The LAFF Society

NYC’s ‘Neighborhood of Conscience’

Treasurer — Wed, 25 Aug 2010 20:23:10 +0000

Michael Seltzer worked in Governance and Civil Society in 1995-1998.

From PhilanTopic, August 20, 2010

by Michael Seltzer

Lower Manhattan is many things to many people: hub of global finance, a mosaic of ethnic enclaves, funky residential neighborhood with breath-taking views of New York harbor, and, of course, backdrop for the most devastating of the September 11 terrorist attacks. But thanks to a series of unrelated real estate transactions over the years, it has also emerged as the world’s first “neighborhood of conscience.” That term was coined in the 1990s after the Rockefeller Foundation invited a seemingly disparate group of nonprofit visionaries to its conference center in Bellagio, Italy — a group that included the leadership of theLower East Side Tenement Museum in New York City, Russia’s Gulag Museum, and the District 6 Museum in South Africa, among others.

At that meeting, these nonprofits found common cause: a shared commitment to relating the past to the present, building “lasting cultures of human rights,” and engaging “ordinary people in dialogue on social issues…through the establishment of sites [of conscience].”

In recognition of its importance, the sites of conscience movementhas attracted the support of a number of foundations and philanthropies over the years, including the Compton Foundation, theFord Foundation, the Lambent Foundation, the Nathan Cummings Foundation, the National Endowment for Democracy, the Oak Foundation, the Open Society Institute, and the Sigrid Rausing Trust.

The emergence of Lower Manhattan as a neighborhood of concience has occurred organically, with many nonprofits and cultural groups having set up shop or established memorials over the last decade on the footprint of what was once New Amsterdam. They include:

The newest group looking to establish a presence in this storied neighborhood is, of course, Cordoba House. Unlike its predecessors, however, plans for the 13-story Islamic community center and mosque have generated a firestorm of controversy. On Tuesday, New York governor David Patterson offered to mediate a solution to what has turned into a regrettable stalemate between the community center’s supporters and First Amendment advocates on one side and opponents of the so-called Ground Zero mosque on the other.

Many veterans of the New York nonprofit scene, including myself, have worked with Daisy Khan, executive director of the American Society for Muslim Advancement and a board member of Cordoba House and can vouch for her unquestioned integrity and inspiring work on behalf of Muslims in America. Just as important is her long-term commitment to build lasting bridges between the American Muslim community and members of other faith communities. (Ed. note: Khan is married to Imam Feisal Abdul Rauf, founder and CEO of the American Society for Muslim Advancement and, with his wife, co-organizer of the Park51 project.)

Cordoba House’s leadership, mission, and plans for the site on Park Place all make it worthy of a location in Manhattan’s neighborhood of conscience. That’s presumably why the local community board’s financial committee voted unanimously in support of the new center and mosque.

We in philanthropy and the nonprofit sector have much to gain from increased engagement with the nearly seven million Muslims who call America home. When I served as a program officer at the Ford Foundation responsible for the foundation’s grantmaking to strengthen global philanthropy, I was often reminded by my Turkish colleagues that the very first foundations were established in Anatolia over a thousand years ago.

Please join with me in calling on Governor Patterson and other civic-minded Americans to lend their support to reaffirming Lower Manhattan as the world’s first “neighborhood of conscience.” I, for one, will be sending a check to Cordoba House.

(Photo Credit: Chris Hondros/Getty Images)

Donors Should Not Drive Development: Learning from Botswana

Treasurer — Fri, 20 Aug 2010 22:00:52 +0000

Steven Lawry was Program Officer in Namibia, Representative in Cairo and Director in the Office of Management Services - 1992-2006.

By Steven Lawry

This is the first of two posts by Steven Lawry exploring why and how developing country governments should set a strong, clear frame for development efforts, and why and how donors and INGOs should work within that frame.

As a young man starting out in international development work in the 1970s, I served as a Peace Corps Volunteer in Botswana. But my only connection to the Peace Corps was a monthly paycheck (a very small one). I was for all intents and purposes a Botswana government civil servant. I held an established government post, Assistant Planner in the Department of Town and Regional Planning.

The Department was a unit of the Ministry of Local Government and Lands. I reported to a Senior Planner, a Swede funded by SIDA. She reported to the Director, who was seconded by UNDP. He reported to an Undersecretary in the Ministry, who was a Motswana, and so forth.

I didn’t realize it at the time, but what seemed to be a sensible and effective way of integrating overseas staff into a developing country’s public service was quite unusual. I came to learn that, in other countries, apart from a few high-level advisors, donor-funded staff usually worked in separate management units, located in aid missions or in the offices of donor-funded contractors and INGOs.

As I came to work in other countries and under different aid staffing regimes, Botswana’s practice of integrating overseas advisors into its civil service structure seemed all the more compelling. It helped ensure that everyone worked to a coherent development strategy, which had been debated up and down the structure (by both Batswana and expatriate staff) and agreed ultimately at the highest levels. overnment programs were backed by donor funds and Botswana government revenues.

Any donor making its funding contingent on activities that fell outside of Botswana’s carefully established priorities would be told, as politely as possible, that they take their funds elsewhere. Funding was important, yes. But more important was ensuring that it was applied in a disciplined and coordinated way to the country’s own development strategy.

Donors rarely did take their funds elsewhere, as they came quickly to appreciate the advantages of Botswana’s approach. Programs were well-conceived and well-executed. They were scaled to the country’s capacity to actually implement them and enjoyed the full endorsement of the government and the commitment of government staff and financial resources. They tended to succeed where similar initiatives, pursued in other countries without the benefit of full government endorsement and engagement, failed.

One obvious lesson of the Botswana model is that operational structure—how donors and donor-supported staff and host governments interact in shaping policies, designing programs and implementing them—really matters.

I have lived and worked in several other developing countries after my time in Botswana, and kept asking myself and others why the Botswana model of staff integration is so rarely found elsewhere. Explanations offered, or implied, were various.

One is the nationalist argument: having donor staff so deeply entrenched in national governing institutions would be an affront to national sovereignty. Moreover, expatriates would be holding positions that should be held by citizens. Many political leaders embrace the nationalist argument, or feel popular pressure to embrace it.

Botswana’s greatest proponent of its integrated staffing model was the President, Seretse Khama. Khama was a person of considerable wisdom and self-confidence, and if there were pressures to eschew this approach, he would have tamped them down with reasoned arguments on behalf of its many benefits.

Importantly, the Botswana model was never meant to be a permanent, open-ended arrangement. Accompanying heavy use of expatriate staff was a vigorous national education and training program, including major investment in the University of Botswana and overseas post-graduate training. By the mid-1980s, less than 20 years after Botswana’s independence, the civil service was largely localized.

Putting the nationalist argument aside, donors have their own reasons for not embracing the model. One is that, despite efforts to appraise initiatives in light of local conditions, most international donors work to a strategic framework produced in Washington, London, Geneva or Paris. Donor programming has an adaptation problem: to align their work with the needs of a developing country as defined by its internal planning process would require a tolerance for flexibility and compromise that many aid agencies can’t negotiate with their home governments.

My time in Botswana pre-dated the rise of INGOs. Since the 1980s, INGOs have come to be major players in international development. As direct implementers of poverty reduction interventions (especially in the fields of health, education, microfinance, reproductive health, and water and sanitation) they loom particularly large.

For many INGOs, public funds (including contracts and grants from USAID) are important sources of funding and have allowed them to expand their funding bases significantly beyond private donations. (In 2009, CARE USA received $240 million in revenue from private sources versus $247 million from USAID. Also in 2009, World Vision received $344 million from USAID, about 28 percent of its total revenue. In 2008, Save the Children received $108 million, or 24 percent of its revenue, from USAID.)

INGOs sometimes receive more direct funding from donors than host governments themselves. Before the January 12 earthquake, 80 percent of all donor funds for Haiti were directed through INGOs; 90 percent of US government funding for Haiti went to INGOs.

As conduits for funding or providers of advisors and staff, INGOs have even less direct functional engagement with host-country governments than bi-lateral or multi-lateral donors, which (compared to the Botswana standard) is already pretty low.

By insisting that their money goes directly to contractors and INGOs, donors foster a parallel system of aid management and administration. INGOs conclude, quite logically, that their principal client is not the host-country government, but the donor. This encourages many of the dysfunctions and inefficiencies that the Botswana model minimized.

Steven Lawry, Senior Research Fellow at the Hauser Center for Nonprofit Organizations, is currently based in Juba, Southern Sudan, where he heads a USAID-funded project assisting the Government of Southern Sudan to develop a new land policy.

Off the Pitch: African Philanthropy Comes Into Its Own

Treasurer — Fri, 20 Aug 2010 21:55:15 +0000

Michael Seltzer worked in Governance and Civil Society in 1995-1998.

From PhilanTopic, July 13, 2010

(Michael Seltzer is a regular contributor to PhilanTopic. In his last post, he wrote about the ascendancy of the global women’s health movement.)

Never before have the eyes of the world been so focused on the continent of Africa. On Sunday, seven hundred million people viewed the 2010 World Cup final between the Netherlands and Spain from Soccer City in Johannesburg, while throughout a month’s worth of earlier matches, millions more were introduced to the prowess of national teams from Ghana, South Africa, Cameroon, Nigeria, Ivory Coast, and Algeria.

What viewers didn’t get to see, however, are the first real signs of an emergent and vibrant civil society in many of Africa’s fifty-three nations. That’s a shame, because in my two trips to Africa this year, I’ve witnessed firsthand how nongovernmental organizations and philanthropic foundations are reshaping the continent’s social and economic landscape.

In Nigeria, the continent’s most populous nation, a momentous event in the history of organized giving on the continent occurred in January when the TY Danjuma Foundation opened its doors. What made the occasion particularly noteworthy is the source of wealth behind the foundation.

General T.Y. Danjuma, a highly regarded statesman and successful Nigerian businessman, gave a substantial portion of his own net worth to establish the foundation. And while the foundation, whose mission is “to enhance the quality of life of Nigerians by supporting initiatives that improve access to health and educational opportunities,” bears his name, he chose to create it as an independent (as opposed to family) foundation, with Thelma Ekiyor, the founding director of the West Africa Civil Society Institute, serving as executive director. Although other foundations have emerged on the continent in recent years, few have been financed solely by home-grown wealth, and even fewer have the resources — or ambition — of the Danjuma Foundation.

Another good example of the phenomenon is the Mo Ibrahim Foundation, which was established in 2006. The Ibrahim Foundation is committed to “supporting great African leadership that will improve the economic and social prospects of the people of Africa.” Its donor, Dr. Mo Ibrahim, is a Sudanese-born mobile communications entrepreneur, and the foundation is best known for annually awarding – or not — the Ibrahim Prize to a democratically elected former African head of state or government who has demonstrated leadership that improves the prospects of people on the continent.

The arrival on the scene of the Danjuma and Ibrahim foundations is emblematic of a renewed spirit of reciprocity on the continent. After centuries of colonialism that did little more than rob Africa of its wealth and fifty fraught years of independence, Africans of means are now giving back to their countries in ways that couldn’t have been imagined ten years ago.

In another sign of the burgeoning growth of Africa’s philanthropic sector, foundation leaders met in 2009 and formed the Africa Grantmakers Network. Members of the network include the Kenya Community Development Foundation (established in 1997), theGreater Rustenburg Community Foundation in South Africa (established in 2000), the African Women’s Development Fund(established in 2000), and Dakar-based TrustAfrica (established in 2001).

Trust Africa executive director Akwasi Aidoo noted that the intent behind the network’s creation was to “change the narrative of Africa as helpless and hapless, tilt the balance of stories, and increase the visibility and knowledge of [philanthropy on the continent].” It’s off to a great start, as are the organizations mentioned in this post (and many others). Indeed, from the six national teams that appeared in this year’s World Cup competition to the dozens of communities across the continent that are benefiting from home-grown philanthropy, Africa is moving quickly to establish itself as a force to be reckoned with in the twenty-first century.

– Michael Seltzer

What is the state of Indonesia’s fight against terror?

Treasurer — Fri, 13 Aug 2010 10:02:42 +0000

By Sidney Jones, Special to CNN

August 13, 2010 — Updated 0217 GMT (1017 HKT)

Editor’s Note: Sidney Jones is senior adviser to the Asia program of the International Crisis Group.Before joining Crisis Group in 2002, she worked for the Ford Foundation in Jakarta and New York (1977-84); Amnesty International in London as the Indonesia-Philippines researcher (1985-88); and Human Rights Watch in New York as the Asia director (1989-2001). Her areas of expertise include Islamic movements; sources of communal and ethnic conflict; and terrorism in Southeast Asia.

Jakarta, Indonesia (CNN) — The arrest on Monday of Abu Bakar Ba’asyir, Indonesia’s best-known radical cleric, shows the commitment of Indonesian police to fighting terrorism. Their efforts on this front stand in sharp contrast to their lack of interest in fighting corruption, ultimately the greater threat to Indonesian democracy.

In general, terrorists have no significant support in Indonesia, and every attack has generated widespread outrage. Ba’asyir is in a slightly different category.

While his support has declined over the past several years, he is a celebrity figure on the extremist lecture circuit and he has become a symbol for many Islamic groups of defiance of the West, in part because of the pressure exerted to have him arrested after the 2002 Bali bombings in which more than 200 people died.

At the time, he was head of Jemaah Islamiyah (JI), the group responsible for the attack, although it was never conclusively proven that he ordered or even endorsed it. He was arrested and tried twice, for different crimes linked to Bali, but prosecutors could never make the most serious charges stick.

This third arrest will have little impact on the overall security situation in Indonesia. Extremist groups have been steadily evolving in new and complex ways: JI no longer supports attacks in Indonesia, and Ba’asyir’s relations with its leaders are strained. He is no longer the most important figure in the Indonesian jihadi movement nor even its most influential ideologue.

But Ba’asyir’s arrest does point to one very big issue for the Indonesian government — how will it handle this man’s detention?

One of Indonesia’s great achievements has been to ensure that terrorism remains a law enforcement issue to be handled by the police, not the military. The government decided early on that it would not engage in widespread preventive detention or closed trials; the media coverage of more than 250 trials to date has been a major factor in convincing the Indonesian public that its terrorists are homegrown.

But a close to 100 percent conviction rate among the hundreds arrested has produced a new problem — radical prisoners and ex-prisoners. Taking advantage of a notoriously lax corrections system, extremists frequently have taken over prison preaching, maintained contact with friends outside, recruited ordinary criminals and even planned operations. A police program to offer economic incentives to prisoners in exchange for cooperation has had limited success, but the hardcore jihadis generally do not take part.

The friendship that grew up between Ba’asyir and a young man named Ubeid, while both were detained in Jakarta’s laughably-designated “maximum security” prison, led to Ubeid’s joining the organization Ba’asyir founded in 2008 — Jamaah Ansharut Tauhid (JAT).

Ubeid helped build an alliance of Indonesian jihadi groups that planned to wage jihad to establish an Islamic state. The training camp they set up in the jungles of Aceh, on the island of Sumatra, was broken up by police in February 2010.

Ba’asyir is now accused of funding the camp and agreeing to become head of the alliance — which was called “Al-Qaeda in Aceh” — and in which some 17 ex-prisoners were involved.

Police and other government officials need to ensure that Ba’asyir does not use his detention again to enhance his stature or recruit new followers. He must not be given access to the press or allowed to preach. The police must ensure that he has no access to recording equipment for lectures that can be then broadcast over the internet, and visits with his friends and family should be monitored to ensure that he is not allowed to dictate messages to his followers.

Terrorism in Indonesia is not easily eradicated, but there is no indication that violent extremism is growing. The widespread fears that Indonesia could become the “second front” after South Asia have not materialized, in part because the local drivers for jihad have largely disappeared.

Terrorism usually emerges in response to war or occupation by a foreign power, repression by an autocratic government, alienation of a Muslim minority or hostile neighbors bent on making trouble. None of the above apply in Indonesia, and the communal conflicts between Christians and Muslims that produced thousands of recruits in 1999-2001 have long been settled.

Even when a splinter group of JI made a major bomb attack an almost annual event — the Marriott Hotel in 2003, the Australian embassy in 2004, the second Bali bombs in 2005, an aborted attack on a tourist cafe in West Sumatra in 2007 and two luxury hotels in Jakarta in 2009 — Indonesian stability was never at stake.

The Indonesian police unit responsible for counter-terrorism has won well-deserved praise, but it operates within a larger police force that is probably the most reviled institution in the country –for failing to treat endemic corruption in its own ranks.

After a local news magazine recently wrote a story about “fat bank accounts” of senior officers, the magazine’s office was firebombed and a researcher investigating the accounts was badly injured in a machete attack. The effort to combat terrorism will only work when members of the public trust the police enough to report suspicious activities.

As long as senior officers enrich themselves at public expense and use thugs to stop investigations, it is not just counter-terrorism — but the rule of law — that will suffer.

The opinions expressed in this commentary are solely those of Sidney Jones.

US focus on the Israeli-Palestinian conflict could lift a bleak outlook for the Middle East

Treasurer — Wed, 11 Aug 2010 18:45:45 +0000

Gustav Ranis worked in the FF Karachi, New Delhi and New York offices from 1957 to 1959.

From Yaleglobal Online 8/5/2010

by Gustav Ranis

5 August 2010

NEW HAVEN: The flotilla incident off Gaza serves to remind us of the broad spillover effects of the long-simmering conflict between Israel and the Palestinians. And they place a big question mark on the view of some, for example Richard Haass, president of the Council on Foreign Relations, that stepping forward now to help solve this conflict represents a major and unwise distraction for the US.

Haass suggests that the Obama administration should keep its eyes on the nation’s many far-from-solved domestic issues and many international trouble spots that require urgent attention. According to that view, the US should not spend scarce diplomatic capital on an endeavor that has not yielded results over many decades, and is even less likely to do so now.

On its face, this seems to make good sense. The US domestic and foreign-policy plate is indeed overflowing, as the administration watches over and, hopefully, winds down two wars; a European debt crisis that could impede domestic economic recovery; a nuclear challenge from Iran that is escalating; another from North Korea that remains unresolved; a potential powder keg in Pakistan; and a challenge from China that has yet to be properly defined, never mind addressed.

On top of all this, the US must constantly guard against terrorist threats that are increasingly serious and increasingly global.

Should the Israel/Palestine issue then be mothballed once again? This dispute is admittedly focused on a tiny piece of land, 360 square kilometers, in the Middle East.

Yet we cannot but notice that the conflict captures attention far beyond that neighborhood. Opposition to the Gaza blockade has the attention not only of every Arab in the region and every militant Muslim in Iran, but also of most moderate Muslims in such faraway places as Indonesia, Malaysia, India and Nigeria.

Turkey, once a sturdy friend of the West, now distances itself from the shrinking “international community.” And it is not, as US Defense Secretary Robert Gates has claimed, because of the European Union’s reluctance to admit Turkey into membership. Even presumably less intensely interested third parties around the world, such as those in Europe and Latin America, attach importance to the character of the longstanding U.S. effort to fashion a solution to this particular conflict.

In nations that are Israel’s most stalwart allies, citizens scrutinize the policies and question Israel’s tactics like the Gaza blockade. Plans are underway for another flotilla to test that blockade this fall, including ships from the US, Europe, India, Canada, South Africa and the Middle East.

In late July, the UN Rights Committee urged Israel to lift its military blockade of the Gaza Strip and allow an independent investigation of the May raid on the aid flotilla. Israel has since agreed to cooperate with the UN investigation.

What is at stake here is not just the ability to help settle one of many international disputes, but the credibility of US President Barack Obama’s announced shift to greater evenhandedness in dealing with it. Any indication that this administration will, after all, follow the path of least resistance and revert to its customary pro-Israel stance can be counted on to cost the US dearly in many current and future trouble spots around the world. Admittedly, Al Qaeda’s methods or objectives are presumably not affected either way. But any shift from evenhandedness could, for example, sway the Iranian opposition’s willingness to shift from a “down with the US” to a “down with the dictator.”

Some believe, along with apparently a majority of Israelis, that the Israel/Palestinian conflict is currently not ripe for ambitious diplomacy and that the US should focus instead on repairing any frayed ties with Israel while concentrating on Iran and its nuclear program.

But when will the time ever be ripe? The parties to this conflict have pursued the well-worn Oslo blueprint for decades with arms’ length help from the US, without success. Time clearly is not on the side of reaching a two-state solution.

Before Israel’s May attack on the flotilla delivering aid, there were signs of a possible rapprochement between Fatah and Hamas and even a willingness on Hamas’ part to consider a recognition of Israel’s right to exist, along the lines of the Arab League’s peace proposal, which is still on the table. If the Quartet – the United Nations, the EU, Russia and an indispensable US, in the lead – were willing to face reality, it would have to recognize that achieving a two-state solution requires participation of Hamas as well as Fatah.

It is often conveniently forgotten that Hamas won the election in Gaza fair and square. Admittedly, the US has labeled Hamas a terrorist organization and refused to deal with it, but this was true of the Stern Gang as well before the creation of Israel. It is relevant to recall that Obama wisely pointed out, both during the presidential campaign and since, that the US must talk to its enemies, not just its friends, to make progress.

Bringing Hamas into negotiations, both intra-Palestinian and with Israel, will undoubtedly raise hackles both in Israel, which already distrusts Obama, and in the US, where both the evangelicals and the Jewish lobby strive to out-hawk Netanyahu. It is hard to believe that it’s impossible to convince Israelis that a policy of relying on force and standing pat is bound to be short-lived. Demography and the march of competitive technology militate against Israel over time, and so is the fact that Egypt and Saudi Arabia, possibly Jordan as well, are bound to become more radicalized once current leaders move on. Israel must realize that maintaining its current position of standing firm can eventually only culminate in a slide towards an unacceptable one-state solution.

As to the US, there are signs that rank-and-file Jews, in contrast to leadership voices, while still supportive of Israel, are ready to criticize policies when they appear detrimental to Israel’s own long-term security interests. Peter Beinart in a recent New York Review of Books article pointed out that especially younger, non-orthodox Jews are currently less ready to find themselves in lockstep with a hard-right Israeli government. General David Petraeus recently pointed out that US ability to win over moderates in the Muslim world is endangered by an inability to settle this conflict equitably.

The possibility that Israel could become a liability rather than an asset for the US is no longer viewed as so farfetched.

It is time for those tepid indirect talks between the principals, apparently going on fitfully despite recent events, to morph into direct talks. The Arab League has just urged this on both sides. Even when a situation looks hopeless, tensions can ease, as was demonstrated in Northern Ireland. And a determined Quartet demarche, with the US in the lead, could be extremely helpful right now.

As unpleasant, even dangerous, as current events and so much finger-pointing may be, this Gaza cloud may have a silver lining after all – well beyond the short-term easing of Israel’s Gaza blockade. It should remind all parties that Hamas cannot be ignored, if the US is serious about working energetically towards a two-state solution before the possibility fully recedes from sight. The aftermath of the flotilla incident represents a crisis that would be exceedingly costly to waste.

Gustav Ranis is the Frank Altschul Professor Emeritus of International Economics at Yale University.

Opinion: New Fla. Law Makes It Harder for Foundations to Live Up To Values

Treasurer — Wed, 11 Aug 2010 18:32:44 +0000

Emmett Carson worked in Governance and Public Policy in 1989-1994.

From the August 7, 2010 issue of The Chronicle of Philanthropy

Mark Richards

Emmett Carson, head of a California community fund: “Who we support…will have significant consequences.”

By Emmett D. Carson

It seems that foundations are destined to relearn the lessons of the past.

During the McCarthy-era hearings, in response to questions about the openness and transparency of foundation activity, the chair of the Carnegie Corporation of New York said, “We think that the foundation should have glass pockets.”

In the years since, foundations have largely embraced the values of diversity, accountability, and openness as a way of recognizing and protecting the enormous freedom and flexibility that foundations enjoy to do their work.

A new Florida law heralded by its supporters as protecting the freedom of private foundations has done just the opposite: It has raised questions about what values foundations operate under and thereby could raise new limits on the tax deductions enjoyed by donors to those foundations.

The new law prohibits the State of Florida or local governments from requiring foundations to disclose certain demographic data about board and staff members, as well as grantees, without the written permission of those involved and prohibits the state from requiring a diverse board or requiring a foundation to make grants based on demographic information. The demographic data covered by the new law include “race, religion, gender, national origin, socioeconomic status, age, ethnicity, disability, marital status, sexual orientation, and political-party registration of its employees, officers, directors, trustees, members, or owners.”

Clearly, government should not be in the business of deciding who sits on foundation boards or which nonprofit organizations receive grants based on demographics. However, the idea that government is prohibited from requesting diversity data as it relates to board composition, staffing, and nonprofit grantees undermines the promise that foundations have made to the American public that they are committed to diversity, inclusiveness, accountability, and transparency in their operations.

Unchallenged, the Florida law will inevitably undermine public support for philanthropy.

That is because the new law calls into question what had heretofore been accepted about the virtue and value of transparency as promoted by key organizations that set standards for foundations: the Council on Foundations, Foundation Center, and Independent Sector.

For example, the Council on Foundations, which represents about 2,000 foundations, states: “In carrying out their philanthropic activities, our members embrace both the letter and spirit of the law. Our members seek diversity and inclusiveness in order to reflect the communities they serve and to ensure that a range of perspectives contribute to the common good and the development of their mission in a changing society.”

Similarly, the Foundation Center, a research organization that collects information on grant makers, states: “Transparency and accountability are key to earning the public trust.”

And Independent Sector, which represents charities and foundations, advises “open and timely sharing of financial, governance, and program information.”

These words lose all meaning unless these organizations speak forcefully to the dangers inherent in the Florida law.

The Florida law appears to succumb to the strategy that it is better not to collect information because doing so might uncover uncomfortable information that we might be asked to act upon. The overreaction by some grant makers to California’s proposed legislation, introduced in 2007, that foundations be required to collect data on the race and ethnicity of their boards, staff members, and grantees was in response to a simple requirement to collect data. Some grant makers feared that the public would learn something from such data that might lead to potential regulation.

Imagine if a law such as the new Florida law applied to the financial and banking industry.

Would we think that banks should not be required to disclose data about the racial or gender demographics of customers who received or were denied loans? Would we accept a law that prohibited government from asking these institutions to collect and publicly disclose racial, ethnic, gender, or socioeconomic data? Would we allow these institutions to suggest that such data could be revealed only with the written permission of those involved? Do we really think that such a perspective serves the public interest and ensures effective best practices for foundations or any industry? The answer is of course not.

Part of the problem is an unwillingness by some private foundations to recognize that a foundation’s assets are not private but instead money for the benefit of society. It is not unreasonable to assume that, in exchange for receiving a tax benefit, individuals accept responsibility to direct charitable funds to broadly benefit all of us.

Voters—and, more important, their elected representatives—are unlikely to continue to provide charitable tax deductions to institutions that have little commitment to transparency and accountability. Some policy makers have already suggested that the current tax deduction for charitable giving be limited so that more money is available for government programs. Unfortunately, the Florida law only strengthens such thinking.

At a time when the public is demanding ever greater levels of transparency and accountability from business, from government, and from philanthropy, this law suggests that foundations are above requirements to share any information about the demographics of their board, staff members, or the nonprofit organizations that receive grant support. Such a law simply raises the question for all to ask, which is what are these powerful and influential institutions hiding? Are they so out of touch with the direction of society that they believe the public is requiring less rather than more disclosure?

For decades, foundations have successfully used their stated commitment to the values of diversity, openness, and accountability to avoid onerous federal and state regulation and legislation. Our success has occurred even though research from the Council on Foundations and Foundation Center has shown that the actions of foundations have not yet matched their words.

Unfortunately, the Florida law is likely to create a state-by-state battleground that will lead to the need for a federal law. It is now time for foundation leaders to determine whether our stated commitment to values of diversity, accountability, and transparency has any real meaning. If we do not forcefully respond to this challenge, we should not be surprised when there are Congressional hearings and our claims of “glass pockets” fall on deaf ears.

Emmett D. Carson is chief executive officer of Silicon Valley Community Foundation, in Mountain View, Calif.

Face to Face: An Interview with Joan Kaufman East Meets West

Treasurer — Sun, 08 Aug 2010 10:43:48 +0000

Joan Kaufman worked in the Foundation’s Beijing office in 1996-2001.

Adorned with a striking necklace from one of her favorite artists in Beijing, Joan Kaufman settles in with a cup of coffee to reflect on her career in international health policy. A self-acclaimed China wonk, Kaufman’s home is filled with Chinese art and antiques: carved cabinets, rosewood wall hangings, and porcelain bowls. Having returned stateside from China over a decade ago to raise her family in Wellesley, Kaufman continues to circle the globe with a suitcase, identifying and addressing emerging issues and opportunities, and educating current and future world leaders about international health issues.

Kaufman moves seamlessly between academics and the public and non-profit sectors. She’s taught at the Heller School for Social Policy and Management at Brandeis, at the Kennedy School of Government, and at Harvard School of Public Health. She’s worked for the Ford Foundation, the United Nations Population Fund, and served on advisory committees for the World Health Organization and the National Institutes of Health. An expert in health and social policy, reproductive health, gender equity, and HIV/AIDS, Kaufman has published extensively and has the ear of the Chinese government.

WWM: What first ignited your interest in public health and in health policy in China specifically?

Kaufman: My interest in China came first. I became completely hooked on everything Chinese after taking a summer course at Columbia on Chinese art, taught by a curator at the Metropolitan Museum. I ended up focusing my undergraduate degree, and a subsequent Masters, in Chinese Studies. My thesis examined the Chinese family planning program, which led me to a second Masters degree in public health. From there I spent four years on the ground in China, working with the United Nations’ Population Fund (UNFPA).

WWM: You were one of the first western public health specialists to be invited into China as part of the reforms introduced by Deng Xiaoping. What were you brought in to do?

Kaufman: This was a very interesting time in Chinese history. Deng Xiaoping has just returned to power following the Cultural Revolution. He was convinced that population control was key to China’s bid for modernization and invited the UNFPA into China to develop a core of expertise in the reproductive health field. We had probably 20 projects going on at the time including undertaking China’s first scientific census and building technical expertise in terms of demography, clinical trial know-how, and manufacturing of modern contraceptives.

WWM: What was the public’s reaction to the One-Child Population Policy?

Kaufman: The One-Child policy really built upon an earlier program—the Later, Longer, Fewer campaign—which encouraged couples in urban areas to limit themselves to two children and those in rural areas to limit themselves to three. The One-Child policy called upon party members to further limit themselves to having one child. The policy wasn’t very popular anywhere, nor well implemented in the rural areas where most people followed a policy of having two children with adequate spacing, especially if the first child was a girl.

WWM: Is it time for the policy to be overturned?

Kaufman: Yes, the policy is not necessary and is, in fact, the cause of considerable other problems. I have been active in a project that I initiated when I was with the Ford Foundation in China that has been looking at fertility rates across China for some time and the negative consequences of the one child policy. The country has changed so much in terms of fertility intentions and desires, and an awareness of the economic tradeoffs of additional children, that we don’t think there would be a massive resurgence in births if the policy were revoked. Maybe a short term up-tick.

There are, however, long-term, unintended consequences of the One-Child policy that will be very difficult to manage. The country’s sex ratio and age ratios are quite distorted. The skewed ratio of more boys to girls will play out for decades in terms of the marriage market and a dearth of girls in society in general. There are not going to be enough young working people to support an elderly population given that life expectancy is so high. China is already entering into below replacement fertility in urban areas, so even though the overall population will continue to grow for a while, once it starts to decrease, it will decrease dramatically and with huge distortion.

WWM: You were actively engaged in health issues in the early days of the AIDS epidemic. What was China’s response?

Kaufman: The first AIDS case was diagnosed in 1985. It was considered a so-called “foreigner’s epidemic”—imported from the vices of the west. I was living in the US at the time, getting a doctorate at Harvard’s School of Public Health, and was part of the AIDS and Reproductive Health Network, which was working on AIDS projects in Africa, Latin America, and Asia. The dynamics of the emerging epidemic in China were clear to me and I advocated for an aggressive prevention program by the Chinese government. When I moved back to China to work with the Ford Foundation in 1996, I devoted a large portion of my grant portfolio to mobilizing the government’s AIDS response. I was able to fund some important behavioral research studies, build up a non-governmental advocacy community, work with government health officials, and bring the researchers, advocates, and government officials together to coordinate our efforts.

WWM: Was there much of a non-governmental health community in China at the time?

Kaufman: The whole idea of an NGO [non-governmental organization] is not well received in China, especially at the local level, where such organizations are often viewed as anti-government, not non-governmental. But on the AIDS issue, and on some other issues like the environment, there is a growing appreciation for the important role that these organizations play both in service delivery and in advocacy. I am seeing more cooperation between the local Centers for Disease Control in China and NGOs, especially when the centers are trying to reach some of the most affected and highly stigmatized populations—like drug users or gay men. The presence of NGOs is growing, but it is still thin.

WWM: Among which subpopulations did HIV first surface in China?

Kaufman: Seventy percent of the early cases involved injecting drug users who shared needles. China was a major transshipment route in the heroin trade in the Golden Triangle in Southeast Asia. Very early on we made a case for harm reduction programs, which include clean needle programs and drug replacement programs—like methadone—to try to decrease the HIV infection rate among the injecting drug user population.

Of course at that point in China there was the feeling that these people were social garbage and that they deserved to die because of their own behaviors. Further, the government had the mistaken belief that the epidemic would stay contained within the injecting drug user population. One of the first things we did was to bring in the “Asian evidence,” people from Thailand and Vietnam, to show the efficacy of harm reduction programs and the evidence that epidemics never stay contained within any one population. I am happy to say that, today, China has a very aggressive harm reduction program for injecting drug users as part of their AIDS prevention program.

WWM: What was the turning point, when AIDS prevention became more accepted?

Kaufman: By 2002, the epidemic became more widespread—over one million Chinese were reportedly infected at the time with estimates of ten million by 2010 (the estimates were subsequently reduced to 650,000 and now is 750,000)—and the infection had spread to include female commercial sex workers, homosexual men, and paid blood donors and their families.

Many people were quite critical of the Chinese government’s handling of a widespread outbreak in Central China that involved blood donation. There is a long history of paid blood donation in China. Traditional cultural reservations about giving blood have impeded the development of a voluntary blood donation system. In this instance, blood collection centers in central China were following unhygienic procedures and many, many people became infected. In Henan province alone, over 60 percent of the adult population in some villages became infected; vertical transmission spread the disease to spouses and offspring and, over time, a major orphan problem emerged. The Chinese government suppressed news of this epidemic and to this day no one has really taken responsibility for it.

But it was a turning point for China with re spect to HIV/AIDS. It changed the face of AIDS in China—these were innocent victims—and the public became more sympathetic. It also forced the government to develop a best-practices response, including launching a free AIDS treatment program.

WWM: What is a best-practices response?

Kaufman: Best practices are interventions that have been proven over and over to reduce HIV transmission. But to be successful, you also have to create an “enabling environment,” a multi-sectoral approach. In order to convince people to come forward for AIDS testing, you have to have enforceable laws and policies that protect them from losing their jobs. You need collaboration between the Public Security Bureau (police), the health department, and NGOs that may be working with drug users so that they are not arrested when they come to a syringe and needle exchange site. In the larger scheme, you have to work on gender equity so that women have more power in their marriages. Most of the global AIDS dollars go to health ministries not to multi-sector initiatives, however.

WWM: You have lived in China and speak Mandarin, but what is your secret, how have you been able to be so effective in the inner circles within China?

Kaufman: I am a collaborator and have been interested and involved in China for a very, very long time. I enjoy a trusted status in China, having built many relationships in the government working with the UN as a funder through the Ford Foundation, and conducting academic research with Chinese colleagues. Even on controversial topics like the AIDS epidemic, my goal is to help China, not to further any personal agenda.

WWM: You are the China Team Leader for The International AIDS Vaccine Initiative. Are we even close to developing an effective vaccine?

Kaufman: No, but it takes decades to develop vaccines. From an evolutionary biology perspective, this is a very challenging virus. The investment we have made in developing the vaccine to date has already led to an enormous amount of scientific knowledge and has demonstrated that a vaccine is possible. Will we have a vaccine commercially available within the next decade? I am not sure. I personally believe that given the complex human behavior that needs to be changed for really effective prevention, having a vaccine is going to be the easiest way to avoid future infections. A vaccine that protects women or young girls, without them having to demand condom use, is important.

WWM: While HIV/AIDS remains at the cornerstone of the Obama Administration’s 2010 budget, it also represents a broader definition of global health, including preventable and tropical diseases, malnutrition, and the health needs of mothers and children. What do you think of this policy shift?

Kaufman: When I teach my global health policy course, I agree with the Obama Admin istration. The lion’s share of funding has gone to HIV/AIDS, and there are other unattended problems, like maternal mortality or malaria, that need to be addressed. When I teach my AIDS policy class, however, I argue that, although we have made very real progress, we must not get complacent. Four hundred people continue to become HIV-infected every day. For every two people put on treatment, five new HIV infections occur. There are just not enough health care dollars out there.

Early Ford Foundation Support for the Grameen Bank: Lessons in Philanthropic Accountability, Risk, and Impact

Treasurer — Wed, 28 Jul 2010 18:08:27 +0000

by Steven Lawry (October 2008)

ABSTRACT

The paper uses a case study of a loan guarantee fund of $800,000 provided by the Ford Foundation to the Grameen Bank in 1981 as a framework for offering reflections on current debates within US philanthropy on accountability, support for innovation, risk taking and impact. Ford’s loan guarantee fund leveraged commercial bank lending to Grameen Bank. The subsequent high rates of loan repayment by loan recipients convinced commercial bankers of the viability of Muhammad Yunus’model of lending to poor entrepreneurs unable to provide traditional loan collateral.

The paper develops the concept of “accountability regimes,”and argues that foundations engaged in international poverty reduction are better able, institutionally, to bear risk in support of innovation than multilateral and bilateral aid organizations such as the World Bank and USAID. That said, recent interviews of a small sample of executives whose foundations fund poverty work abroad suggest ambivalent attitudes toward funding innovative and risky projects. This is attributed, in part, to high expectations on the part of foundation boards and top executives that foundation-funded programs show positive, early and measurable impact. The great diversity of the US philanthropic community, and thecommitment of many foundations to important charitable activities that are not necessarily inviting of innovation, further explains a more modest investment by US philanthropy in the kind of innovative work that they are uniquely sanctioned to support.

Encouraging foundations to be more open to supporting innovative initiatives, the paper next offers three operational principles, drawn mainly from the Grameen case study, which foundations might observe in their poverty reduction initiatives. These are: the strongest ideas are likely to come from individuals and organizations outside of foundations working close to the problems; long-term impact assessments should focus on achievement of administrative and policy reforms in institutions that matter in the lives of poor people and; active and early engagement with governments, the private sector and publicly-funded donors will increase the chances that new ideas, once successfully tested, will bring about systemic change.

Early Ford Foundation Support for the Grameen Bank: Lessons in Philanthropic Accountability, Risk, and Impact

In the 1970s, Muhammad Yunus had this now familiar idea that commercial banks could successfully lend money to poor people in Bangladesh who did not own the kinds of traditional assets, such as titled land and houses, typically needed to collateralize loans. By making loans to individuals through groups of peers and neighbors, a mix of mutual support and social pressure would ensure that individual loans were repaid. In 1981 Yunus, then an economics professor at Chittagong University, was preparing to test the new lending model on a large scale. As recounted in his autobiography, Banker to the Poor1,he approached commercial banks in Bangladesh and asked them to capitalize the Grameen Bank’s five-year expansion plan, that aimed to open dozens of branch offices in five rural districts in addition to those in Jobra village and Tangail district, where Yunus had been testing group lending models since 1976 and 1979 respectively. Grameen was at the time a special project under the Bangladesh Bank, the central bank of Bangladesh, and the ability to raise funds on commercial terms was seen by Yunus as a key test of Grameen’s viability as a banking model and essential to its expansion nationally.2 The commercial banks declined Yunus’ initial request for capital. Banks have complex accountability regimes (a concept I discuss further below) consisting of depositors, shareholders, and regulators that act to ensure deposits will be safe and the bank will remain solvent. In the absence of collateral, poor people were not seen by bank managers as credit-worthy customers.

Yunus came to understand the immediate problem as one of reducing the risks to commercial banks of investing in Grameen in the face of uncertainty as to how his new loan repayment model would work out. So he went to the Ford Foundation’s office in Dhaka and asked for an $800,000 loan guarantee fund as security against commercial bank lending. After careful appraisal by senior staff, Ford agreed to the request and deposited the requested funds3 in a Grameen account at a London bank. Bangladeshi banks in turn agreed to Grameen’s request to capitalize the planned expansion of operations, on commercial terms. The new repayment model worked, the commercial banks got their money back with interest, and the rest, as it were, is history. Yunus had made good on his initial assurances to the foundation that he would never have to dip into the loan guarantee fund. “The fact that it is there” he told Ford staff, “will do the magic.”4

I find the story of this partnership between Muhammad Yunus and the Ford Foundation compelling in a number of ways. Most importantly, it demonstrates how private foundations are able to take on risk on behalf of new approaches to poverty reduction in ways that other institutions, including financial institutions such as commercial banks and publicly-financed donors such the US Agency for International Development (USAID), often cannot. Once the new ideas and practices that foundations are willing to fund initially are proven, banks, governments and other kinds of donors are more likely to incorporate them into their own work and in ways that may have far-reaching impact on the lives of poor people.

Building on the case study of Muhammad Yunus and the Grameen Bank, this paper seeks to explain why foundations are better able to support risky but potentially ground-breaking new approaches to poverty reduction in ways that other kinds of institutions cannot. It is not clear that foundations for which poverty reduction is a priority take full advantage of their distinctive ability to support innovative work. As a result, opportunities to foster essential changes in the policies and practices of key institutions—including in government and the private sector—that very directly affect the lives of poor people may be lost. The paper concludes with recommendations on how foundations concerned with poverty reduction might make fuller use of their distinctive and important advantages.

Foundations can bear greater levels of risk than other kinds of institutions.

Various categories of organizations display different kinds of accountability regimes. An accountability regime is the mix of formal rules and informal protocols and conventions—public and private, external and internal, moral and ethical—that condition organizational decision making in the face of opportunity, uncertainty and risk.

The Grameen case suggests that the differences in accountability regimes faced by foundations and commercial banks have implications for their respective tolerances for certain kinds of risk. If Yunus’ experiment had failed one might imagine the president of the Ford Foundation telling his board, “Well, we appraised this very carefully. It seemed like a good idea. And supporting ideas that have promise of giving poor people better access to opportunity is part of what we do. Taking on risk requires us to be prepared to accept a certain amount of failure.” One might imagine a sadly different conversation in the bank’s board room if the loan had failed and the manager had approved it in the absence of Ford’s loan guarantee.

Comparing accountability regimes of for-profit organizations like banks with not-for-profit organizations such as foundations presents some interesting “apple-and-orange” analytical challenges. For private firms, accountability is directly connected to performance in competitive market environments. Survival, profitability and investment returns are among the precise and rigorous criteria against which the market and shareholders evaluate private firms and their executives and boards. The tax-exemption granted to foundations and other nonprofit organizations is not based on demonstrating measurable results, but upon pursuing a recognized charitable mission with the intention of providing social benefit.

Importantly, accountability regimes vary among different kinds of donors engaged in international development and poverty reduction. The World Bank is governed by a board consisting of 22 national governments, its loans are negotiated with beneficiary governments, and it raises much of its finance in global financial markets. World Bank policies and loans are subject to a particularly complexcombination of political scrutiny and market discipline that favors the orthodox and tested approach over the innovative and risky.

The US Agency for International Development (USAID) is an entity of the US Department of State, and in addition to its important development work, serves a variety of US national and global political interests. Unlike foundations, USAID’s funding is appropriated directly from the federal budget and its policy and programming decisions are subject to high levels of Congressional scrutiny. USAID’s mission, goals and budget are subject to a great number of claims and pressures from a diverse community of constituency groups. USAID has numerous political detractors, often making administrators averse to taking on innovative and risky projects where they would have to explain before Congress the “waste” of taxpayers’ dollars if they should fail. The World Bank, USAID and other large multilateral and bilateral donors have a mandate to fund major sector development programs, often involving large investments in agricultural, transportation, educational and health infrastructure, at levels of expenditure significantly beyond the budgets of foundations.

Philanthropic accountability regimes are, on the other hand, arguably simplerand less subject to close public supervision or market discipline.5 Foundations are accountable through US tax law for assuring the public that tax-exempt foundation dollars are being used for bona fide tax-exempt purposes, such as for education, health care, research and charitable relief. In 1969, Congress passed legislation requiring foundations to pay out five percent of the value of their endowment annually on charitable works and management costs.6 Foundations have an ethical responsibility not tospend lavish amounts of money on themselves, taking into account the need to employ and adequately reward professional staff to shape programs and manage and monitor grant portfolios. If particularly risky ventures should fail, they do not have to pay anyone back. These considerations have from time to time accommodated, I believe, a greater appetite for supporting innovative and risky work—such as the early development of microfinance—among philanthropic donors than institutions such as the World Bank and USAID.

In fact, where new ideas developed with philanthropic funding show promising results (in other words, are looking less risky), publicly-financed donors are often willing to provide funding support at levels that may enable the work to be brought to scale in ways that foundations, with their smaller budgets, cannot. Indeed, microfinance programs are today ubiquitous elements in the poverty-reduction strategies of the World Bank, USAID and a great number of other donors.

Do we see a greater proclivity on the part of foundations to support experimental and risky approaches to poverty reduction than say the World Bank or USAID? The data and even methodology needed to offer a conclusive answer to this question are lacking.7 However, a recent unpublished study summarizing interviews with current or former executives of seven of the largest fifteen US foundations that fund poverty reduction in developing countries provides some useful insight. The study found that supporting innovative programs does not appear to be a central tenet of philanthropic strategy.8 The study drew the following conclusions:

 Support for explicitly innovative approaches to poverty reduction is a small and probably decreasing part of what foundations do.

 High expectations on the part of foundation boards and top executives that foundation-funded programs show positive, early and measurable impact reduce tolerance for innovation and risk.

 While foundation leaders recognize the value of supporting local leaders and organizations, they are reluctant to fund non-US 501(c)3 organizations, especially when the granting foundation does not have an office in the country where the work is being carried out. US organizations perform reliably and to a high standard, but they are wedded to organization-wide policies and practices that may not be inviting of local innovation.

 Post-9/11 international compliance regulations and legal uncertainties are having a chilling effect on making grants to non-US organizations.

Although these findings are based on a small number of interviews, they are not surprising in light of the diversity of the US philanthropic community. In the words of Joel Fleishman, “Every foundation is sui generis, each reflecting the personalities, values, goals, and talents of the key people behind it.”9 Foundation program priorities may be quite firmly established by their founders, and may or may not encompass areas of endeavor where systemic social or institutional change is considered an ultimate measure of achievement.

Surely, trustees would imagine their stewardship responsibilities to extend to ensuring some discernable impact from the programs and grants they approve. US philanthropy provides the US and the world great service through its support for educational, health care and arts institutions that yield clear social benefits not dependent on achievement of systemic changes in governance or markets.

That said, it should also be clear that the kinds of systemic changes exemplified by Yunus’ new model for bank lending are needed in greater number and in many places around the world if significant progress is to be made in reducing poverty.

Powerful ideas come from outside of foundations.

Good ideas have many sources of inspiration, but the powerful insights that Muhammad Yunus had about banks and their underserved but potentially viable clients in rural Bangladesh had very particular antecedents. Yunus lived and worked near to the community he wished to serve, he had an intimate knowledge of his country’s social, economic and political institutions, and he applied what are clearly strong analytical skills and intuitive powers to the problems he encountered. He also demonstrated a talent for persuading leaders of key institutions—banks, government agencies,foundations and other donors—of the potential viability of his ideas. A person of thought and action, an insightful analyst and incisive leader, Yunus is a model of the kind of rare social innovator that foundations should be most receptive to supporting.

The example of Muhammad Yunus’ partnership with the Ford Foundation suggests some lessons for the posture of foundations and the role of foundation program staff in relation to prospective grantees.

First, foundations should have their doors wide open to the potentially powerful ideas of people outside of philanthropy who are in a position to test and champion those ideas in the complex social, economic and political environments in which they live and work. That Yunus did not have to penetrate several layers of Ford Foundation bureaucracy is a testament to the Foundation’s understanding that vital experience and knowledge is located throughout the societies in which Ford made grants, and not only in its offices in Dhaka and New York. Foundation program staff should be constantly in search of people distinguished for the sophistication and power of their ideas and their practical understanding of what it takes to bring about meaningful change in their societies.

Moreover, the Grameen Bank case illustrates the difference between general knowledge of markets and market institutions, such as commercial banks, and particularistic knowledge of the differing social and cultural environments in which banks may operate, and the importance of having commandover both. It was an axiom of development economics that a constraint to the flow of commercial credit to poor people was their inability to marshal collateral. It required Yunus’ particular knowledge of Bangladeshi rural society and cultural resources to fashion a socially-mediated set of protocols and incentives for assuring loan repayment.

Program staff should have strong conceptual and analytical skills and a considerable amount of general knowledge about the societies in which they work. Foundation staff should not be asked to shape highly detailed and specific program strategies within their fields of general responsibility. Narrow program frames may have the effect of prematurely rejecting consideration of potentially powerful ideas because they“don’t fit my program.” For instance, where a foundation makes a commitment to supporting microfinance institutions and staffs its poverty division with mainly microfinance specialists, it is increasing the possibility that unforeseen future breakthroughideas for reducing poverty that are not related to microfinance get overlooked. Being alert to changes in the big picture is a vital staff capacity.

Board members can encourage the foundations they steward to be more open to the ideas of social innovators. By conveying a passion for innovation and an understanding that successful innovations typically emerge only after prolonged periods of trial and error, boards can sanction risk taking on the part of executives and staff. Board members surely must take account of organizational mission, founders’ intent and their traditional fiduciary responsibilities, but observance of these responsibilities should in no way preclude openness to the powerful ideas of individuals and organizations working close to the problems.10

Efforts to better measure impact are a good thing, but they should not have an inadvertent chilling effect on innovation.

It is essential that current calls for greater foundation accountability not put the brakes to philanthropy’s unique capacity to support innovation. Surely, certain improvements in accountability protocols are appropriate. Some foundations have clarified and tightened internal decision-making processes to reduce the danger of trustee conflicts of interest. Resources are being set aside to support evaluations and impact assessments. A number of foundations are making efforts to invite beneficiary communities and grantees into discussions about strategy and impact. These efforts may have the positive effect of giving the public greater overall confidence in foundation governance and management in ways that may come to increase the public’s tolerance for foundation risk-taking.

The growing emphasis on quantitative measures of short-term impact can, however, shift the energies and attention of foundation program officers and grantees away from the hard work of fostering the kinds of systemic changes that are often needed to improve the lives of poor people. In a recent speech at Bates College, former Ford Foundation president Susan Berresford warned of the danger of “miniaturizing ambition” when foundations put too much pressure on themselves and on grantees to demonstrate short-term, measurable impacts. When your goal is social justice, the relevant indices can be amorphous and hard to define, but their long-term and systemic impacts can eventually be described. They may indeed speak to significant achievements.

Short-term performance indices alone have limited value in evaluating systemic change and are insufficient measures of its ultimate achievement. In my view, the kind of social entrepreneurism represented by Muhammad Yunus was concerned with fostering new ideas about how financial institutions could refashion their practices and programs in ways to better serve poor people. This view of social entrepreneurship, which focuses on the force of ideas rather than charismatic personalities alone, “moves the field toward defining entrepreneurship in a broader way that includes organizational and administrative reforms.”11 Actual achievement of essential reforms is the kind of practical measure of impact that evaluators concerned with systemic change should be following over time.

Achieving systemic change requires foundations and their grantees to work with governments, the private sector and publicly-funded donors early in the life-cycle of a promising idea.

For Muhammad Yunus, the essential goal was changing the lending policies of commercial banks in ways that gave poor people access to credit. Yunus told Adrienne Germain, the Ford Foundation representative in Dhaka in 1981, “I want to offer a guarantee to the commercial bankers who are supporting us so that they can’t back out of the expansion because it is too risky.”12Importantly, commercial banks were participants in the experiment from the outset, their participation facilitated by the Ford loan guarantee fund.

US philanthropies principally funded public institutions in the first thirty years of their engagement in developing countries, from the early 1950s to the early 1980s. For a number of reasons, the Ford and Rockefeller foundations began in the late 1970s and early 1980s to shift their funding away from government agencies, public universities and research institutes and quasi-independent development banks toward nonprofit organizations. Nonprofit organizations were seen to be less subject to the bureaucratic and political constraints of government and were often led by resourceful, dedicated and innovative new leaders. Significantly, large foundations that have begun funding internationally in recent years, such as Gates, Atlantic Philanthropies, Starr, Hewlett and Packard, have followed in the path forged by Ford and Rockefeller of principally funding nonprofit organizations.

Foundation funding has arguably proven decisive to the growth and independence of civil society in many countries around the world. But one of the consequences of the historic shift of foundation funding to the nonprofit sector is narrowed scope for direct engagement by foundations with governments on important public policy questions. This need not necessarily be a problem when the NGOs funded by foundations are engaging effectively with their governments on matters of shared interest. But problems do arise, in my view, where NGOs are not mixing it up with governments where current public policy is an impediment to the achievement of a program’s goals, or where new government policies can bring considerable benefit. Governments, the private sector and large, traditional nonprofit institutions such as churches are vitally important institutions, and their policies toward the poor are often what foundations and civil society should be seeking to influence as a matter of priority.

We are not able to assess the record of transfer of promising new ideas from civil society to mainstream institutions in this paper. That record merits study. The lesson of Grameen is that when Yunus began to test the new lending model beyond the relatively controlled confines of his home district, he purposely engaged the institutions he understood he had to change—commercial banks—in the experiment from the outset. Yunus suffered considerable frustration as a result of his very early engagement with the Bangladesh Central Bank and a number of commercial banks. Officials of these institutions were endlessly skeptical of the viability of his plans. But his early encounters with state officials and commercial bankers deepened his understanding of the obstacles he had to overcome to change the banking system fundamentally.

The risks and rewards of philanthropic freedom.

Bearing risk on behalf of social and institutional changes that give poor people greater access to the benefits of markets, education, health care and political representation and human rights is philanthropy’s great opportunity. I believe that foundations enjoy greater public sanction to carry risk on behalf of social innovation than many philanthropists and foundation executives appreciate. I also believe that, while the kind of insightful thinking and astute leadership qualities demonstrated by Muhammad Yunus are not commonplace, foundations can make no better contribution than to look outward and support people of comparable judgment and experience and the organizations and movements that they lead. I also believe that foundations have greater impact when they support efforts to change how governments, the private sector and other institutions that touch the lives of poor people respond to their circumstances and problems.

Poor people in developing countries live with uncertainty and bear risks on behalf of a better life that few of those who live in developed countries can imagine. Their prospects are made harder when key institutions, public and private, national and international, can’t figure out how to bend and refashion their own purposes and policies in ways that give poor people access to the kinds of resources, benefits and protections those with greater wealth take for granted. This was Muhammad Yunus’ great achievement. He saw in poor farmers and business people considerable entrepreneurial acumen stymied by lack of access to loan capital. Yunus fashioned an experiment using Ford Foundation risk capital that changed fundamentally how commercial banks in Bangladesh viewed the credit-worthiness of poor people. It was a marvelous partnership, and one that speaks to the great promise and potential of private philanthropy when it undertakes to bear risk on behalf of social innovation.

Steven Lawry is senior research fellow at the Hauser Center for Nonprofit Organizations at Harvard University, where he co-leads a research program on transnational philanthropy and poverty reduction. He held a variety of positions at the Ford Foundation between 1992 and 2006, including representative for the Middle East and North Africa from 1997 to 2001. He was president of Antioch College from January 2006 to August 2007.

The author is grateful to Ashley Berendt, graduate student at the Harvard Divinity School, for her research assistance. He wishes also to thank Charles Bailey, Susan Berresford, L. David Brown, James Honan, Jan Jaffe, Laura Johnston and Tony Pipa for their comments.

1 Yunus, M. Banker to the Poor(New York: PublicAffairs, 2003).

2 Ibid, 112.

3 Ford Foundation records indicate that the exact amount of the loan guarantee fund was $770,000, consisting of a $154,000 recoverable grant to cover the first 2% of the value of possible loan defaults and $616,000 in the form of aProgram Related Investment (PRI) to cover the subsequent 8% (Recommendation for Grant/Program Related Investment, The Ford Foundation, May 21, 1981). The unused funds were rolled over into a new grant to Grameen, in 1983, in support of research on small-scale enterprises and to provide loan guarantees to experimental group-owned enterprises. In assessing the experience of the initial grant and PRI, Ford staff recommending that the funds be rolled over into a new grant action noted, “The loan default rate that the banks feared never materialized and the recoverable grant was not used.” (Recommendation for Grant Action and Program Related Investment, The Ford Foundation, May 31, 1983, p. 10)

4 Yunus, M. Banker to the Poor, 113.

5 Some critics of large philanthropies argue that the tax exemption granted expenditures on charitable activities justifies much greater public supervision of foundation activities than is currently the case. See 11 for example: Arnove, R. and Pinede, N. “Revisiting the Big Three,” Critical Sociology, no. 33 (2007) 389-425.

6 The Tax Reform Act of 1969 provides that foundations disburse 5 % of the average fair market value of their investment assets annually.

7 The Hauser Center for Nonprofit Organizations seeks to assist in filling this gap with the research project: Philanthropy, Civil Society and Development Breakthroughs.

8 Bastante, S. The Strategic Role of US Private Foundationsin Poverty Reduction in Development Countries: Are They Supporting Innovation?(Cambridge, MA: Hauser Center for Nonprofit Organizations & Harvard Kennedy School, May 2008).

9 Fleishman, J. The Foundation(New York: PublicAffairs, 2007) 28.

10 A consultant commissioned by the Ford Foundation’s Dhaka office in 1986 to review Ford’s early grant support for Grameen noted in his report that “The Foundation’s own contribution has been its flexible and timely support which proved critical in enabling Grameen Bank to keep up momentum and to maintain the supportive environment in which creative individuals like Dr. Yunus best flourish.” (Ford Foundation Memorandum, “Close out of grants #810-0578 and #810-0579: Grameen Bank,” March 30, 1986).

11 Light, P.C. “Reshaping Social Entrepreneurship,” Stanford Social Innovation Review, (Fall 2006) 50.

12 Yunus, M. Banker to the Poor, 113.

Note from Dick Magat

Treasurer — Wed, 28 Jul 2010 17:09:41 +0000

Submitted by Dick Magat, who worked from 1957 to 1983 in the Office of Reports.

The Bronx Home News, celebrated in the various obituaries of Daniel Schorr as the place of his first journalistic triumph has another claim to fame. One day in 1917. the paper ran the following banner headline on its first page: “Bronx Man Leads Russian Revolt.” It seems that Leon Trotsky lived in the Bronx for a short while, and this paper grabbed for a local angle. Unfortunately the Times obituary neglected a salient chapter in Schorr’s life—his attendance at DeWitt Clinton High School, my own alma mater by the way.

Note from Willard Hertz

Treasurer — Wed, 28 Jul 2010 17:05:07 +0000

Sent by Willard Hertz, who from 1958 to 1981 worked in the International Division, the Office of Reports and the Office of the Secretary and General Counsel.

I have now added to the clients for my program notes the Bay Chamber Concerts of Rockport, Maine. At a concert earlier this month, Enid Schoettle and I were both in the audience. After the concert, we greeted one another and caught up for a few minutes. Enid is now an independent consultant, spending her summers at nearby Camden, Maine, which has a large colony of retired State Department and CIA staffers.