Strategic Giving

Peter Frumkin

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STRATEGIC GIVING: The Art and Science of Philanthropy by Peter Frumkin 448 pages (Chicago: University of Chicago Press, 2006)

Peter Frumkin, professor at the University of Texas at Austin’s Lyndon B. Johnson School of Public Affairs, has written an important and provocative book that will be read and debated for years to come. Strategic Giving is both a comprehensive, critical analysis of modern philanthropy (particularly foundations) and a useful guide for wealthy donors who want to distribute their money to meet public needs as effectively as possible. Frumkin has created a thoughtful theoretical framework for understanding the giving process.

The author discusses many of the current problems and tensions surrounding philanthropy, but he is not value-free in his assessments of philanthropic performance and developments among foundations. His evaluation is one of the book’s strengths, for it will provoke lively discussions and arguments – dialogue that should prove useful in a field noted for its intellectual torpor.

Several key themes reappear throughout the book, including Frumkin’s contention that the values, passion, and energy of donors are critical in maintaining the pluralism and soul of philanthropy, an element that the author believes has been severely neglected in recent years. He claims that unless the vision and intent of donors receive greater attention, foundations are likely to become less animated, more bureaucratic, and less effective. Donor satisfaction, Frumkin asserts, is as important to philanthropy as the community and public benefits it produces. Though the author argues strongly for this proposition, it remains highly debatable.

Although many donors like Bill and Melinda Gates have infused their institutions with the vision and energy Frumkin touts, there are many who have been unimaginative and lackluster. And there have been numerous foundation professionals – Alan Pifer, William Bondurant, Kirke Wilson, and Michael Joyce come to mind – who possessed the vision and skills to steer their institutions to great accomplishments. Values, energy, and imagination are not confined to donors. In fact, one could make the argument – as does Susan A. Ostrander, professor of sociology at Tufts University – that the growth of donor initiatives and control is actually eroding the independence and effectiveness of nonprofit organizations.

Another theme, which follows from the first, is that foundations are being taken over by professionals, thereby undermining the influence of donors and trustees and robbing the institutions of their vision, flexibility, and innovative spark. Frumkin labels it “creeping professionalism.” Professionals may have contributed to foundation sclerosis and bureaucracy, but it is also true that the enormous growth of foundation assets over the past 20 years has made professionalization inevitable, a point Frumkin downplays. Instead of carping about this development, he might have focused more productively on the quality and skills of the professionals who staff our foundations, especially the CEOs of mid- and large-sized institutions. The problems Frumkin outlines can be found among these executives, rather than in professionalism itself.

The first three chapters of the book focus on several of the major problems and challenges of philanthropy, among them effectiveness, accountability, and legitimacy. The author explores the relationship between government and philanthropy, the dimensions of international funding, the mechanics of giving, the role of trustees, the relationship between donors and donees, and the nature and limitations of evaluation as a tool to assess effectiveness. Throughout his discussion, Frumkin weaves the purposes and history of philanthropy. It is a compact and informative analysis for both donors and nonprofits.

The book tends to gloss over some of the unseemly acts of donors and foundations, however. For example, he states that there have been only isolated cases of fraud, abuse, and waste, when in fact there have been numerous instances of such inappropriate behavior, many of them exposed by the media in the past five years, prompting an ongoing investigation by the Senate Finance Committee. He also claims that only a few foundations have paid inflated trustee fees. In 1998 trustees probably received in excess of $300 million, money that should have been allocated to needy nonprofits. Nor does he mention the enormous amount of self-dealing, excessive compensation, and high travel expenses incurred.

He calls the Tax Reform Act of 1969, which imposed some federal regulations and oversight on foundations, an “unfortunate precedent.” The act, by eliminating abuses and demanding accountability, actually preserved American foundations by forcing them to abolish inappropriate behavior that would have ensured their demise. He also fails to give due credit to the Filer Commission and the National Committee for Responsive Philanthropy for pushing foundations to issue annual reports and become more publicly accountable.

The second half of the book provides an instructive guide to help donors become more strategic in giving away their money. Strategy, according to the author, is the missing ingredient in many donors’ philanthropic process. He cites five essential elements for a giving strategy: deciding which vehicle to use for giving away the donor’s money; clarifying the purpose of the gift; setting a time frame for giving; choosing the level of donor engagement with grant recipients; and assessing the impact the contributions will have.

Because Strategic Giving is a donor-oriented book, Frumkin gives relatively short shrift to the impact of philanthropy on nonprofit organizations and our democracy. The reluctance of foundations to provide general support, for example, is only briefly mentioned, although it is perhaps the most contentious issue in donors’ relationships with their grantees.

Neither the elite governance structures of foundations nor the growth of huge foundations run by a few family members seem to concern the author. He dismisses the impact of large foundations on our democratic process by saying that aggregate foundation assets are so enormous that a single foundation won’t have a great influence. That assertion is hard to defend when the Gates Foundation, with the addition of Warren Buffett’s money, will be donating about 10 percent of all foundation money distributed annually. And there will be more megafoundations in the next decade. Isn’t it troubling that such gigantic sums of tax-deductible money will be granted each year at the whim of a few family board members and without the benefit of public debate? The issue deserves a much more serious discussion.

Although some of the author’s views are questionable, the book as a whole is a praiseworthy addition to the literature about donors and giving. Well written, unlike so many other academic texts, it will increase our knowledge of philanthropy while simultaneously stimulating our critical assessment of the field. It is a must-read.

Pablo Eisenberg is a senior fellow at the Georgetown Public Policy Institute. He was previously the executive director of the Center for Community Change, a national technical assistance and advocacy organization working with low-income and minority organizations and constituencies throughout the country.