May 06, 2009

Thoughts from Day Two of Council on Foundations

by Tim Ogden

Day Two of the Council on Foundations annual conference featured two great sessions that we’ll turn into articles soon. In each case, the presenters had useful, substantive and thought-provoking things to say. Of course, there were a couple of not-so-great sessions as well.

The first session that really caught my attention focused on philanthropy’s role in ensuring markets work in low-income neighborhoods. A little over a year ago, I wrote a post on “emerging opportunities” calling out the possibility of bringing low-cost, high-quality supermarkets into poor neighborhoods. Apparently I was already behind the times even then—an organization called The Reinvestment Fund has been doing exactly that, using investment capital, in my own backyard for several years. Panelist Jeremy Nowak had plenty of things to say about the challenge of integrating philanthropy and for-profit investment, with this quote perhaps the most telling: “We couldn’t deal with foundations because the foundations that we talked to wanted to be the customer. We needed to serve actual customers.“ A similar sentiment was expressed by Moira Carlstedt, president of the Indianapolis Neighborhood Housing Partnership (which provides market-rate mortgages for low-income residents of Indianapolis who even during the bubble couldn’t get credit) who noted that her organization had turned down several program-related investments from foundations because the foundations had too many stipulations for the investment to be worth it. Another soundbite of Jeremy’s worth repeating: “Quick, scale and philanthropy are mutually exclusive.“ The very clear message from the session was that there are lots of opportunities out there for philanthropy to help nudge markets in the right direction, but philanthropists and foundations have a lot to learn before they can capitalize (pun intended) on those opportunities. We’ll be interviewing several of the panelists in the next few weeks so we can provide a fuller picture of what they had to say.

The other terrific, and disappointing, session was on slavery and trafficking. Terrific because the presenters brought passion and knowledge in equal parts to the session. Disappointing because there were so few people there to see it—it was the most sparsely attended session I saw at the conference. All the presenters did a great job of illustrating how easy it is to overlook slavery and trafficking even though it is pervasive—a charge I personally and Philanthropy Action will both plead guilty to but hope to rectify. We’ll be publishing more content from this session in the coming weeks but for now I’ll provide two pointers to what seem to be a high-impact, low-cost opportunities highlighted in the session. Julia Ormond, founder of ASSET, noted that the State of Texas recently issued a regulation requiring all outlets holding a liquor license to post the National Trafficking Hotline number. According to Ormond, now half of the calls to the hotline originate in Texas. A little funding to help speed the adoption of a similar regulation in every state would seem to be a great opportunity to have a big impact on trafficking. Kevin Bales, founder of Free the Slaves, pointed out that while similar numbers of people in the US are murdered and trafficked each year (an estimated 17,000), there are 85,000 trained, full-time homicide detectives but less than 50 trained, full-time trafficking experts in police departments around the country.

Now for some sour notes. First, continuing the trend from the first day, the lunch plenary speaker was Melody Barnes, Director of the White House Domestic Policy Council. Ms. Barnes spent some time discussing the Office of Social Innovation and the $50 million social entrepreneurship fund recently announced by the administration. Ms. Barnes claims that a new bureaucracy is not being built, but given the attention this initiative is going to get, one wonders how the OSI can distribute the funds without lots of bureaucracy. It left me wondering why the administration didn’t just inject the money, TARP-style, into ShoreBank and the Nonprofit Finance Fund (for instance) and let people who have acquired some practical knowledge of social investment put the money to work. The session that seemed to be responsible for the small crowd at the Slavery and Trafficking session was a “discussion” of the National Center for Responsive Philanthropy’s report “Philanthropy At Its Best” which criticizes foundations for not meeting NCRP’s definition of good philanthropy (which includes giving at least 50 percent of funds to “marginalized groups” and providing general operating support rather than restricted funds). The comments and viewpoints expressed were exactly what anyone marginally familiar with the sector over the last ten years could have predicted.