Democratizing Philanthropy Through Community Foundations – Part 2

In my last post, I looked at three definitions of the phrase democratizing philanthropy:  1) expanding and connecting the base, 2) expanding access to the establishment, and 3) redistributing philanthropic power and ownership. All three definitions could describe a community foundation’s hope to be “the community’s foundation.”

There are two related terms worth noting, both used more often outside of the U.S.:

• Community philanthropy – In a 2012 report for the Mott Foundation, author Barry Knight described community philanthropy as a sense of “local people helping each other, by sharing resources for the common good.” He also noted that an essential quality is “reciprocity based on a principle of solidarity, which are qualities that build an inclusive and equitable society.” Articles by the Global Fund for Community Foundations tie community philanthropy to all three definitions of democratizing philanthropy. The graphic above is from the Fund’s 2016 Global Summit on Community Philanthropy which had the hashtag #ShiftThePower.
• Participatory philanthropy – Consultant Cynthia Gibson reminded me of this term. It is rooted in grassroots activism and describes a variety of ways that foundations actively engage beneficiaries of services, or a general group of residents, in decisions about funding. Reports by Lani Evans and The Lafayette Practice provide helpful insights.

Challenges in democratizing philanthropy

The three terms – democratizing philanthropy, participatory philanthropy, and community philanthropy – describe the work of a bigger set of organizations than community foundations. Conversely, at least in the U.S., not all community foundations are strong practitioners of the terms. Why not?

The Source Codes of Foundation Culture report by Grantmakers for Effective Organizations provides an important clue. Its authors write that three institutions have historically shaped how foundations in the U.S. think and act – banks, universities, and larger for-profit corporations. Those institutions prize hierarchy, degreed expertise, professional analyses, and detailed processes. Their cultures help community foundation board and staff members feel more comfortable stewarding charitable assets. But their cultures definitely aren’t naturally built for democratized, inclusive philanthropy.

The cultural source codes for U.S.-based community foundations also include a mandate to build permanent endowments. This mandate is core to the National Standards for U.S. Community Foundations accreditation program. Endowment building isn’t core to the broader definitions of community philanthropy and participatory philanthropy. And once people are in charge of stewarding endowments, it isn’t natural to give up power over them. Psychology and behavioral economics research shows that we are highly susceptible to the status quo bias and endowment effect, reinforcing preferences for institutional control.

Those institutional source codes also appear to reinforce an echo chamber of institutional practices and viewpoints. Research for the Hewlett Foundation in 2017 showed that foundation staff and board members see their philanthropic peers as their most trusted and primary source for new knowledge. And, those staff and board members still don’t reflect the racial and ethnic diversity of the communities they serve.

Former Humboldt Area Foundation executive director Peter Pennekamp wrote about these challenges in Philanthropy and the Regeneration of Community Democracy in 2013:

“The most intractable obstacle to the proposition that modern, organized philanthropy can become a lively actor in a vibrant democracy is the culture-laden belief, often unconscious but seldom questioned, that possession of greater material wealth or professional expertise is necessarily accompanied by superior skills to make things better no matter what the circumstance. It’s simply assumed that people with these assets know more. This top-down cultural presumption extends to narrow beliefs about the identification, measurement, and evaluation of effective philanthropic practice.”

The other big clue is in community foundation business models. In the early 2000’s, community foundations more deeply studied their business models and the means to achieve financial sustainability. They were urged to ensure their activities and components funds (such as scholarships and DAFs) paid for themselves. The activities of democratizing philanthropy didn’t have sustainable revenue sources, so were often eliminated. Strategic priorities shifted to work with wealthy donors and their advisors, work that had a shorter-term financial ROI than democratizing philanthropy. As a result, the overall field of community foundations became more financially sustainable.

Even advocates of community philanthropy and participatory philanthropy admit the work is hard. It can be slower, fraught with community politics, and demanding of the limited time and energy of all participants. Community foundations still working toward financial sustainability just may not have the staff capacity or expertise.

Why re-assess the opportunity?

A community foundation is successful if the power brokers and establishment of the community value it and donate to it, right? Doesn’t financial sustainability and quality institutional management benefit the community in the long run? If it ain’t broke, why fix it? That’s the subject of the next post.

In the meantime, have I missed other reasons why U.S. community foundations don’t actively democratize philanthropy?