Anonymous Giving and Transparent Grantmaking
Primary audience – donors and their advisors
Over the summer, I saw a number of articles about the pros and cons of anonymous giving and grantmaking. Some were likely off the radar of donors – a series on HistPhil and an article in the Foundation Review. Some were part of an ongoing public debate about anonymity in Donor-Advised Funds that has spilled out from philanthropy-related news outlets to sources such as the New York Times and The Atlantic.
There are also a rising number of articles about “transparency” in philanthropy, a related topic. Those tended to be written about private foundations which can’t be completely anonymous because their 990-PFs are publicly available. However, the foundations can choose degrees of opacity or transparency about their goals and grantmaking criteria, in publicity about their existence and grant histories, and more. You’ll see two camps on this issue:
- Advocates for donor and funder privacy such as the Philanthropy Roundtable and online publication Philanthropy Daily.
- Trade groups such as Exponent Philanthropy, National Center for Family Philanthropy, and United Philanthropy Forum – all of whom serve family foundations more than individual donor families – who are encouraging more transparent grantmaking and public giving. Their encouragement is partly underwritten by a national funding consortium.
Many of the sources I’ve mentioned are clearly pro- or anti- anonymity or transparency, and decisions about both are conflated with political biases (e.g. liberals critiquing the non-transparent philanthropy of conservatives and vice versa). If you’re looking for fairly unbiased “pro and con” articles for donors, see this article by philanthropic advisor Dawn Franks, this guidance from the For Purpose Law Group, and Peter Frumkin’s book The Essence of Strategic Giving.
Another answer: “it depends”
Families with private foundations may also choose “situationally transparency,” as described by Bob Reid, CEO of the JF Maddox Foundation in his article, Foundation Transparency: Opacity – It’s Complicated. He wrote about family foundations that typically keep a low public profile – e.g. no website, no grant application process or contact with nonprofits, no self-generated publicity. But, they choose to drop those practices when working with a highly-trusted nonprofit that also closely meets their giving goals. Reid wrote that both the foundations and nonprofits believed their collaborative work, off the radar of the public, leading to more flexible, efficient, and creative approaches to problem-solving and community impact.
Donors who establish Donor-Advised Funds have more “it depends” choices than do those who establish private foundations:
- Does the DAF sponsor know the source of the money? They can choose to remain anonymous to the sponsor by giving through a trust that has a generic name and has one of their advisors as point of contact.
- Does the DAF bear our name? They can choose to create a generic name that doesn’t connect to the donor family or company. You’ll see DAF grant checks with names such as “Anonymous Fund #23” or “God’s Grace Fund.”
- Does the grantee know who we are? Many DAF sponsors will allow donors to turn anonymity on and off per grant and/or grantee. That is, the grant check is from the “God’s Grace Fund” but the founding donors tell the grantee about the connection or ask the DAF sponsor to do so.
- Is the grant acknowledged publicly by the DAF sponsor or the grantee? DAF sponsors typically don’t publicly list grants made per DAF and the donors to DAFs often prefer this practice. But a community foundation might ask donors to DAFs to allow publicity for grants made to the foundation’s own strategic initiatives, hoping to incentivize other donors and fund advisors to also give. Donors with a DAF can also advise the DAF sponsor, on a grant-by-grant basis, to instruct a grantee to not publicly acknowledge the grant. To make things messier, when the donors do want publicity, DAF sponsors may have different rules for public attribution of the grant (e.g. the symphony listing in its written program “Jane and John Miller” or “Jane and John Miller Fund” or “Jane and John Miller Fund, a fund of the Big City Community Foundation”).
I’ve worked with donors who were situationally anonymous in their Donor-Advised Funds and I’ve seen family foundations make the choices Reid describes. Ultimately, donors see those and other charitable tools as extensions of their values, hopes and fears, and self-identity – not too different from their self-expression through individual giving. They’re making very personal decisions about which nonprofits to trust with money that is a stand-in for their values and identity.
Levels of trust in nonprofits, in public institutions, and in society as a whole have declined over many years. Donors with charitable tools may need more time and effort than in past generations to build their trust in nonprofits. While I understand nonprofits’ and researchers’ frustrations with opaque or anonymous giving, I’d rather err on giving donors the choices they need to continue being generous, or sometimes even making a significant impact.
What do you think?