How Much Stays Local?

Released last month, a study from the Foundation Center revealed that one-third of the grant dollars awarded by Washington-area foundations in 2006 went to locally-focused organizations. The remaining two-thirds went to Washington organizations with a national or international focus or to organizations outside of Washington.

The study, "Giving By Foundations in the National Capital Region: How Much Stays Local?" is the "Foundation Center’s first-ever examination of locally-focused giving within a specific metropolitan area." As a report of giving in 2006, the report presents an interesting snapshot of the local funder community before the recession and raises an important question for the DC philanthropic sector: how much stays local?

As DC and its nonprofits look out for the nation, who's looking out for DC? Fannie and Freddie, for instance, were the second- and eighth-largest foundations, respectively, in the area in 2006, and they were taken over by the government in September of last year, leaving charities to wonder who would fill the vacuum.

A June 2007 report from the Foundation Center "Key Facts on Washington, DC Area Foundations," noted that "foundations in the area targeted a larger share of their funding than U.S. foundations overall for the economically disadvantaged" and that "foundations in the area also gave more for the benefit of ethnic or racial minorities." The report attributed this to "regional demographics." But, when this new study shows that fully two-thirds of DC funders' attention is focused elsewhere, that critical support for economically disadvantaged and minority communities goes with it at a time when it's most needed.

Perhaps, the urgency of the times will encourage new donors to step up or urge current funders to look locally. Perhaps, the Foundation Center report on DC for 2009 will paint a different picture, but the tension between local ties and national focus will always be with those living in and near the nation's capital.

This morning's Washington Post chronicles the latest instance of these conflicting impulses:

A D.C. fund created to improve the city's neglected neighborhoods is being divided among several agencies and funneled to big-budget nonprofits such as the Kennedy Center in Mayor Adrian M. Fenty's new proposed spending plan.

While it's comforting to think that our nonprofits can be both local and national, that funders can fulfill their missions elsewhere and be engaged local citizens, the economy will push many to make difficult choices. A recent Washington Grantmakers survey captured the economic catch-22: 86 percent of respondents reported a decrease in assets in 2008, and four out of five grantmakers reported receiving more grant requests in 2008 than 2007. Appealing to funders already caught between increasing needs and declining financial resources, will local nonprofits survive? How much will stay local - and how much of what's local will stay?

Emerging Leaders Salon Takes Off

EPIP-DC kicked off the return of its Emerging Leaders Salon with a conversation with Virginia Esposito, Founder and President of the National Center for Family Philanthropy. February's well-attended discussion had participants talking about careers in philanthropy, the world of family giving, and the economy.

Esposito began the discussion with some of DC's emerging leaders by telling the story of her own 29-year career in the field. She had started out as a schoolteacher before arriving, partly by chance, at the Council on Foundations. It was there that she discovered a fascination with the contributions of philanthropic families.

"All I hear about is how family detracts [from giving]," Esposito said, relating the story of one philanthropy professional who wanted to work for "families - but families without issues."

"That's just sad because, 'issues' and all, family adds so much to the process," she said. "Giving families embody the central democratic principle of personal initiative for the public good. Their work is as much an act of citizenship as their industry, their vote, and their taxes."

That passion for family philanthropy encouraged Esposito, along with other leaders in family giving, to create the Council's Program on Family Philanthropy and, in 1997, the independent National Center for Family Philanthropy.

She spoke of the roots and traditions, the values that transcend generations, that families bring to their philanthropy, and called attention to the commitment, passion, and responsiveness that families' giving reveals.

"We haven't done a good job of increasing understanding about what it is that foundations and, more specifically, family foundations do," she argued, pointing to NCFP's recent initiative to combat public misperceptions by articulating the "value of family philanthropy."

She encouraged emerging leaders to follow their own passions and to be open to new opportunities and the chance to do something different.

"When I first started out, we didn't even use the phrase 'family foundation,'" Esposito said. "Now there's the National Center, and family giving has its own department at the Council and at community foundations and organizations around the world."

Esposito also acknowledged a debt to her many mentors, among them foundation trustee, educator and former dean of the Graduate School of Education at Harvard University Paul Ylvisaker.

"I think any career in philanthropy takes passion, commitment, and a willingness to take the long view," she said. "But it also takes a group of mentors that inspire, teach, and encourage. I am the product of so many people who took the time to teach me – to invest in my knowledge and, consequently, my career. They daily play some part in who I am and what I do and I remember each one with enormous respect and gratitude."

The conversation then turned to the topic of philanthropy and the economy as giving families struggle to keep up with rising needs amid declining assets and the added tragedy of the Madoff scandal.

"Foundation assets are down as much as 30 to 40 percent over the last year," Esposito said.

She noted that families were getting creative to meet growing needs: renegotiating grant agreements, convening nonprofit groups, collaborating, giving access to professional and technical assistance, and offering lines of credit and no-interest loans.

Esposito contended that the crisis was an opportunity for reflection, for foundations to ask themselves: "What are we really doing here?"

"You don't have to give up your dream of perpetuity to step up," she said. "It's gotten to the point that we boast of our investment returns as much as we boast of impact. Payout should be a function of what you're trying to do - not what you're trying to make."

She encouraged grantmakers to see how they might help both with grants and beyond grants.

Of particular concern to some members was the loss of some well-known social justice grantmakers.

"We're losing foundations that were willing to go into places and be advocates that others weren't, like the JEHT Foundation," Esposito acknowledged. "It's a real loss."

"There seems to be a new awareness that government isn't taking care of the vulnerable," Esposito said, pointing to the aftermath of Katrina and the more recent housing and credit crises. "Social justice may be at the forefront of people's minds in a new way."

"I was concerned about speaking to the 'Emerging Practitioners' because I feared it implied I better have already emerged or, at my age, had little chance of doing so!" Esposito explained. "What I realized is that EPIP-DC is an impressive group of leaders – nothing 'emerging' about them. The great delight I took in spending time with them was enhanced by the opportunity to pay tribute to my own leader-mentors."

Special thanks to Ginny Esposito and the National Center for Family Philanthropy for hosting this event.

Safe Space for Let

At a recent conference, a group of young leaders were talking about the need for "safe spaces." Can a young person of wealth, for example, feel safe in a room full of people that might be looking for something from them? Can a person of color, for another example, feel safe in a room full of people that don't look like them? We young people wanted to discuss wealth, poverty, philanthropy, race, class, gender, the whole lot, but these aren't easy conversations for many people. Where were the "safe spaces" for these delicate discussions?

I found it all very unfortunate.

I thought to myself, "'Safe space?' I don't need 'safe space.' I have plenty of 'safe space.' I call it 'daily life.'"

As a straight, white male, I have safe space to spare. It's what being privileged is all about. I'm safe everywhere. I don't get a double-take or a repulsed gasp when I tell people about my wife because people expect my spouse to be female. I've never been denied a loan, a job, a friendship, or a hello because of the color of my skin because that doesn't happen to people that look like me. I don't have to worry about whether people take me seriously at work because I'm a card-carrying member of the boys' club. Safe space? It's my home address.

So I can spare an hour or four at 3 AM to listen without judging because I can talk pretty much whenever I want. And I can take a conversation or a convening that makes me a little uneasy because, at the end of the day, I could tear down a wall or four and still be safe in my own skin. The way I figure it, a difficult conversation now and then is a small price to pay to make somebody else feel safe. Some people don't have safe spaces to return to. I might even learn something.

So if you need safe space, people, please don't expend time and energy creating it. Just borrow mine.

Exercise Restraint on the Excise Tax

Things just keep getting worse and worse.


According to The New York Times, foundations who invested with Bernard Madoff may be subject to additional loss in the form of an excise tax. This tax is meant to ward off potentially risky investments by funders and to encourage exercising a thorough vetting process for identifying investors.

The financial implications can be huge. For example, if the IRS enforced this tax in the current scenario, the following could happen:

"The penalty can equal 10 percent of the amount invested during the tax year in question. If the foundation fails to try to recover the funds, there is an additional 25 percent penalty. The foundation’s officers, directors and trustees also face a 10 percent penalty, and a 5 percent additional penalty if they ignored red flags or did not thoroughly vet Mr. Madoff’s investments and proposals."

But with the huge losses of many foundations, particularly those that invested heavily with Madoff, what's 25% of $0?

Though the IRS has yet to make a definitive decision on whether or not to enforce this tax, I can only hope that this situation is given special consideration. This scandal was clearly a huge shock to everyone involved and seems to be a fairly isolated one.

Point blank: The philanthropic community is in need of redemption. And additional slashes to what little assets remain is not the solution...

The Emerging Leaders Salon Returns to DC

The DC chapter of Emerging Practitioners in Philanthropy (EPIP) presents the return of the Emerging Leaders Salon!

If you're an aspiring leader in philanthropy, join us for our signature conversations with leaders and thinkers in the field.

This month features a discussion with Ginny Esposito, president and founder of the National Center for Family Philanthropy. Ginny will discuss her own career path in the field, the world of family foundations and funds, and how they're meeting the challenges of today's economy.

Date: February 19, 2009
Time: 12:00 - 1:30 PM
Place: National Center for Family Philanthropy, 1818 N St NW, Suite 300, Washington, DC, 20036

As with most of our salons, it's brown-bag lunch, but refreshments will be provided.

Click HERE to RSVP for this event.

Over(compensation)head

The issue of nonprofit executive compensation is once again making headlines. According to the Seattle Post-Intelligencer, the Boy Scouts of America's chief executive earned $589,000 in 2006, exceeding the 75th percentile level of average salary ranges for comparable nonprofit CEO salaries. Critics assert that these hefty salaries take the executives' focus away from fulfilling the organization's mission. However, Boy Scouts representatives insist that this level of compensation is needed to retain quality executives for the long-term.

Nonprofits have long been known for their poor staff compensation, not only with respect to yearly salary but retirement benefits. And the solution has been to create more attractive compensation to compete with the for-profit industry. Yet, with our current economy, does this practice still make sense given the increase of competition for foundation funds?

Since salaries are included as overhead in organizational budgets, many grants that will be awarded in the coming year will undoubtedly cover a portion of this. In this economic recession, should funders take into account higher than average executive salaries when considering whether to award a grant?

What do you think?

Yes We Did; Now Are We Done?

Ah, yes. It is done. Change has finally come to The White House.

For millions of Americans, our country's shameful legacy of racism and inequality was effectively muted at 12pm on January 20, 2009, when a man with a name like Barack Hussein Obama was elected to the highest post in the land. As President Obama so eloquently stated in his inaugural address, "This is the meaning of our liberty and our creed...and why a man whose father less than 60 years ago might not have been served in a local restaurant can now stand before you to take a most sacred oath.” Yet, while significant progress has been made in reforming the face of our political system, the work is far from over in ensuring equality for all.

African American and Hispanic students still lag behind their white counterparts in obtaining their high school diploma. The foreclosure crisis and environmental pollution continues to disproportionately impact communities of color. Subtle bias in hiring decisions effectively limits minority populations from attaining meaningful employment. Unfortunately, the list continues.

These are all issues that President Obama's administration is undoubtedly aware of. Various nonprofit civil rights groups have already reached out to him, highlighting the work that still must be done to improve the lives of disenfranchised communities. For social justice funders, now (more than ever) is the time to stand firm with these groups to fight for equality.

We all know the scale of the current economic crisis, enhanced for many by the Madoff scandal. Several foundations and community organizations have had to close their doors as a result.

Yet, the philanthropic community must stay the course in supporting social justice programs.

As changes are occurring at the national level, we must continue to mirror these changes on the ground. And let's not look at the solution to this problem as simply a monetary one. Funders have various levels of capacity. Below are my thoughts on how philanthropy is uniquely situated to continue addressing civil rights issues in the Age of Obama.

1) Funder Collaboratives. Many grantmakers have realized the power of pooling their money in addressing social ills. This format not only allows likeminded funders to share strategies with each other but it reduces the amount of time that nonprofits spend approaching these grantmakers for support.

2) Knowledge Management. Grantmakers have done an excellent job of sharing best practices. Whether it’s online through a foundation's Web site or convening grantees, funders are already highlighting the wealth found in peer learning circles.

3) Harnessing the Power of Peer Pressure. Funders that support social justice and advocacy efforts are already aware of the importance of using their resources to address inequity. However, there are others that do not for a variety of reasons. Through organizations like EPIP, grantmakers can continue to highlight the need for social justice funding within the philanthropic community.