

Other philanthropic consultancies, foundations and for-profit businesses are trying similar experiments and efforts. Goldman Sachs — not the most popular company these days – nevertheless has launched the 10,000 Women and 10,000 Small Business Initiatives. Google Dot Org is trying something similar, by investing small venture capital amounts in for-profit startups trying to do social good. JPMorgan’s social sector finance group is bringing financial skills and funding to nonprofits.

We need more of these first-mover, change-the-model partnerships.

We’ll never get anywhere significant in building social change if we keep divorcing real moneymaking venues from philanthropy

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