By: Krystian Seibert | Policy & Research Manager, Philanthropy Australia
The President of the Rockefeller Brothers Fund made quite an impression on hundreds of people who heard him speak during his recent visit. Here Krystian Seibert, who accompanied Heintz throughout his visit, shares his own insights and lessons learned.
In April, Philanthropy Australia partnered with the United States Studies Centre to host a visit to Australia by Stephen Heintz, the President of the Rockefeller Brothers Fund (RBF). The visit was part of our US Foundation Funding for Australia initiative, aiming to start a discussion about the benefits of transparency and openness within the philanthropic sector.
Stephen is a highly influential leader within the US and indeed the global philanthropic community, and his visit was an exciting opportunity for him to share unique and valuable insights with Australian funders—insights informed by his many years of work within philanthropic and civil society organisations. It was an inspirational week and at the end of all the events and meetings, I truly felt fortunate to have had the opportunity to learn so much from Stephen. The following are some of the main take-outs which have stuck in my mind.
One of Stephen’s key messages is that in order to maximise their impact, foundations need to use all their resources to effect change.
We often hear this phrase used in the context of impact investing – and it’s certainly true that foundations should not only be looking at their grants in order to achieve impact, but also their investments. However Stephen’s message was broader than the one we’re used to hearing.
He recounted how when he joined the RBF, one of the changes he initiated involved developing proxy voting guidelines and procedures. These were based on an understanding that the voting rights that come with the foundation’s share ownership are economic assets of the foundation and should be aligned with its mission. They also help to advance one of the major objectives of the RBF’s grants program, namely to strengthen the democratic governance of key institutions. The detailed guidelines cover issues such as director independence, board diversity, executive remuneration, auditor appointment, and capital structure.
The scope for using voting rights to effect change in corporate behaviour is more limited in Australia compared to the US – Australian shareholders can’t issue directions to board members of companies, and there are a number of reasons for this. But shareholders can still influence the composition of boards, for example around important issues such as diversity. Of course such engagement won’t be for every foundation, but it does provide an idea of just how broad a foundation’s strategy for achieving change can be.
Stephen also spoke about the RBF’s well known decision to divest from investments in fossil fuels. One of the RBF’s key focus areas is addressing climate change, and this decision was seeking to align the Foundation’s economic assets with its mission. At the time, some questioned whether the decision was merely symbolic, given the relatively small size of the RBFs investments in fossil fuels when compared to the overall size of the market for fossil fuel companies.
Indeed, in many respects the decision was symbolic but, as Stephen said, “symbols matter”. The RBF’s decision to divest was an example of a foundation using other important assets: its voice, its brand, and its reputation to take a stand on an issue and send a message to investors, policy makers and the broader community. In this case it was a foundation set up using wealth generated in the oil industry, saying that fossil fuels are no longer the way of the future. That’s a very powerful message.
I am often vexed by the question of what the respective roles of the philanthropic, public and private sectors are. It may seem like a deceptively simple question – but it’s not. What should government fund, and should government be able to step back and expect philanthropy to fill the gaps? How should philanthropy seek to engage businesses to change their practices? These are questions whose answers can depend on ideology, and where the person seeking to answer them is sitting.
Stephen was able to cut through this issue in a very insightful manner. He pointed out that compared to the magnitude of the problems in our community, and compared with the scale of both the public and private sectors, philanthropy has modest resources to contribute.
In 2014, US private foundations made grants totalling some $54 billion. This is not an insignificant sum but if you compare it to the US federal budget, which is about $4 trillion, or the US economy, which is nearly $18 trillion – the economic resources available to philanthropy are very modest. Given this, philanthropy can’t be expected to replace government, but instead it must seek to influence government and business to seek to effect change.
Stephen had two very clever analogies to describe the role of philanthropy in this regard.
1 – Philanthropy is like acupuncture: we only have a handful of tiny needles – the question is where to insert them in order to trigger some larger systemic change.
2 – Philanthropy is like a tugboat: we have the two big ships sailing into a harbour, these are the public and private sectors – philanthropy’s task is to use its resources to help guide those ships safely to the port and help them avoid running aground.
Based on these analogies, Stephen had one very clear message – philanthropy that influences public policy or corporate behaviour through research, policy development, and advocacy significantly leverages its modest resources.
Stephen used a brilliant case study from the RBF’s work to demonstrate this role.
Last year, the United States, the United Kingdom, France, Germany, China, Russia, and the European Union agreed a deal with Iran aiming to verifiably prevent Iran from obtaining a nuclear weapon. Few people will have realised the critical role played by philanthropy in the years before this deal was secured.
Since 2002, the RBF provided $4.3 million in funding to support the so-called ‘Track II’ diplomacy with Iran, through an NGO called the ‘Iran Project’. This initiative brought together senior former government officials from both countries to engage in the kind of talks that would not be able to happen through official diplomatic channels.
Secret meetings, co-convened and chaired by the RBF, were held in locations in Europe, aiming to build an understanding of the respective positions of US and Iranian Governments. The US participants routinely briefed officials in the George W. Bush and Obama administrations on the discussions, helping grow their understanding of the Iranian position. The Iranian participants did the same in Tehran.
Iranian participants included Mohammad Javad Zarif – and the Iran Project’s relationship with Zarif proved critical in helping to jump-start negotiations after he was made foreign minister in 2013 by the newly elected Iranian President Rouhani.
You can read more about the important role of the ‘Track II’ process in this article.
During his visit to Australia Stephen highlighted other examples of philanthropy strategically using its assets to amplify its impact – including examples of where it helped influence not just public policy, but also corporate behaviour.
The Iran case study made me think about what challenges could Australian philanthropy help facilitate ‘Track II’ style initiatives?
One issue which comes to mind is that of asylum seekers, and the need to secure a regional solution that ensures that asylum seekers are treated humanely whilst at the same time providing for secure borders. Could unofficial talks supported by philanthropy help yield results there?
Overall, Stephen’s visit to Australia was a big success, and we look forward to the opportunity to welcome him to Australia again in the future.
It was clear that audiences were impressed by the RBF’s approach to strategic philanthropy, and as the peak body for philanthropy, Philanthropy Australia will continue to focus on providing opportunities for philanthropic sector leaders from both Australia and aboard to share thought leadership.
We are also looking to build on the momentum of the release of the US Foundation Funding for Australia report, so that Australian funders can take advantage of the benefits of transparency and openness – so stay tuned!
This article originally appeared here.
Jun. 06, 2016
Sign up to our weekly e-newsletter for sector news, expert opinion and resources.