OP-ED: Accountability: For What and To Whom Should Philanthropy Be Responsible?

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The following essay was prepared for a discussion on accountability in philanthropy—part of a series of six discussions entitled "The Dialogues on Civic Philanthropy: Perfecting Our Grants" (2005-2006). By clicking the links to the right, you can access more information on this series, learn about the Dialogues project as a whole, read other prepared essays, and download discussion transcripts.

AN AGE-OLD question that will never go away

Accountability of the philanthropic sector is one of the most urgent issues in our sector today. Similar to past years, it will not be easy to reach a consensus on the right answer to the question about to whom philanthropists are accountable. The critical importance of this question is evident from the way many foundations initiate their strategic planning activities by asking the participants, “To whom are we responsible?”

This question always generates some lively conversation and varied responses from the participants. Participants typically say the foundation is responsible to one or more of the following groups: trustees, donors, clients, regulators, grant recipients, and the public. If it is a corporate foundation, some other groups are mentioned including employees, shareholders, customers, and communities.

I feel that to some extent, whoever controls the uses and processes in philanthropy might well be accountable to each of these groups, depending on the charter of the philanthropic entity. However, I feel strongly that for the philanthropy sector, our highest level of accountability and responsibility is to the public. This is because the public has made philanthropic funding tax-exempt and entrusted us with the responsibility to make the best use of these resources for the common good. This broad mandate from the public, with few strings attached, leaves philanthropists with an enviable amount of flexibility to be creative, innovative, and entrepreneurial in whatever we choose to do for the common good.

Tax-exempt funds—a fundamental public policy that we can not ignore

My response to this question about accountability is strongly influenced by my view that the tax-exempt character of the resources we use is made possible by a unique public policy, and that this public policy is kept viable and sustainable only by the exemplary conduct and performance by those of us who control the resources. If the philanthropic sector loses sight of the need to be accountable to those who make and shape this public policy, then we should expect the authority to try to modify the public policy in an effort to force greater accountability. Therefore, it is not surprising to me that the recent abuses in the use of philanthropic dollars by a relatively small number of organizations and individuals in the sector have caused authorities to restrict the sector’s flexibility.

Our objective

A particular challenge for the philanthropic sector today is how best to avoid becoming an over-regulated sector. We must do this by convincing the authorities that we have the capacity and commitment for self-regulation. My experiences as a research scientist and the former head of a philanthropic foundation help me to understand and appreciate the advantages and the best environment for this work. These include being able to work in a climate that is unhampered by unnecessary bureaucracy, a work environment that fosters innovation, creative problem-solving and that allows flexibility to achieve the most effective and efficient use of limited resources.