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Democratizing family philanthropy: Shifting practice to share power

Text TOGETHER superimposed on a wall splashed with different colors of paint

“Nothing about us without us,” is commonly used by community activists when speaking about the changes they want to see in their communities. The idea is simple: those most affected by social problems—the intended beneficiaries of any program—should fully and meaningfully participate in decisions about programs, policies, and strategies that may directly impact their communities. Philanthropy is not something done “to people”; ideally, it is something done “with other people” to help them or to improve the world.

Donors who want to have a meaningful impact in communities—especially those who want to help the most marginalized and vulnerable—have very strong reasons to explore how their giving strategies can adhere to a deeply held community-based sentiment. This sentiment translates into a compelling and straightforward principle at the heart of democracy itself: any person significantly affected by a decision deserves to have a voice in the making of that decision. Democratic theorists call this the “all-affected principle.”

Why is it not enough for me to decide how to spend my resources? What harm is there if I decide on my own where to give my resources away, especially if destined for good causes? It’s my money after all, so shouldn’t it be up to me to decide?

When you choose what issues to prioritize, you usually decide based on your own lived experience, knowledge, or advice from a small group of people around you—even if you are using a philanthropy consultant. Most likely, you do not live close to the most vulnerable communities or engage with them on a daily basis. Therefore, your understanding of the communities’ most pressing needs might differ significantly from what those closest to them would say should be prioritized. By imposing your values, priorities, and choices on communities in need, you risk taking a paternalistic approach to your philanthropy.

Involving those closest to the problem in your philanthropic decisions also leads to better outcomes. Their experiences often motivate them to identify new ways to tackle their challenges. By engaging those dealing with these challenges firsthand, you ensure that you do not fall privy to an overly disconnected and analytical approach. The assessments, ideas, and solutions that emerge will likely be more relevant and applicable to people’s lived experiences.

Furthermore, all philanthropy needs some degree of public accountability. Ninety percent of all private foundations do not have a website or provide information to the public—aside from the annual 990 tax form. Donor-advised funds are not required to provide any accounting of annual distributions and allow complete anonymity for donors. Worst of all, the lack of transparency and community engagement undermines the potential for a donor to learn because there is no built-in feedback loop from those they intend to benefit. Too frequently, philanthropy is a one-way street: the donor directs dollars and benefits to others, and the only reciprocal engagement is an expression of gratitude toward the donor. That is not an incentive structure that respects other people’s agency or facilitates learning.

What if I’m actively listening to my grantees?

Some donors make a conscious effort to listen to their grantees’ needs, and sometimes even extend their listening to the beneficiaries. The Fund For Shared Insight’s Listen for Good campaign is a recent and notable example of such an effort; it encourages funders to reach out and collect feedback from their partners as they design and implement their grantmaking.

Although this listening approach ensures that you do not make decisions in a vacuum, it still affords you total control of your giving strategy. After listening, you can decide to accept or ignore the advice of others.

Doing philanthropy democratically requires you to go beyond listening—it demands something more dramatic. If you want to incorporate democratic principles into your decision-making process—if you want to support the dispossessed and marginalized—then you need to share decision-making power in your philanthropic structure. Listening to grantees and beneficiaries does not substitute involving them in the grantmaking process itself.

What if I allow the organizations I fund to determine how they want to spend the resources? What if I make unrestricted and flexible grants, and let the leaders of the organizations decide how to spend the money?

Providing general operating aid through unrestricted or flexible grants is good philanthropic practice, and has increased visibility and support. During the COVID-19 pandemic, many large foundations converted project-based donations to unrestricted grants to give their grantees the needed flexibility to respond to the crisis.

Unrestricted grants show trust between a funder and an implementing partner. Building relationships of trust between funders and grantees is a first step towards flattening the inherent power imbalance between the two; nevertheless, it does not represent a clear example of power-sharing or an attempt to do your philanthropy democratically. After all, you, the donor, have decided where to allocate your funding. You have made the strategic decision of where the funds should go in the first place, but you refuse to attach any strings to your gift.

To do philanthropy more democratically, you must give up your individual power to decide where to make a gift. You must shift your philanthropic decision-making process from an autocracy—or perhaps more generously, a “technocracy”—to a more inclusive and democratic approach. The group making your funding decisions must include representatives from the communities it wants to support. There are two ways to go about this. First, you can incorporate community members into your philanthropic governance, ensuring they have a meaningful voice and are not just token representatives on the board. Alternatively, you can relinquish control of where the funding gets distributed by giving to community-led funds and organizations that provide resources to the most marginalized communities.

What if I identify a nonprofit organization whose leadership represents the communities it aims to serve?

That is a step in the right direction. It is important to identify organizations that have leadership on staff and the board representing the communities that they serve. However, it is worth noting that you are still wielding the power of deciding where to spend the resources and what projects to fund. For example, there is a difference between allocating money to a specific nonprofit led by people of color and letting people of color decide what causes are worth investing in.

Isn’t the ultimate example of democratic decision making just paying my taxes and letting elected officials decide how to spend taxpayer dollars? Are you suggesting that I should voluntarily pay more in taxes?

You definitely could—and maybe even should—pay more taxes, even if just voluntarily by making a donation to the U.S. government. But we know that is not likely.

Of course, you can certainly speak out about the need to raise taxes on the wealthy. Many critics of big philanthropy argue that the current tax rates on high net worth individuals are historically low, and loopholes in the tax code—such as the carried interest tax deduction—unfairly favor the wealthy by lowering the net cost of their contribution. If you voluntarily pay more taxes, the government can commit additional resources towards public goods and priorities determined by democratically-elected public officials.

There are some high net worth individuals, such as the Patriotic Millionaires, who agree that the ultra-wealthy should pay more taxes.[1]  Even beyond this group of self-proclaimed “class traitors,” donors such as Bill Gates, Marc Benioff, Reed Hastings, Warren Buffet, George Soros, and Pierre Omidyar support higher taxation for the rich.

However, it is fair to say that many donors don’t share this sentiment, either because of a deep distrust of the government’s priorities, or because of the government’s inability to distribute the resources efficiently. Many wealthy individuals have said something to the effect of “Why should I give my money to democratic institutions that are ineffective, polarized, and unrepresentative? Why would I give more of my money to a broken system that can hardly produce public benefits? We, donors, have succeeded in business and other endeavors. I think we can outperform the government!”

Well, for one thing, we would respond that we have written a separate piece on how philanthropy can help fix our broken democracy. However, you might also want to try a different path:

How can I apply a more democratic approach to my philanthropy, by which the communities most proximate to the needs can participate in the decision-making process?

We have outlined two possible approaches below.

1. You can restructure your philanthropy, so those most proximate to the problems become part of your governance structure.

Whether you have a foundation, a donor-advised fund, or a limited liability corporation, you can design the governance to include members of the communities you want to support. Instead of centering your giving around your decisions, you can focus on the needs of the people, empowering them to decide how to deploy your philanthropic resources. Otherwise, if it is difficult to restructure the governance of your philanthropic organization, you can also consider setting up an advisory body with decision-making rights.

There are a few funders who have done this. Holly and Bill Marklyn in Seattle, Washington, fund racial and gender justice. They have transferred their philanthropic decision-making power to an advisory committee of people of color with lived expertise on these issues through The Share Fund.

The Nia Tero Foundation, a Seattle-based organization funding indigenous rights, includes indigenous leaders on its staff and board and supports programs to amplify the work of seasoned Indigenous storytellers.

Another way to restructure your giving is to create a pass-through foundation.  Following Martin Luther King’s assassination, Ralph Hoaglund, co-founder of CVS, incorporated the Fund for Urban Negro Development (FUND) to channel white suburban wealth to the Boston Black United Front. The Black-led foundation then redistributed the money to African American organizations and neighborhoods.

You can also give up control of your giving strategy by transferring the funding to a trusted organization embedded in the communities you want to reachFor example, in 1984, Barbara Meyer started the Bert and Mary Meyer Foundation (BAMM), a family foundation focused on rural grassroots community organizing in 14 southeastern states. Ten years later, the board pledged to transfer the foundation’s entire endowment to what was to become the Southern Partners Fund (SPF), a public foundation led by the heads of grassroots community organizations throughout the rural South.”[2]

There are also ways to share or transfer decision-making power to communities less formally. For example, the Headwaters Foundation—a conversion foundation focused on social determinants of health in Montana—hosted open community meetings to invite the people they serve to guide the region’s resources towards improving the wellbeing of their community. A diverse range of participants voted for nonprofits they thought were effectively addressing the issues that lower Montanans’ health standards. Headwaters then funded the community-selected nonprofit in each county. Interestingly, the foundation noted that there was a substantial consensus regarding the top nonprofits chosen by community members.

2. You can fund community-led philanthropic funds that are more proximate to the communities you are looking to support.

By letting others decide how to distribute your funding, you are, in effect, democratizing your philanthropy. Citizens and community leaders determine the values guiding your philanthropic dollars: what to fund, how much, and to what end. In this approach, you would share your power and authority with a broader decision-making body representing a diverse group of communities and organizations. Therefore, you can identify community-led funds or organizations with a participatory process at the local level to determine how to distribute resources within the community.

Community-led funds can take different forms, but they all give traditionally marginalized populations direct control over the distribution of grant money. Since a single community may hold a range of diverse perspectives, a fund should rely on an entrusting existing leader within the community to help direct the fund and promote a participatory process that represents the people’s values.

For example, Resource Generation—a multiracial organization of young people committed to leverage their wealth and privilege for social change—compiled a list of community-led funds to support people affected by the coronavirus crisis.

Additionally, Giving Compass posted a range of funds led by community-based groups.

This sounds interesting, but where do I start?

Your existing philanthropic governance structure will likely determine how quickly you can shift towards one of the options we have provided above. If you are part of a family foundation whose members don’t want to share decision-making power in their giving strategy, you can create an advisory committee to inform your foundation’s strategy, curate giving opportunities, and decide where to distribute your resources. If you have inherited a philanthropic structure that you cannot change, you might consider making your gifts to one of the community-based funds listed above.

Regardless of your situation, you should ask yourself: How might I make sure my organization is putting the communities we seek to serve at the center of our philanthropic efforts? How can I adhere to the “Nothing about us without us” inclusion principle?

Reprinted from the National Center for Family Philanthropy.


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