Beyond Grantmaking:
Reimagining the Potential of the Community Foundation in Its Second Century

Ambassador James A. Joseph
2014 Council on Foundations Fall Conference for Community Foundations
Cleveland, Ohio
October 20, 2014

(Much of this speech is copyrighted from a book soon to be published by the Duke University Press and should not be quoted without attribution to the author)

Let me say how delighted I am to participate in this 100^th anniversary of community foundations and to be invited to both reminisce about the past and reimagine the role and potential of the community foundation in its second century. In Shakespeare’s Hamlet, Horatio says to Fortinbras, “I have some rights of memory in this kingdom,” so I hope you will excuse me if I take a moment to remember with great fondness our celebration of the 75^th anniversary in 1989. A few of you in the audience will remember the Council’s initiative that we called the National Agenda for Community Foundations. It was chaired by Steve Minter, who was then President of the Cleveland Foundation, and it was composed of five projects: On-site consulting, Data gathering, National Training, National Presence and Community Leadership. The work of the National Agenda influenced or supported directly the development of more than 200 community foundations in the United States and I personally travelled to Europe, Africa, Asia and South America as an evangelist for the revolutionary idea introduced here in Cleveland by Frederick Goff. You can imagine how pleased I am that there are now more than 1700 community foundations worldwide, and more of them are outside the United States than in our national borders.

We begin the second century of community foundations at a difficult and dangerous time in the life of the American people and the history of an interdependent world. Wherever we look on the globe it seems to be the destiny of populations group of all sort to live between two worlds, an old order that is dying but not yet dead, and a new order that is conceived but not fully born. All around us we see the trauma of transition, even the emergence of what psychologists call a period of free-floating anxiety in which we become anxious about being anxious.

Peter Drucker, the great management guru, once warned that the greatest danger in times of turbulence is not the turbulence; it is to act on today’s problems solely out of yesterday’s logic. In the next few days, we will celebrate the rich history of community foundations and much thought will be given to how to improve both the craft and art of grantmaking; how best to trigger the charitable impulse; and how best to market the revolutionary idea introduced one hundred years ago here in Cleveland, but soon spread across the nation and around the globe. My purpose in this opening plenary, however, is to raise and comment on three questions that I believe should be a part of every conversation where community foundations gather to reminisce and to dream. They are a logical follow up to Paul Ylvisaker’s essay in the publication by the Council in connection with our 75^th anniversary celebration.

Paul defined the essential role of a community foundation as making a community more of a community, but he also wrote about the need to retain the power and attraction of the local even as the territorial concept of community constantly expands. Whether you are a community foundation in the Americas, Europe, Asia or Africa, you will need to ask: 1) What does it mean to help make a community more of a community in a world that is integrating and fragmenting at the same time, a world in which the more interdependent we become, the more people are turning inward to smaller communities of meaning and memory; 2) What does it mean for the mission and impact of a community foundation when our communities are neither fixed nor final. They are always in the making; and 3) Are we sufficiently imaginative when we speak of the community foundation as a social enterprise that goes beyond grantmaking?

While leadership for the first community foundations was provided by civic-minded bankers, our 1989 survey found that more than 50% of the executive officers and staff came to their assignments from other positions in the nonprofit sector while board and distribution committee leaders were more likely to be in business or law. Today, I would argue that we need leaders who reflect and respect the demographics of a community and leaders who are more than administrators who manage and distribute charitable funds efficiently. Leading begins with leaders who are willing to take risks. Many of the great community foundation leaders I have known in the last half century have been men and women who were willing to take risks. I have been a manager and I have been a leader. As a manager, I prized order, but as a leader I had to be willing to risk chaos.

For years, our society looked for leaders who inspired us, informed us and called us to a higher purpose. More recently, in many places in many parts of the world, more people seem to be looking for leaders who fit their comfort zone, people who look like them, act like them and think like them, that is, if they think at all. It is this romanticizing of ordinariness that threatens not only the potential for social cohesion but narrows both the idea of a public good and those selected to lead us in our public life.

Reexamining and Reaffirming the Centrality of Community in the Civic Narrative

And so my first observation as we launch the second century of community foundations is that you are ideally equipped by your charter and your legacy to take the leadership in reaffirming the centrality of community in the American civic narrative. It is indeed odd that since we met twenty five years ago, cultivating community and what it means to be a community of communities seem to have receded as an American affirmation. We hear intense debate about whether the individual or society should have primacy in the American narrative. A primary calling of community foundations in their second century, therefore, is to help get the civic narrative right; to help bring back into balance the romance of rugged individualism and the enduring effort to form a community where individuals embrace, reaffirm and take responsibility for supporting and promoting the common good.

Our constitution begins with the words we the people, but while I the person was never mentioned it was implicit in the idea of promoting a more perfect union. And while people who look like me were not included as full persons in this revered, almost sacred, document, those who wrote it had the language right when they argued that if we were to form a more perfect union we would have to establish justice and if we were to ensure domestic tranquility we would have to promote the general welfare. Even among those who emphasized the need to provide for the common defense, there were some who understood that the best way to demonstrate the efficacy of our democracy to critics abroad was to demonstrate that it could work equitably for all of our citizens at home.

In recent years, there have been large voices suggesting that we build community by crisis and we build community by accident but we do not know how to build community by design. Quite the contrary, I am sure it has been your experience as it has been mine that when neighbors help neighbors and even when strangers help strangers both those who help and those who are helped are transformed. When that which was their problem becomes our problem, there is a new connectedness and new forms of community are possible. I learned many years ago that when you experience the problems of the poor or troubled, when you help to maintain excellence in theater or dance, when you help someone to find special meaning in a museum or creative expression in a painting, when you help someone to find housing or regain their health, when you help to fight bigotry and to promote diversity, you are far more likely to find common ground and you are likely to gain a sense of self-worth in the process.

So where do we look for a concept of community appropriate for a world that is integrating and fragmenting at the same time. I am delighted that this is an international and multicultural gathering because I want to refer to a notion of community that comes from the Southern tip of the continent that produced one of the greatest leaders of the 20^th century. Nelson Mandela grew up at a time and in a place where the notion of community was best expressed by the Xhosa proverb “People are people through other people.” It followed that to deny the dignity of another person is to deny one’s own. To diminish the humanity of another person is to diminish one’s own. It was not so much the idea of “I think, therefore I am,” but “I am because you are.”

Reimaging the Community foundation as a Social Enterprise that goes beyond Grantmaking

So what does this imply for the second century of community foundations? I have argued that we will need to develop a second century narrative that reaffirms the centrality of community in the American story, and I have emphasized the need to redefine the notion of community to fit the realities of a world that is integrating and fragmenting at the same time. I want now to shift gears and say a word about the need to reimagine the second century model of the community foundation as not simply a grantmaker, but as a social enterprise that strategically deploys not just its financial capital, but its social, moral, intellectual and reputational capital as well. But going beyond grantmaking may first require us to shed our inherited fear of public life, especially the delusion that the community foundation is so constrained in what it can say or do about public policy that we must restrict our presence to promoting and facilitating charity rather than engaging in philanthropy that informs or enriches public policy.

Some of you have heard me use the story of the Good Samaritan to make the opposite point, but for those of you who have not I ask you to imagine that a traveler finds an injured man on the side of the road and stops to provide help, but as he repeats that trip he constantly finds someone injured in the same spot and each time he stops to provide aid. While we applaud him for his charitable spirit, should he not at some point ask who has responsibility for policing the road? His impulse for charity should invariably lead to a more strategic intervention. And that is why so many people who started out providing charitable relief ended up seeking to eliminate the cause of social injury rather than simply ameliorating consequences. Charity is good, but justice is better.

To remember Frederic Goff is to remember that he had been a small town mayor before he set out to loosen the grip of what he called the dead hand of the past. It is thus not surprising that the community foundation became not an independent silo in the philanthropic sector but a leading facilitator for collaboration within the sector and for partnerships with the public and private sectors. Even the Council on Foundation owes its growth and impact over the years to the leadership of community foundations who understood that strengthening communities required cooperation among the myriad models of organized philanthropy emerging. The community foundation provided proximity, credibility and local trust. As a corporate executive, I learned how important it was to work with community foundations in our local communities, and I even helped develop them where they did not exist.

For years, I have been advocating a form of intellectual engagement with philanthropy that looks critically at the macro-organizational model of a foundation as primarily a custodian of financial capital. It is now time to take the next step and begin the examination of how a foundation can use not just conventional assets, but the other forms of capital that are so easily overlooked or, at best, underutilized. I have been pleased to see more foundations addressing the long-term disconnect between grantmaking and investment functions. But let me be bold enough today to suggest that the foundations with the most impact in the second century may well be those that integrate into their operating plans, goals and strategies the use of at least five forms of capital at their disposal. Some of my friends who have heard me make this argument have started to call this the SMIRF plan, in that it calls for an integrated use of social, moral, intellectual, reputational and, of course, financial capital for making a community more of a community.

Social Capital

Robert Putnam popularized the concept of social capital and we now use it frequently to refer to the idea of networks, norms, social trust and voluntary cooperation for mutual benefit. But we rarely apply this concept to the new groups who are enriching our civic culture. Communities throughout the United States have been experiencing a population shift that has brought new neighbors who are fueling the economy and a new middle class of color that provides the potential for a new, but stronger, civic life. But before we can fully engage them in a common effort to make our communities more of a community, they must be made to feel that they belong, that their traditions are respected and their contributions recognized.

We need to take leadership, very active and high profile leadership, in demonstrating that diversity need not divide; that pluralism rightly understood and rightly practiced is a benefit and not a burden; and that the fear of difference is a fear of the future. As I travel around the world, I hear more and more people saying that until there is respect for their primary community of identity, they will find it difficult to fully embrace the larger community in which they function. Many onlookers see this as reason for despair, but it may be that the first stage in the search for common ground is the search for beginnings, a focus on heritage and history. Respect for differences may thus be the first requirement in making a community more of a community.

Moral Capital

The third asset of a community foundation after its financial and social capital is moral capital. You are custodians of values as well as resources. Who better than community foundations to inform, enrich and enlarge the present discourse in our society about equity and inclusion. This is an area in which I believe that it is time for our sector to lead again, time to de-bunk the misplaced myth that social change is off limits, especially the notion that it is hazardous to the health of the sector. One way or another, community foundations around the world are pointing to shortcomings in public life that are significantly changing the way we meet our responsibilities to each other as both local and global citizens.

While I emphasize the importance of moral capital, we do not necessarily need moral language to achieve moral ends. Nowhere is this more obvious than in how we address issues of equity and inclusion. Long before the authors of the book The Spirit Level documented how more equal societies almost always do better than less equal societies, there were community foundation leaders arguing that inequality lowers the quality of life for all of us, not just the poor. Many years later, the picture that emerges from comparative national research is that inequality is socially corrosive.

In other words, there is now empirical evidence that inequality damages social relationships, and that measures of trust and social cohesion are higher and violence is lower in more equal societies. That is the message we must convey as we remind our fellow citizens of our obligations to each other. We have an opportunity to change the narrative from simply a moral imperative to enlightened self-interest. I learned a long time ago that the language of morality can sometimes be a deterrent to achieving moral ends. Enlightened self-interest sells in many instances where public interest does not.

Intellectual Capital

Another asset of the community foundation that is often underutilized is its intellectual capital. Many activists in the sector are engaged passionately in public life, but like Thoreau at Walden Pond, there is a tendency to build castles in the sky and then set out to put foundations under them (no pun intended). Community foundations can help them to ground their passion into persuasive evidence by providing not just networks but knowledge. I found through my work as chair of the Louisiana Disaster Recovery Foundation, established by the governor in the aftermath of Katrina, that one of the most important assets we provided was intellectual capital that strengthened the capacity of those formerly marginalized to participate in deliberations about their future.

Reputational capital

A fifth asset of the community foundation is a form of capital we rarely think about and is one of the most overlooked and underutilized. It is what Robert Putnam has called reputational capital. Like conventional capital for conventional borrowers, community foundations can use their reputational capital as a kind of collateral for those whose formal credentials under state their potential and reliability. An endorsement through a grant, a loan, technical assistance or even high level partnerships is especially helpful to groups that are often marginalized because of the past of those who lead them and the pathologies of those who are served by them. Their leaders may be most effective in working with high school drop-outs, former drug addicts and the formerly incarcerated precisely because they were once victims of the same predicament; and because they greatly value their support from a community foundation they are very likely to acquire an additional incentive to perform responsibly.

So there you have it. Throughout the world, we see examples of community foundations, large and small, who understand that their uniqueness lies in the ability go beyond grantmaking. To them I say congratulations. But I would be less than honest if I did not say to others that both your community and our interdependent world will benefit when you intentionally develop and deploy the full tool kit at your disposal. What I have been trying to say is that you have an opportunity to be the authors of a new narrative, even actors who by your action write the history of a new age. And I remain optimistic about your future because like the character in the Sophocles play, I believe that it is possible for hope and history to rhyme.

Over the last twenty five years, actually I should say over the last half century, I have ended almost every message of this sort by trying to place what you do and who you are in a deeper perspective than simply the practical and most visible aspects of your work. And there is no better way to remind your countries and communities of the importance of community foundations and those who lead than to once again quote Vaclav Havel whose country my wife and I left a few days ago to join you for this great occasion. Havel once wrote that I am not an optimist because I do not believe that everything ends well. I am not a pessimist because I do not believe that every things ends badly, but I could not accomplish anything if I did not have hope within me; for the gift of hope is as big a gift as the gift of life itself.

And that is the sum of my message today, when community foundations provide help you provide hope, and the gift of hope is as big a gift as the gift of life itself. Thank you and keep the faith.

(Ambassador James A. Joseph was appointed President Emeritus of the Council on Foundations in 1995 after almost 14 years as Chief Executive Officer. He has served in senior executive or advisory positions for four United States presidents, including Deputy Secretary of the Interior for President Jimmy Carter and U.S. Ambassador to South Africa for President William Clinton. He has also served as president of the Cummins Foundation and taught at Duke, Yale and Claremont)