Nonprofit Chronicles

Journalism about nonprofit organizations and their impact

104516501-2014_EmmettCarson_019_FN.530x298Days after a workplace scandal with #metoo overtones led to the departure of Mari Ellen Loijens, the chief fundraiser at the fast-growing Silicon Valley Community Foundation, questions are swirling about Emmett Carson, the founding CEO of the SVCF.

Carson has been trying hard to distance himself from the noxious behavior of Loijens, which was exposed last week in a long, investigative story in The Chronicle of Philanthropy.

It isn’t going well.

The background: Loijens has been accused by more than 20 former staff members of bullying and belittling people, making tawdry and sexually inappropriate comments at work and, in one instance, back in 2008, telling a woman who worked for her that she wanted to kiss her. The unprofessional behavior stretched over more than a decade, those former employees of the SVCF told me and Megan O’Neil, news editor at The Chronicle. The foundation hired a law firm to investigate and, less than 24 hours after our story was published, said that Loijens had resigned. With $13.5bn in assets under management, the community foundation is a philanthropic powerhouse–bigger than Ford or Rockefeller.

Before and after our story was published by the Chronicle, Carson made a series of statements indicating that he was unaware of the depth and extent of Loijens’ conduct.

Some former employees say that’s not true. Others say he did not want to know. Still others say that it was his obligation to find out why so many people were unhappy with Loijens and left the foundation.

Let’s compare some of Carson’s statements with what others say.

On how the SVCF responded to claims of workplace misconduct

What Carson said, in a tweet:

What Carson said, by email to David Callahan of Inside Philanthropy: “We can also affirmatively state that there have been no formal reports of inappropriate conduct involving any employee at SVCF.”

What Carson said, in an April 20 letter to donors and nonprofits: “We do not tolerate inappropriate conduct of any kind at SVCF…We investigate all claims of misconduct and take appropriate action to remedy the situation….the claims of sexual harassment were new to us.”

What others say: In the 2008 case of sexual harassment, the victim, who doesn’t want to be identified, told me that she continued to report to Loijens, after discussing the situation with Carson. This made her so uncomfortable that she quit, without having another job. Carson has since acknowledged the case, but he has not explained why he told Callahan that there had been “no formal reports of inappropriate conduct involving any employee at SVCF.”

Two women who used to work for Loijens challenged Carson when he said on Twitter that the SVCF investigates all claims of misconduct.

Maria Moreno, a former assistant to Loijens, tweeted:

Helen Dannelly, a former development director, tweeted: I requested to speak with you about Mari Ellen, Emmett, and you refused, exclaiming: “Helen, I am the CEO!” as if you were too high up to be bothered by with such matters. The buck always stops with the CEO. You allowed this to happen. For years.” She subsequently deleted the tweet.

Michele McGurk, a former director of media and communications at the SVCF, said on Sunday on Facebook: “I witnessed and experienced a small portion what has been written about in the news articles. I spoke up at the time, even filed a complaint once. In hindsight, I wish I had done more.”

Rebecca Dupras, a former vice president of development, said Carson and the SVCF’s human relations department made clear that they did not want to hear about Loijens. “Even if you just started to talk to him about it, he did not want to hear it,” Dupras told John Woolfolk of the San Jose Mercury News. “I heard her [Loijens] make lots of sexual and racist comments, sexually inappropriate remarks to me personally, alone and also in front of other people.”

On transparency and accountability

What Carson said, in a tweet:

What Carson has done: He has declined requests for interviews from reporters at The Chronicle of Philanthropy, the Mercury News, the San Francisco Chronicle and Palo Alto Online.

Here are some questions for Carson: To what extent were you aware of Loijens behavior? What, if anything, did you do about it? Did her resignation include a severance payment? If so, how much? (Any severance would be paid out of tax-advantaged donor funds.) What is the scope of the law-firm investigation? Who do the lawyers report to, you or the board? Do they have the leeway to look into your role?

Carson is, of course, under no legal obligation to answer any of those questions publicly but his reluctance to do so undercuts the rhetoric about accountability and transparency.

On the SVCF’s accounting of its grant-making

What Carson said, in a 2016 press release: The SVCF awarded grants totaling $1.3 billion in 2016, benefiting thousands of people and causes in the Bay Area, across the United States, and around the world. ”We are thrilled and humbled that 2016 marks the first time we have made more than $1 billion in grants in a single year.”

Where some of those grants went: To commercial providers of donor-advised funds like Goldman Sachs or Fidelity. In other words, account holders of funds at the SVCF decided, for whatever reason, to move their money to donor-advised funds elsewhere. As I noted last year in a story about the SVCF published by the Stanford Social Innovation Review:

One of the largest grants reported by the SVCF in 2016 was a $25 million “contribution” to a donor-advised fund at Goldman Sachs. In 2015 and 2016, another $21 million left the SVCF for donor-advised funds at Fidelity, Schwab, Vanguard, Bank of America, and elsewhere. These grants are transfers to financial institutions that do not do charities any good, but they are logged as “grantmaking” by the SVCF.

This may seem like a small point. But if the SVCF is willing to describe transfers to Goldman or Fidelity as contributions, merely to inflate its importance, any claims that the SVCF makes about a more important question–like whether Carson tolerated a toxic workplace–need careful scrutiny.

What’s next? That depends on the SVCF’s board, and on the wealthy people in Silicon Valley who maintain donor-advised funds at the community foundation. One wealth advisor in the valley told me: “The donor community is activating now.” It’s possible, too, that staff members feel empowered to speak publicly, or to the board.

Regarding the role of the board, in an editor’s note, PaloAltoOnline said that Bill Johnson, CEO and President of Embarcadero Media, which operates PaloAltoOnline.com, served on the Silicon Valley Community Foundation Board of Directors from 2004 to 2011. The board was not informed of any allegations of misconduct during that time, according to Johnson. The board, it seems, was not told of the 2008 allegation of harassment against Loijens now acknowledged by Carson.

In Hebrew, by the way, “emet” means truth.

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Mari Ellen Loijens was featured in Scene Magazine in 2009.

Last night, the Chronicle of Philanthropy published a long story about the Silicon Valley Community Foundation that I wrote with help from Megan O’Neil, the news editor at the Chronicle.

The headline:

A Star Performer Created a ‘Toxic Culture’ at the Silicon Valley Community Foundation, Say Insiders

An investigation is looking into reports of bullying, sexual comments, and an oppressive office culture.

mariellenrloijens

Mari Ellen Loijens

This afternoon, Loijens resigned, the foundation has confirmed. That was fast. It is not and should not be the end of this sad story.

The Chronicle story is based on interviews with 19 former employees of the community foundation, which, with $13.5bn assets under management, is bigger than the Ford Foundation. Those ex-staffers “accuse Mari Ellen Loijens, the foundation’s top fundraiser, of engaging in emotionally abusive and sexually inappropriate behavior, and they use words like ‘toxic’ and ‘terrible’ to describe the workplace over which she presides,” the story says.

This blogpost is about the story behind this story. It explains the challenges of reporting on a big foundation like the SVCF, and points to problems in the way Emmett Carson, the foundation’s CEO, has responded to the allegations.

First, I must say that I’m grateful to the Chronicle for publishing this story. It’s behind a paywall, so I can’t share most of it with you, but please consider subscribing to the Chronicle. It’s one of the very few places that reports on foundations and nonprofits. Importantly, it has the respect and the reach to hold them accountable.

The story begins with an anecdote:

Not long ago, the actress, author, feminist, and activist Rose McGowan —- who said last year she had been raped by Hollywood movie executive Harvey Weinstein — visited the Silicon Valley Community Foundation to consider opening a donor-advised account. A disgruntled staff member told her to look at the foundation’s reviews on Glassdoor, a website where workers anonymously rate companies and their management.

The reviews there are abysmal, citing high turnover, a “toxic culture,” “lots of scapegoating and blaming of staff,” and claims of sexual harassment.

“The reviews caused me to not do business with them,” McGowan says.

It was a rare setback for the fast-growing Silicon Valley Community Foundation.

The story goes on to describe in detail how Loijens belittled staff, made lewd comments at work and, on one occasion a decade ago, told a woman who worked for her that she wanted to kiss her. [Loijens is married.] Six former employees of the SVCF are quoted by name; they deserve credit for sticking their necks out on behalf of others who suffered what many experienced as abuse from Loijens.

The man in charge

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Emmett Carson

The question now becomes, what is the responsibility of Carson, the high-profile CEO of the community foundation? To paraphrase a line made famous during the Watergate hearings: What did he know and when did he know it?

First, a bit of  backstory.

I knew nothing about community foundations until last spring when Eric Nee, a former colleague of mine at FORTUNE magazine, asked me to write about the SVCF for the Stanford Social Innovation Review, where he’s the managing editor. That story, headlined The Charity That Big Tech Built, explained how the SVCF had become a repository for donor-advised funds from wealthy people in the Bay Area, including Facebook’s Mark Zuckerberg. It aired complaints that the SVCF did not do enough for local charities. Carson, who does not take criticism well, was displeased, and he wrote a rebuttal for the Chronicle of Philanthropy. Phil Buchanan of the Center for Effective Philanthropy weighed in, too.

Last September, I got an email from a former employee of the SVCF who, then and now, wishes to remain anonymous. S/he wrote:

I can’t say anything on the record (SV is too small, and retribution is a fear given prior bullying tactics of SVCF’s leadership). I wonder if there are public records acts requests that could allow you to look at prior HR legal challenges. There were numerous people who were harassed by Emmett’s second in command over the last decade…Is any of that public? Again, it will be tough to get anyone on the record but plenty of people willing to talk on background.

I put him/her off. The allegations were a decade old and foundations aren’t subject to public records laws. Arguably, they should be, but that’s another story.

A failing report card

On January 9, at the height of #metoo, the tipster emailed again, this time with a link to reviews of the SVCF on GlassDoor. These are anonymous reports, so they must be taken with a big grain of salt.

But SVCF’s reviews are so negative, and its rating is so low that they got my attention. The SVCF currently has a 15% approval rating, meaning that just 15 percent of the reviewers recommend working there. For context, I looked at foundations, nonprofits and companies, including some known for their demanding workplaces, and found none as low. These are unavoidably imperfect comparisons, but here are some numbers: Facebook (94% approval) Ford Foundation (90%), Uber (84%) Hewlett Foundation (79%), Amazon (74%) United Way (71%) Gates Foundation (66%), McDonald’s (56%), Walmart (55%) and the American Red Cross (43%).

I began to track people down who had worked at the SVCF, some referred to me by my tipster and other that I found on my own. [LinkedIn is a wonderful resource for reporters.] I was wary of being passed from one disgruntled person to another, and managed to find a handful of people who like working for Loijens. Those satisfied employees one declined to be interviewed. I can only surmise that they did not want to diminish the experiences of their former colleagues. In any event, treating some people well does not excuse treating others badly.

The stories that I heard from most of the former employees were egregious,  but none of the first dozen or so people who spoke with me would permit me to use their names in the story. For reasons that I still don’t fully understand, they said they feared retribution from Loijens or Carson. They also worried about getting on the wrong side of potential future employers.

I didn’t think a story relying entirely on anonymous stories would merit publication in The Chronicle or have much impact. Then, last month, Elizabeth Dressel, an lawyer who worked at the SVCF for about a year, agreed to an on-the-record interview. Others slowly came around.

Then this happened:

April 2: I file a draft to The Chronicle. Stacy Palmer, the editor, plans to moderate a panel with Carson later that week. We agree that, to be fair, she will tell him about the story face-to-face.

April 6: Stacy Palmer tells Carson that the story is coming. The rest of their conversation is private. I’m guessing he is not pleased.

April 12: Palmer asks Megan O’Neil to work with me. We continue to report the story and seek a response from the SVCF. Megan secures a key interview, confirming the outlines of what I’ve learned.We email Sue McAllister, the SVCF’s marketing director, seeking interviews with Carson and Loijens. You can read our subsequent email exchange here.

Carson’s initial response

April 12: David Callahan of Inside Philanthropy publishes a story about the SVCF with the headline, Why is this giant community foundation–and its leader–so controversial? He cites the GlassDoor ratings and mentions Loijens. Carson responds by email:

While we cannot verify any anonymous reports through third-party forums like Glassdoor, we conducted an anonymous employee survey in December 2017, which 90 percent of our staff participated in, which showed 89 percent feel they have good working conditions, 94 percent feel safe in the workplace, 85 percent feel their supervisors treat them with respect, and 84 percent feel their supervisors help them handle personal issues at the workplace satisfactorily, among other positive findings.

Unbidden, Carson also tells Callahan, by email:

We can also affirmatively state that there have been no formal reports of inappropriate conduct involving any employee at SVCF.

Keep that in mind as you read on.

April 16: In response to our request for interviews with Loijens and Carson, the SVCF’s Sue McAllister writes:

The specifics that you have shared with claims of sexual harassment are deeply concerning for SVCF, and as a result we have retained the services of Thompson Hine LLP to do a full investigation of these claims and the alleged behavior of Mari Ellen Loijens.

Carson declines to talk but McAllister invites us to submit questions by email.

April 17: Before responding to us, Carson publishes a “Statement on Allegations of Workplace Misconduct” on the SVCF website. He says that he is “fully committed to further cultivating and ensuring a safe workplace and a culture that is inclusive and open.”

The statement says that Thompson Hine, a national law firm, has been hired to look into the allegations. It does not mention the name of the lead investigator or tell former employees how to get in touch.

Some former employees are contacted by HR at the SVCF and invited to talk with Sarah Hall, a senior counsel at Thompson Hine. She’s a former federal prosecutor, but she appears to have little or no experience with labor and employment law, or allegations of sexual harassment.

Spinning the story

Carson, who has yet to respond to our questions, tweets:

Remember those words–transparency and accountability.

A former SVCF employee says to me, by email:

Emmett is positioning himself to throw her under the bus to save his own ass (pardon my language) and it is not right. As a CEO, he either knew or should have known. He should have asked more questions and opened his eyes at least to the turnover rates.

This is mere speculation, of course.

But, by posting a statement and tweeting before responding to us–knowing that we will wait for him to comment–Carson appears to be trying to get out ahead of the story. He’s doing “damage control,” in the argot of Washington politics.

April 18: The SVCF responds to our questions. Sort of. Transparency and accountability, this is not.

The Chronicle publishes our story.

Today, April 19: Recall what Carson told David Callahan a week ago: That “there have been no formal reports of inappropriate conduct involving any employee at SVCF.” This may be technically true–who knows what is meant by a “formal report”?–but it turns out to be misleading.

Carson tweets:

Then Maria Moreno, a former executive assistant to Loijens, tweets:

To which Carson responds:

By my count, Carson thus acknowledges two complaints to HR of inappropriate conduct, one aimed at him. Several years ago, Loijens’ former executive assistant, Rui (Rae) Zhou sued the foundation; it’s not clear whether she, too, complained to HR.

Transparency, this is not.

Two concluding thoughts. Unlike most of this blogpost, let’s label them opinion. First, I wonder whether the very business model of the SVCF, which depends on donor-advised funds, or DAFs, undermines the principles of accountability and transparency. DAFs are built upon a legal fiction: While the law requires that DAFs be controlled by the parent charities like the SVCF, it is the donors, in practice, who decide how the funds will be spent. What’s more, DAFs are anything but transparent. They appeal to wealthy donors precisely because of their tax advantages and secrecy. [See my recent blogpost, Philanthropy’s Dark Money, for more.]

Then there’s this, apparently from a former employee of the SVCF who posted advice to management earlier this month on GlassDoor:

You have this obsession with being the biggest community foundation in the world…but for what? That isn’t inspiring. That isn’t why people get into nonprofit work. Why should the organization be so proud about how much money sits in its accounts and doesn’t actually go to benefit nonprofits? It makes no sense. It’s an incredibly misguided measure of success that mainly serves to stroke your own egos. Can’t you see that? Can’t you see that when you brag about being the biggest and the best in front of employees who are overworked, under-resourced and underappreciated, it leads to resentment not pride.

More to come, presumably, but not from me, at least for a while. I’m heading to Rwanda on a reporting trip in a few days.

MANFORD-obit-jumbo

Jeanne Manford, a founder of PFLAG (Parents, Families and Friends of Lesbian and Gays), carries a sign at a 1972 Gay Liberation Day parade. She is interviewed on Making Gay History. Credit: Les Carr. Courtesy: PFLAG

Not all that long ago–during my lifetime, in any event–every institution of US society was arrayed against gay and lesbian Americans. Local police. Federal law enforcement agencies, including the FBI. Private employers. Educators. Hollywood, and the newspapers. Churches, of course, and synagogues who told gay people that they were sinners. Worst of all, perhaps, the psychologists and psychiatrists who told them they were perverts and deviants, and set out to cure them with shock treatment, drugs, castrations and lobotomies. So much for the idea of liberty and justice for all.

Most of that is history, thank goodness, and the stories of people who made it so are told in a wonderful podcast called Making Gay History, which recently wrapped up its third season. Eric Marcus, an author and journalist, began work on the podcast in 2015, during the waning Obama years, but Making Gay History turns out to be perfectly suited for this dismal Trumpian moment: It is illuminating and inspiring, a welcome reminder that change happens, sometimes quickly, when people push hard enough for it.

The podcast features interviews with pioneers of the gay rights movement, some little-known or forgotten, including Phyllis Lyon and Del Martin, the co-founders of the Daughters of Bilitis, the first lesbian organization in the US; Frank Kameny, who fought an 18-year battle with the US government after being fired from his job at the US Army Map Service in 1957 for being a homosexual; and trans rights activist and Stonewall veteran Sylvia Rivera.

“These people fought for their rights at a time that was far more difficult than our own,” Marcus, 59, told me, when we spoke by phone last week. “They provided a roadmap. They set examples for us. Their stories are inspiring.”

Making Gay History is made possible, as they say, by the Arcus Foundation, the Ford Foundation and the Jonathan Logan Family Foundation, which is why I’m writing about in here on Nonprofit Chronicles. Listening to the podcast has led me to reconsider my skepticism about arts and culture philanthropy. As an effective altruist, I’ve argued that most charitable giving should flow to the world’s poorest places, where the needs are greatest and our dollars go further. Museums and symphonies are fine, but, like elite universities, they mostly serve the rich and so should be able to make a go of it on their own.

Making Gay History, it seems to me, is different. It would not have gotten off the ground without a modest $45,000 grant from the Arcus Foundation, which financed the first season of 10 episodes. Subsequently, Marcus raised about $200,000 from the Ford Foundation and $75,000 from the Jonathan Logan Family Foundation, which will carry the podcast into a fourth season. Along the way, Marcus and his colleagues have also built a handsome website with audio, transcripts, images and links for visitors who want to dig deeper. It all adds up to a work of lasting social and cultural value, a rich return on a modest philanthropic investment, and, as it happens, one with global reach: The podcast has been downloaded in more than 200 countries and territories, including some where LGBTQ people today face the oppression (and worse) that gay and lesbian Americans endured in the 1950s .

ebt751_Q_400x400The podcast came about almost by accident, Marcus told me. The author or co-author of 11 books, most with gay themes, he was laid off from a full-time job in 2015 and began to think about a collection of 100 audio interviews that he had done for the two editions of his book, Making History, an oral history of the gay liberation movement published in 1992. (A second edition, called Making Gay History, was published 10 years later.) Altogether, Marcus accumulated more than 300 hours of cassette tapes that he donated to the New York Public Library, which agreed to digitize the collection, never thinking about a podcast. “I figured scholars and students would access the archive,” he said.

Fortunately, the audio is high quality. Marcus worked at ABC News and CBS News early in his career, where he met a veteran NPR executive named Jay Kernis, who advised him to invest in broadcast-quality equipment. He did so because he wanted the interviews to last. “I knew they had value,” Marcus said. He knew that some people he was speaking with would not be around for long: “I was working against the clock with two groups of people—elderly activists, and men who had AIDs and were dying.”

Kevin Jennings, who was then the president of the Arcus Foundation, an unusual grant-maker that funds LGBTQ causes and the protection of apes, was the first foundation executive to recognize the value of the archive. Barbara Raab, then a program officer at Ford, which has a program to support “creativity and free expression,” came across the podcasts and loved them. “This fit squarely in the mission of our work, which was to tell social justice stories and elevate voices–literally, in this case–that are often not heard or invisible,” she told me. Raab shared the podcast with Johnathan Logan, whose family foundation is now a supporter. Marcus, Jennings and Raab had all crossed paths over the years, which made fundraising easier. 

“A very sad time to be alive”

The stories that have stuck with me after listening to all three seasons of Making Gay History were those told by LGBTQ people who came of age in the 1940s, 1950s or early 1960s. Shirley Willer recalled being slapped around by a police officer in Chicago one night in the late 1940s as she was looking for a lesbian bar. “It was a very sad time to be alive,” said Willer, who much later became the national president of the Daughters of Bilitis.

Chuck Rowland, an Army veteran and member of the Communist Party, who helped found the Mattachine Society in 1950, described the early struggles in the movement between those who wanted to noisily demand LGBTQ rights and those who wanted to quietly fit into respectable society. He was kicked out of the Mattachine Society by the group that believed that “the only way we’re ever going to get along is by being nice, quiet, polite little, uh, little boys that our maiden aunts would approve of,” he said.

Playwright and activist Larry Kramer remembered how awful he felt during his freshman year in college in 1953, saying: “When I went to Yale, I thought I was the only gay person in the world, and tried to kill myself because it was so lonely.” He was sent to a university psychiatrist who told him to stay away from other homosexuals.

Kramer went on to found  GMHC (originally known as the Gay Men’s Health Crisis) and ACT UP (the AIDS Coalition to Unleash Power) in response to the AIDS epidemic. Now 82, he lived long enough to see Yale welcome LGBTQ students. “I love going back to Yale now,” Kramer says. “There’s a dance every year for well over a thousand gay men and women, across the campus from where I tried to kill myself because I thought I was the only one.”

Sadly, Del Martin, Frank Kameny, Sylvia Rivera, Shirley Willer and Chuck Rowland did not live long enough to see all of the gains made by the LGBTQ movement. We don’t know what they would have thought of the fact that most Americans support same-sex marriage, or that about 10 percent of LGBTQ adults are married to a same-sex spouse. What we do know is that LGBTQ Americans–and the rest of us–owe them a lot. One thing we owe them is to keep on fighting for what we believe to be right.

Thanks to my daughter Sarah Gunther, director of philanthropic partnerships at the Astraea Lesbian Foundation for Justice, for telling me about Making Gay History.

 

downloadUntil recently, Al Cantor and I had never met. We connected on Twitter,  traded emails, talked by phone and enjoyed our interchanges. Al has spent more than three decades in the nonprofit world, as executive director of an agency helping at-risk New Hampshire boys, as an executive at a community foundation, and as vice president of a community loan fund that provided financing for people with low incomes. He started his own consulting firm in 2012. I spent four decades as a reporter covering politics, media and business before starting to write about philanthropy and nonprofits in 2015. Al and I share common values, but recently Al wrote that he had come to believe that “we’re the Yin and Yang of charitable cynicism: everything that I distrust, you embrace; and everything that I embrace, you distrust.” Really? Let’s see:

Marc: What got us going, Al, was a blogpost where you wrote: “I give from my heart–and my observation is that most other donors do the same thing. There’s absolutely nothing wrong with that.” You’re right that most donors give from the heart. But there’s a lot wrong with that. It’s one reason why we have so many ineffective and inefficient charities. Nonprofits don’t have a financial incentive to measure and report on their impact because donors don’t take the time to try to figure out which nonprofits are really making a difference. It’s odd: Many of us set aside time to research our investments and plan our vacations. We look for reviews and ratings before going to a movie or restaurant. Shouldn’t we be as thoughtful and intentional when giving to charity?

Al: Well, Marc, first, let’s not belittle the role of emotion in making important decisions. The most important decision of my life was getting married to Pat, and I didn’t sit back and do research and analysis before falling in love. (By the way, 35 years later, and we’re doing great.) People connect emotionally with charitable organizations, too — and they develop bonds with their leaders. There’s truly is nothing wrong with that — and it drives vastly more charitable giving (generally, a good thing) than intellectual dissection of financial statements and impact measures.

But second, I’m highly skeptical of nonprofit reviews and ratings. The best-known evaluation outfits, Charity Navigator and Charity Watch, work from offices half a continent away from the organizations they’re judging. They pull information from the charities’ Form 990s, draw conclusions about their efficiency and effectiveness, and slap on a rating — three stars, B-, whatever. (I wrote about this a while back in The Chronicle of Philanthropy.) You have to realize, Marc, that it’s frighteningly easy to game the 990s and make your organization look more efficient than it is. These evaluators presume, too, that spending on “overhead” — administration, fundraising, finance — is by definition bad, and spending on “program” — the direct costs of service delivery — is good. That’s a wildly over-simplistic and dated model for judging nonprofit effectiveness. And finally, whenever evaluators get into measuring actual program impact, they find that it’s nearly impossible, so they fall back on painful jargon about “theories of change” and “logic models” that frankly make my teeth hurt, and that mean virtually nothing in the real world.

Marc: OK, we agree on a few things: First, I, too, didn’t rely on metrics when I got married. That worked out fine: Karen & I have been together for 37 years.

We can also agree that ratings from the likes of Charity Navigator and GuideStar have very limited value. They help screen out wasteful or fraudulent charities but they do not measure impact. So long as they try to evaluate hundreds or thousands of nonprofits, it will be all but impossible for them to do so. To their credit, they have been trying to bury the overhead myth for years. But without anything to put in its place, that’s hard. One of my first posts for this blog was headlined Evaluating nonprofits: If not overhead, then what? There’s no clear answer yet.

Finally, we can agree that the decision to help others is an emotional. My heart tells me to give. But it can’t tell me where or how to give and, as someone who identifies, more or less, as an effective altruist, I want to do as much good as I can with my money. To figure out how, I set aside my emotions and use my brain.

Can we also agree, as the Gates Foundation likes to say, that all lives have equal value? If so, we should help the world’s poorest people, whose needs are greatest. To that end, most of my own giving is guided by GiveWell, which seeks out the best giving opportunities.

Al: Well, first of all, let’s hear it for long and happy marriages!

I really respect GiveWell, Marc. They really do find the biggest bang for the buck in terms of saving lives. I get that, and the charities they recommend do remarkable work and save thousands of lives, mostly in sub-Saharan Africa. I can’t knock your following their advice.

That said, GiveWell has a list of only nine charities in the whole world on their top recommendation list, plus another 20 or so that they find worthy and cost-effective. In terms of saving the most lives for the penny, I think that’s a great list. But the focus is incredibly narrow. If you want to support anything helping people with low incomes in the US, you’re out of luck. (I’ll remind you that we have some 43 million “food insecure” people in this country. Sending money to an American food bank or free health clinic may not save as many lives per dollar as in the developing world, but it still helps people who need help.) And GiveWell’s list does not deal with environmental organizations, including those that are fighting climate change, a force that is disproportionately affecting the very people GiveWell wants to help. And I have to say that arts and education are worthy charities, too — what’s the world without beauty and intellectual engagement? Are those kinds of causes off limits because they’re not purely about saving lives?

Marc: I’m with you, sort of, on climate change. I used to make the bulk of my donations to environmental groups, but stopped because (1) they aren’t making much headway on the climate crisis and (2) most won’t embrace the world’s No. 1 source of low-carbon power, i.e., nuclear energy. As for education, if I knew of a nonprofit with a great track record of helping poor kids succeed, I’d consider donating. Do you have any recommendations?

You lost me at the arts, though. Given a choice between saving the art in the National Gallery or the people who visit the museum, I’d have to choose the people; the reality is that money we donate to the arts, or most anything else, instead of giving to alleviate poverty or disease means letting people suffer.

I wish we had the equivalent of a GiveWell for important causes like the environment and education, as well as localized ratings for cities or communities around the US. You used to work at a community foundation, Al. Could they take on the role of vetting and recommending the best nonprofits in their cities or regions?

What I really want to see is what some have called a “market for good”– a way to reward the best nonprofits, penalize the worst and ignore the rest. But first we need to know which is which.

Al: I think your big-city bias is showing, Marc. I live in a small city, Concord, New Hampshire (population about 45,000), not Washington or New York. When I say “the arts,” I don’t think about the National Gallery or Lincoln Center. I think about the Concord Community Music School, which teaches the joy of music (and a sense of community) to kids, adults, seniors, immigrants, children with disabilities, many of them with no money and at no cost.Or I think of Oklahoma Humanities, a group I’ve worked with, which leads book discussion groups in state prisons. These are “arts” groups, but giving to them is not gilding the lily at some major museum catering to rich people.

As for giving to education, donating to Harvard or Stanford is about the most inefficient form of charity imaginable, and it reaches beneficiaries who generally don’t need it. (Malcolm Gladwell skewers giving to the richest universities brilliantly in his podcast, “My Little Hundred Million”.) But giving to schools that serve working-class kids, especially if the money is spent on direct service and not hoarded in endowments, can be a very wise use of funds. So don’t dismiss giving to the arts and education out of hand. You should think about institution itself, the people it serves, and how the money will be used.

Two last thoughts:

First, you have asked me about how you can know about an organization’s quality and impact. Well, to quote Yogi Berra, “You can observe a lot by watching.” And by asking people who benefit from the work. In my original post that set you off, I talked about my respect for a group working on children’s literacy. Yes, I’m fond of the leader. I trust him. But I also have heard great things about their work, not simply from their staff and from their materials, but from other organizations in the community serving kids from families with low incomes. One of the groups is a very gritty Boys and Girls Club that I know does great work, and the literacy group I highlighted collaborates with them — and the kids there simply love them. So too a program for kids at high risk where I’ve been a board member: the literacy group comes to their summer camp, and it’s one of the best days of the year. You may dismiss these efforts, because they don’t literally save lives, and a dollar spent on a book for a kid in New England would undoubtedly go further in helping prevent malaria in Africa. I get that. But my heart and, yes, my mind tells me that a group helping kids who have never really interacted with books to love reading is a great thing that’s worthy of my support.

Having delivered the de rigueur quote from Yogi Berra*, I’ll close by quoting sociologist William Bruce Cameron: “Not everything that can be counted counts, and not everything that counts can be counted.” We’ve learned from the obsession with test scores in public schools over the last two decades that focusing too much on measurable outcomes actually distorts and spoils the mission — and inspires cheating, too. And there’s a reason some of the best nonprofits don’t do a very good job of evaluating themselves and communicating their impact. It’s because they’re busy delivering programming. They’re counseling vets, feeding the hungry, sheltering the homeless, and, yes, teaching art to kids. Some of the most effective organizations I know don’t do nearly as good a job at blowing their own horns and accounting for their achievements as some other groups that, frankly, aren’t all that great at meeting mission.

Marc: Some great points, Al. I agree that local charities do good and important work in education and the arts. The trouble is, it’s hard for many donors to identify them. One approach might be to set aside a share of giving for groups that work nearby–and give time as well, if possible–and then devote the rest to helping those whose needs are most pressing. No doubt we should give from the heart, but I hope more people will use their heads as well. And thank you for using both!

* Open minded of Al, a Red Sox fan, to quote Yogi Berra.

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Rules, they say, are made to be broken.

This is not necessary when it comes to the rules designed to promote transparency in foundations. They’re so ineffectual that there’s no need to break them.

Wealthy donors can and do hide charitable giving for which they claim tax deductions, the investments they hold in tax-advantaged accounts and information about what they pay their professional staff, which is also tax-deductible.

The result is that despite such well-meaning initiatives as Glasspockets and the Fund for Shared Insight, transparency and accountability in the philanthropic sector are on the wane.

Billions of dollars of philanthropic dark money are flowing into so-called donor-advised funds, the black boxes of philanthropy. Private foundations and charities, meantime, have devised their own ways to avoid public scrutiny.

This is a problem for a couple of reasons. First, the money flowing into foundations and nonprofits is tax-subsidized. Donations are tax deductible, as are most earnings from investments. In order to judge whether the tax subsidies are beneficial, people and their elected representatives should know where the money comes from, how it’s managed and where it goes. Second, big-time philanthropy is an exercise of power. The charter school movement, environmental activism, Washington think tanks of every stripe–these are all fueled by charitable dollars. By deploying dark money, the wealthy escape accountability.

This problem was thrown into focus last week by the inadvertent disclosure of deposits made by three of America’s wealthiest donors into donor-advised funds held by the Goldman Sachs Philanthropy Fund. Former Microsoft chief executive Steve Ballmer donated $1.9bn into his account. Laurene Powell Jobs, the widow of Apple founder Steve Jobs, put $526m into her fund. Jan Koum, the co-founder of WhatsApp, deposited $144m.

Their deposits were revealed only because of an IRS mistake caught by Bloomberg. Without the IRS error, no one would know that these funds exist. Going forward, it will be difficult if not impossible to know how they are spent. Big money is shielded from public view. .

By coincidence, Ray Madoff, a Boston College law professor and leading critic of donor-advised funds, or DAFs, last week held a philanthropy “boot camp” for reporters. Madoff, who has been called the woman saving the world from philanthropy, told those of us in attendance that it is harder than ever to hold big-time philanthropy accountable for its power.

Of the $1.9bn deposit into a DAF made by Ballmer, Madoff quipped: “I hope you all enjoyed making that gift with your tax dollars.”

It’s no joke. Assuming that the former MSFT exec is in a top tax bracket, that donation could save him (and cost the federal government) as much as $600m. Which is fine, but it would be useful to know how the money is being spent, so we can judge whether the tax deduction for such charitable donations is worth the foregone federal revenues.

The fastest-growing sector of philanthropy

Donor-advised funds, or DAFs, are the fastest growing sector of philanthropy, largely because of the tax benefits and anonymity they offer. Tech-industry titans, in particular, favor DAFs. Just in the last few months, my own reporting has bumped up against DAFs funded by Facebook’s Mark Zuckerberg and his wife, Priscilla Chan; Facebook co-founder Dustin Moskovitz and his wife Cari Tuna; Instagram co-founder Mike Krieger and his wife, Kaitlyn Krieger; and Brian Acton, who with Koum founded WhatsApp.

In 2016, DAFs brought in $23bn in contributions and held charitable assets of $85bn, according to the National Philanthropic Trust. In 2017, driven by the new tax law, they almost surely grew faster. Donor-advised funds made up six of the 10 biggest charities — yes, as a matter of law, these are public charities — on the latest annual list published by the Chronicle of Philanthropy.

DAFs provide significant tax advantages over private foundations, which until recently were the common philanthropic vehicle of the very rich, even in Silicon Valley, as evidenced by the Hewlett, Packard and Moore Foundations.

The key, as Madoff explained it, is the differing tax treatment of so-called complex assets, such as pre-IPO stock, private C- and S-Corp stock, restricted stock, limited partnership interests, artwork and collectibles. While tax law requires private foundations to value such donations based on their cost, DAFs permit donors to deduct the full value of such assets, without paying capital gains tax on the appreciation, according to Madoff.

“Taxpayers who give appreciated property get double the tax benefits of those who give cash,” she said. “This double benefit is a big part of the rise of DAFs.”

In a pitch to donors, Fidelity Charitable quotes Steven C. Mayer, the former CEO of Teva Pharmaceuticals and a Fidelity DAF holder, as saying: “Donating privately held stock to a private foundation is not a tax-efficient option.” The pitch concludes: “When it comes to helping donors and their advisors donate complex assets to charity, Fidelity Charitable is an ideal option.”

Particularly if you are donating “commercial grains” or “virtual currency,” which Fidelity accepted as donations in 2015, according to its latest IRS Form 990. We can only imagine how these complex assets are valued for tax purposes.

Why DAFS are a sham

Right about now, we should also point out that DAFs are based on a fiction. Under the law, when donors put money into a DAF, they “give up all legal control over their donations,” Madoff said. In practice, the donors can merely “advise” the DAF — hence the term donor-advised fund — about where they want the money to go. You can bet your last dollar that the DAF management firms heed that “advice,” so long as donations go to an accredited charity.

This fiction is the reason why donors can take an immediate tax deduction when they give to a DAF, and incur no obligation to push the money out to real charities that, er, actually try to do good.

Unlike private foundations or most public charities, DAFs have found a way to avoid disclosing information about their own operations–and, importantly, how much they generate in fees for the asset management companies that birthed them. Fidelity Charitable’s operations are outsourced to FMR, i.e., Fidelity Investments. which as a private company need not disclose salaries. It does not report the pay of any employee.

Remarkably, Goldman’s Sachs Philanthropy Fund also does not pay any employees, which is convenient because it does not have to disclose what they are paid. It told the IRA on its Form 990 that “neither the organization nor any related organization compensated any current officer, director or trustee.” *

It’s not as if private foundations are models of transparency, either. Try, for example, to find out what Bloomberg Philanthropies, the foundation of former NYC mayor and billionaire Michael Bloomberg, pays its CEO. Its Form 990 lists fees paid to directors, but not to staff. Nor does it list its investments–as most private foundations do. Instead, it simply says that its endowment is managed by Willett Advisors.

Might Gates and Bloomberg own shares of fossil fuel or tobacco companies? If you care about such things–I don’t, particularly–there’s no way to check.

See what I mean about not having to break the rules designed to promote transparency? They’ve become a joke.

***

Disclosure: I opened a DAF with Vanguard last year for tax reasons. None of the money will sit in the DAF for any longer than three years. Because I’m a reporter who covers philanthropy, I list my charitable donations each year in a blogpost, like this one.

UPDATE:  * Andrew Williams of Goldman Sachs emailed me immediately after this post went up to explain. He wrote: “This DAF is managed by Goldman Sachs Private Wealth employees as a service to our charitable clients and all services are donated.  GSPF (Goldman Sachs Philanthropy Fund) has no employees.”

Also, I probably should not have singled out the Bloomberg Family Fund for its lack of transparency. John Seitz of Foundation Financial Research sent me pages from the Ford, Hewlett and Moore Foundation 990s that show investments in funds identified only by numbers or letters, whose actual holdings are opaque. Others, like MacArthur and the Robert Wood Johnson Foundation, are much more transparent, he notes.

sp001pxHelping the world’s poorest people escape poverty is, in principle, a simple matter: Give them cash! The trouble is, there are too many of them: About 700 million people  more than twice as many people as live in the US — are thought to live on less than $1.90 a day, according to best estimates from the World Bank. Probably the only practical way to end poverty on that scale is with robust economic growth. That will take time.

In the meantime, though, unless we choose to ignore their suffering,  it would be helpful to figure out how governments, foundations, donors and profits should use their wealth to lift the incomes of the poor. Should the wealthy give cash grants, gifts of livestock, low-interest loans, job training or something else to the extreme poor?

It’s an important question. While longer term investments in public goods — roads, ports, education, health care systems, good governance — can help spur economic growth, so can helping poor people be less poor. As Jeremy Shapiro, a founder of nonprofit GiveDirectly, has said: “Poverty alleviation through redistribution–if it acts as a stimulus or engine for human capital–can further economic development.”

Two recent studies — both about nonprofits that I’ve praised on this blog — have got me thinking about short-term poverty alleviation. One is a randomized evaluation from Innovations for Poverty Action, a research and policy nonprofit that often works with development economists, that looked at a “graduation” program run by Village Enterprise in Uganda. The study found that the graduation program–a multi-faceted attempt to improve livelihoods–lifted the consumption, assets, nutrition and self-reported well-being of the poor, and that it did so better than cash alone. The Village Enterprise program included a cash grant of about $100, classes in business practices, two years of mentoring and a savings group that enabled small-scale entrepreneurs to pool their resources. Graduation programs have been well-studied, notably in a landmark 2015 study of six programs that produced encouraging results. Even Nick Kristof wrote about itContinue reading

The Chronicle of Philanthropy last month published my opinion piece on climate philanthropy. They’ve kindly agreed to let me repost it here.

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Governments made promises to reduce their emissions two years ago. They’re falling short.

America’s foundations have poured billions of dollars into the fight against climate change. What do they have to show for their money?

Big environmental grant makers — Hewlett, MacArthur, Moore, Packard, and the rest — can point to a few meaningful victories.

The Energy Foundation laid the groundwork for renewable-energy policies that 29 states have adopted. The ClimateWorks Foundation coordinated work to help developing countries replace polluting refrigerants with efficient, climate-friendly cooling. Bloomberg Philanthropies financed the Sierra Club’s campaign to shut down coal-fired power plants. Foundations have backed educational efforts, ranging from Al Gore’s documentary An Inconvenient Truth to the Climate Central website, which helped persuade Americans that humans have contributed to climate change and that the government should do more to promote clean energy and take other steps to protect the planet.

But when it comes to U.S. climate policy, grant makers and the environmental nonprofits they support have been stymied. President Trump has pulled the United States out of the Paris climate accord. His EPA administrator, Scott Pruitt, is dismantling the agency’s efforts to regulate greenhouse gases. The Republicans who control Congress are hostile to climate action.

Globally, the picture is nearly as grim. In the past two decades, annual emissions of greenhouse gases have grown from the equivalent of 35 billion tons of carbon dioxide a year to nearly 50 billion, and atmospheric concentrations of carbon dioxide are rising relentlessly.

If philanthropy is to be judged by its outcomes — and how else should it be judged? — climate philanthropy has failed. The U.S. government is further from acting to curb climate change than it was a decade ago. Without action by the United States, which is an indispensable player on the global stage, it will be all but impossible for the planet to avoid catastrophic climate change.

Robert Brulle, a sociology professor at Drexel University, says: “The big funders have learned way too little from the success of the conservative movement. They’ve spent millions and millions of dollars, and the climate movement, such as it is, continues to fail.” Continue reading