That being said, I’ve recently come across a term called ‘participatory philanthrophy’. This concept has a number of institutional forms which vary according to the organization. On one end of the continuum the public has an opportunity to comment or ‘vote’ on potential grantee applications. A great example of this is The Case Foundation’s work http://miyo.casefoundation.org/

On the other end of the contiuum are situations where the public serves as a ‘board’ for the philanthrophic organization making site visits, scoring applications and often times recommending final grant award amounts to a committee of ‘experts’ or outsiders.

Although this topic is recently catching hold in philanthrophic organizations we would be remiss not to acknowledge the public participation literature, where citizens are involved in decision making in the public and private sectors (like budgeting, economic development, environmental risks, etc.)

 One of the main findings in public participation literature to date is that not only do the goals of involving the public need to be articulated up front, but establishing exactly how public participation can lead to those goals signals certain process and procedural requirements that will ensure its effectiveness.

So how can philanthrophic organizations use this literature to their benefit?

1) Involving the public can be linked to goals in a few different ways (this is not an exhaustive list)

a. Impact on citizens

b. Impact on acceptability of decisions

c. Ability to acquire additional information

I am hypothesizing that most philanthrophic organizations would use citizens in order to acquire additional information from individuals who live, work and play in the areas where potential grantees are doing their work. Perhaps their perspectives lend themselves to new information or better insights.  However, this is just my hypothesis and until explicit information is garnered from the few philanthrophic organizations who do this type of work, we are all speculating. To date, all we have are many normative and ancedotal statements that involving citizens creates ‘better decisions’.

Secondly, if the goal of involving the public is to acquire new and additional information from citizens who are ‘on the ground’ experts how can ‘participatory philanthrophy’ be structured in order to achieve this goal?

How can philanthrophic organizations ensure that the information they require is representative of citizens in the community, and not just those citizens who have the resources and time to participate? More importantly, how will they know if they have achieved a group who’s interests are representative of citizens in the community?

As you can see from just this one example, there is quite a bit of work to be done in really implementing successful participatory philanthrophy programs. I’d love to have feedback on what you think the goals of these programs are and how philanthrophic instituations can achieve these goals through involving the public?

Despite all of my questions, I’m quite happy that this is starting to take place in our philanthrophic institutions. Yet, that is likely because of my own normative beliefs that involving citizens in grantmaking can create ‘better grantmaking decisions’.

I’m hoping my dissertation work can explain exactly what that is.

Because of President Obama’s and the federal government’s imprint on this initiative, I have often wondered where the funds would be awarded and subsequently distributed, and how far of a reach they would have on a national level. Does geography matter in this case? It may be a while before we can truly tell, but in the interim, I have constructed a map using Google Maps that lists the donors providing matching funds, as well as the eleven intermediary groups who will further disperse funds to subgrantees. I will be working to update the map to also reflect the subgrantees that receive funds. It is my intent to collect as much data as possible through the map and throughout the duration of the Social Innovation Fund to see the extent of the Fund’s impact across the nation.

So, back to my original question: does geography matter? A brief look at that map will show you a couple of interesting things:

• Four of the five major matching donors are located in California; three of them are based in Silicon Valley (two involve the founder and first president of eBay), and one in Los Angeles. The other major donor is based in New York City.
• All but two of the intermediary organizations are located east of the Mississippi River: Three organizations in New York City, two in Washington, D.C., two in the greater Boston area, one in Louisville, Kentucky, and one in Cincinnati, Ohio. REDF of San Francisco was the only West Coast grantee, and though the Missouri Foundation for Health in St. Louis is technically located west of the Mississippi, it is still geographically closer to all of the grantees in the East.

These are just some basic observations. Perhaps geography doesn’t matter, and this is only an interesting, if maybe coincidental, markup of the locales of donors and grantees. But, we won’t know for sure for a while. In any case, with the addition of subgrantees and future inceptions of the Social Innovation Fund, hopefully the map will diversify. I hope the map will eventually serve as a tool for those who wish to apply for grants in the future, as well. In any case, I appreciate your commentary and feedback here or on my personal website for how the map can be improved.

For more information and different points of view on the Social Innovation Fund and those serving as intermediary organizations, I highly suggest the following reads:

• “Analysis of Social Innovation Fund Results” at Adin Miller’s blog.
• “Social Innovation Fund Announces Grantees” at Sean Stannard-Stockton’s Tactical Philanthropy Blog
• “Congratulations to the Social Innovation Fund’s inaugural grantees!” at the Public Innovator’s Blog
• “Federal Government Awards $50-Million in First Set of Innovation Grants by Debra E. Blum at the Chronicle of Philanthropy
• “Wise Picks? Commentators Weigh In on the Social Innovation Fund Grants” by Nicole Wallace at the Chronicle of Philanthropy (with links to blog posts by Nathaniel Whittemore, Marcia Stepanek, and Sara Mead)
• And, of course, the Corporation for National and Community Service’s Press Release announcing the grants

I like many others have been closely following the unveiling of the Social Innovation Fund under Obama’s Administration, not only watching ‘who’ is advocating and supporting this Fund, but also what the process will be like. As someone who is especially interested in better understanding how supply side aspects of grantmakers impact both intended and actual outcomes of grantmaking there are so many reasons that I’m excited about this fund but also extremely cautious. Since many bloggers, practitioners, and academics are writing about this I would love to get some general feedback on perspectives about the process as perhaps this advice could be taken into account in the actual distribution and administration of funds. So please feel free to leave comments or contact me offline.

I’ll start with the positive and really what I’m excited about. . .

1. The explicit recognition by government that real, long term solutions to complex social problems in the United States require collaboration between ALL sectors. This in itself is tremendous and an acknowledgment linking back to Salamon’s theory of nonprofit and government as complementary partners

2. A focus on evaluation (I’ll discuss my extreme hesitation about why I’m cautious about getting excited about this below). However, the fact that this fund will provide monies for nonprofits beyond operations while also having nonprofits COMMIT to data collection and evaluation is HUGE. I hope this  has a signaling effect to ALL nonprofits that evaluation is a necessary component of doing ‘good’ work

3. It’s use of intermediary grantmakers instead of using the government to distribute these funds. Not only is there an American distaste for more government involvement in any sort of decisions, but truthfully if these funds were solely distributed by the government, we can all imagine the bureaucratic red tape that would exist. Additionally, it is likely that the intermediary grantmakers who specialize in particular focus areas while also having overall expertise in grant making provide a better conduit to distribute these funds

Everything so far sounds good, but again I’m most excited about the overall signals the social innovation fund creates but extremely concerned about  the actual process.

Here are my initial concerns

1. A focus on evaluation =) Yes, I know I mentioned I was excited about this above but when it really comes down to it, several of my favorite evaluation questions emerge. What are you measuring? How? With what resources? Will this fund taken into account already established metrics like The Urban Institute’s Outcome Indicators Project or The United Way’s outcome metrics? Will it consult academics or experts in evaluation about how, why and what to measure within these nonprofit organizations?

2. This idea of growth capital. Plainly stated – I’m confused. I keep reading it but can’t figure out why the Social Innovation Fund is considered growth capital? The fund almost seems like a recognition by government that what most nonprofits need to grow is access to equity capital so they can scale up to size, but still not allowing a legal form that accommodates this within the U.S.  (see literature on social enterprise for more info. on this and how successful these legal forms have been internationally, particularly in the U.K.)

Scholars have found that many of the difficulties associated with nonprofit organizations scaling up to size is a lack of access to capital. In fact, many social enterprises and innovative nonprofits are funded by foundation grants, which ultimately ‘expire’ after 3 years of funding. So how is this fund any different?

Why do we continue to think that innovative organizations need more grants, more evaluation, more data? What exactly is innovative about this fund? Is it government working explicitly with philanthropists, because that has been occurring since the beginning of American philanthropy and still occurs to date.

3. Finally, how can we ensure that local, community based organizations who are doing great work CAN actually scale up without risking their mission. Scholars have found that some of the reasons nonprofit organizations work, and work well,  is because they are local and community based.

More importantly, for those nonprofit organizations who do receive funds won’t they be the larger, more established, more professionalized nonprofits? These organizations will likely  have the capacity to not only go through the administrative process of applying for grants, but also the financial and operational capacity to accept a large grant.

Overall, I fear that without changing the process of awarding these funds to innovative nonprofits, the Social Innovation Fund risks falling into a trap of being just another organization that provides grants – and that my friends,  is simply not that innovative after all.

There are different ways to make a financial investment in artwork, but due to the complicated nature of the art market and the many expectations that differ from traditional financial market exchange, I usually suggest that novices with investment goals start by searching for an art investment fund, rather than buying work outright. Most of gallerists whom I have spoken with recognize that artwork does have investment value, but they tend to prefer someone who will buy works that have an emotional resonance, or aesthetic appreciation value. Given the recent troubles with people who have thought of their houses as too much of an investment, I also share this caution. Furthermore, being able to pick artwork at a low price that will go up in value over time requires some expertise, and a greater return is necessary to compensate for the relatively high transaction costs of buying and selling at auction.

Art funds, however, usually provide this expertise in-house, the same way that a hedge fund manager has expertise in stocks, bonds and other investments. Although this type of securitized art investment is fairly new, there are a number of established and upcoming funds with different goals. The best funds will offer the benefits of a diversified portfolio of artwork, expert advising, financial expertise, and transparency about management costs, goals and other factors. When you put money into one of these funds, which are usually structured as private equity, you are essentially buying a ‘share’ of their portfolio. Many of the funds have the added benefit of annual dividends, which could be preferred to a direct purchase of art, where the investor only sees money at the end of a fairly long holding period.

But is this socially responsible investment (SRI)? Well, if we think about the meanings of sustainable investing, through screens and filters, as well as other types of socially responsible investing, such as faith-based goals, artwork would be considered acceptable for many of these goals. For example, according to one expert in Islamic finance, the fact that the funds are backed by real assets means that they could be a type of Islamic investment. Another consultant that I spoke with laughed at the idea that artwork was socially responsible, but he said they could be seen as a type of passion investment. Artwork is not usually associated with sin products, environmental pollution, or other areas typically associated with negative screens. Credible fund managers  will also carry out due diligence on any work purchased, to make sure that it is not stolen property or under dispute.

While some people oppose the idea of treating artwork as a financial investment, a good number of those involved in the art market welcome new buyers, even if they are investors rather than traditional collectors. Purchasing shares in an art fund is not the same thing as donating to a museum, but it is a way of directing money toward arts and culture.

Potential investors with an SRI agenda should know that this type of (fund-based) investment does not usually benefit the artists directly. This is because living artists are paid for their work when it is sold for the first time through a gallery, but unlike film producers or musicians, they do not typically enjoy profits on future sales of their creations. Intellectual property rights protect them others profiting from the unauthorized use of the images or ideas, but artists are not paid from future sales of the actual piece. The exception is that in the European Union, and a few other places, auction sales are taxed by the droit de suite, or artist’s resale rights, which provide a form of royalty to the artist or their estate. Nonetheless, while the artists may not benefit directly if funds are purchasing work in the secondary market, it is possible to make the argument that for an artist to gain a greater following in the secondary market does improve their career prospects, at least indirectly.  (There are a few funds that have goals of providing income to actual artists, but these typically have a different structure, so I will not discuss these here.)

With these considerations in mind, my personal opinion is that we can think of art funds as socially responsible investing, but you have to think about your goals. This type of (fund-based) investment can provide some benefits to artists and those in the market, but bear in mind that it is not the same thing as directly “investing in the arts” by donating to a museum or other nonprofit engaged in arts and culture.  It might be more accurate to say that you are investing in the art market, as opposed to the arts. However, if you want to invest your money according to your values and interests, this seems to be a reasonable way to go about it.

As with all investment advice, be sure to do your research and due diligence.

This has led me to several questions (particularly as I think back to my former life as a fundraiser in the nonprofit sector). If (as network theory and a good deal of anctedotal evidence would suggest, ) getting grants from foundations is truly about “who you know” and what “social circles” you’re a part of – how does that impact nonprofits who are likely “outsiders”, like social justice or advocacy organizations?

There’s almost a chicken and egg question that results from this train of thinking.  Many scholars and funders are trying to understand what a ‘better performing’ nonprofit looks like. But the subsuequent question this leads me to ask are if nonprofits thought of as ‘better performing’ are really just those organizations with better reputations.

In the economist tradition of studying nonprofits, performance would be a measure of the”efficient production” of goods/services. So how does reputation impact a nonprofits production? Are funders associating reputation with high performance or are they truly using some of their own measures to construct their image of a ‘better performing’ nonprofit.

In my own work I hope to “answer” some of these questions by conducting a survey or an experiment with foundation board members (at least these are my hopes!) to better understand how and why funders make their decisions.

I also hope to advance our understanding of terms in the sector that are constantly used, but always misunderstand. Supposedly financial health, collaboration, and organizational performance are the ways that funders make grant decisions but empirically we really don’t know a good deal about these decisions. In fact, we don’t really understand how funders view these concepts. Again thinking back to my work experience there is likely a gap that exists between the way funders view collaboration and the way nonprofit managers and staff view these terms.

I hope this provides everyone some food for thought and would love to hear feedback from anyone who has any thoughts on this!

The theme for this year’s conference is Philanthropy in Communities: Finding Opportunity in Crisis. It is relevant and timely, and I am really excited to see the research that will be presented. I will be presenting two papers: the first is on managerial perceptions of innovation value in public and nonprofit organizations, and the second will be a case study of the now defunct Arizona 2-1-1 Online program. I’m also excited to be participating in a colloquium entitled “Does Real Action Happen Online?” I’m very eager to hear my colleagues’ response to what I view as a question of ever-increasing importance.

In addition to presenting my research, Lindsey McDougle and I will also be helping with the social media coverage of the conference. I’ll post a few updates on my blog and here at thirdsectornetwork.org. Also joining me in the social media coverage are:

So, even if you can’t join us in Cleveland, we hope you’ll join us online!

In the company of these fine nonprofit researchers, I feel like a bit of a black sheep, because my interest in nonprofits has come as a result of my dissertation research, which is on the use of artwork as a financial investment and how this ‘financialization’ came to be. This led me to write a policy  paper about the potential negative consequences to museums that treated artwork as a financial investment, with some modest proposals about how we might avoid the loss of stakeholder trust that comes from liquidating permanent collections. Working on that paper has led me to thinking more about nonprofit assets and governance.

Despite my outsider status in the area of nonprofits (I have not specialized in nonprofit organization studies), I do have a healthy regard for nonprofit management as a part of organization theory and management studies. One thing that I liked in my training in public policy and management at Carnegie Mellon University was that we were encouraged to see ourselves as having the flexibility to move between government, nonprofit and corporate work throughout our careers. I suppose I have already done this alongside my academic career, because I have had the opportunity to work for several nonprofits in my role as a part-time GIS mapping consultant, including the Trust for Public Land and OpenLands in Chicago. While I am now pursuing an academic career, in the future I hope to do more research on nonprofits, as well as consulting work, and when teaching project courses, I hope to have local nonprofits as clients for my future students, which is a good way for universities to give back to the surrounding community.

I do have another rallying cry to study nonprofits, which is that from a theoretical perspective, if we study nonprofit and other forms of organization, this increases the diversity in the types of organizations studied, which is likely to bring about new findings for organization and management studies. (To make an analogy, anthropologists often  study one society at a time, but through comparison they are able to create more general theories and insights that inform researchers who work on different geographical regions.) Well, that’s my Chicago theory coming to the foreground, and I suppose I should end on that note, rather than going on about the increasing professionalization of the nonprofit community and creation of new epistemic cultures around nonprofit management. I look forward to seeing how this forum will evolve in the future.

We are all in agreement that the world is rife with talk and activity of and within the third sector. Our interests are common, but each of us has managed to target something rather unique.

Photo courtesy of RGK Center for Philanthropy and Community Service, UT Austin

Nonprofit organizations, volunteerism, business associations, public charities, family foundations, art as investment, corporate social responsibility, generation X and Y in the nonprofit workplace, higher education, social enterprise…and the list of topics goes on and on. We are particularly concerned with what makes certain aspects of these topics “nonprofit,” “philanthropic,” or generally socially beneficial. Our common thread is our desire for the development of theory and practice in the third sector, and as our RGK mentor Peter Frumkin put it in his book On Being Nonprofit, the “structural features [that] give these entities a set of unique advantages that position them to perform important societal functions neither government nor the market is able to match.”

However, recent structural changes within some organizations have challenged that ideal…but odds are, one of us is interested in those changes, and we’ll eventually end up discussing it at some point.

We look forward to providing what we hope will be insightful commentary, and we invite you to take part in the discussion.