Philanthropy & Public Trust Initiative

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This is part of "Principles for Grantmakers & Practice Options for Philanthropic Organizations."

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Making a Difference in Philanthropy:
Leadership on Ethics and Standards

by Bill King, President, Minnesota Council on Foundations

Minnesota philanthropy has always been known for giving out of proportion to the state's size. Philanthropy in our state also has a history of being ethical and highly principled. It is built on the shoulders of giving pioneers with names like Crosby, Dayton and Hill.

So, why do we revisit, revise and retool our principles and ethical and legal practices? Why spend so much time on this work if we don't have major instances of philanthropic fraud and abuse?

Purposeful work in creating standards and identifying exceptional philanthropic practices keeps us engaged in continual improvements, brings others new to the field into the fold, and demonstrates to all constituencies our commitment to not just maintain but also seek the public's trust.

The Minnesota Council on Foundations was founded in 1969 by several leading foundations at a time of increased scrutiny, as Congress had recently passed the first substantial regulation of philanthropy. From that beginning, MCF's work focused on ethics, law and "lived" standards in the field. Our role was to advance the work of foundations in fostering public trust.

Increased Activity in '80s-'90s

Beginning in the mid-1980s, our work became even more attuned to public trust and accountability. A lot was happening. Investigative reporting on philanthropy, such as the Philadelphia Inquirer's "Warehouses of Wealth," appeared in the media. There was increased demand for transparency and accountability. And the field itself in Minnesota took on discussion and debates of large topics, with the impetus of larger-than-life foundation leaders like Jim Shannon, Humphrey Doermann and others. Several topics were important at the time: Is philanthropy a field of practice, a profession or an industry? Should there be codified ethical standards to guide the work of philanthropy? More staff were employed at foundations to coalesce around issues, to seek training around best practices and to try innovative new ideas in philanthropy.

There were several milestones in the drive to create MCF's original Principles for Grantmakers:

  • The MCF board of directors adopted "Guiding Values and Responsibilities" for the work of the board in 1989.

  • The 1991 "Imperatives for New Times" strategic plan identified overreaching requirements, one of which was "high standards in philanthropic practice."

  • In 1992, MCF launched "Who's Minding the Store," a board-led study of trusteeship and governance.

  • In 1994, a task force began two years of work on what would become the first Principles for Grantmakers and the accompanying Illustrative Statements of Practice, both of which were adopted in 1996.

  • In the 1997-1998 membership renewal cycle, subscription to the Principles for Grantmakers became a condition of membership.

Minnesota Model

Minnesota has become a model for many others. We were the first regional association to adopt a list of principles for foundations and corporate giving programs, and our Principles for Grantmakers have been adopted by a number of regional, national and international organizations. We still remain one of two regional associations that requires signing on to the principles as a condition of membership.

Of course, principles and the practices to achieve them are not static. Changes cause us to rethink and reassess. In 2004, 10 years after our first foray into the public trust and accountability work, MCF decided to reexamine the 1996 principles and practices to see whether they needed to be updated within the context of philanthropy today.

We saw several things. Minnesota philanthropy had expanded significantly. There were new players, new approaches and philanthropic vehicles, larger wealth at younger ages and increased research of the field that made all these trends noteworthy.

Communications had become more rapid and accessible through the Internet, fueling increased transparency and the demand for even more. Disasters from 9/11 to Hurricane Katrina had highlighted chinks in service delivery systems, along with demands for the accounting of every dollar spent. The media's influence and investigative reporting had helped shape perceptions where a few bad actors tainted the entire field.

New Public Trust Work

Into this mix, the MCF board launched a renewed commitment to our public trust initiatives. In mid-2005, the board empanelled a Public Trust Task Force, chaired by Dan Johnson, former chair of the board of directors, and co-chaired by Holly Sampson, current board chair. That group of 15 members and staff took on the work of revisiting each idea and concept from the founding 1996 efforts. The result is a splendid new body of Philanthropy & Public Trust work: new Principles for Grantmakers that are more aspirational and less transactional than the earlier version, along with a preamble that places philanthropy within the context of the larger world today, and new Practice Options for Philanthropic Organizations that offer the best thinking of philanthropic leaders on exceptional foundation practice.

I want to personally thank and applaud the efforts of the task force; every individual brought something unique to the process. The task force and I also want to praise the work of Jane Ferguson, MCF's vice president of communications, who as our chief scribe helped synthesize our thoughts into cohesive language and never lost sight of the clarity and consistency of the final product.

Will we revise the principles in another 10 years? It's hard to predict when the time will be auspicious to revisit them yet again. As we have learned from history, the moment will arise from the calculus of growth, change and leadership requirements in the field of philanthropy.