Transcript of Kevin Murphy's Keynote at 2013 AGM

Kevin Murphy’s Keynote Address, Philanthropy Australia AGM, 16 April 2013

Kevin Murphy is President of Berks County Community Foundation and chair of the Council on Foundations. He spoke at Philanthropy Australia’s AGM in Melbourne with the support of Australian Communities Foundation.

Thank you Louise.

It occurs to me that we are truly blessed in this field.

When we’re dealing with our donors, we’re working with people who have made incredibly selfless commitments to the common good.

When we’re working with our grantees, we are working with people who have foregone many other options to dedicate their lives to the service of others.

We work with the best of humanity and we work with them at their best.

Today, we received a stark reminder from Boston that there are dark forces as work as well. 

Our thoughts and prayers are with our colleagues and friends in Boston as they begin to deal with the horrible tragedy there.  But our work must go on, as we MUST overcome the evil that happened there.

Thank you for inviting me.  I bring greetings from Vikki Spruill, the President and CEO of the Council on Foundations and our 1750 member foundations.

I arrived here fresh from presiding over the Council’s AGM in Chicago last week and attending the Philanthropy New Zealand AGM earlier this week.  I may be setting some kind of world record for AGM attendance in a two-week period.

Fresh off those experiences and a week of thinking about philanthropy, Louise asked me to talk with you a little bit about two or three key trends in global philanthropy and what I think they mean. 

I was raised in the Methodist church and almost went into the ministry.  I got close enough to learn the first lesson taught to every Methodist minister:  Use no more than three examples and use no more than 19 minutes.  I do in fact have three trends that I think are shaping philanthropy—and a bit of a conclusion about what those mean for peak bodies.

The first and most obvious of these is the globalization of philanthropy. 

Look no further than the fact that the CEO of a small community foundation is in Melbourne Australia meeting with foundations from halfway around the world for evidence that the world of philanthropy is changing.

The globalization of philanthropy is evident in two ways.

First, there’s a growing desire or need for cross border giving.  Global companies wanting to be involved beyond their headquarters community drive some of this.  Companies like IBM, for instance, seek to be global citizens. 

Large foundations are in on the act too, as they seek to address global health issues, for instance.  Simply put, you can’t eliminate polio in the world—as the Bill and Melinda Gates Foundation seeks to do—unless you eliminate polio everywhere in the world. 

Even community foundations have developed global grantmaking interests.  Many of us help our Jewish families make grants to support Israel.  The Cleveland Foundation has an active program of building relationships with Cuba.  Even the little Berks County Community Foundation has an active partnership with a foundation in Russia to promote youth philanthropy in our communities—and a program to build relationships with China.

The other facet of the globalization of philanthropy is the desire to share what we’re learning with each other and to recognize that many of the changes we’re confronting in our communities aren’t unique to our region.

So when we think about how to revitalize an old industrial city in Southeastern PA, we’re as eager to learn the lessons of Liverpool England, as we are Liverpool Ohio.  Funders concerned about ocean quality are pretty aware that every ocean has two sides that must learn from each other and coordinate. 

So, globalization is the first major trend I see.

The second major trend I see all over the world is the shifting relationship between philanthropy and government.  It’s not yet entirely clear how all of this will shake out.

In many countries like the United States and Russia, the governments have suddenly taken notice of the existence of these curious animals called “foundations.”  In the case of Russia, it’s clear that foundations make President Putin uncomfortable, as it’s a general rule that anything he doesn’t control makes him uncomfortable

In the U.S., congress has begun to question what foundations do and how the money is spent. 

In February, I spent 2 ½ hours testifying before the House of Representatives Committee on Ways and Means—our tax writing body defending the importance of the charitable deduction in our tax code.  In my lifetime, that deduction has NEVER been called into question.

There’s increasing interest around the world by legislative bodies in whether our resources could be used to replace diminished governmental resources.  There’s a lack of basic mathematical understanding at play here.  By way of example, the County we serve has a county government.  It would spend our entire grantmaking budget in about 40 hours.  The Bill and Melinda Gates Foundation, were we to spend all of its endowment replacing the budget of the U.S. Government, it would last about 80 days.

For decades, we’ve operated on model of “philanthropy invents, government implements.”  From health care breakthroughs to white lines painted on the sides of the road, foundations have been the experimental risk capital for society, with government providing the resources to bring social change to scale.

But it’s not clear that model will hold up in the future.

If it seems like I’m unclear about what’s going on in the relationship between philanthropy and governments around the world, it’s because I am.  I see change at lots of levels but not yet a clear direction for the future.

The final big trend I see is the changing relationships between donors and their philanthropic legacies.  This is sometimes characterized as “the emergence of new forms of giving.” 

There may be new forms of giving…..but I haven’t see one yet.

What I have seen is a greater tendency of donors to be deeply involved in the management of their philanthropy.  Sometimes this is in the form of wanting to have greater family engagement in their legacy. 

The new donors are often marked by a skepticism about the traditional ways foundations have worked—and doubts about whether they want to be part of our networks.

Above all, many of these donors believe that the lessons they learned while making their money can be applied to the social problems they choose to address in giving their money away.

Sometimes they’re right.  Sometimes they’re wrong.

But the higher level of donor involvement is reflected everywhere.  United Ways see more donor designated gifts. 

Community Foundations have seen an explosion of donor advised funds that allow donors and their families to remain involved in grant-making.  Colleges report declines in general giving in favor of more specific support for particular pet programs.

The effects of this aren’t entirely clear.  It’s certainly a disruption of the historical pattern of believing that the administration of social funds was best entrusted to professionals with deep background and expertise in social problems.

So, globalization, changes in the relationship with government and increased donor involvement. 

Here’s what I think that means for peak bodies like Philanthropy Australia and The Council on Foundations.  All of these trends point in the same direction to me:  A growing role, but a changing one for national organizations.

Again, in the spirit of Methodism, I see three important roles:  Connecting Foundations, Advocating for them, and supporting the Growth of Community Philanthropy.

As donor involvement changes and both donors and the government demand more evidence that we’re getting results with these incredible legacies we manage, we’re discovering all the time the critical importance of connecting philanthropy across its traditional siloes. 

Knowing that a large community foundation in Melbourne is working on sustainable energy and connecting them to a small family foundation in Brisbane allows them to exchange information, move more quickly, test and validate their theories in ways that we didn’t used to have.

This requires a different model of national organization, one that has capacity and inclination to be closer to its members and can be a thought leader among its members. 

This is very different from the old “transactional” model where the associations passively waited to respond to information requests and responded with studies or issue papers.

In our early experience in attempting to convert the Council to a more proactive, connecting organization, I can tell you that it is proving to be both hard and rewarding. 

The second imperative for these national organizations is advocacy on behalf of the field in changing times, or perhaps more accurately, representation.  The Australian economic situation is such that I’m convinced you are poised for a dramatic growth in the size and scope of philanthropy here.

And here’s one thing I can promise you:  In time—some in your government will come to view endowed philanthropy with a mix of skepticism, envy and lust. 

Where we see “generous permanent endowments” legislators in difficult budget times see “big piles of cash.” 

Where we see “social innovation” some will see “end around run on government.” 

Where we see “thoughtful leadership that’s not politically motivated” some will see “arrogance” and where we see “patience and an understanding that social change takes time” some will see “ineffectiveness.”

The dialogue that needs to go on with government at all levels is a constant one and is best managed through collective action. 

Building the capacity of national organizations needs to be a priority for philanthropy all around the world.  Our ability to act independently of government and achieve results with the money we’re entrusted with is ONLY as good as our ability to, in fact, act independently of government pressures.

This is not an argument against transparency and accountability.  It is an argument that says national associations give us the vehicle to begin and carry on conversations with policy makers about our roles and responsibilities on an ongoing basis.

And without those conversations, bad things can happen.

The final critically important role that national associations are playing, and must play, is the elevation of community philanthropy.

Before you dismiss this as the predictable argument of a community foundation CEO, let me ask you to suspend that assumption.  I am, famously, considered a grumpy curmudgeon in the states about the so called “community foundation movement.”  In my role as the CEO of a community foundation, I’ve been a leading and loud voice against national branding, joint marketing efforts and just about any other symptom I see of the disease known as “community foundation self-indulgence syndrome.” 

But in my role as chair of the Council, I lead an organization where we’ve come to realize that community philanthropy—including but not limited to community foundations is the face of philanthropy in our advocacy work. 

When Congress wanted someone from a foundation to testify in February about the importance of the tax deduction, I was selected.  I wasn’t picked for my good looks, but for the fact that community foundations like mine show Congress that endowed philanthropy is and can be a broadly participatory exercise. 

We are, to put it bluntly, a far more sympathetic face than our colleagues at large national foundations, no matter how important and compelling their work is. 

The local connections of community foundations and the impact they have make policy makers very loathe to do anything that we say would hurt philanthropy.

The Council for years (maybe decades) treated community philanthropy as a third-class citizen in its planning, its governance and its communications.  Only in the last five years or so has the Council realized that by lifting up and embracing community philanthropy, it both strengthened the network of connections that it could make and created a far richer storyline about the role and importance of philanthropy.

We are at a pivotal point in philanthropy globally. Global philanthropy is no longer emergent, it is here for real playing a major role in communities everywhere.  That emergence has been driven in many cases by donors whose understanding and expectation of philanthropy is very different.  And that emergence has, or will, catch the eye of governments everywhere.

The challenge for peak bodies or national associations will be to connect philanthropy in new ways to improve our effectiveness, advocate for our work and our independence, and lift up community philanthropy in way that connects our field more meaningfully to the people we serve.

We need to get better at what we do each day. 

We need to make up for what happened in Boston.

Thank you.

Apr. 18, 2013

 Tags: recommended reading, general, community foundations

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