The Future of Community Foundations in the Age of Disintermediation

Lucy Bernholz and Katherine Fulton have written eloquently on The Future of Community Philanthropy in the age of increased competition and collaboration from financial services firms (for assets under management), new legal tools like generation skipping trusts (now holding billions), financial advisers trained in philanthropy (who distintermediate the community foundation's advisory function) and new technology linking donors, advisers, and nonprofits (thereby disintermediating the community foundation grant-advisory function). 

Katherine and Lucy should be studying Newdea and vice versa.

What is the role, then, the real role of a community foundation, the one role that a Newdea, or Fidelity, or US Trust, or Merrill cannot plausibly play? I suggest it is moral and community leadership. The community foundation ought to be in the forefront of encouraging what Tracy Gary calls, "Inspired Philanthropy." This comes down to several things:

1. Increase the total supply of philanthropic dollars in the community by promoting "prudent and inspired" giving.
2. To that end encourage donors to work with advisers to be as generous as possible now and later.
3. Work with advisers to get them fairly paid. (Yes, unless you do they won't play as often as they might.)
4. Educate donors about causes and encourage donors to learn from one another.
5. Open the door to new donors, even if they are not white, educated, or high class. Tons of money is in blue collar businesses, under leadership that may be high school educated. Your donor groups should reflect, presumably, the ethnic mix of your community. Build a welcoming and inclusive community of communities whose staff and board are diverse and shall we say, "not snobby."
   
6. Promote face to face interchange and bonding among the key elements of the community: donors, advisers, nonprofit leaders, volunteers, media, politicians, and passionate advocates of a better world.
7. Provide stewardship of the donor's dollars after the donor is gone in accordance with the letter and spirit of the donor's passionate commitment to a given vision of the good.

OK, so what is the business model that supports such community moral leadership? Primarily, the model remains assets under management. What would distinguish the community foundation from for-profit providers would not be rates of return, expense ratios, or high-powered technology, but "high touch" moral and community commitment and leadership. Now, if you asked me as for-profit philanthropy person if any financial services or legal firm could plausibly position themselves the a moral and community leader for the good of, say, St Louis, Dallas, Chicago, or for the good of specific affinity groups, like Evangelical Christians; Gay, Bi, Lesbian and Transgendered,  Latinos,  Greens, and on and on, I would say, "Are you insane? What do you think we are running here, an eleemosynary institution? Philanthropy is a way to get sticky clients and sticky assets. We have information. You want wisdom, virtue, beauty, justice and excellence? See a priest, professor, philosopher or poet. This is a business not a seed-bed for the soul. What do I look like, Jesus Christ? Moral leadership is in the eye of the beholder. You want a book for a little uplift? I got Chicken Soup for the Soul, 7 Habits of Highly Successful People, I got Atlas Shrugged, and Management Secrets of Attilia the Hun. Take your pick. Then let's get back to getting the deal done. Moral leadership. For that we charge extra."

In an ownership society crass is good, and stupid sells. Business may have a double-bottom line, but one reports to the other or it gets fired. The only hope we have of real and deep, wise and virtuous, not to say self-sacrificing, moral leadership is from the nonprofit sector. Please! This is one game the nice people cannot afford to lose to the shrewd double bottom line billionaires to be.

Ask, a community foundation leader, not about your own assets under management. Ask how you in your community foundation can increase the total supply of philanthropic dollars, and how you can help bind the hearts and minds of the supply side and the demand side for those dollars. Take a total systems perspective and ask how you can get good things done by introducing the right people to one another (advisers, givers, nonprofits, media, public policy types). Ask how you can transform and elevate what is low, selfish, ugly and venal in our society (without putting off your board and other constituents who are exemplars of same.) If you do that unselfishly, honestly, honorably, faithfully, and visibly, you will get your share - a growing share of a growing total -  of the philanthropic assets under management and you will have very little competition for your (he swallows hard) "Brand Promise." If you want an uncontested competitive position, try the high ground. You will find it undefended - a wildernness untouched by human foot.

Now why would you provide moral and community leadership as a community foundation? Uh, because that is why you were founded? Because - am I wrong? - you put the good of the community ahead of your own? And those who are last shall be first, and the meek will inherit this world. At some point you either step up and represent what is best in this country and our moral and civic traditions, or you may as well pull over and let the financial companies go by you like an 18 wheeler high-balling down the highway with the horn blasting.  You are lousy at running a business, so how about leading a community revival? If you can't or won't you are not necessary and will be replaced by asset gatherers who do transactional giving deed better, quicker, and cheaper - with no particular heart and no particular soul.  Our  country and our communities need visionary community foundations for the health of our civic life. That is the appeal in the light of which it makes sense for a donor to use a community foundation rather than a for-profit surrogate. Do you make that appeal, if you are with a community foundation; do you partner with the financial firms for the greater good; or do you think you can compete on their turf on their terms? Looking to community foundations for moral and civic leadership, I am often shocked to hear what sounds like a business manager asking, "So what is in it for us?" What is in it for you is survival. But your extinction will only be mourned if you stood for something more important than assets under management. Stand selflessly for the good of the community and you will perform the one essential service that all well informed and resourceful citizens should and will support.  The results will be assets under management, a big raise, etc. 

Comments

[Daniel F. Bassill]

Phil, I've added a link to this message in my own blog at http://tutormentor.blogspot.com/2006/08/welfare-reform-next-steps.html

I've put it in context, focusing on the next steps of welfare reform. If community foundations want to improve schools, or end poverty, they will need to step to the plate, as you've suggested, to connect those who can help with those who need help for much longer than just short term project based funding.

I don't think this moral leadership opportunity is limited to community foundations. I think it needs to be taken by CEOs, faith leaders, and others who a) have a responsibility; b) have a self interest; c) want to seize the opportunity to create more visibility for their own role in the world

Changing the behaviors of people who already are leaders of foundations or businesses is just as difficult as changing the behaviors of people on welfare. I believe we need to take a longer view, and focus on how we can intentionally create a new generation of leaders who think and act differently than what we have now. That means we need to reach kids early and mentor them continuously until they are in work and careers where their leadership can have a moral impact on how we bridge the two sides of the economic and social divides of this world.

[Phil]

Dan, thank you for the impassioned and visionary comment and correction. Of course you are right. Community Foundations might be conveners of civic leaders, but cannot supplant them. Mentoring youth to be civic leaders is so important. Again, that ties in which trends in financial and legal services. Our clients are asking us for help in being better "financial parents." They want to get their kids engaged so they don't become bratty trust fund babies. They are wrestling with "how much is enough, when?" And they are receptive to the thoughts that the best inheritance may be a philanthropic fund that the child eventually manages. To prepare the child for that role parents are receptive to ideas on how to engage kids early, often with the parents, in civic family projects. You might consider how you could reach out to the englightened tax, legal and financial advisors with a proposition on how you could help wealthy client's get their kids engaged.

[Daniel F. Bassill]

I have volunteers from JPMorgan Chase and Merril Lynch on my board and among the volunteers at http://www.cabriniconnections.net. I've helped careate a program at the Chicago Bar Association that enlists lawyers and law firms to be volunteers and donors (http://www.lend-a-hand.net).

What makes my work unique is that I maintain a database of almost all non-school volunteer based tutor/mentor programs in Chicago. Thus, I'm not just drawing volunteers/donors to my organization, I'm taking the leader role that intends to draw these resources to all existing programs, and to fill voids in neighborhoods that don't have programs.

Keeping this in miind, I've suggested to my financial friends that on the Inernet based brokerage web sites it would not take much to have a button for planned/charitable giving, where the firm advocates for giving into tutor/mentor programs, and provides financial services so the donor uses that company to facilitate their giving.

So far, none have accepted, but I keep trying. Most great inventions are simple ideas that someone finds a new way to execute. How many people have looked at something and said "Why didn't I think of th at?"

If we can keep innovating ideas that benefit non profits and communities, and make them public, then we can stimulate the ownership of these ideas by people who can execute them better than me or people like me.

As long as a small group of people value my role in this I'll have enough funding to continue to play that role and the winners will be all of the youth serving organizations who are better supported than they are now.

[Phil]

I may have a worthwile suggestion. Why don't you email me privately?