Likewise, journalists and documentary filmmakers face a similar dilemma: how to tell hard truths they observe in their reporting, without having to tailor their accounts to advance the public relations demands of philanthropic benefactors, which are becoming increasingly prominent players in an otherwise declining news industry.

Nowhere is this tension more clear than the case of Detropia, which will be seen in a national broadcast on PBS next week. Participants in the CEP conference in Detroit will have the chance to get a sneak preview tonight, after the opening reception.

Detropia recently won the Henry Hampton Award for social documentary film in the 46th Annual Film and Video Festival, a joint project of the Council on Foundations and Media Impact Funders.

But a previous screening last year with foundation and nonprofit leaders in Detroit touched a raw nerve.  “They just rejected the film outright,” according to Rachel Grady, who directed the film with Heidi Ewing. “They told us we missed the story; we missed the dozens of rays of light that were being planted all over Detroit.”

Grady says that they did look for stories of gritty determination – and indeed some of those stories are included in the film – but she says that those stories were overshadowed by the enormity of the problems facing Detroit.

Foundation leaders will have a chance to judge for themselves how well Detropia balances the story of modern Detroit in tonight’s screening, while everyone else will have a chance next week. And funders who would like to engage more directly with the filmmakers will hear from Grady and Ewing in person at the Media Impact Forum, which will take place June 4 at the Ford Foundation.

This post is excerpted from the current edition of The Chronicle of Philanthropy, where I write an occasional column.

Vincent Stehle is the executive director of Media Impact Funders and a member of the board of directors at the Center for Effective Philanthropy. You can find him on Twitter @VinceDaily.

Hear Vince speak at our national conference, Pursuing Results, and join the discussion at #CEP13.

In May 1980, NCRP released Foundations & Public Information: Sunshine or Shadow? It was a scathing report that took foundations to task for their reticent approach to sharing information, and it launched a decades-long commitment by NCRP to promote increased transparency. The report explored why foundations should be accountable and transparent, and also the inadequate government requirements at that time. It ranked and scored 208 of the largest philanthropies using a rigorous methodology and found that 60 percent of foundations in the sample did not meet an acceptable standard of transparency. Just 4 percent were found to be “excellent.”

The methodology included a heavily weighted assessment of whether foundations provided the kinds of information that nonprofits most desired, including information about grantmaking interests and policies, and how grant applications were evaluated and decisions made about which organizations to fund.

I see many parallel findings between that report and CEP’s excellent new report. A full 33 years later, nonprofits are still clamoring for more information about how foundations make funding decisions and they want clear and open communication about priorities. They want to know whether it’s worth their time to cultivate a relationship and pursue funding. And despite an explosion of glossy annual reports and fancy websites, leaders of grant-seeking organizations are still highly frustrated by the lack of clear communication about a central element of foundation activity, namely how foundations decide which organizations to fund.

Foundation Transparency surveyed 138 nonprofit leaders, and I was unsurprised to see many of the respondents reference a desire to know how foundations assess their own performance and the impact they have. It only seems fair that since foundations are requiring this from grantees, that they be willing to be accountable for articulating impact, too.

Some of the findings suggest to me that nonprofits really want foundations to function as true partners. For example, the fact that an overwhelming majority of respondents wanted to know more about what foundations are learning indicates that grantees want learning to go both ways.

The CEP report doesn’t explore the regulatory framework for foundation transparency, nor does it explore in-depth the arguments for why greater transparency may be warranted. But another report released this year does revisit those questions. The Philanthropy Roundtable published in March 2013 Transparency in Philanthropy: An Analysis of Accountability, Fallacy, and Volunteerism.

As I reviewed Foundations & Public Information in light of the Roundtable’s current offering, I was struck by how little the arguments in favor of greater foundation transparency have changed since 1980. The original NCRP report looks at the partially-public nature of philanthropy, which is revisited by the Roundtable (though our organizations obviously come down on different sides). The partially-public dollars argument asserts that because of the preferential tax treatment afforded to foundations, a high level of transparency and accountability is owed to the public and grantees. NCRP repeated and expanded on this argument in our 2009 publication Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact.

In 1980, NCRP devoted some attention to why greater transparency is in the self-interest of foundations and how it might improve their effectiveness. This topic is explored robustly in the Roundtable’s new report, Criteria, and is touched on in the CEP report. Because I see additional regulation as unlikely in the near future, the link between effectiveness and voluntary transparency merits further exploration.

Speaking of regulation, there has been some increase in activity around this in recent years, though nothing has actually changed for more than 20 years in terms of mandated disclosures. Most philanthropy insiders are familiar with efforts by the Greenlining Institute to pass AB624, which would have required new disclosures for the largest foundations in California. Fewer are aware of quieter efforts by the Philanthropy Roundtable to pass legislation in several states banning efforts similar to AB624.

The last substantive change that shaped the current required information disclosure in the IRS form 990-PF can be traced to when NCRP worked with Senator Dave Durenberger (R-Minn.) to influence the IRS to change what it required in the form. Those changes contributed to helping the Foundation Center produce the best data available about the sector. An abbreviated version of how NCRP’s efforts on transparency evolved, including the Durenberger intervention with the IRS, can be found on page 10 of this look back at NCRP’s history.

What I’m left with is a sense that, on the issue of transparency, the more things change, the more they stay the same.

Coincidentally, around the same time as I was reviewing the new CEP publication and beginning to think about crafting this blog post, Bob Bothwell invited me to join him on a Friday evening for a baseball game at Nationals Park. Bothwell was NCRP’s executive director from its inception in 1976 until 1998. I am reminded again of how important it is for those of us from a new generation who are leading nonprofits and foundations to intentionally nurture connections to our history, even while we attempt to take our organizations in new directions.

And in case you’re wondering, the Washington Nationals beat the Cincinnati Reds 1-0, and Jordan Zimmerman pitched a one-hitter.

Aaron Dorfman is executive director of the National Committee for Responsive Philanthropy (NCRP). He frequently blogs about the role of philanthropy in society. Follow NCRP on Twitter @ncrp.

Of course, foundations are free to be as transparent as they want (with the exception of reporting the mandatory 990 PF form), so conversations about the extent to which foundations share information often highlight that foundation transparency is voluntary. However, the concern over whether transparency is voluntary or mandatory misses the main point: What do we really mean by “transparency” and why does it matter?

While all of us might like to know more about foundations, there’s one group that relies upon the information foundations are willing to share: the nonprofits who seek foundation support.

To learn more about what nonprofits think about foundation transparency, we surveyed our Grantee Voice panel, a sample of nonprofits of varying sizes and focuses that receive support from large foundations. We asked them what foundation transparency means to them, in what ways would they like to see foundations be more transparent, and why this matters. Our newly released report, Foundation Transparency: What Nonprofits Want, summarizes that research.

From the 138 nonprofit leaders who responded to our survey, my colleagues Ellie Buteau, Ramya Gopal, and I found that these nonprofits certainly have a perspective on how transparent foundations are and why this matters to their organizations.

One takeaway from our research is that to nonprofits, foundation transparency means being clear, open, and honest about information that nonprofits care about, which is information about foundations’ processes and decisions that have implications for their work.

We also learned that there are key areas where nonprofits desire greater foundation transparency:

• What foundations are learning through their work;
• How foundations assess performance and the impact they are having;
• Foundations’ selection processes and funding decisions.

Nonprofit leaders view information about these issues as important to their organizations. These leaders also report that the foundations that are more transparent are more helpful to their organization’s ability to work effectively, easier to develop good relationships with, and more credible.

To my earlier questions of what is transparency and why does transparency matter, the data we collected from nonprofit leaders indicates that nonprofits want meaningful, clear information that will help them plan, assess, and spend their time wisely. Such transparency is in the interests of both the foundations and the nonprofits they support.

Andrea Brock is a Manager on the Research team at the Center for Effective Philanthropy. You can find her on Twitter @CEP_Andrea.

Join the conversation about the findings featured in Foundation Transparency: What Nonprofits Want on Twitter using the hashtag #granteevoice. Hear Andrea speak about this topic at our upcoming national conference, Pursuing Results, and join the discussion at #CEP13.

In this video, President Phil Buchanan previews the agenda for our time in Detroit and highlights several of the exciting sessions on our program. From outside experts armed with insights for philanthropy to seasoned foundation leaders sharing lessons from their experience to the unveiling of new CEP research, this conference will provide attendees a chance to learn and connect.

Hope you’re as excited for this conference as we are. See you in the Motor City next week!

Mark Russell is the Director of Communications & Programming at the Center for Effective Philanthropy.

Nonprofit leaders commented on the burden that different requirements, definitions, and metrics from different foundations place on their organizations.

One nonprofit leader pointed to the creation of standard measures as a way that funders could relieve this burden. The respondent said, “If foundations can come to an understanding and develop standardized measures of success, the nonprofit community can focus on the actions that will lead to success.” Smaller, yet valuable, steps that funders could take would be to consider whether, and how, they will use all of the information they require from grantees, and ask grantees what information they are already collecting for their other funders or for their own organization’s use.

Ellie Buteau is Vice President of Research at the Center for Effective Philanthropy. You can find her on Twitter @EButeau_CEP.

Join CEP for multiple sessions on the topic of nonprofit performance assessment at our upcoming national conference, Pursuing Results, and follow the discussion at #CEP13.

But reading this year’s Nonprofit Finance Fund State of the Sector Survey, generously supported by the Bank of America Charitable Foundation, made me realize how much higher the stakes are becoming; it’s about much more than a personal win. Open, truthful dialogue between funders and grantees has always been important (if elusive).

It is now imperative.

The nonprofit sector’s ability to adapt and meet growing social needs depends on nonprofits and funders having frank conversations and, together, making tough decisions about how to move forward.

The Survey results affirm what many of us working in the social sector in the United States already recognize: that demand for services continues to increase faster than available funding.

• 78 percent of organizations reported increases in demand for their services in 2012 and 83 percent anticipate even greater demand this year.
• A majority of organizations reported that they could not keep up with demand last year and do not think they will this year.
• For self-identified “lifeline” organizations, the situation is worse—almost two-thirds anticipate they will not keep up with demand this year.
• Government payments fail to cover the full costs of services for four out of five organizations that receive government funding

None of this is new news. And despite the gloom and doom, most organizations are managing to survive. After the shipwreck of the great recession they are treading water, if not exactly getting ahead.

But the full Survey results point to a growing understanding that treading water is not going to be good enough. Treading water is a good-enough response if the storm is breaking up and you can see land nearby. But what if the storm is just gathering and we are out on the open ocean?

Many Survey respondents recognize that we cannot hunker down and wait for the clouds to clear. They have taken stock of demographic pressures and economic realities. They are not waiting for government funding to return to pre-recession levels or for demand to subside. Almost 40 percent plan to change how they raise and spend money in 2013.

For these leaders, the Era of Adaptation has dawned. What does Adaptation entail? Some organizations are partnering and merging, shutting down programs they cannot run independently. Others are tapping new revenue sources, ramping up private fundraising efforts, or starting revenue-generating enterprises. They are engaging volunteers in new ways, contemplating taking out loans, and investing in their capacity to measure and demonstrate their impact.

Unfortunately, while the Era of Adaptation is upon us, the financing conversation stays stuck in the Cult of the New and Different: “program expansion” remains by far the one financing need that most organizations (60 percent) report comfort discussing with their funders. Few report comfort discussing issues that become more pressing when an organization is seeking to adapt: operating reserves, cash flow, and facilities investment.

We do not know exactly how we will adapt. But we do know adaptation requires nonprofits to invest in building and sustaining their organizations, not just running programs. They will need to understand how the money they raise and spend connects to program results. They will need to communicate that link better. And they will need to have funders equipped analytically and culturally to understand these financing needs.

In this Era of Adaptation, the open dialogue, mutual respect, and productive collaboration that the Grantee Perception Report tracks are not just ways for task-oriented program officers to keep score. They are the foundation on which we will build the relationships that can navigate the hard choices ahead of us.

Antony Bugg-Levine is CEO of Nonprofit Finance Fund. You can find him on Twitter @ABLImpact. Hear Antony speak about the topic of supporting nonprofit sustainability at our upcoming national conference, Pursuing Results, and join the discussion at #CEP13.

Here at CEP we try hard to take smart risks. But, we’re like any organization that’s taking real risks: sometimes they don’t work out.

Our efforts over the last couple years to scale up a data visualization tool we called the “Strategy Landscape” fall into this category. As we made the tough decision to stop offering Strategy Landscapes, we did learn something about tools for funder coordination and collaboration, and I want to share some thoughts in the hopes that it might have some value for others seeking to facilitate collaboration.

In 2010, we were actively thinking about how to provide tools that could help funders understand and act on information about funding strategies in the fields and communities in which they work. So when Monitor Institute (now Monitor Deloitte) approached CEP about a tool they were developing to classify and visualize grantmaking strategies across funders, we were excited. It soon became clear that the Monitor Institute Strategy Landscape addressed two important challenges we’d observed:

• Funders often find it difficult to articulate and communicate strategies internally and with peer funders
• Collaboration and coordination across funders at the level of strategy seems somewhat limited

In 2011, CEP began a pilot initiative with Monitor Institute to develop Strategy Landscapes to facilitate deeper understanding, enhanced communication, and more collaborative decision making among groups of funders. We recruited three pilot groups—funders working in Detroit, New Mexico, and on K-12 education. By the end of 2012, the tool had been used by five collaborations and one large funder who wanted to map their “internal” strategic landscape.

In total, the tool brought more than forty funders together to focus on their strategies and grantmaking. We are proud of the success of these efforts and the relationship-building and group discussions the tools have helped catalyze. We witnessed some fantastic conversations and we hope the tools will stimulate many more. Nevertheless, we have concluded that there just isn’t enough sustained demand for the kind of comparative, standardized strategy information the Strategy Landscape provides to continue offering it.

A few lessons in particular stand out for me and my colleagues.

The incredible motivation and interest of a few early groups of funders that really craved this kind of information led us to overestimate the demand and believe that examples of use would snowball and generate further enthusiasm. We were wrong. (We should have realized that earlier, and avoided turning a little bet into a somewhat bigger one.) We also didn’t accurately anticipate the level of technological flexibility the tool would need when, inevitably, groups wanted to use the tool differently than we had anticipated. We fell down on both of those counts.

We also learned some things about the challenges of facilitating coordination and collaboration across funders:

• Many funders often didn’t categorize individual grants by strategy or geographic target. (And for some funders, as we knew from our previous research, strategies didn’t exist at all.) It took more staff time to code grants and strategy information than we expected. And we thought that it would be relatively easy for funders to add this level of tracking to their grants management systems to facilitate future updates of the tools. But it wasn’t.
• Many funders were most interested in a strategy visualization tool primarily during moments of major planning. We knew up front that that daily or weekly use of the tool was probably necessary for motivating continued engagement with and updating of the tool. Use patterns point toward a much more periodic use of the tool. I think we succumbed to a classic “if we build it, they will come” temptation. Furthermore, CEP doesn’t provide the on-the-ground presence in fields and communities that could have helped increase use of the tool at other important moments.
• Some funders believed their grantmaking strategies were unique. From some funders, especially those that did have clear and defined strategies, we encountered resistance to even modest generalizations that were necessary to group strategies from different funders together. There was much more energy for focusing on what made strategies different than on what made them similar. Individual funders wanted the “standardized” taxonomy to reflect their particular language and strategies.
• Some funders had price sensitivity for tools to facilitate strategy coordination and collaboration. It’s clear that the Strategy Landscape was viewed as a “nice to have,” not a “need to have.” It also had high fixed costs because the tool was designed to be quite customized for each group using the tool in a new content area or community. Overall, each Strategy Landscape cost about $100K. Split over 10 or so foundations, that’s not a huge cost for each foundation, but the initial price tag was scary and the coordination of getting everyone to chip in was extremely time-consuming.

Put it all together, and we learned that this was too complex and customized a tool—and therefore too expensive and time-consuming—for what most funders want right now. We’re still talking with Monitor Deloitte about whether there’s a way to open-source the Strategy Landscape, making it more cost effective and potentially easier to implement for funders interested in visualizing their strategies. For example, CEP could lightly support a group of funders implementing it on their own. But the time that has been required of CEP for cross-funder coordination, data collection, and data cleaning leaves us a bit skeptical about whether even an open-source version could be practical.

We still believe that visualizing customized information about how grants across foundations roll up into common categories of strategy, geographic targeting, and tactics (policy, direct service, etc.) could be very useful as funders work to address common issues. But this just wasn’t the right tool at the right time.

Kevin Bolduc is Vice President of Assessment Tools at the Center for Effective Philanthropy. You can find him on Twitter @kmbolduc.

For about four minutes, the former President talked proudly about nearly 30 years of fighting this scourge. He said full eradication of Guinea worm is in sight—down from millions of cases a year in the past to just a handful so far in 2013. And then Jon Stewart (at 4:28 in this video) jokes, “Bill Gates is out there with malaria, do you see him and rib him a little bit? Like ‘Hey man, how’s it going with malaria?’” Carter replies, “We don’t rag ‘em because we get a lot of money from the Bill Gates Foundation….They’re really good people. I really am one of Bill Gates’ greatest admirers.”

Watch the video, both for the amazing story of what a funder and a grantee can do together, and for President Carter’s reaction.

It was a perfect reminder: if it’s tough for a former President to speak candidly about his funder directly, it’s got to be impossible for most grantees.

And that’s why CEP’s work to provide candid, comparative, third-party feedback from grantees, declined applicants, donors, and staff remains just as important as ever.

It’s only through a confidential survey—in which the respondent’s name will never appear—that a funder can hear amazing comments like these and be confident that it represents a true picture of their relationship and not just an artfully-framed snapshot from a financially-dependent nonprofit.

Below are some positive quotes from Grantee Perception Reports (GPRs) that funders have posted on their websites as an act of transparency and accountability (you can see the full set of links to public GPRs here).

From Wilburforce Foundation:

“All of the Wilburforce staff are a joy to work with. Even when they are asking a difficult question or pointing out an area in which your work might improve, they do it very professionally and nicely. They push just the right amount. They do not try to change your plans, only to improve the way you think about or conduct your work. Above all they are supportive of the work, the goals of the work, and their grantees as individuals.”

From Rockefeller Brothers Fund:

“RBF is a role model for other private foundations, both in terms of the clarity and integrity of their funding processes, and their mission and commitment to creating meaningful, long-lasting change that promotes and respects diversity and cultural understanding world-wide.”

From The Rhode Island Foundation:

“The program officer we work with is highly professional, asks great questions but really took the time to understand the goals and value added of our program for RI residents. Working with her and RIF has been a real pleasure that has strengthened our program work, connections in the state and messaging as well.”

Combined with some comparative data, comments like these can provide real confidence that grantees believe a funder’s work is, well, working!

Of course, while many comments are positive, not all of them are. One of the most frequent comments I hear from funders when talking about a potential grantee survey is this one: “We don’t really need to do a survey. I have great relationships with my grantees. They’re totally forthcoming about what we could do better.”

I can promise you, that’s just not true.

A comment like this is unlikely to be shared directly.

“The disparity between expectations and results was the most disappointing that I have encountered in a lifetime of fundraising. The organizational opportunity costs and inter-organizational relations costs may have exceeded the benefits.”

Or this one.

“We always felt we had a ‘Hannibal-The-Cannibal’ relationship—stay where you are and mind yourself and it’s okay. Take one step forward and your arm will be bitten off.”

Or this one.

“If adequate funding to cover the administrative requirements were requested, such a request would be denied… The foundation treats grantees as criminals who are about to abscond with the funds. The minute detail required for all expense items implies that no level of trust exists between funding source and grantee.”

These are just a few examples from different foundations, but the topics raised are not uncommon. When comments like these rise to the frequency of a theme for any particular funder, it’s important information that should help improve effectiveness and impact for everyone!

CEP’s data strongly suggest that grantees want to find funders that are aligned with their work. They want funders to help them create more impact, with money and, often, with advice and assistance as well. That requires a great funder-grantee relationship. An upcoming report on responses to a recent Project Streamline survey of nonprofits shows that more than 40 percent of respondents have “never had a funder ask for feedback.” Yet we know that grantee feedback is a window into how a funder can make the best use of every last dime it has.

Ten years into providing funders with candid, comparative grantee feedback through CEP’s Grantee Perception Report, a lot has changed. The survey has continued to evolve, as we’ve constantly updated it based on feedback from funders and new research, we’ve increased opportunities for customization, and we’ve moved the report delivery online while making the data easier than ever to interpret. Funders that have used the tool more than once often have seen real improvements in their grantees’ experiences.

Don’t lose out on the opportunity to get this important feedback. I promise you, it will make a difference.

Kevin Bolduc is Vice President of Assessment Tools at the Center for Effective Philanthropy. You can find him on Twitter @kmbolduc.

At a time when the most risk-averse sector—government—needs to become an enabler, unfortunately leadership from other sectors is in short supply. Levels of trust in corporations and the media hover in the low double digits according to the Edelman Trust Barometer. And, the connective tissue to facilitate cross-sector collaboration barely exists.

Hold up. The words above alone even sound boring.

How are we supposed to reinvent America if we’re all so mired in “theories of change” and abstractions?

Who ever committed their blood, sweat, toil, and tears to a theory of change?

We’ve become such a rationally driven society that we’ve forgotten what got us here in the first place: the inventors, tinkerers, entrepreneurs, and innovators like Thomas Edison, Harriet Tubman, and Steve Jobs.

These people led with their hearts, had passion for exploring the unknown, and validated their hypotheses through many iterations. Examine the research on innovation and creativity, from Peter Drucker to Clayton Christensen to Keith Sawyer, and you’ll find that ingenious ideas almost never hatch fully-baked. Experimentation and often painstaking learning underlies most great inventions and innovations.

America wasn’t invented by those afraid of failure.

As Edison said, “I haven’t failed, I’ve found 10,000 ways that don’t work.”

At Pixar, cofounder and president Ed Catmull describes the creative process on a movie there as going from “suck to non-suck.” Story artists at Pixar use an average of over 50,000 storyboards when making a new film.

Whether Jobs, Edison, or Pixar animators, these are experimental innovators who use little bets to work toward an imagined future.

So how can it be that the world of philanthropy has become so risk averse and afraid of failure when it’s just the moment for leadership?

Government is waiting.

When Pixar director Brad Bird was told he couldn’t possibly manage the complexities of making The Incredibles, he issued a call to arms at Pixar:

“Give us the black sheep. We want the artists who are frustrated. We want the ones who have a different way of doing things that nobody’s listening to.”

What the world needs more of right now isn’t analysis and planning. The world needs more “black sheep,” people who are willing to embrace their own humanity, creativity, and voices by using small, affordable bets to learn and lead a new way forward.

Much like the Carnegies, Rockefellers, and Morgans stepped up to lead the country forward after eras of extravagance, America desperately needs a lot more courage and creativity from its philanthropists.

The good news is that there’s a whole generation of socially-minded entrepreneurs just waiting in the wings. They’ve got the insights. They’ve got the energy and resilience. And, they’ve already learned to collaborate well, since they have no other choice.

These social entrepreneurs just need more courageous people to stand up and bet on them a bit ahead of the curve. They need more black sheep.

This revolution will be improvised.

Peter Sims is an entrepreneur and award-winning author specializing in disruptive innovation and creativity. You can find him on Twitter @petersims. Hear Peter speak about the themes from his book Little Bets: How Breakthrough Ideas Emerge from Small Discoveries at our upcoming national conference, Pursuing Results, and join the discussion at #CEP13.

In our 2011 report State of Foundation Performance Assessment almost half of foundation CEOs (48 percent) reported that they were combining information across functions into a foundation-wide performance assessment.

The most frequent reason cited for doing so was to learn and to improve the foundation’s future performance. Other frequently cited reasons were demonstrating accountability for the foundation’s use of resources and understanding the external impact that can be attributed to the foundation’s work.

CEOs working at foundations that reported combining information into a foundation-wide performance assessment differed from those who did not on a few dimensions:

• They tend to collect more types of information to understand effectiveness
• They find the operational data they collect more useful in understanding how effective they are
• They report having a better understanding of the progress their foundation is making to realize its strategies

* * * * * * * *

If you are attending the COF conference this week, be sure to swing by to visit CEP at booth #500 for a demo of our new online reporting tool.

To read about foundation CEOs’ attitudes toward assessment and what foundations are doing to understand their performance, see the report, The State of Foundation Performance Assessment: A Survey of Foundation CEOs, published by the Center for Effective Philanthropy.

Ellie Buteau is Vice President of Research at the Center for Effective Philanthropy. You can find her on Twitter @EButeau_CEP.