Sep 01, 2016

Upturn;

"Data at scale" -- digital information collected, stored and used in ways that are newly feasible -- opens new avenues for philanthropic investment. At the same time, projects that leverage data at scale create new risks that are not addressed by existing regulatory, legal and best practice frameworks. Data-oriented projects funded by major foundations are a natural proving ground for the ethical principles and controls that should guide the ethical treatment of data in the social sector and beyond.This project is an initial effort to map the ways that data at scale may pose risks to philanthropic priorities and beneficiaries, for grantmakers at major foundations, and draws from desk research and unstructured interviews with key individuals involved in the grantmaking enterprise at major U.S. foundations. The resulting report was prepared at the joint request of the MacArthur and Ford Foundations.

Mar 15, 2016

Marsh & McLennan; Oliver Wyman; SeaChange Capital Partners;

Our research, based on the first comprehensive financial analysis of New York's nonprofit sector, found that 10% of the city's nonprofits were insolvent and 40% had virtually no cash reserves. Less than 30% were financially strong. If anything, things are getting harder, given market volatility, the move to value-based payments in health care, and increased costs for real estate and labor.Fortunately, we also discovered that nonprofits can take a few concrete steps to reduce their risk of failure and sustain vital programs:Make risk management an explicit responsibility of the audit and/or finance committee.Develop a risk-tolerance statement, indicating the limits for risk-taking and the willingness to trade short-term impact for longer-term sustainability.Keep a running list of major risks and the likelihood and expected loss for each.Put in place plans for how to maintain service in the event of a financial disaster, or even a "living will" that specifies how programs will be transferred to other providers (or wound down in an orderly fashion) in the event that recovery is not possible.Brief trustees regularly about longer-term trends in the operating environment.Periodically explore the potential benefits of various forms of organizational redesign, such as mergers, acquisitions, joint ventures, partnerships, outsourcing, managed dissolutions, and divestments.Compare financial performance to peers on an annual basis.Develop explicit targets for operating results (margins, months of cash, etc.) and contingency plans if minimum targets are not met.Redouble efforts to build and safeguard a financial cushion or "rainy-day fund," even if doing so forces consideration of difficult programmatic trade-offs.Doing any of these will depend on a functioning partnership between capable management and a critical mass of experienced, educated and engaged board members. Therefore, organizations serious about risk management must work hard to recruit board members with a wide range of experience. They need to ensure ongoing education for both new and existing board members and to empower high-functioning committees. Many organizations, particularly large and complex ones, would also benefit from having an experienced nonprofit executive on their board.

Nov 14, 2014

Center for Strategic Philanthropy and Civil Society at Duke University Sanford School of Public Policy;

By at least one measure, the Kresge Foundation has made the biggest bet, among all national foundations, on the future of Detroit. The question is: What led them to accept the risk?

Dec 20, 2010

Commonwealth Fund;

Details the 2009-10 performance of the fund's investment portfolio, compared with those of peer foundations and leading university endowments; the fund's risk management strategies and assessment; and its budget outlook through 2015.

May 19, 2010

Philanthropy Awareness Initiative;

Presents a case study of the Ford Foundation's success in framing the launch of an initiative as more than a transactional news item and communicating its risk-taking and innovative approach. Identifies media relations strategies and ripple effects.

Nov 03, 2009

New York Foundation;

In 1906, the U.S. economy was in shambles. Banking titan Jacob H.. Schiff, who was to become founding chairman of the New York foundation, issued a stern warning that America would face critical failure if the nation didn't modernize its banking and currency systems. There would be "such a panic," he said, "As will make all previous panics look like child's play." The country did not heed his call, and in 1907, economic conditions worsened, the situation capped by two stock market crashes and a global credit shortage. Depositors lined up to take their money out of the banks. A little more than a hundred years later, the U.S. economy plunged once again. This time, investor Warren Buffett shared his view on the crisis, saying the economy has "fallen off a cliff." At first it might seem paradoxical to celebrate grantmaking amid the current economic conditions. But rich traditions of philanthropy deserve special honor not just in flush times, but also in times of greatest need. And one foundation--established in an economically stressful period of American history, when there were few templates for grantmaking--warrants recognition. Even during the toughest times of the past century, that foundation has stubbornly clung to the ideals upon which it was founded: social justice, grassroots giving, and faith in the resilience of New Yorkers. That foundation is the New York Foundation. This is its story.

Jan 01, 2009

The Foundation Review;

Not all foundation mistakes are the same, but three aspects of philanthropic investing are mistakes that can be avoided. First, foundations mismatch their reach and their resources. They sometimes overreach in the ambition of their investments, thinking they alone can address the complexity and scale of important social issues. Conversely, foundations sometimes underperform by not taking substantial risks on behalf of change and innovation. Second, foundations sometimes ignore the need to generate knowledge, by failing to commit to and invest in evaluation, self-reflection, and communicating lessons to relevant audiences. Third, foundations are sometimes not transparent about their knowledge of what works and what does not.Philanthropy provides high-risk financial resources to help solve messy social problems and improve our overall quality of life. This role involves not only generating social innovations, but also discovering how they can be adopted and spread throughout society. There is no tried-and-true road map for this role, and foundations confront multiple dilemmas in mission, culture, and operational strategies. Hence, philanthropy inevitably makes mistakes.

Oct 01, 2008

FSG;

Discusses in detail the legal aspects of mission-related investing, including federal and state fiduciary laws, foundations' fiduciary responsibility, and emerging practices, and makes recommendations. Includes examples of investments and case studies.

Feb 24, 2008

Annie E. Casey Foundation;

Outlines the rationale behind Casey's program-related investment to stimulate private investment in charter school facilities in Indianapolis. Describes the decision-making process and the issues considered, including fund management and risk mitigation.

Jul 01, 1998

Philanthropy Magazine; Philanthropy Roundtable;

Like the rest of us, foundations don't like to admit mistakes and they like even less to publicize their failures. On the surface, however, there appears to be little reason for foundation reticence about communicating and explaining failure. No matter how philanthropic decisions turn out, the huge endowments of foundations provide an impenetrable shield that allows these privileged institutions to roll along quietly and securely in virtual perpetuity. Nor would foundation's "customers" be easily put off by an occasional gaffe. At most large foundations, the mailbag is always full of new proposals, and a long line of grant applicants is delighted to accept foundation largesse regardless of how well or poorly a foundation has performed in the past.