April 2008

Dear Friends and Colleagues:

2008 is turning into an interesting and challenging year for philanthropy. Foundation accountability and transparency continue to be hot topics. I’ll talk about some of the big pressing issues a little later in this letter. But, to begin, I’m pleased to report that the Walter and Elise Haas Fund has taken concrete steps to increase our own transparency and accountability.

First, we engaged the Center for Effective Philanthropy (CEP) last year to undertake an anonymous survey of the Fund’s 2006 grantees. We sought—and received—frank feedback on our grantmaking practices. The results of CEP’s Grantee Perception Report are now available on-line. The board and staff were very pleased to know that the values that we believe guide our philanthropic work are, indeed, those experienced by our grantees.

Second, the trustees have removed the Fund’s administrative costs from our payout calculations for 2008. The Fund will provide a full 5% payout for grants, separating the resources available for administration and grantmaking. While many foundations consider, for sound reasons, administrative costs to be grant related, the allowance of administrative costs in calculating grant payouts has led to some confusion about and mistrust of foundation expenditures. Separating the two protects the grants budget from inflation-related administrative costs, while providing more transparency to our colleagues, grantees, and community.

The Fund calculates its payout based on a three-year average of the value of its portfolio.  As of the end of 2007, that value was approximately $246 million. (The trustees use a 3 year average to soften any major changes in valuation on a year to year basis.) Thus our 2008 grantmaking budget is pegged at just over $12 million, inclusive of prior multi-year commitments.

Also, I want to use this opportunity to address a few of the broader issues of foundation accountability, particularly in regards to the California state legislation, Assembly Bill 624, now under consideration. This state bill would require foundations of $250 million or more to report yearly, and in detail, grants to organizations specifically serving ethnic minority, LGBT, and other underrepresented communities; grants to organizations at which 50% of the staff or board are ethnic minorities; grants primarily serving low-income communities; the racial and gender composition of the foundation’s board and staff; and the amount of administrative funds being contracted to businesses owned by ethnic minorities.

Whether or not AB624 passes, it signifies the new attention being paid to philanthropic practice, and offers some important insights. On the one hand, the legislation reflects philanthropy’s very mixed track record on diversity. For some foundations, including ours, diversity is an explicit value and is implicit in much of our grantmaking (though it has not been our practice to collect the level of data required by AB624). On the other hand, the legislation also reflects philanthropy’s lack of attention, as a sector, to building relationships with elected officials and administrators, and these officials’ lack of understanding of the role of philanthropy in society.

From my perspective—and one that I have also brought to Northern California Grantmakers in my role as board chair—the challenge ahead, regardless of the outcome of this specific legislation, is to bring the issues of diversity and racial equity to the forefront, examine and share best practices of data collection and reporting, and seek a deeper understanding of the relationship between diversity and effective grantmaking. At the same time, individually and collectively, foundations need to begin the slow, patient work of educating legislators and other government officials so that the body politic and the public have a greater appreciation of the range of foundation types and strategies and the value foundations bring to our communities and the broader society.

I look forward to continuing to share my thoughts and engaging in this important discussion as it unfolds over the next several weeks, months, and years ahead.

Respectfully yours,

Pamela H. David
Executive Director