Democratizing Philanthropy Through Community Foundations – Part 3

Social license graphic

Community foundations often say they want to be “the community’s foundation,” emphasizing an egalitarian hope for their institution’s ability to involve people from all income brackets. Related concepts are democratized philanthropy, community philanthropy, and participatory philanthropy. My first post in this series looked at potential underlying goals and tools. My second post outlined two primary challenges for community foundations in realizing their hope – institutional culture and business model sustainability.

Community foundations measure success in terms of assets under management (AUM), backed by financial the sustainability of their operations. They also measure success by the depth and breadth of their connections to wealthy donors and power brokers – the community’s establishment. If they’re successful in those measures, why change anything?

Why should community foundations re-assess the opportunity to democratize philanthropy? I see at least four related reasons:

  1. Reinforcing community divisions and inequities – Blogger and speaker Vu Le wrote (post one and post two) about the unintended results of the focus on wealthy donors as heroes in solving community problems. His critique is thoughtful, noting that an institutional focus on wealthy donors reduces the value and voice of other people, especially marginalized communities. And, it reinforces the idea that “people who need help” are not like me as a donor, never my equal or partner. Authors Jenny Hodgson and Barry Knight see similar problems in philanthropic funding of international development. They see community philanthropy as a solution while Vu Le crowdsourced a model of community-centric fundraising with similar tenants.

How is your community foundation unintentionally minimalizing the gifts and assets (not just financial) of all residents?

  1. Community divisions breed distrust in the establishment – I’ve written before about declining trust in institutions – including nonprofits – and declining trust in our fellow citizens. Those numbers keep getting worse. Declining trust also shows up in many recent books and articles critical of foundations and wealthy donors, written by both liberals and conservatives. They’re attracting attention outside of the typical philanthropy news outlets. For instance, the political establishment doesn’t automatically trust the nonprofit establishment. More states are passing or considering laws that challenge donor privacy, the use of charitable endowments, and tax deductions favorable to charitable giving.

Is your community foundation taking trust in the nonprofit sector for granted?

  1. Declining trust means losing social legitimacy – I recently learned about “Social License” – “the acceptance or approval continually granted to an organization’s operations or projects by the community and other stakeholders.” This license is both intangible and impermanent and seems especially important to community foundations. Research into social license (see the graphic above) shows that an organization must prove its legitimacy in a community before it can earn credibility. Credibility, in turn, is needed for real trust and approval. And deep trust is, in turn, needed to inspire a community to become emotionally invested in the organization’s future and even advocate for it.

Is your community foundation’s community willing to passionately advocate for your continued existence? Are you getting by with tacit acceptance?

  1. Without trust and legitimacy, the establishment is being bypassed – Recent articles – Benjamin Soskis, Nathan Schneider, and a Fast Company series are examples – note that the rapid rise of crowdfunding sites such as GoFundMe and Kiva is partly due to their direct connection between a donor and recipient. Schneider writes that this human connection is rooted in faith traditions around giving. The authors also write that crowdfunding sites and organizations such as GiveDirectly are attractive to the newer generations of donors because they bypass the philanthropic and government establishment. The sites don’t directly solve the challenges cited in the first reason above, but they often feel more peer-to-peer than typical community foundation options.

 How many donors – especially women and younger generations, the inheritors of the intergenerational transfer of wealth – are bypassing your community foundation for other options?

There are no easy answers to the issues and questions I raised in these posts. But, I think they’re worth honest discussions and debates inside of community foundations and with the communities they wish to serve. Receiving high ratings from a Donor Perception Report misses the mark. And, typical “resident engagement” or “community engagement” models promoted by community foundations don’t go far enough to build a durable Social License or to truly democratize philanthropy. Community foundations interested in those honest conversations will have to challenge their own organizational cultures and their assumptions about measures that create long-term success. I’m looking forward to participating in those discussions when and where I can.

 

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