November 29, 2005
by Neal B. Freeman
The following essay was prepared for a discussion on bequests and legacies—part of a series of six discussions entitled "The Dialogues on Civic Philanthropy: Perfecting Our Grants" (2005-2006). By clicking the links to the right, you can access more information on this series, learn about the Dialogues project as a whole, read other prepared essays, and download discussion transcripts.
THE EROSION over time of donor rights and values is a problem that needs no introduction to the philanthropic community. Indeed, that problem has become the dog-bites-man story of contemporary philanthropy. No longer merely a “businessman’s risk,” it seems a virtual certainty that, absent preventative measures, foundation executives will slip the bonds of moral and, in egregious cases, legal obligation to the donor.
In our counseling work at Foundation Management Institute (FMI), we begin by asking the prospective donor, “Who do you want to be in one hundred years?” It will come as no small surprise that the answer is never, “I wish to be known down through the years as a generous supporter of trendy nonprofit enthusiasms, many of them an anathema to my own personal value system.” Prospective donors never answer that way, as I say, but few major donors have managed to escape that fate. (A participant in a recent FMI roundtable announced his intention to name the family foundation after his worst enemy. I think he was kidding.)
How did we come to this pass, where so much seems to have slipped between cup and lip—where the donor’s expectation is so frequently frustrated by the professional’s remediation. The first is the collapse of trusteeship. Time was, only a few decades ago, when in accepting a Board appointment one solemnly acknowledged the donor’s declaration of trust in one’s stewardship. That trust, if well placed, could seal arrangements for a lifetime, and well beyond. Too often in the foundation world today the trust agreement does not so much seal arrangements as incite a search for the elastic phrase and the inflatable loophole.
The other explanation is one of structural displacement. Consider the arc of philanthropic history. It begins with the giving and receiving of a discrete benefaction, a two-party transaction in which one principal, the Have, interacts personally with the other principal, the Have-not. This uncluttered relationship became the norm, surviving across the millennia, with resource squared up directly with need. Then, a half-century ago, as the philanthropic process became more complex and elaborately papered, the nonprofit executive arrived, mediating between donor and grantee. Philanthropy was now a three-party transaction. Over time, and quite predictably, power seeped away from both the increasingly detached donor and the increasingly dependent grantee into the hands of the fully engaged “professional” in the middle. By the last decade of the twentieth century, a transfer of power had been effected from donor to manager, from principal to middleman.
However plum their new position might be, foundation managers could not help but notice that it was situated precariously. The foundation mangers, along with the rest of us, were entering the frictionless era of deregulation and (somewhat later) the Internet, in which circumstances the middleman’s role seemed almost certain to be radically compressed. One had only to witness a Wall Street order-taker facing off against a discount broker. Or a bookstore owner hearing the footsteps of Amazon. Or a travel agent fighting off the airline Web sites—if one could still find a travel agent at all. Ev
Neal B. Freeman is chairman of the Foundation Management Institute (FMI).
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