New to Grantmaking? I Was Too

By Amy Liebman Rapp, Alex Cares for Grieving Youth

Within hours of the September 11 World Trade Center terrorist attack, my voicemail and email were overloaded with requests for services from corporations, mental health agencies, and schools. All were looking for assistance in how to help adult survivors cope with the sudden traumatic death of their loved ones and support the grieving children and teens whose parents had died in the towers.

I accepted several challenging opportunities that included working with the American Red Cross and the Aon Corporation, but the most intriguing call came in early 2002 from a board member of a recently formed charitable foundation called A Little Hope.

The founder, Cantor Fitzgerald bond trader Whitney Siderman Michaels, was on her honeymoon in Hawaii with her husband Evan, while Cantor Fitzgerald’s corporate headquarters, located on floors 101 to 105 of the North Tower, were destroyed. A staggering 658 employees died. As Whitney and Evan attended numerous memorial services, they witnessed many bereaved children now having to face life without their mother or father and wanted to find a way to offer them hope for the future.

The board of directors were seeking a mental health professional with expertise in childhood bereavement to join the board and wanted to meet with me. In addition to my clinical thanatology (death, dying, and bereavement) practice, I had been president of the board of a nonprofit children’s after school organization and had an extensive business background. After meeting the founders, I agreed to become the foundation’s clinical advisor and a (volunteer) founding board member. The first fundraising gala in lower Manhattan took place just three months later in June 2002, and more than $200,000 was raised.

The strategic plan was to establish a granting organization that would provide emotional support for the surviving children of September 11 who experienced the death of a parent. Many of the board members were highly skilled individuals working in the corporate sector (hedge funds, banking, accounting, law, and insurance), but no one had any previous board experience. I realized that with prior board experience and a current network of colleagues in the bereavement field, the executive committee of A Little Hope was looking to me to spearhead the granting initiative.

Continue reading

10 Foundation Activities That Call For Additional Care

Private foundation trustees and staff oversee countless activities, from setting direction and selecting grantees to reviewing policies and investing assets. Several foundation tasks—some mandatory, some voluntary—call for additional care.

All are worth your careful consideration to help you be financially savvy and legally compliant, and to help you take full advantage of your foundation’s flexibility.

Reducing your excise tax

Foundations must pay a small excise tax on net investment income each year. The tax is currently 2% of net investment income minus certain expenses, although it is possible to qualify for a 1% rate if, generally speaking, your current year’s expenditures exceed by 1% of net investment income your average expenditures over the past 5 years.

It is difficult for private foundations to qualify for the reduced rate every year without forever increasing their payout rates and depleting their assets, but many foundations miss the opportunity every few years. To see if a small increase in distributions would qualify you for the 1% rate, be sure to calculate your qualifying distributions a month or two before the year’s end. Some foundations accelerate their distributions to qualify.

Engaging in transactions with foundation insiders

Self-dealing rules prevent private foundations from entering into a broad range of transactions with foundation insiders, known as disqualified persons, unless specific exceptions apply. No topic within the private foundation rules raises as many questions and concerns as self-dealing, because the rules can be counterintuitive and the penalties steep.

To avoid self-dealing in all cases, be sure to understand the rules and take care when hiring or leasing space from foundation insiders, inviting guests to galas or fundraisers, paying personal pledges, compensating trustees and staff, and paying for family travel with foundation funds—activities that lend themselves easily to self-dealing. Consult knowledgeable legal counsel before engaging in any transactions with insiders.

See Exponent Philanthropy’s publication How to Avoid Self-Dealing >>

Choosing alternative investments

A relatively new class of investments, known as alternative assets or alternatives, has become an increasingly popular way to address limitations in traditional equities and fixed income securities.

Alternatives offer a range of risk, return, and diversity and encompass a wide array of products, including hedge, private equity, real estate, venture capital, and commodity funds, and funds of funds. They may be limited partnerships, limited liability corporations, regular corporations, or trusts.

Continue reading

Charlottesville Lessons: Listen to Those We Serve and Learn From Our Blind Spots

By Henry Berman, Exponent Philanthropy

When events as horrific as what happened in Charlottesville erupt, many of us in philanthropy are struck with sadness, outrage, disgust, depression, shock, and terror.

While we take in all the information we can—especially the insights of trustworthy analysts and commentators—we ourselves start doing the usual punditry. We issue calls for action. We offer to provide more money and new programs to educate Americans and ourselves about hate groups, racism, and diversity. We make pledges to operate in new ways.

But let’s face it: If we really expect to make a difference, each of us needs to change how we act, and to better understand how our own biases too often get in the way of nonprofit and philanthropic leadership.

Continue reading in The Chronicle of Philanthropy (subscription required) >>

Henry Berman

Henry Berman became Exponent Philanthropy’s CEO in 2011, previously serving as acting CEO, board member, and committee member. Through his experience as a foundation co-trustee and Exponent Philanthropy member since 2003, he brings a firsthand understanding of the needs of members to his role.

A Compass Only Works When You Trust It

By Henry Berman, Exponent Philanthropy

In philanthropy, like in life, we have relatively little ability to control disruptions, internal or external, and the big changes they often portend.

Although we may anticipate an influx of assets upon the sale of a business, or predict the arrival of the next generation, most of us can’t really manage the exact timing and collateral effects of these events.

This begs the question, What defines how each of us reacts to disruption?

In a word: values. As we think about, worry about, and react to disruptions, we do so through the lens of our own values.

Continue reading

Donor Intent: Building a Legacy of Impact Through Partnerships

By Charles H. Hamilton

Donor intent matters. A bevy of articles, consultants, and examples are available on how to craft donor intent statements and how to communicate them. Whatever the content and form, they should be dynamic, reciprocal learning tools that engage family members and beneficiaries. Extreme care needs to be applied so donor intent is not a one-way, power relationship. At its best and most effective, it is a shared connection that embodies cooperation, mutual exchange, and honest give-and-take.

Engaging grantees

Too often, donors (and philanthropoids) wrongly see no need to listen to grantees, heaven forbid. The idea of “strategic philanthropy” in practice too frequently fosters donor conceit and that stale old “I’ll go it alone because I know best” attitude. Donors are still so easily seduced by the hubris endemic in philanthropy, which “has no natural predators,” to use Tony Proscio’s wonderful phrase. This produces very poor relationships indeed. It usually generates anemic results and unsustainable change.

We live in a world of complex and evolving social needs. We are buffeted by rapidly changing methods to address these needs: some astonishing and some snake oil. These are knowledge problems no donor or foundation can surmount alone. Good intentions simply don’t reach impact without a cooperative commitment, humility, and hard work. The good news is that my experience has been that many donors and family foundations understand the difficult nature and remarkable ability of these reciprocal relationships with grantees to translate intent to meaningful societal impact.

Engaging different generations

Building reciprocal relationships with grantees is difficult. Consider, then, the terror and euphoria of different generations around the family kitchen table! This is a different kind of partnership of serial reciprocity, because the connection is passed from generation to generation. Each subsequent generation reaffirms, changes, adapts, and finally passes on again what becomes an ongoing family legacy.

Continue reading

What the Law Requires When Making Grants

By Andy Carroll, Exponent Philanthropy

Many people say the U.S. government imposes too many regulations and too much paperwork on our economy. Although everyone doesn’t feel this way, it’s a pretty common refrain.

One arena very free of government requirements is foundation grants to public charities. Yet many people who work in foundations and many professional advisors to foundations—attorneys, accountants, and consultants—are not aware of this freedom.

Project Streamline, an initiative of PEAK Grantmaking, is trying to get the word out. Several years ago, Project Streamline worked with legal experts to find out exactly what the IRS requires private foundations to do when making grants.

The answer might be shocking.

Continue reading

5 Tips for Using Simple Convenings for Intentional Learning

By Kris Putnam-Walkerly, Putnam Consulting Group

This post originally appeared on Putnam Consulting Group’s Philanthropy 411 blog (July 3, 2017). Kris’s tips apply to all types of convenings, whether bringing together funders, grantees, or a mix.

My firm recently helped the David and Lucille Packard Foundation conduct a series of small gatherings of funders to discuss the Foundation’s learnings from a seven-year investment in summer learning. (For more information about that initiative, download the summary report we created, or visit the Foundation’s website.) While the convenings were specific to the summer learning topic, I observed several actions within them that I’d consider best practices for using small group gatherings for intentional learning, no matter what the subject.

1. Keep it casual and comfortable. Each convening was intentionally small—no more than 20 people—which allowed participants to gather around a common table. This fostered a sense of intimacy and a conversational tone. In addition, the Foundation provided a meal, either breakfast or lunch depending on the time of day, and allowed plenty of time for participants to enjoy it without feeling rushed. This also allowed foundation representatives in the room to catch up with old friends and meet new people, further building the sense of camaraderie and conversation.

2. Be clear that it’s a conversation, not a presentation. At the beginning of each gathering, the Packard staff made it clear that they had learned a great deal from listening to other funders, and they were hoping to continue that by having the funders in the room share their reactions and insights on the summer learning work. While the Packard staff did kick off the conversation with a quick overview of their initiative’s strategy, outcomes and lessons learned, the bulk of the agenda was allocated for questions and discussion. In fact, the agenda even included specific smaller one-to-one conversation time in which participants could dive into whatever aspects of the work caught their interest most—after which they shared highlights with the group.

Continue reading

How You Can Discern and Inspire Promising New Ideas—Before Anyone Else

By John Richardson, Blackstone Ranch Institute

Many foundations avoid being the first funder of new initiatives. For the Blackstone Ranch Institute, being first-in is often the ultimate sweet spot.

For over a decade, our foundation has been placing early philanthropic investments in a broad range of new initiatives in the environment and sustainability fields. Very often they have been the first grant. The majority of them have grown into significant networks, campaigns, or organizational efforts that have moved those fields forward in meaningful and substantial ways. During that time, many have asked how we know how to choose the right grantees, and how we know whether or not their proposed initiatives have real promise.

Whereas part of our ability comes from experience and intuition (as in, does this feel right?), a number of considerations go into our initial assessment of opportunity that allow us to base an intuition upon a solid foundation. Our hunches, in that sense, are carefully calculated hunches.

Continue reading

Why Invest in Volunteer Engagement?

By Jane Leighty Justis, The Leighty Foundation

Foundations large and small are always looking for leverage. Where and how can we invest our limited assets in ways that will produce the best returns? Will organizations we funded in the past survive these times of shrinking resources and growing needs? As investors in the nonprofit sector seeking innovative opportunities to maximize our efforts, we must challenge ourselves to better support and build organizational capacity.

A logical and often overlooked solution is supporting effective volunteer engagement and the infrastructure that sustains it.

When creating our family foundation, we agreed that supporting organizations in building their capacity to engage volunteers would increase their ability to accomplish their missions, and, therefore, their long-term sustainability. This strategy has provided a tremendous return on our investment.

For example, in 2011 the Pikes Peak Volunteer Engagement Initiative sought to increase the effectiveness of nonprofit volunteer engagement strategies in the Colorado Springs, CO area. The goal was to enhance organizations’ capacity to fulfill their missions and meet community needs. The Leighty Foundation funded and led a five-year Initiative to increase the capacity of nonprofit organizations in the region. We invested in individual organizations through Volunteer Impact Grants, in the community through securing experts to provide training support to dozens of organizations, and in the future through our support of the Center for Nonprofit Excellence as host of the ongoing work.

In its first phase, the Initiative convened and connected board and executive leaders, staff members, and volunteers to identify needs and issues related to volunteer engagement. In addition, we fostered peer exchange and learnings through a community-wide symposium on volunteer engagement, seminars, and reflection gatherings.

Continue reading

Embracing Our Foundation’s Role as a Convenor

By Mickey Gula, Buhl Regional Health Foundation

The Buhl Regional Health Foundation is a new health conversion foundation in Western Pennsylvania, situated on the Ohio state line.

We convened a daylong community health forum last fall to connect community leaders and organizations, explore our evolving region, and identify opportunities to improve the region’s well-being.

Over the past 30 years or more, our area has seen many changes, including the decline of the quality of life for many. We are members of the Rust Belt and live within an area of the country that has seen steep economic decline. Generations had worked in area steel mills to support their families, but our young people have moved away to find work and a better standard of living. Our county has one of the oldest populations in the state.

One of my early steps as executive director was to reach out to other conversion foundations in Pennsylvania. The state has nearly 40 similar foundations that fund a number of initiatives: health access, mental health, healthy eating, active living, and meeting the needs of the aging. I learned that all work closely with their local nonprofit agencies to engage them in conversation, educational efforts, and collaborations to improve the health and well-being of their communities outside of traditional health care settings. The connection these foundations have with grantees also assists them in finding areas of focus that can make an impact in their communities.

Continue reading