Defining The Difference Between Charity And Philanthropy

March 27, 2006       Mark Hrywna      

Within in the next five years, the COF probably will be known as the COP. Steve Gunderson, president and chief executive officer of the Council on Foundations (COF), said there have been enough changes in his first six months on the job without a name change to the Council on Philanthropy. “I think we’re doing enough change…Let’s take this one step at a time. We’ll get there. The mindset’s clearly there.”

Gunderson succeeded Dorothy Ridings this past October as president/CEO of the nonprofit membership association of more than 2,000 grantmaking foundations and corporations. In that time, he’s made several changes within the organization: transforming professional development staff into “philanthropic leadership;” consolidating conference and planning staff; and, bringing all technology staff under one title of management information system.

The entire role of philanthropic leadership will be “to help craft the Council’s role in leading the sector in programmatic leadership, in making a bigger difference than we have in the past,” Gunderson said during a March sit-down with The NonProfit Times at the Council’s Washington, D.C., headquarters.

“We’re trying to re-evaluate all the staff, bring in new people at a different level, significantly upping the experience of our staff, redefining the whole skill set.” Gunderson also is seeking to partner with regional associations, to provide some structural visibility around the country while making the Council a “clearinghouse of information” by creating a state issues coordinator, as part of its government relations effort, to help track what’s going on around the nation.

The former eight-term Republican congressman from Wisconsin also plans on making changes outside the COF’s immediate structure, in the area of membership criteria.

“Anyone engaged in competitive grantmaking ought to be a member,” Gunderson said, “and that’s really the criteria.”

There are organizations significantly engaged in competitive grantmaking that have not been members in the past because of “old 50-percent rules,” where less than 50 percent of their money is going into competitive grantmaking yet they may be doing $50 million a year in grants. “Why do we not have them as a member? It makes no sense,” Gunderson said.

“Anyone engaged in competitive grantmaking can and ought to be a member of the Council on Foundations,” he said. “And that’s really the criteria.”

He also expects to expand the affiliate/associate members, as there are more people becoming philanthropic advisors, who he believes can be helped by the Council.

“We knew one of the first things he needed to do is look at the structure of the organization and see what opportunities to make it more effective,” said Maxwell King, president of The Heinz Endowments and chairman of the council’s search committee.

A graduate of the University of Wisconsin-Madison, Gunderson also served three terms in the Wisconsin state legislature. Prior to joining the Council, he was senior consultant and managing director of the Washington, D.C. office of The Greystone Group, a Michigan-based strategic management and communications consulting firm. The challenges and unique opportunities are what drew Gunderson to the Council post. “I think we are facing bigger challenges about an emerging two-class society today and the problems of that, the haves and have-nots, than in any time in my memory of public service,” he said. “On the other hand, this sector is a growth industry. If I can help guide the movement, it’s the best opportunity of my life.”

The Council’s search committee had become frustrated after interviewing more than a dozen candidates and reviewing 40 or 50 profiles, according to King. No one had exactly the right combination of abilities the committee sought.

Early on, King said, the committee made it clear it didn’t want to emphasize candidates with political experience, but with more organizational experience, whether in the nonprofit or for-profit arena.

In the first interview with Gunderson, King said, the committee found a candidate “who had such a wonderful combination of a strong altruistic, values-driven sensibility and a tremendous energy and passion…for the work that foundations and nonprofits do.” King credits Gunderson’s “tremendous start” in the post to the “combination of high energy, high focus, with great sensitivity and a great commitment to ethics and to strong organizational values.”

There is potential for the Council to be more activist, King said, “to be more of an advocate for the highest values of the nonprofit field.

“We see the Council as being a champion of ethics, good governance, accountability, continuing to be a champion for organizational effectiveness. In other words, results.” Emmett Carson, Ph.D., president and CEO of The Minneapolis Foundation and chair of the Council on Foundations Board of Directors, said that he had several things in mind for a new leader. It was important to have a CEO who had direct, hands-on experience in understanding the workings of Congress while having a protective agenda as well as a proactive agenda for how legislation could strengthen and further work of the foundation community. He also emphasized the need for a new leader to be ready to evolve and change, without a fixed view of the future because “the focus will become less on institutions and more on the values of giving and how to give through different institutions.”

The COF needed “new eyes and a new vision to the internal council structure that had been in place in the last 15 years, and someone who’d come in and take a fresh look” at how departments overlapped, had different visions and serviced members better, he said.

“In each category, Steve has been better than expected,” Carson said, adding that he wouldn’t have expected a former politician to be the top candidate, but Gunderson’s lack of ideological perspective on matters “is very refreshing.”

In the past, COF has focused “too much on the mechanics of how we do our work, and not the importance of why we do it, and how it impacts democratic life in America,” Carson said. “Steve has a keen notion that people care about us – the media, government and general public – because of what we do.”

Evidenced by the work surrounding Hurricane Katrina and how foundations might respond to the avian bird flu, as well as his leadership in ethics and accountability, Carson said Gunderson is leading “with what we’re doing” and not on the “mechanics of how we do so much.”

“I expect all that to increase as he becomes more familiar with membership, their needs, and puts his own mark and stamp of leadership on the direction of the Council,” Carson said.

Upon taking the position, Gunderson said a Washington, D.C. colleague described his job as more important than that of Congress, because of the paralysis and polarization on The Hill.

“Government’s in retreat, whether you like that or not, on domestic issues,” Gunderson said. “That retreat has no relationship to the needs of society.

“I think when you look at the needs of society and you look at the federal deficit, I don’t think we oughta be in the business of putting philanthropy out of business because I think we’re going to need a significantly greater participation from philanthropy in addressing society’s needs in the future,” he said.

Foundations are willing to join the Council when they organize, Gunderson said, but “philanthropic leadership and philanthropic citizenship require their continued participation.” And with increased scrutiny and government oversight, he said, “just for them to continue to have a positive environment in which they can produce philanthropy and to continue to engage in it requires their participation.”

The vision and voice of philanthropy

Gunderson sees the Council as “the vision and the voice of philanthropy.” “We have to help individual players understand their context in a much bigger philanthropic world, in society. We can help give them the vision of all that’s happening and how they fit into that.

“I really see our role as the vision and voice at the national and global level for philanthropy,” Gunderson said. But more specifically, he makes sure to indicate it’s the voice of the resources side of the nonprofit sector. “Our bailiwick is effective grantmaking,” he said, adding that Independent Sector, and other organizations, must take care of the delivery side of the sector.

Once Congress gets past charitable reform, Gunderson expects governance to be the next big issue for government. “We never again want to be in a position where we react to what The Hill proposes. We want to act, we want to lead.”

He anticipates introduction of governance legislation during the next session of Congress. “You will see us come up with specific recommendations for what ought to be appropriate government role in governance.” And if it’s not government’s place to get involved, the COF will not hesitate to jump in.

“One of the primary responsibilities is to grow the environment that will allow the growth of philanthropy. That means, one, having public confidence in investing in philanthropy, and two, make sure government regulation is at a minimum.”

Part of the Council’s membership statement includes an ethical statement, which gives COF the ability to step in where there has been egregious misconduct and take steps, Gunderson said. In the case of the J. Paul Getty Foundation, the council took “bold action” publicly, he said, not to publicly reprimand a member but “to address their problems and bring them back into good standing in the family of philanthropic membership.”

The Getty Foundation was placed on probation for 60 days by the Council pending the receipt of information concerning charges of misconduct against the trust and its president and chief executive officer. Allegations included excessive spending and perks, use of foundation assets for personal benefit, a suspect real estate deal, and potential self-dealing. Getty’s status has since been restored.

Ethics and effectiveness are two barometers that will determine the success of the sector in the future, he said. With major tax reform looming in the coming years, Gunderson said the sector also must develop a science for calculating the public’s return and benefit on its investment in the sector to be prepared for that debate, when it happens in three to five years.

 “Foundations have operated on a sense of tradition and a pace appropriate to tradition,” Gunderson said. “We’re trying to replace the word tradition with a sense of urgency. Get people to understand the process has to happen and it has to happen quickly.”

Generational transfer of assets

The unprecedented generational transfer of assets in the coming years is the Council’s biggest challenge.

“We will grow in size by default just because of the asset level,” Gunderson said. “Will we grow significantly in size, enabling us to grow significantly in service will depend on how we define philanthropy and how we communicate with that generation and convince them that investing in philanthropy makes sense,” he said.

“We’re going to be pretty aggressive in the area of communications that will allow us to hopefully reach that general public. We also will be aggressive in the issue of conduct and self-regulation of our members so there is public trust that people will want to be part of this,” said Gunderson.

Most Americans don’t know what philanthropy is, the difference between philanthropy and charity, or what a foundation is, Gunderson said. The Council must “design a multitude of different communication vehicles appropriate to the sector, because frankly, one public service campaign will not do it.”

Diversity within the sector, Gunderson said, “is every definition of diversity,” whether it’s diversity in ideology, experience, or ethnicity.

“You can’t look at America and look at the dramatic growth of the African-American and Hispanic communities without understanding the importance of addressing their specific needs.”

The council will be reaching out to “growth constituencies; it’s a part of leadership and investing in the future.

“The Hispanic community will become a major part of the philanthropic community in the United States in the next few years, and we will either show them the Council is an appropriate place for them to locate as a membership service organization or they will go somewhere else.”

The Council’s Latin American initiative will serve as a model for future outreach to other constituencies.

“We have to become engaged not just in American philanthropy but we have to become engaged universally, around the world,” Gunderson said, and in the next five years the Council will increase its presence in participation in programs and leadership all over the world.   NPT