On December 12, 2019, Rockefeller Philanthropy Advisors (RPA) gathered philanthropy leaders, board members and clients for a discussion of the role of philanthropy in today’s society. The conversation, focused on “Philanthropy Under Fire,” built on concepts explored in RPA’s recent publication, Social Compact in a Changing World. Panelists included:

• Valerie Rockefeller, Chair, Rockefeller Brothers Fund; RPA Board Member
• Ray Madoff, Professor, Boston College Law School; Director, Forum on Philanthropy and the Public Good
• Melvin Galloway, Chief Operating Officer, Planned Parenthood, Federation of America
• John Bae, Program Director, Criminal Justice Reform Public Welfare Foundation

The conversation, which ranged from the role of power and privilege in philanthropy and resource allocation in the public interest to accountability and voices involved in decision making, is below, edited for clarity and length.

Melissa Berman: There are a number of key questions circulating around the philanthropic community about the degree of influence individual and institutional philanthropists have over the public sphere. These questions encompass a set of challenging concepts that have relatively few clear and crisp answers but are important to helping the field progress. Questions such as: Should people who have enormous amounts of power and privilege be able to use philanthropy in a way that may enhance their power or privilege? Who gets to decide what the public interest is? How can that be kept from being political? And in terms of transparency, if philanthropy is accountable to the public, if these are resources for the public good, who gets to decide whether philanthropy is doing a good job or not? How are the voices of the general public meant to be heard in this conversation? These are a few of the questions we will touch on today.

[to Valerie Rockefeller]: What’s it like in the current climate to carry the weight of the Rockefeller family name and to be visible not just as an individual, but also as the chair of the Rockefeller Brothers Fund? How does that affect your sense of how you can carry out your own personal mission?

Valerie Rockefeller: Valerie Rockefeller: From a philanthropic point of view, the challenge of scrutiny is also an opportunity for greater transparency because if you’re going to be under scrutiny then you think, “Great, this is a good chance for us to ‘up our game’in what we’re doing and to be more proactive in sharing the message.” So, you always have to be humble and make sure that you’re putting your grantees and your work first. But as long as you’re being observed more closely, you can say, “This isn’t about us. Yes, the money is concentrated in families and endowments. And this is not how it should be, or how it will be when we achieve social justice,” which all of us in this room are working towards. We hope there won’t always be this concentration of wealth. But in the meantime, let’s use the money for systems change. Ideally, philanthropy should be risk capital for programs that would be scaled by government and others. So, be proud of your work, be as clear as possible about your goals, and seek the opinion of others without losing sense of your own strategic vision.

Melissa Berman [to Ray Madoff]: When you think about the role of philanthropy in the public good, can private philanthropy ever be truly accountable in the kind of system that we operate in? And what are the mechanisms that might strengthen accountability?

Ray Madoff: When we talk about accountability and philanthropy, we have to recognize that it’s a different type of accountability. The whole strength of philanthropy is that individuals are deciding that the way they think the world should be bettered is by taking a particular path. And maybe that path is working on curing a disease, or maybe it’s promoting Irish step dancing and that is ok. People have different visions, and we can’t have accountability by requiring the use of philanthropic dollars for something that somebody else decides is the best way. However, I think that the sector could be accountable to making sure that, whatever the cause is, funds are actually committed to it. Our current rules don’t adequately do that. We provide all these benefits upfront for money to be put aside for future charitable giving, and virtually no requirements at all for the money to ever get out. The rules that we point to—like the five percent payout rule—do not actually operate to produce the desired result. What I’d like to see is for the sector that often prides itself on policing itself to actually police itself and to say, “You know what? Tax reform is really necessary.”

Melissa Berman [to Melvin Galloway]: Planned Parenthood is sort of in the cauldron right now. You’re in the midst of very vicious attacks that are attempts to delegitimize the organization and its work. How do you respond to this as an institution, when what used to be a fact is now potentially an alternative fact? And how does this environment test your social compact and your resilience?

Melvin Galloway: We are all in a cauldron right now, which is sad to say. The attacks against Planned Parenthood are not only about Planned Parenthood; they are attacks on personal rights. At Planned Parenthood, mission is the first and foremost thing that drives people to go to work every day. As we look ahead, we are not just thinking about our federation, but also about our role in supporting other movements and organizations. So front and center for us right now is what type of collective security does the broader movement need? We’re driving towards that question.

Melissa Berman [to John Bae]: It’s wonderful to hear about your organization’s commitment to criminal justice reform, which is an area that needs more sustained support. When you think about the Public Welfare Foundation’s belief that good ideas bubble up from the community in light of your own perspective as somebody who worked in community, how do you reconcile the power dynamic, and how do you make that commitment authentic?

John Bae: Historically we’ve seen that successful movements put at the center those who are most impacted by the issue. So, with that philosophy in mind as we engage partners, grantees and different organizations in the work, we focus on open engagement, building trust, and open communication. We don’t tokenize people, especially those directly impacted by the issue. And we approach the issues and people with humility and recognize that we are not the experts. For example, I recently called a meeting with different organizations and partners to figure out what our investment plan could be for the next four or five years. I had a date, a time, an agenda–everything was set. And then a partner called me and said, “This is really uncomfortable, but we don’t want you to come.” I was like, “Whoa, really?” I was kind of shocked. Then she told me, “If you have a funder in the room, it disrupts the dynamics. There can be a bit of posturing, and you’re not going to get the genuine conversation that’s needed for you to come up with your plan.” After hearing that, we took a step back, and adjusted our approach.

Melissa Berman: What is the best advice you could give someone who is trying to understand how to answer the current critiques of philanthropy?

Valerie Rockefeller: Tell your personal story to develop empathy. And I also would also say turn to the arts because that is how we end up communicating around these issues in a way that kind of level sets us. One other point I will add is back on the transparency piece and this sort of building credibility piece. The more you can share about what you’re doing, the better.

Ray Madoff: Taxes really matter, yet funders rarely want to pay attention to them because they’re seen as boring, complicated, and not very sexy. Still, they very much shape behavior. And if funders, in particular, sit on the sidelines when they know there are problems with the tax system, they are doing a disservice to all of their grantees. Because nonprofits are deeply hurt by our current system in lots of different ways. We all go to a lot of meetings where funders talk about the importance of asking the tough questions, but many of the tough questions never actually get asked because they are about taxes.

Melvin Galloway: Achieving impact is as much about building capacity as it is about achieving objectives. What I see, having been on both sides, is that you may have funding for a specific project. But the capacity to actually deliver or sustain that project is not there.

John Bae: Melvin Galloway: Achieving impact is as much about building capacity as it is about achieving objectives. What I see, having been on both sides [of operating and funder organizations], is that you may have funding for a specific project, but if capacity to actually deliver or sustain that project is not there, it is detrimental to long term success.

Audience Member: How can we encourage people to not take advantage of tax loopholes?

Ray Madoff: It’s not realistic to ask people to not take advantage of tax loopholes; that’s never going to happen. We need to close the loopholes. We also need to adopt fairer policies that counter our current system that overburdens wages (which is subject to high taxes and withholding) and under burdens funds received by inheritances, gifts, or capital appreciation. It is not a coincidence that these are the ways the wealthiest among us typically get their money.

Audience Member: Should some [philanthropic] organizations have term limits for staff?

Melvin Galloway: Every organization is better off with a healthy turnover in staff. That doesn’t mean every two, three or ten years, but there is something about being able to break strategic frames in an organization, and figure out where you want to go next. However, at Planned Parenthood we have litigators that work across the country in state fights who have been there for 30 years. They have the kind of knowledge that you can’t just pick up, buy, or replace. There is a balance that needs to be struck.

[this is not me, I don’t remember who said it]

If there are people who have come to the point where they think that the foundation’s money is really their money, or if they’re impervious to new ideas, then their management should either help them develop a broader perspective or help them out the door.

Audience Member: Are Rockefeller institutions with Rockefeller family trustees credible messengers on tax policy reform, especially with respect to philanthropy and the tax benefits there? Also, what are the highest priority tax reforms that you would put on the table?

Ray Madoff: The Rockefellers are the perfect leaders for tax policy reform. Who better to speak for philanthropic reform than caring philanthropists that are interested in philanthropy and how it operates in society? Nonprofits really can’t advocate for themselves because they don’t want to expend their political capital on taking a stance that has the potential to alienate their biggest donors. So, if not the Rockefellers, it’s left to groups that want to pursue more power for donors, like the Alliance for Charitable Reform, among others. I apologize if I’ve offended anyone here who is a part of any of these groups

I would suggest that the highest priority tax reforms are those that ensure that private foundations and donor advised funds are incentivized or required to spend their assets on charitable ends within a reasonable period of time. Current rules are not adequately addressing this.

For example, under current rules, private foundations can meet their payout requirement by paying salaries and travel expenses for family members. This is not a problem with the large foundations, but is more likely to be a problem for the 100,000+ foundations with assets of 10 million dollars or less. This is corrosive to the system, and should be a high priority tax reform item.

In addition, I think it’s a problem that private foundations are able to meet their payout requirements by giving to donor advised funds. We should either have a payout requirement or not have a payout requirement, but we should not have a payout requirement that is so easily avoided.

Finally, I think we need to address donor-advised funds. It is poor policy to provide upfront tax benefits and not adopt any mechanism or requirement that the tax-benefitted funds ever be committed to charitable use.

Audience Member: Do the differing values of a potential client or donor affect how you engage? Would you accept funds or forge a partnership with someone who has divergent values from your organization?”

Melvin Galloway: The way we work is by building relationships with our donors over time, so values are super important to us. There are instances where the values are totally off, and we don’t accept those funds. We are also super fortunate to have a broad base of support among grassroots level donors.

Audience Member: Some of the bigger boards that I’m on have come out with a value statement that they have worked very hard on and are proud of. It’s a statement that gives you cover legally, and there are a lot of reasons to have it. But the lines keep changing. I think every non-profit question, “Whose money do I take? Do I take sugar money? And also you might take it today. But what’s going to happen ten years from now?” I was with somebody yesterday who said, “So, let me understand this. If my grandchildren do something evil, my name will be erased from programs that I’ve started? I said, “That’s a really good possibility.” Everyone is having trouble trying to figure out what the line is. It’s very easy to say “the values of the organization.” But what does that really mean? It changes. The lines change. It’s a different world now than it was five years ago, then it will be five years from now.

Audience Member: Can anyone tell me about the history of philanthropy and the way it’s been under attack over time? I don’t really see taxes as the greatest use of all money. It doesn’t allow you to question your own system. There really is a role for philanthropy to play in making society more fair and equitable, for taking risk, or making investments for the future that will help our society be its very best.

Valerie Rockefeller: The role of philanthropy is to raise voices in society and to knit together the social fabric that does not exist from the US government. We’re not trying to replace government, we’re just trying to fill in some gaps and show different ways of making our democracy work better.

Audience Member: I would say that my biggest criticism of philanthropy is how little it has played to its potential. That it really hasn’t punched above its weight. It hasn’t used the hyper agency that it has. It hasn’t taken the risks that it could have taken. I think if philanthropy did play that role, it would be attacked a lot more. But it would also have a lot more support from the people who it’s backing. And so is this ongoing criticism actually going to change philanthropy and encourage more boldness? Or is it going to get everyone to cower back in their shells and be even less bold than before

Valerie Rockefeller: I think there has been more boldness in sustainable investing. Risk capital is the sweet spot for philanthropy. When we [the Rockefeller Brothers Fund]  announced that we were divesting from fossil fuels, there were 53 billion dollars in assets under management that pledged to divest, and now there are over 12 trillion dollars five years later. This was a whole movement involved in the global divest and best movement, including faith communities, towns, individuals, universities, and philanthropists. The biggest lesson emerging from this movement is to be brave, but also clear and inclusive about what you’re doing. And if you fail, be willing to try again.

 

 

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