Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

April 28, 2008

Foundations can be more active shareholders

Private foundations in the U.S. are missing a huge opportunity to put their money where their mission is.

With endowments totaling over $600 billion, much it invested in publicly-held companies, most of those foundations focus more attention on the five percent of their assets they pay out in grants than on the investment of all their assets.

And research shows most foundations delegate the voting of their proxies to investment managers, and that those managers typically vote those proxies based on recommendations of the management of the companies in which the foundations hold stock.

But a growing number of foundations are taking a more active approach to their role as shareholders, aiming to align their proxy voting with their philanthropic mission.

Building on their previous publication, “Unlocking the Power of the Proxy,” As You Sow and Rockefeller Philanthropy Advisors now have published “Proxy Season Preview 2008” to inform proxy voting by foundations.

As the two groups say, by failing to take a more active shareholder role, “foundations miss the opportunity to influence corporate policy, and may unknowingly support actions that conflict with their own guiding principles.”

The new publication explains social and governance resolutions being considered by corporations; looks at key issues and trends; provides updates on votes in recent years on specific issues; identifies key investors and organizations filing proxy resolutions; lists companies that have scheduled shareholder votes; and lists resources and reports to help foundations learn about the activities of peer organizations.

Foundations control a lot of stock in publicly-held companies and, through their proxy voting, can help shape the way those companies do business.

By investing more time and attention to their role as shareholders, foundations can make a bigger impact on the critical issues they spend so much time and attention trying to address through their grantmaking.

April 21, 2008

Nonprofits must lead for change

Change is essential, and tough.

Working at the heart of constant and rapid change, nonprofits themselves are in the change business.

Their job is to address the symptoms and causes of urgent social problems.

To make change happen, nonprofits must change the way they do business, both inside their own organizations and with partners whose collaboration is needed for social progress.

Ultimately, change depends on leadership, which is rare in a marketplace in which fear, self-interest, competition and a preoccupation with management techniques drive organizations.

Effective leaders, in contrast, lead by inspiring and engaging the vision, leadership and collaboration of co-workers in their organizations and partners in their communities, says Anita Brown-Graham, director of the Institute for Emerging Issues at North Carolina State University and a trustee of the Z. Smith Reynolds Foundation in Winston-Salem.

Speaking at a Lunch ‘n’ Learn workshop in Charlotte sponsored by the Philanthropy Journal, Brown-Graham urged nonprofit leaders to work to shape change rather than waiting for change to shape them.

Citing Jim Collins’ “Good to Great: Why Some Companies Make the Leap…and Others Don’t,” she said what distinguishes great companies from good ones is a corporate culture of vision and innovation, rather than simply a visionary CEO.

That kind of leadership is critical to address the social problems we face, and requires a new way of thinking about leading.

Rooted in their passion, Brown-Graham says, leaders create a sense of urgency among the people who need to be involved in making change happen.

Those leaders build a team with the “credibility, skills, connections and formal authority” essential for guiding change, she says, and that team must operate with “trust and emotional commitment.”

For the team to be effective, leaders must show they mean business through action not words, and must repeat the story of the vision and process as often as they need to.

Members of the team must truly be part of change initiatives, and must be able to see, through short-term “wins,” that they are having an impact and that the larger goal is within reach.

And faced with a culture of resistance and fear, Brown-Graham says, leaders must continually push for change and nurture the new culture they are trying to create, using existing tools, such as promotions and incentives, to engage employees and organizational partners.

And even when wins occur, she says, leaders must be vigilant about making sure changes “stick” and are not erased by backsliding into the old way of doing business.

Social progress depends on change, which depends on leaders with the vision and courage to create a culture in their organizations and communities that will inspire and engage true partners in shaping change.

April 14, 2008

Tapping philanthropy’s true value

Consumed with managing their survival in what can be a brutally competitive charitable marketplace, nonprofits are failing to lead or thrive.

Nonprofits should be addressing urgent needs, attacking their roots and brokering change by unleashing the power of giving and collaboration.

Instead, while parading as servant leaders and team players, many nonprofits practice bare-knuckle brawling, clawing for turf and knee-capping any and all rivals or potential rivals.

Enabling the failure of leadership that infects the nonprofit world are foundations that, while preaching innovation and collaboration, continue to reward nonprofits that talk a great game about the need for collaborating but in practice lack the vision and courage to truly work together to make change happen.

Nonprofits and foundations need to change the way they do business.

Facing an exodus of nonprofit executives who are overworked, underpaid, starved of board support and opportunities for career advancement, and increasingly nearing retirement, the charitable world must make a massive investment in developing existing leaders and identifying, recruiting and cultivating new leaders.

Nonprofits need leaders who not only can manage their organizations effectively but also can provide the vision to see ahead, seeing the crucial connection between organizational success and the partnerships needed to address larger social problems.

Which nonprofits, and which nonprofit leaders, are willing to leave their egos and organizational power-grubbing out of the search for shared solutions to the urgent problems our communities face?

And which nonprofits have the vision and courage to create partnerships in which they and all their partners truly are willing to make the sacrifices and build the strategic alliances and market-driven solutions critical to making our communities better places to live and work?

In the charitable marketplace, those with wealth and power are quick to preach the gospel of collaboration but slow to give up any of that wealth and power in the interest of working together to address common problems.

Fixing what is wrong in our communities will require fixing what is wrong in the charitable marketplace, and that will take leaders honest enough and brave enough to collaborate productively while competing vigorously, all the while staying true to the value and power both of collaboration and competition.

April 7, 2008

Connecting with PJ

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