What’s a “blind spot” in the context of philanthropy? It typically refers to a behavior, observation or perception that, while well intended and fully benign, has an unintended consequence. That consequence may impact others in a family or grantees or the philanthropy sector as a whole.1
Why Now?
Many organizations are confronting the long overdue and legitimate challenges of diversity/equity/inclusion (DEI)2 and exploring unintended or unconscious biases in our practice, our words, our funding and our governance. That, of course, is both timely and much needed, and there’s an explosion of literature helping the philanthropy sector engage and embrace those questions.
But there are deeper underpinnings and assumptions to address before you can implement effective DEI responses. The scenarios below are intended to expose some of these underlying blind spots in the funder/philanthropy world. All of them are based on real situations, though none apply exclusively to any one individual or foundation.
Conscious Use of Self
Scenario 1: A non-profit theater company has invited the CEO of a foundation to be a guest at a forthcoming opening. The foundation has never funded in this area, and the CEO informs the theater company of that fact in writing. The nonprofit replies that it understands but would welcome the CEO’s attendance anyway. The question: Should the CEO accept the invitation?
Why not? Having taught this case for many years for many different constituencies, I would assume that most readers would first approach this as a question of the legal limits of gifts or the sufficiency of an a priori determination of eligibility or other transactional matters. And those responses would be fair—but inadequate. Advisors of all sorts give differing answers to these questions. Because it’s not a major legal issue and probably would be considered de minimis by many, a common answer from experienced funders is, “Why not?”
Invariably, the answer given prior to attending the show is ignored by the nonprofit, and the funder/foundation receives a request for funding shortly after attending. After all, whatever their words may have been, attending implies interest or at least a willingness to reconsider. The funder’s behavior gives a mixed message, and any development professional will look for any opening.
The blind spot. This is far from a major ethical lapse, and unless the tickets involved are for opening night at Carnegie Hall, not a significant legal one. But it does demonstrate how funders must be aware of how they come across, what message their affect gives and what doors they want to open to potential grantees. The blind spot, in this case, is limiting their decision making to the technicalities and not focusing on what message their decision sends.
The Intimidation Factor
Scenario 2: A prominent foundation proudly announces that it will make its meeting spaces available to the local non-profit community. The foundation occupies space in a very prestigious area, and its meeting spaces are state-of-the-art. Yet it learns that the non-profit community is reluctant to use the spaces. The foundation is puzzled. Why?
For many nonprofits, simply going to the offices of a foundation is intimidating. Nonprofits providing direct service in lower income areas may find that going to the foundation’s offices implicitly emphasizes the economic/class divide between the funders and the served population. Moreover, as wonderful as the space may be, it’s not necessarily particularly convenient to the staff of these organizations, and the nonprofits only have access when the foundation isn’t using the spaces. At the same time, many of the nonprofits are reluctant not to use the space, fearing that the foundation would look askance the next time there’s a grant request.
There’s no simple answer to this. It’s not a legal issue, but rather another example of affect. Should foundations or wealthy donors purposely locate their spaces in the midst of lower income areas to counter the intimidation factor? Probably not. That action isn’t likely to produce the intended result because, after all, the power of the purse strings follows the funder. Should the funder consider funding communal meeting spaces in those areas? Perhaps. Should funders make it a point to meet in “safer” (that is, less intimidating’) spaces? Probably.
The blind spot. The key issue here is the blind spot that assumes that any generosity by a funder is or should be welcomed by a non-profit community so radically in need of support. This isn’t an issue of making conditions that discount the real circumstances of the grantee; it’s an issue of acknowledging that a funder is likely to convey class or economic inequity without intending to. And let’s be clear: This applies regardless of the race or ethnic background of the grantee.
Behind the Scenes
Scenario 3: A well-respected nonprofit submits a balanced budget every year in its grant request. For a long time, that balanced budget was convincing evidence of a well-run organization. No one asked questions about salaries, fringes or personnel practices. Recently, a local publication “exposed” that the CEO of this organization was getting a salary way above the norms for the community. On closer examination, it also became clear that much of the staff was being paid at the lower levels of comparable professionals, and most didn’t receive fringe benefits. The foundation had an extensive internal debate: Are human resource practices and policies the business of the foundation, or is it micro-managing to ask for those details? Is it more problematic that the CEO might be overpaid or that the line staff is underpaid? What might/should a funder do?
The blind spots. Ten-to-15 years ago, the typical response from funders to this scenario was that it wasn’t the funders’ business to get involved in the weeds. The funder gave financial support, and the financial stability of the organization was a key and reliable indicator that the organization was well run. Over the last few years, it became clear that focusing on finances as the primary indicator was itself a blind spot. After all, the budget summary alone didn’t tell the whole story, not even the whole story of the finances. The success of the organization was built on the backs of the underpaid/underfringed. As funders have become more and more committed to impact, deeper and more probing questions are natural. More funders need to acknowledge that expecting an undercapitalized sector to solve society’s systemic problems is foolhardy and short sighted.
Funder blind spots are revealed in the questions we ask. Nonprofits answer those questions and organize their work and their presentations to show that they understand and internalize those questions. Most often, neither the funder nor the nonprofit is aware of how profoundly those questions shape the relationship. Thus, if funders regularly asked about personnel practices and staff training and retention, it wouldn’t take long for the financial picture to reflect that. Funders have a responsibility to make those discussions safe and to provide funding in such a way and at such a level so as to enable the success they desire, as well as make sure that they’re investing in the equity internal to organizations they fund.
Ruling from the Grave
Scenario 4: A wealthy businessman and grandfather instructed his attorney to create a foundation to come into existence on his death. The foundation was to continue the political and philanthropic values and priorities this client espoused during his lifetime. In fact, the instructions were quite specific: The foundation, left to the funder’s adult grandchildren to run, was to support “conservation” but shouldn’t fund “environmentalism.” While the trust didn’t mandate specific organizational funding in the future, there was a list of favored organizations to inform the grandchildren in their implementation of the foundation.
At no point did the grandfather or the attorney involve the grandchildren in the formulation of the guiding documents. After all, the grandfather was the client, and his donor intent seemed quite specific.
After his passing, when the grandchildren learned of their inherited responsibility, they were dumbfounded. Even if they understood some of the implied political posture of their grandfather, how to implement it seemed quite impossible. How does one do “conservation” funding that isn’t “environmental?”
Scenario 5: A first-generation funder is approaching the end of her life aware that her children are still living out childhood mutual resentments and are estranged from each other. She instructs her lawyer to create a foundation that would take effect on her passing. Her explicit desire, expressed in a preamble to the foundation bylaws, was that having joint responsibility for the foundation will get her children to get along. Sadly, after her passing, her lawyer discovered that one can’t resolve unresolved family issues through philanthropy.
The blind spots. These two scenarios occur more frequently than you might wish. There are numerous blind spots that serve to make what could have been opportunities for the successor generations into experiences of frustration.
In the first situation, the grandfather’s decision to insist that his estate bind the heirs to his philanthropic commitments, even if not absolute, left uncertainty and discomfort among his heirs. This went beyond donor intent to donor control.
His attorney’s decision not to strongly encourage a discussion with the grandchildren while the grandfather was alive revealed a blind spot. True, the grandchildren weren’t his clients, but not thinking through the implication of the client’s wishes—or pushing that implementation down the road—meant that his client’s wishes weren’t well served.
Third, while I’m sure that the enabling document for the foundation met all legal criteria, it attempted to control both the priority of giving and the political inclinations from the grave. There’s little incentive for those heirs to have a commitment to effective philanthropy even if they want to honor their family legacy. They felt that they weren’t running a foundation but managing a single purpose fund.
If the first situation led to problematic philanthropy, the second was an attempt to use philanthropy to solve a non-philanthropy problem. The intent, while poignant, wasn’t philanthropy at all but was to use the transaction of philanthropy in the hope that it would transform harmed relationships into healed ones. In my experience, such a mandate often (not always) serves to exacerbate the tensions because it forces estranged individuals to make consensus decisions when competing values, styles and priorities make decision making hard enough anyway.
Talking at Cross Purposes
Scenario 6: A well-known periodic study examines how philanthropy questions are integrated into client planning by wealth/financial advisors and/or T&E lawyers. Invariably, the study shows that there’s a marked disconnect between the reports of the advisors and the reports of the clients. A very high percentage of trusted advisors posit that they do have discussions with their clients about philanthropy. A high percentage of clients say otherwise. Why?
The blind spot. Over the years, the percentages have improved, but the divide remains. Both are telling the truth, but they mean very different things. For advisors, philanthropy often means the structures of philanthropy, including: trusts, investment vehicles, tax saving systems, foundations and donor-advised funds. For them, the structures relate to money under management for philanthropic purposes or legal entities that can be established. Most lawyers and financial advisors seem to do this part quite well.
For clients, though, the discussion of philanthropy implies money to do public good. For most clients, the discussion of the structures isn’t why they want to talk about philanthropy. What philanthropy means to them has to do with the decision to have their money used for purposes to improve the world in some way. Discussions of the vehicles independent of what they want their money to accomplish means, to many of those surveyed, that the advisor isn’t really talking to them about what really matters. Thus, the marked statistical variance.
This blind spot is understandable for two reasons: (1) Most simplistically, a wealth advisor makes money through assets under management and a lawyer makes money from fees. Money out the door for philanthropic giving potentially reduces those assets so there’s an understandable self-interest to focus on the management side; and (2) philanthropic decision making is rarely a core competence of a wealth advisor or a T&E lawyer. Some do have philanthropy as their primary core competence, and, in working with clients, often see how our professional colleagues haven’t had the kinds of discussions about philanthropy that they would value.
Understanding this blind spot would go a long way toward erasing the disconnect. After all, the vast majority of people of wealth never look beyond their key trusted advisors. Therefore, learning more about philanthropy, its practices and the underlying decision making or partnering with philanthropy advisors would make clients more satisfied. Bringing those understandings into the discussions will most assuredly yield more gratifying long-term philanthropic decision making.
Sensitive Practices
The philanthropy-related field has had its own kinds of myopia for a long time, fully independent of the issues of racial, ethnic and economic inequities. Without learning how to see, hear and internalize more sensitive practices first, addressing the current imperative to address systemic matters of DEI will yield little more than tokenism. That would be a lost opportunity and a sad commentary on what many feel is a pivotal moment of opportunity.
Endnotes
1. I’m not a lawyer, and with some very limited exceptions, the ideas and examples I’ve included aren’t legal ones although they can and do involve lawyers. On the whole, the issues I address begin where the law ends and best practices begin. My observations are based on several decades of experience advising and teaching funders, heading a foundation, serving on the boards of numerous others and as a funder myself. This vantage often exposes where other professionals’ blind spots have led to less-than-optimal outcomes in the philanthropy realm.
2. “Diversity, equity and inclusion,” usually referred to by the initials“DEI,” is the widely used contemporary shorthand for redressing racial, gender, economic and ethnic inequities. A number of academics and practitioners have suggested that DEI is missing a key component in the process: “Belonging” is a precondition for full non-tokenistic inclusion. Others believe that the order should be changed—that equity should be the end result, thus “DBIE.” These adaptations may seem pedantic, but if solving endemic and systemic flaws in the American social and economic ecosystem were easy, it might have been done a long time ago. Those who challenge the common terminology want to ensure that businesses, nonprofits, educational institutions and others in the body politic don’t seize on surface palliatives instead of in-depth systemic changes. In this article, for simplicity’s sake, I’ve continued to use “DEI” but with full awareness that’s representative of a more complete and challenging discussion.