Fleishman urges new era of accountability in philanthropy

Cover photo of The FoundationJoel Fleishman is on a mission to save foundations from themselves. Calling them “the least accountable major institutions in America,” Fleishman argues in a new book that although foundations play a vital role in the country’s civic life, they must act quickly to mend their arrogant and secretive ways or risk increased public skepticism and government regulation.

“The only way for foundations to protect the freedom, creativity, and flexibility they now enjoy — and which they need if they are to serve society to their fullest potential — is to open their doors and windows to the world so that all can see what they are doing and how they are doing it,” he writes in The Foundation: A Great American Secret — How Private Wealth Is Changing the World.

Few people are better placed to send a message to the nation’s grant makers than Fleishman, who has worn many hats during his long career: philanthropy scholar, foundation head, foundation-board member, charity-board member, corporate-board member, public official, university administrator, university fund raiser, Duke University public policy and law professor and more.

Joel FleishmanNow 72, he has written his first book — an effort, he says, to air his “lifelong lover’s quarrel” with foundations.

“People criticize them for having lots of money and not spending it very well or spending it on excessive salaries or perks,” he said. “Sure, there are examples of that, but what’s really important is what the foundations have done. The value they’ve conferred on society over the course of the past 125 years is just amazing, and nobody knows about it.”

However, facing minimal government regulation or public oversight, he writes in his book, foundations “operate within an insulated culture that tolerates an inappropriate level of secrecy and even arrogance in their treatment of grant seekers, grant receivers, the wider civic sector, and the public officials charged with oversight. This needs to change.”

Foundations, Fleishman warns, are treading on dangerous ground by keeping information from potential supporters. Furthermore, by refusing to discuss their mistakes openly, grant makers keep vital information from their nonprofit colleagues about what works and what doesn’t.

Right and Wrong
In preparing his book, Fleishman interviewed more than 100 foundation executives and program officers, academic leaders and nonprofit heads. He and some Duke colleagues used that information to draw up 100 case studies, some of which are included in the book. He writes that the most successful foundations focus on a limited number of issues, thoroughly analyze whether it is practical to tackle a given problem and carefully select the organizations that will receive their grants.

But the point Fleishman hammers home hardest is that foundations must honor their tax-exempt status by letting the sun shine on their activities — provide more documentation about their grants, analyze and call attention to their failures and conduct public evaluations of both their existing and potential new programs. A chapter of “not-so-modest proposals,” warns that given increased Congressional scrutiny, foundations could face retaliatory legislation if they don't open up voluntarily.

Among his suggestions: Foundations should develop a “transparency and accountability code,” create a board to hear appeals from people who have been denied information from a foundation, pay for a system to publicly rate foundations on how open they are and require foundations above a certain size to employ an ombudsman. Absent such efforts, Fleishman says, a federal Foundation Freedom of Information Act might be needed.

‘Wise Elder’
Fleishman keeps himself strictly in the background in his book. But friends and colleagues describe him as a Renaissance man (he wrote a monthly wine column for Vanity Fair magazine for eight years) with a huge network of friends and associates. While he shuns the limelight, they say Fleishman has been a major force for greater accountability and effectiveness in the nonprofit world.

Joel Fleishman at book signing“In other cultures, he would be called a wise elder,” says Peter Karoff, founder of the Philanthropic Initiative, a nonprofit organization in Boston that advises foundations and other donors.

Fleishman joined the Duke faculty in 1971 as a professor of public policy and law and was the Sanford Institute’s founding director. He chaired the Duke Capital Campaign for the Arts & Sciences and Engineering, and was appointed first senior vice president of the university in 1991. After serving as president of The Atlantic Philanthropic Service Co. Inc. in New York City from 1993 to 2001, he returned to Duke full-time in 2003.

In addition to his work at Duke, Fleishman sits on the boards of several corporations, including Polo Ralph Lauren and Boston Scientific, which he says gives him insights that he can apply to his nonprofit work.

Corporate boards, he says, are much more focused on "careful process." He adds: "The directors pay much closer attention to what's going on than is typical of nonprofit boards, of foundation boards."

Fleishman left an especially big imprint during his spell as president of Atlantic, the U.S. arm of a grant maker headquartered in Bermuda with about $3 billion in assets — which at the time awarded all of its grants anonymously at the request of its founder, Charles Feeney, an Irish businessman. Given his emphasis on openness, it is ironic that Fleishman ended up working for a foundation that operated so secretly.

But Joel Orosz, a professor of philanthropic studies at Grand Valley State University, in Grand Rapids, Mich., and former program director at the W.K. Kellogg Foundation, says Atlantic “did an incredible amount of quiet field building,” providing money to projects to monitor and improve the effectiveness of charities and foundations that attracted few other grant makers. Many groups that now do such work got support from Atlantic during Fleishman’s tenure.

New Generation of Scholars
Fleishman will continue to wage his “lover’s quarrel” at Duke, where he heads the only academic program in the country that focuses on foundation decision making ... [He] hopes the program will incubate a new generation of scholars who will write books to take up where The Foundation left off.

He says the publicity generated by [Warren] Buffett’s gift to the Gates Foundation could inspire greater attention to the issues he raises in his book — and calls on the Gates Foundation to become a “model of what a transparently run foundation can be. Foundation leaders must find the courage and vision to rise above their self-imposed, self-imagined phantoms of insecurity,” he writes, “and lead their institutions into a new era of transparency, accountability, and effectiveness.”

A longer version of this article first appeared in the Dec. 7, 2006 issue of The Chronicle of Philanthropy. Used by permission.