Alliance Online - September 2006

Flying the philanthropy flag against all the odds? The role of grantmaker associations

Andrew Milner

Trade associations are generally considered to be good and useful things – they can represent the interests of their members to the external world, they offer a means of sharing information among people practising the same vocation and helping them to learn from each other, and they provide a sense of community and solidarity. Grantmaker associations are in effect a branch of this family. Does the general proposition hold good in their case? On the eve of the 2006 WINGSForum in Bangkok, Alliance asked a number of its members from around the world how they see their main purpose and achievements; what the principal obstacles to their work are; how important to them that network of networks, WINGS, is; and – the key question for all organizations in the non-profit sector – how sustainable they believe they are.

What do grantmaker associations do?

Most of the work of grantmaker associations is, broadly speaking, in ‘capacity-building, information sharing, networking and advocacy’, as Oman Jiao of the Association of Foundations in the Philippines puts it. To this list might be added, implicitly or explicitly, encouraging the establishment of new foundations. Rosa Gallego of the Spanish Association of Foundations (AEF) generally agrees but has a different slant on the advocacy element. She describes AEF as ‘a channel of negotiation with the government for the solving of any matter which may be raised regarding the foundation world’. They act as ‘a representative of the sector’ and safeguard its interests, especially when it comes to the drafting of new legislation. It is interesting that the matter should be stated that way round: rather than advocating for legislative change, they aim to ensure that any such change does not prejudice the position of foundations and donors. This is a point also made by Rob Buchanan of the US Council on Foundations (see below).

The ‘capacity-building and information sharing’ might take a number of forms. The Group of Foundations in Argentina concentrates on research and training. ‘One of the principal thrusts,’ says Carolina Langan, ‘is our training activities (on grants management) and our conferences to mobilize private resources for the social field.’ The Group of Institutes, Foundations and Enterprises (GIFE), Brazil, produces publications and provides a certain amount of training ‘courses and congresses’ for the third sector and philanthropy field.

It’s also worth pointing out at this stage that, though their general purposes are similar, the particular emphasis of the associations’ activities differs from place to place. As in Latin America, much of the philanthropy in Bulgaria is corporate philanthropy, which means that this occupies much of the attention of the Bulgarian Donors’ Forum. It is, says Vessela Geertcheva, a ‘bridge between business philanthropists and traditional grantmaking organizations’. It works with both philanthropists and the media to help raise the ethical standards of business giving, and it also presents an annual Corporate Philanthropist’s Award.

The Association of Foundations and Grantmaking Organizations (Assifero) in Italy and the East Africa Association of Grantmakers in Kenya are particularly slanted towards community foundations. ‘We realize that ultimately development resources will have to be generated locally,’ says Monica Mutuku. ‘Unfortunately, the majority of NGOs don’t pay much attention to local resource mobilization, hence the need to promote community foundations.’ The Philippine Association of Foundations is composed of both foundations and NGOs, making it an association of both grantmakers and grantseekers

How far does their reach extend?

The degree of influence they can exert beyond the immediate circle of their members and the extent and range of their services depends very largely on how well established they are and how well resourced. Our respondents are all aware of the importance of working with the media to develop a better public profile for philanthropy, but few have the resources to do much about it. The Council on Foundations, an exception in this as in so many other respects, has its own media department which ‘in 2005 alone responded to over 300 media inquiries’. GIFE in Brazil, a relatively young but rapidly growing organization, says it is constantly trying to facilitate better communication of what foundations do through ‘courses, workshops, publications, manuals, breakfasts etc’. It also trains journalists in third sector-related issues.

The Council on Foundations’ legal staff, says Rob Buchanan, ‘often provide advice to wealthy individuals and their financial advisers, through workshops and the Council’s Philanthropy Advisors Network, about setting up foundations and other options for their philanthropy’. They have also produced a range of publications to assist new foundations. Likewise, the Association of Spanish Foundations offers legal and fiscal advice to its members and provides guidelines and customized advice on the process of constitution for new foundations.

As to influence, the Association describes itself as ‘a voice not likely to be ignored in any issue concerning the legal framework or the making of policies towards the sector’. Meanwhile, the Council on Foundations has spearheaded foundation opposition to the US Treasury’s anti-terrorist guidelines for overseas funding, and a measure of how seriously it is taken may be drawn from the fact that the sector coalition it assembled succeeded in inducing the Treasury to revise the initial version of the guidelines.

Not all grantmaker associations are alike

These are well-resourced, well-established associations. The Association of Spanish Foundations has a longer history than most (it was formed from the merger of two existing organizations in 2003), and its very substantial membership base (804 members) gives it, feels Rosa Gallego, a very strong influence and position. At the other end of the scale – and these are the majority of those we spoke to – are those that operate on a very slender margin, particularly in places where grantmaking foundations are relatively new.

The East Africa Association of Grantmakers is one such. ‘We would like to be able to commission independent research and studies about trends of philanthropy in East Africa,’ says Monica Mutuku. ‘We are very limited by budget yet this would boost our advocacy efforts.’ Jamaica Foundations and Corporate Donors is another, surviving on what Jeanne Robinson calls ‘the volunteerism of the members’ and lacking paid staff. ‘It is a challenge,’ she says, ‘to keep members motivated without a staff administrator to coordinate programmes and meetings.’

Creating an enabling environment

Most see one of the prime purposes of a grantmaker association as being to help produce an environment that is conducive to foundation and non-profit activity. Here again, the extent they have been able to do this has been at least partly dictated by resources.

Through both its advocacy and training activities, GIFE is actively involved in pushing for a more conducive legal environment for philanthropy in Brazil. Jeanne Robinson of Jamaica Foundations and Corporate Donors says that ‘the organization has been able to make the public more aware of the role philanthropy plays in development through its conferences and the directory of donors it produced several years ago, which is still used as a resource for fundraising locally by non-profit organizations’.

Few had any concrete examples to offer. An exception was the Association of Foundations in the Philippines which, says Oman Jiao, ‘lobbied for the retention of tax incentives for donors in the Comprehensive Tax Reform Package which was revised in 1998’. Another exception was the Council on Foundations. Rob Buchanan says that while advocating for a more favourable legislative environment can mean advocating new legislation, ‘it is more likely to involve advocating against or for modification of legislative and regulatory proposals that could adversely affect the environment in which foundations currently operate’ (see also Rosa Gallego’s remark, above). He cites COF leading opposition to the US Treasury’s anti-terrorist guidelines, which we have already mentioned.

The US is hardly typical among our respondents. As Rob Buchanan puts it, the US already enjoys a fiscal and legal climate in which donors can thrive, with ‘the accumulation of new wealth, a long-standing culture of philanthropy, and tax incentives’.

Elsewhere, others are struggling to reconcile high ambitions with small budgets and to increase membership in societies with little tradition of organized philanthropy. ‘Improvement of legislation and regulations concerning philanthropy is on the agenda of the Russian Donors’ Forum,’ says Natalya Kaminarskaya. But, given the relative youth of both the Forum and the sector itself in Russia, it has been unable to make much headway as yet. Another reason for limited success in this respect might well be inexperience. The Group of Foundations in Argentina speak of wanting to create better conditions for philanthropy but put their inability to do so down to ‘lack of experience around how to influence public policies’.

Encouraging the development of new foundations

The same story, with a few variations, might be told about the creation of new foundations. It is clearly on the agenda of our respondents, but in most cases they had little tangible to say. Most can and do offer services to new foundations that approach them for assistance. For example, Assifero in Italy has ‘promoted the establishment of a new community foundation’ in southern Italy. Jeanne Robinson of Jamaica Foundations and Corporate Donors cites ‘helping to write articles of association and putting the organization in touch with those in the legal profession who are willing and able to help’. Predictably, the Association of Spanish Foundations and the Council on Foundations provide a more comprehensive service, AEF ‘offering guidelines in the process of constitution, not only from the legal point of view but also from the economic and the managerial one’. We have already noted the range of services from legal advice to specific publications offered by COF to new foundations.

Achievements

Modesty of means and inexperience notwithstanding, grantmaker associations have had their successes. The East Africa Association of Grantmakers has revitalized and focused debate on tax incentives for giving, says Monica Mutuku.

The Association of Foundations, as we have seen, was involved in lobbying for the retention of tax incentives for donors in the Philippines. It is also, says Oman Jiao, ‘one of the founding members of the Philippine Council for NGO Certification, which certifies not-for-profit institutions as tax donee institutions.’ Though it operates on a virtual shoestring, Jamaica Foundations and Corporate Donors is ‘the only organization of its kind in Jamaica’, says Jeanne Robinson. It has produced the local directory of donors and is at least a rallying point and presence for grantmakers.

Another exception – GIFE

As a general rule of thumb, the longer established grantmaker associations are, the stronger and more successful they are. Established in 1995, GIFE in Brazil breaks this rule to a certain extent, but special circumstances apply. It describes its purpose as being ‘to improve and disseminate concepts and practices regarding the use of private funds for developing the well-being of all’. It has – on its own showing – been important in setting standards for the new brand of philanthropy which has been growing up over the last ten years. Brazil had what Fernando Rossetti of GIFE describes as a ‘third sector boom’ in the 1990s that is still under way. Until then, Brazilian philanthropy was essentially ‘charity-like’. GIFE has been able to put itself in the van of this new trend: it ‘had a central role in enhancing strategic planning and thinking in the field (from the idea of developing “social technologies” that can then be scaled up through public policies to the building of complex evaluation and measurement tools for social change)’.

Its growth has been rapid. In 1995, GIFE had 25 members. It now has 90 members, most of them organizations that are less than 10 years old.

Sustainability

There are two elements to sustainability: the sustainability of members and the extent to which associations are able to contribute to this, and the sustainability of the associations themselves. For many of our respondents, their own sustainability is a source of some concern. ‘Jamaica Foundations and Corporate Donors does not have a large budget,’ says Jeanne Robinson, ‘and has been kept operational by the volunteer contributions of its members.’

To overcome the customary dependency on grants and membership fees, the Association of Foundations in the Philippines has started building an endowment fund, which currently stands at some $300,000. AF set up a Board of Advisers composed of eminent individuals, each of whom donated US$20,000 to the fund. ‘We are halfway to our target amount,’ says Oman Jiao. ‘Hopefully, we can achieve financial sustainability in the next five years.’

The Bulgarian Donors’ Forum has the highest grant dependency of all the respondents, at 80 per cent, but Vessela Geertcheva is confident that ‘time and quality marketing’ will help shift this proportion in favour of membership dues and services. (Services is an area where organizations can hope to produce some of their own income, but typically this accounts for only a small proportion of revenues – 8 per cent in the case of the Association of Foundations, 7 per cent in the case of GIFE, and 10 per cent in the case of Association of Spanish Foundations.)

Membership fees, though more reliable than grant funding, have to be justified if the organization is to sustain itself in the long term, as Bernardino Casadei of Assifero points out. On the face of it, Assifero is in a better position than most, since two-thirds of its revenues come from membership fees and a third from grants. ‘For what it does, the association is sustainable, but because at the moment the level of services is very limited, unless it changes its approach, the foundations will stop paying their fees.’

Like the Association of Foundations, GIFE is building an endowment, which has reached the figure of $500,000, and describes itself as ‘more or less’ sustainable. It has grown from 70 to 90 members in the last year and a half, says Fernando Rossetti. ‘With roughly 130 members, the payment of staff would be secured – and then the fundraising could concentrate on strategic projects.’

As we might expect, financial sustainability is not a big worry for the Council on Foundations. Only 10 per cent of its revenues comes from grants, with membership dues (68 per cent) and earned income of one kind or another (28 per cent) making up the rest. Monica Mutuku, by contrast, feels that East Africa Association of Grantmakers is not yet sustainable because it hasn’t succeeded in diversifying its sources of revenue sufficiently and remains 68 per cent grant-dependent.

The Group of Foundations in Argentina, says Carolina Langan, is sustainable, but only at the relatively modest level at which it operates: ‘We are sustainable but we need to grow.’ The Russian Donors’ Forum also believes that it is sustainable because ‘our membership base is constantly growing. We try both to diversify our sources and to attract new donors.’

If not, why not?

There are broadly two reasons, often related, why grantmaker associations find it difficult to become sustainable: scarcity of resources and the difficulty of attracting and retaining members.

As Carolina Langan points out, the creation and maintenance of a grantmaker association is a two-way process, balancing the interests of the individual member against that of the organization. The organization exists for the members, so their interests are fundamental to it, but if it is to continue to serve those interests, members have to invest in its future. The Argentine Group of Foundations needs ‘to know its members’ interests and needs better in order to deliver more tailor made services. At the same time, it needs to encourage them to support “the cause” of the organization further, rather than just becoming members in order to take advantage of the services.’

This is echoed by Jamaica Foundations and Corporate Donors. As well as ‘financial stability with recurrent funding for annual budget and a stable membership base’, a grantmaker association also needs ‘buy-in from the patrons of the organization through personal interest and funding support’.

For the East Africa Association of Grantmakers, too, the main difficulty in becoming sustainable is recruiting and retaining members, especially among smaller organizations who find it difficult to afford the US$1,000 membership fee. Compounding this is the long-term and frequently intangible nature of grantmaker associations’ work which, says Monica Mutuku, can ‘make some members impatient and give them a feeling of no value for their annual membership’.

As far as the Philippine Association of Foundations is concerned, the key to member buy-in, and hence sustainability, is relevance: ‘The association should continually be providing relevant programmes and services to its members.’ Bernardino Casadei of Assifero, which he describes as ‘not a very vibrant institution’, talks of the need ‘to provide real services to its membership’.

Avoiding dependence on a few donors and ‘building a membership base that can sustain the work of the association through dues or fees’ is the key to sustainability, says Rob Buchanan of the Council on Foundations. He also feels that grantmaker associations need to provide quality services and dynamic leadership if they are to retain existing members and attract new ones. As we have seen, it is precisely this that can be a struggle for shoestring operations in places where indigenous grantmaking has struck only shallow roots as yet, and where the associations themselves have few resources.>

Sustaining member organizations

In Brazil GIFE runs training on starting and running an endowment and building and running governance structures. In the Philippines the Association of Foundations provides its members with ‘training sessions on fundraising and strategies for resource mobilization as well as development and improvement of their organizational systems and procedures’.

Likewise, the East Africa Association of Grantmakers is ‘currently in a campaign to encourage our members to build endowments’, says Monica Mutuku. ‘We have held workshops that provide different investment options for our members to address the issue of sustainability.’

Sustainability, she admits, is a key issue for their members and ultimately of course for the network: ‘We would like to be able to have challenge grants for our members. There is a big issue of sustainability in the region and building endowments is still a fairly new phenomenon. Small challenge grants would be a big boost in this area.’

Again the exception to the rule, Rob Buchanan feels that for Council on Foundations members ‘sustainability is not as much of an issue as it may be in other countries where the tradition of endowed foundations is not so strong’. COF nevertheless works to enhance member sustainability ‘through its conferences, professional development programmes, publications and one-on-one staff support’, working with members ‘to improve their governance practices, investment strategies, legal compliance and grantmaking effectiveness, all of which contribute to their long-term sustainability’.

Constraints on ambition

Apart from lack of funds, what prevents grantmaker associations from doing things they would like to do and can see would be beneficial? The Group of Foundations in Argentina would like to foster a better legal framework but, as we have seen, they are hindered by their inexperience in lobbying for changes in public policy and by what Carolina Langan calls ‘organizational incapacity’.

Ironically, it is Kenya’s unfavourable legal framework that Monica Mutuku cites among the three things that are preventing the East Africa Association of Grantmakers from fulfilling its wish to offer challenge grants and to sponsor research into philanthropy in Kenya. The other two are regional fragmentation and the lack of funds.

Jamaica Foundations and Corporate Donors would like ‘to hold a public annual meeting to expose the public to the work of the members, which will provide opportunities for donors to interact with each other and establish networks in the sector with public and private interests.’ Here again the obstacle is money

The Bulgarian Donors’ Forum is more sanguine in respect of its ambitions. Its goal – and one that is within reach, believes Vessela Gertcheeva – is to become more active at the European level and to represent Bulgarian philanthropists there. What’s preventing this at the moment, she thinks, is what she calls the ‘level of [organizational] development’. ‘We need to firmly establish ourselves [in Bulgaria] and then go European.’ Unusually, she thinks that funds ‘shouldn’t be a problem’.

Lack of funds and limited organizational capacity are a problem for GIFE as for so many others. GIFE would like to be able to scale up its activities so as to cover the whole of Brazil – and its 180 million people – but it lacks funds and organizational capacity to do this. At the moment, explains Fernando Rossetti, ‘most of GIFE’s activities tend to concentrate in the richer and more industrialized (therefore, more philanthropic) south-east region of the country.’

Alone among our respondents, the Council on Foundations can set what it describes as ‘an ambitious agenda’ with some confidence that it can be carried out. In pursuit of this agenda, COF ‘is in the process of seeking member buy-in, developing the organizational capacity (through internal restructuring and new hires), establishing new policies and seeking additional funding, where necessary, to move ahead in all areas.’

Where does WINGS come in?

‘At WINGS I meet my peers,’ says Fernando Rossetti of GIFE. ‘It is an opportunity to network our organization to the best philanthropy practices in the world. From the way we organize meetings to the speakers we bring to our conferences, many are the influences of WINGS on our activities.’

Differences in ambition, resources and scale of operations notwithstanding, our respondents all agree on the crucial role WINGS plays in supporting and nurturing both its member associations and their members.

According to Jeanne Robinson, ‘it is a significant source of information which is most helpful in keeping the organization aware of the global community, of opportunities for funding assistance and for networking and training.’ ‘WINGS activities have helped give credibility to our associations,’ says Monica Mutuku. ‘Our members feel the East Africa Association of Grantmakers is a channel to the wider world’, and this has motivated them to retain their membership so as to have access to the networks, information and resources from participating in WINGS activities.

For the Council on Foundations, WINGS provides an effective means of linking with other support organizations around the world. ‘Rather than developing bilateral relations with each of them, the Council can engage with and support the global infrastructure for philanthropy more efficiently through the WINGS network,’ says Rob Buchanan.

Like Monica Mutuku, he thinks that WINGS connects individual COF members who want to fund overseas into a wider world: ‘A growing number of Council members are interested in funding outside the US. WINGS gives them a link to sources of information that can be helpful in shaping their grantmaking activities abroad.’

According to Vessela Geertcheva, ‘the Bulgarian Donors’ Forum uses the network a lot. One of our biggest achievements – the participation in CEENERGI (Central and Eastern European Network for Responsible Giving), which targets corporate givers and unites in CEE countries, was in a way started through our WINGS contacts and experience.’

The message is clear: while support from below, from individual members, is critical to the survival and well-being of grantmaker associations, WINGS’ higher-level support can be equally important, conferring legitimacy and providing individual foundations with ready access to international expertise and connections.

‘Under-staffed and under-funded’

As we have seen, the differences between grantmaker associations make generalizations almost impossible, even when they are pursuing the same general aims. We have the Council on Foundations at the one extreme – well-resourced, influential and self-confident – with the cash-strapped Jamaica Foundations and Corporate Donors, reliant on the voluntary efforts of its members, and Assifero, which has still to develop the kind of strategic direction that will galvanize its members, at the other.

A few points can be made, however.

• Associations in developed countries with established philanthropic traditions are likely to be stronger and more influential.
• The most thriving tend to be those that are least dependent on grant funding.
• The main obstacles to development are generally lack of funds and an adverse operating environment (campaigning against which is often one of the purposes of the organization). Good intentions are often thwarted by scarcity of resources.
• The key to long-term sustainability is a reliable and growing membership base and a dynamic relationship between members and association. The association needs to inspire confidence by its leadership and responsiveness, but members need to have confidence in the organization for it to be able to do so.

Finally, associations in countries with a relatively young foundation and third sector (and who are themselves only just finding their feet) have an important but challenging role to play. Monica Mutuku of the East Africa Association of Grantmakers might fittingly have the last word here. She feels that ‘with the new wave of community foundations, infrastructure organizations are more important than ever’. Yet the odds are stacked against them. They are being asked to perform difficult tasks such as ‘advocacy for a better environment for philanthropy’ which ‘requires comprehensive research and organizational capacity to establish and interpret facts and figures that often challenge the status quo’. And they are being asked to do this with very few resources. They are, as she remarks, mostly ‘under-staffed and under-funded’.

Alliance would like to thank the following for their contributions to this article:

Rob Buchanan Director, International Progammes, Council on Foundations, USA
Bernardino Casadei Project Manager, (Association of Foundations and Grantmaking Organizations) (Assifero)
Rosa Gallego Deputy Director, Association of Spanish Foundations
Vessela Gertcheva Executive Director, Bulgarian Donors’ Forum
Oman Jiao Executive Director, Association of Foundations, Philippines
Natalya Kaminarskaya Executive Secretary, Russian Donors’ Forum
Carolina Langan General Coordinator, Group of Foundations, Argentina
Monica Mutuku Secretary, East Africa Association of Grantmakers
Jeanne Robinson Honorary Secretary, Jamaica Foundations and Corporate Donors
Fernando Rossetti Secretary General, Group of Institutes, Foundations and Enterprises (GIFE), Brazil

Andrew Milner is Associate Editor of Alliance. Email am@andrewmilner.free-online.co.uk

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