Who rules philanthropy?
By: Marc Gunther
Tags: Race, Racism, Nonprofit, Philanthropy

Who rules philanthropy?

White people, mostly.

The board of directors of Margaret A. Cargill Philanthropies oversees more than $7 billion in assets

The Margaret A. Cargill Philanthropies, which consists of two foundations with assets of more than $7 billion, is based in Eden Prairie, MN, a well-to-do suburb of Minneapolis. When Minneapolis was shaken by protests after George Floyd, a 46-year-old black man, died at the hands of police, the Cargill Philanthropies, like so many others, felt a need to respond.

“The senseless killing of George Floyd is evidence of the underlying inequities and racism that continue to exist in our community and our country more broadly,” the philanthropies said.

Margaret Cargill Philanthropies promised to look at “equity and inclusion” in its grant-making and later directed more than $2 million to communities of color in the Twin Cities.

It did not, however, add any people of color to its all-white board of directors. The five board members are an insular group: An accountant, a financial advisor, an investment manager, a lawyer and an Episcopal bishop, most with ties to Margaret A. Cargill, an heiress whose wealth funded Cargill Philanthropies. Ms. Cargill died in 2006.

Cargill Philanthropies is by no means the only large foundation with an all-white board. Of the 40 biggest private, grant-making foundations, a dozen — that is, 30 percent — appear to have no BIPOC board members. [BIPOC stands for Black, Indigenous and people of color.] It’s hard to be certain because no one collects data on the racial makeup of foundation directors, and most foundations approached for this story did not reply.

The problem starts at the very top with the Bill & Melinda Gates Foundation, which is by far the largest private foundation in the US, with assets of $51.1 billion. “Our employees should reflect the rich diversity of the global populations we aim to serve — in race, ethnicity, gender, age, cultures and beliefs — and we support this diversity through all our employment practices,” the foundation says.

This diversity does not extend to the board. The foundation trustees are Bill Gates, his wife Melinda Gates and billionaire investor Warren Buffett, Gates’ longtime friend and a major donor to the foundation.

The Chan Zuckerberg Initiative (CZI) Foundation has an even smaller board. It is structured as a charitable trust with a single trustee: Mark Zuckerberg, the co-founder of Facebook. This gives Zuckerberg and his wife, Priscilla Chan, the foundation’s co-CEO, absolute control over the foundation’s $3.1 billion in assets.

Recently, Chan wrote:

I stand with my Black colleagues. I stand in solidarity with the Black community and all those risking their own health and safety in the fight for justice, equity, and inclusion. And I stand with our Black grantees and partners. Black Lives Matter. But without action, words don’t mean much.

Indeed.

This pattern — expressions of concern, coupled with an unwillingness to share power — is all too common in the foundation world.

“Racial justice is long overdue,” writes Janet Haas, M.D., the board chair of the William Penn Foundation, where the ultimate power is held by an all-white corporation made up of Haas family members.

Other big foundations with segregated boards include the Helmsley Charitable Trust, the Walton Family Foundation, the Robert W. Woodruff Foundation, the John Templeton Foundation, the Richard King Mellon Foundation, the Wyss Foundation, the Carl Victor Page Foundation (founded and funded by Google co-founder Larry Page) and the Susan Thompson Buffett Foundation.(1) All have assets of at least $2.3 billion, according to Candid.

On the website of the Walton Family Foundation: Many Black faces. On the board: None.

“There is no excuse”

“Any organization that has an all-white board in 2020 has to ask itself, ‘why is this so?’,” says Edward Jones, the vice president for programs at ABFE: A Philanthropic Partnership for Black Communities, an industry group that has been pushing diversity in philanthropy for — wait for it — nearly half a century.

“There is no excuse,” Jones tells me. “If it is because of a policy, then change the policy. If it is because of your self-segregation or social proximity, then widen your circles. If it’s because of plain, old prejudice, then that speaks to a much bigger problem.”

“There’s nothing stopping a foundation from committing to a more diverse board, other than having the will to do so,” Jones adds.

Aaron Dorfman, the president and CEO of the National Committee For Responsive Philanthropy, which has pushed foundations for decades to diversify, says: “It’s outrageous that there are still so many all-white boards in philanthropy.”

By email, Dorfman explains:

First, diverse boards make decisions that are better attuned to community needs. If you actually want your philanthropy to succeed in tackling thorny problems, you would be wise to include as trustees people who have lived experience closest to the problems and direct experience working with impacted communities. Second, diverse boards help strengthen democracy in America rather than undermine it. Foundation dollars should be considered partially public dollars because of the preferential tax treatment donors and foundations receive. If the leaders of mega-foundations don’t share power voluntarily in their philanthropies, eventually, Congress might force their hands.

This is no idle threat. Legislation signed in September by California Gov. Gavin Newsom will require public companies headquartered in California to appoint directors from underrepresented communities to their boards. There’s no reason why diversity mandates could not be expanded to foundations, or imposed by other states or the Congress.

Legislation ought not be required, if only because there are compelling reasons to diversify boards — and to do so in ways that go well beyond race. Groups perform better when they are composed of people with a variety of life stories and experiences, studies show. This Harvard Business Review story explains Why Diverse Teams are Smarter.

Lawyers and bankers

Leaders of community-based nonprofits, for example, aren’t often represented on foundation boards, but they could be. they could offer insight gained from years of trying to attack social problems, as well as helpful critiques of how foundations operate, says Phil Buchanan, president of the Center for Effective Philanthropy.

“If you look at the professional backgrounds of some boards, their backgrounds are so similar — the schools they attend, the places they work,” Buchanan says. “It isn’t that lawyers and investment bankers can’t contribute, but boards should not be only lawyers and investment bankers.”

Others have made this argument, to little avail. The Chronicle of Philanthropy took a close look at the boards of 20 big foundation in 2017 and described them as “insular, well-heeled, and out of touch with average Americans.” More trustees had a Harvard degrees than lived in flyover states.

Vincent Robinson, founder and managing partner of The 360 Group, an executive search firm for foundations and nonprofits, says most boards fill vacancies from their own networks. They should cast a wider net, he suggests.

“I just looked at the MacArthur genius awards,” Robinson said. This year’s group of academics, artists and scientists is notably diverse. “What about one of these people?”

What do the foundations say about all this? Here some responses:

Cargill Philanthropies: “Our boards have actively sought to increase the diversity of voices in governance over the past several years,” Leanne Huber, communications director said. Cargill’s investment committee includes two people of color, she noted, and the board just last month added Kathy Annette, a Native American woman, as a program advisor to the board.

Gates Foundation: From an unidentified PR person: “The Gates Foundation does not have a board. You can find information about the foundation’s executive leadership team here.”

Chan Zuckerberg Initiative Foundation: Racial issues have become a hot topic at CZI, which recently published a report on its efforts to diversify. A spokesperson told me: “Our staff and program leadership are the owners and decision-makers around where we make grant investments, in accordance with our strategy.”

William Penn Foundation: “While the Corporation, which is composed of family members, is legally responsible for the foundation and appoints its directors, the foundation’s board of directors has sole discretion and authority over the foundation’s annual grant-making of over $117M per year,” a spokeswoman says. The board includes two people of color.

P. Russell Hardin, the president of the Robert W. Woodruff Foundation, was the only foundation executive to respond to my questions. By email, he said:

You are correct that all five of our trustees are white men. Like most foundations, ours began with a board of the donor’s most trusted advisors. As with most foundations, the donor and his inner circle were white. Mr. Woodruff died 35 years ago, and we still have one trustee who goes back to Mr. Woodruff. However, recognizing the need for younger and more diverse trustees, our board has adopted a retirement age for all future trustees. As our very small board evolves, be assured that diversity will be a priority.

Hardin also replied to a question I asked all the foundations: Does diversity matter and, if so, why?

My own personal opinion is that diversity among trustees helps broaden perspectives in the boardroom. Even in a boardroom like ours where the conversation already is focused on the needs of the disadvantaged (and particularly black Atlantans), diverse perspectives might offer a different lens on priorities, problems and strategies.

There’s some evidence to support this view inside philanthropy. Several of the biggest foundations stand out for the diversity on their boards and among senior leaders: Ford, W.K. Kellogg and Open Society. Not coincidentally, they have been consistent, major funders of racial-justice work, long before now.

The W.K. Kellogg Foundation board of trustees

By contrast, Cargill Philanthropies is notable for its absence from a coalition of foundations, most from Minnesota, that formed in response to the killing of George Floyd.(2) Known, inelegantly, as the Philanthropic Collective to Combat Anti-Blackness & Realize Racial Justice, the BIPOC-led coalition intends to support Black-led social change in Minnesota and use participatory grant-making to allocate its money.(3)

No regrets

Integrating foundation boards isn’t hard. Foundations of all sizes that were once tightly controlled by families have diversified. The National Center for Family Philanthropy has resources that explain how to bring in community board members.

“We’ve heard time and time again that no family foundation has regretted bringing on non-family board members,” says Nick Tedesco, the president and CEO of the family foundations’ group. “Philanthropy is often a top down exercise. What you are looking for with independent board members is creating more of a bottom up practice.”

Because so many problems— poverty, inadequate schooling, disease, climate change and others— fall hardest on communities of color, bringing people of color onto boards is imperative, Tedesco told me, via Zoom.

“All philanthropy ought to be informed by the communities it sets out to serve,” Tedesco said. “Ceding power to people of color on your board is a good place to start. It is a question of impact. It is a question of equity.”

True enough. So please, philanthropists, until you diversify your boards, spare us the rhetoric about black lives matter.

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(1) I made my best effort to determine the race of board members. When asked, most foundations ignored my emails asking them about the makeup of their boards. I was unable to contact The Susan Buffett Thompson Foundation, which says on its website that it does not respond to inquiries, and the Carl Victor Page Foundation, which does not have a website. I stand ready to correct errors, if any.

(2) Leanne Huber of Cargill Philanthropies explains: “We did not sign on to the Philanthropic Collective statement because of the advocacy elements that call for specific policy and system changes. MACP does not directly participate in advocacy or public policy, due to guidance from our founder.”

(3) Participatory grant-making is the ultimate way to engage nonprofits and their constituents in the process of giving away money. It unnerves donors because it requires them to give up control — which is precisely the point.