I am all #COF09'd out

Well it is finally over. The Council on Foundations put on an amazing annual conference in Atlanta. I had a great time, met a lot of you, and learned a ton but I can honestly say I have never missed my own bed more than I did yesterday. There is only so much philanthropy talk that one woman can take before she goes mad. That being said I want to give a special thank you to Chris Cardona from TCC Group and Jason Franklin from the 21st Century School Foundation for sharing their perspective and insights from the conference. I'd also like to thank Dan Pallotta-the author of Uncharitable, Hildy Gottlieb- author of the Pollyanna Principles, and GrantCraft for donating books and gift certificates for my twitter contest. Special congrats to @jessamynlau, @danavshelley, @kivie, @mollina, @philaction, @bsttrach, @gilliangonda, and @nachristine who were all winners in the twitter contest. There are three $15 gift certificates to GrantCraft left for the first three commenters who posts a link to their favorite piece of COF09 coverage from any blog or news source in the comment section below.

Great conference coverage was also provides by legions of twitterer and great bloggers including Rosetta, Sean, and the new COF blog, Re-Philanthropy.

Who's Managing the Other 95%, and What are They Charging You?

I've always found compelling the argument that foundations, which put so much attention into how their 5% (or more) payout is invested in grantees' work, could do more to look at how the other 95% of their assets are invested. There are many levels to this issue, and an underattended panel yesterday on "Emerging Liquidity Issues for Foundations" addressed one that is particularly timely: when endowments shrink, how available are investments for grant commitments? As the title of the session implies, in this strange new world where the financial-services industry has been turned inside out, the assumptions funders make about the seemingly simple transaction of turning investments into cash to make a grant may be called into question. The panelists, Jeffrey Haber, Controller of the Commonwealth Fund, and David Nee, Executive Director of the William Caspar Graustein Memorial Fund, shared a wealth of examples of challenges foundations are facing with regard to liquidity. Certain types of investments are changing the terms of liquidity, sometimes several times within a few months. For foundations invested in hedge funds, concerns arise about when money will be available to convert into cash, and some funds have even begun "metering" -  charging more to withdraw after 20% of funds have been withdrawn. These funds are concerned about large withdrawals en masse as investors seek safer havens for their money. Some foundations, faced with having to sell assets whose value is significantly lowered in order to make payout, are trying instead to get short-term loans (!!) to meet their grant commitments, on the idea that the interest paid on the loans would be less than the lost value of selling assets toward the bottom of the market. The experiences of foundations seeking to secure such loans have been "remarkably divergent", according to Haber. Also divergent have been the experiences of foundations with fund-management fees. One audience member shared a successful experience, in which his foundation, which was in the 3rd year of a set of 5-year grant investments, chose to maintain its existing grant commitments rather than try to renegotiate them, and as a result sought savings in other places, such as investment-management fees. They were able to renegotiate these with their investment managers, making it easier for the foundation to meet its existing grant commitments.

These are not topics with which I'm conversant, so the session was a fascinating learning experience (and I don't doubt that I've failed to capture the full nuance of a rich discussion) and an eye-opening look into the types of discussions that are happening at foundations across the country.

The discussion put me in mind of one of my favorite non-philanthropy blogs, Marginal Revolution. It's two economists from George Mason University who write about every topic under the sun, from the quality of Portuguese cuisine to arguments about using fiscal policy to get out of the recession. A recent post revisited the work of J.M. Keynes, the touchstone of thinking on the idea of an economic stimulus whose work first became influential during the Great Depression. The post looks at what is (apparently) a pivotal chapter in Keynes' key work, which points out that all investors buy into a "convention" or assumption that in terms of the economy,  "the existing state of affairs will continue indefinitely, except in so far as we have specific reasons to expect a change." All the rosy projections of the intergenerational transfer of wealth a few years ago were based on that convention, indeed much of our economy and society have bought into this convention. But the last eight months have shown us what the world is like when the convention no longer applies. The Marginal Revolution post is a bit of an uphill climb, but worth it. Key passage, directly from Keynes:

"It has been, I am sure, on the basis of some such procedure as this that our leading investment markets have been developed. But it is not surprising that a convention, in an absolute view of things so arbitrary, should have its weak points. It is its precariousness which creates no small part of our contemporary problem of securing sufficient investment."

Precariousness, indeed. As they like to say on Marginal Revolution, these are "sentences to ponder." What would it look like to plan philanthropic investments for a world where the convention of "business as usual, indefinitely" doesn't necessarily hold?

Chris Cardona is a Consultant at TCC Group, a thirty-year-old consulting firm that provides strategic planning, evaluation, grantmaking services, and program design and implementation to foundations, corporate giving programs, and nonprofits.

When We Become "The Man"

I had the pleasure of attending the Next Gen party last night at the COF Conference. It is always a great opportunity to catch up with colleagues, eat some great food, and pick up Emerging Practitionersin Philanthropy S.W.A.G. This year the party was hosted by COF as part of their work with the Next Generation Task Force to institutionalize the Council's commitment to next gen issues. I applaud the Council on this work to move this work from the sidelines to the core but a small piece of me misses being the outsider. In previous years, EPIP especially, made an effort to bring young people together in an authentic way. Connections were made and support was offered. The EPIP Next Generations parties had titles like "An Intergenerational Transfer of...Fun" and more "emerged" foundations leaders would attend the events as a show of support for the next generation of foundation leadership. It always felt like a young people's revolution to get a place at the table. This year was a little different because we have a place at the table. The Next Generation Task Force is a long term commitment that extends outside of getting more young people to the annual conference and more and more young people are on regular Council committees. I ask that all of the groups that have been working on this issue for so long like EPIP, Resource Generation and 21/64 take some time to appreciate all that they have done to get the field to this point but I ask all of us to not get too comfortable with progress. There is still more work to be done to have authentic leadership from young people in the field and a fun party with fake bouncers to reinforce the "hip jazz club" vibe is just one step in many.

Time of Change or Time of Crisis?

Throughout the COF Conference there has been two competing themes. One theme sounds a little bit like this "it will take most foundations until 2017 to get to 2007 asset levels, assuming a healthy (and unlikely) 10% return." The room groans and starts scribbling down numbers. People compare their investment strategies and then remind each other that foundations have a lot more to give than silly things like money. We convene and train and release reports and are a lot of fun to have around at a dinner party. "We can still be relevant", we cry. We commit to making a 6% payout, forgetting to mention to ourselves and to grantees that 6% this year is still, much, much less in actual grant dollars than 5% last year. We return to our hotel rooms disheartened and call our CFO to figure out how much we can cut from our budget, so that perpetuity doesn't actually mean, when the money runs out in 2015.

The second theme of the conference is change. There is excitment in the air that some amazing changes are happening politically, socially, and economically. We have a federal administration that is asking the philanthropic sector to offer solutions to our country's most pressing needs. Stimulus dollars are coming to our communities and foundations across the country are coming to the table to make sure that the new dollars don't exacerbate current inequalities, foundations'  traditional Lone Ranger approach to grantmaking has been replaced with a renewed spirit of collaboration and an honest look at the root causes of systemic issues, and economic challenges have made all of us look for new ways to streamline and improve our business model. Each of these changes will improve the way that our institutions interact with our grantees, our government, and our communities.

Now isn't the time to cry over what we were, it is the time to rise up to the potential of what we can become.

To Change the World, Start With One

 

In Tuesday's session on Philanthropy's Role in Linking Social and Personal Transformation, the transformation of individuals was described as a central strategy to creating social change. Foundations often shy away from the "soft" side of change, but by ignorning the indovidual you risk developing unsustainable movements. The speakers described how their organizations created an environment where personal transformation is nurtured.

ForestEthics has taken a long term view when it is planning staff development acticities. The organizations invests in communications training, meditation techniques, and intensive leadership development programs. The purpose of this investment is to ensure that the movement has sustainable leaders. For this organization, the professional development budget of staff is one of the last expenses to be cut.

Ng'ethe Maina, Executive Director of Social Justice Leadership, described how his organziation engages multiple staff members from 50+ organizations that participate in multi-year development cohorts. This wide and deep model ensures that change sticks.

Indivdual transformation is key to organizational and community transformation. By supporting the development of sustainable leadership, philanthropy can have a lasting impact.