Book Discussion of "Trouble in Foundationland"

Event Summary

In January 2004, the Bradley Center released via the Internet its first monograph, Trouble in Foundationland: Looking Back, Looking Ahead, an in-depth look at the debate surrounding the Charitable Giving Act of 2003 (a.k.a H.R. 7). As a part of the release, the Bradley Center convened a panel discussion on the monograph on January 15. The event was attended by over fifty nonprofit administrators, foundation leaders, members of the press, scholars, and students. Alan Abramson of the Aspen Institute led the panel discussion, along with Elizabeth Boris of The Urban Institute and Georgetown University’s Pablo Eisenberg. Speaking first, however, was the monograph’s author, Peter Frumkin.

Panel Presentations

The Tax Reform Act of 1969, “the real first major set of regulations” regarding foundations, had two important unanticipated effects, Frumkin began his presentation. Both were defensive reactions to government regulation on the part of foundations. First, foundations sought to recast themselves as "public trusts …operated for public purposes." Second, they became much more professional, with large increases in staff and administrative costs. However, neither of these reactions addressed the two core challenges to philanthropy, then or this past year: the effectiveness of philanthropy and the accountability of foundations. Hence, said Frumkin, we’re right back where we were thirty years ago. “For this circle to really be broken, the foundations need to get their eyes on the core issues, the real, basic, fundamental issues of effectiveness and accountability, develop an argument for one or both of these, and I think that their problems would recede significantly.” Foundations could begin, he noted, by seeing to it that their payout rates are determined by a calculation of the amount of money needed to carry out their missions effectively, rather than by set rates or common practices.

The three remaining panelists had both criticism and praise for Trouble in Foundationland. Both Alan Abramson, of the Aspen Institute, and the Urban Institute’s Elizabeth Boris disagreed with Frumkin about the problems of professionalization. Boris argued that the professionalization of the foundation world has increased its accountability, because many foundation professionals come directly from nonprofits and are in continual dialogue with them. "I would think that having staff in place who talk to one another, who go to meetings about grantmaking… do[es] raise the level of grantmaking," she argued. Abramson took issue with the idea that professionalization dampens creativity. "Rather than professionalization being the enemy of creativity, I think there is some professional prestige… that attached to creative grantmaking." But Georgetown University's Pablo Eisenberg took issue with Abramson: "Who do we have as professionals in our foundations?" he lamented. "We have a lot of people who are not creative, [who are] supercautious, inexperienced, and gutless—and many of them are chosen precisely for those qualities." Eisenberg faulted above all the selection system for professional philanthropy's lackluster leadership.

As for Frumkin's claims that foundations have failed to address issues of accountability and effectiveness, Boris cited the freedom foundations have to decide for themselves what is effective, resulting in a "salutary and healthy" diversity. This diversity also means, however, that some foundations do very well in improving their effectiveness, while others do not, and still others simply don’t care whether they are effective. One might want all foundations to monitor their effectiveness, but that would contribute heavily to administrative costs, Boris concluded. On the topic of accountability, Eisenberg criticized nonprofit organizations for not standing up for higher payout, demanding more money for operating costs, and otherwise holding foundations accountable. “For their part, nonprofits, lacking spine, have shown an enormous degree of lack of integrity and cowardice,” Eisenberg fumed. And the Council on Foundations, he added, has done “zippo” to put in place structures that would facilitate better grantee-donor relationships.

Questions were posed to the panelists by several audience members, including the Independent Sector’s Peter Shiras, Capital Research Center’s Terrence Scanlon, Drew Anderson of the Heritage Foundation, and Hudson Institute’s own Amy Kass. Also in attendance were the CEO of BoardSource, Deborah Hechinger, Steve Jordan of the American Chamber of Commerce, and Chronicle of Philanthropy editor Stacey Palmer. The Chronicle carried a piece by Frumkin and a mention of the monograph in its very next issue.

For Further Information

To request further information on this event, the transcript, or the Bradley Center, please contact Hudson Institute at (202) 974-2424 or "email Kristen":mailto:kmcintyre@hudson.org.

Hudson Institute's Bradley Center for Philanthropy and Civic Renewal aims to explore the usually unexamined intellectual assumptions underlying the grantmaking practices of America’s foundations and provide practical advice and guidance to grantmakers who seek to support smaller, grassroots institutions in the name of civic renewal.