The Chronicle of Philanthropy - December 10, 2009 Issue

Foundations Need to Take Greater Chances in Hiring Leaders, by Pablo Eisenberg

In the December 10 issue of The Chronicle of Philanthropy, Pablo Eisenberg, a Senior Fellow at the Georgetown Public Policy Institute and a fascinating foundation world pundit, writes an insightful article about the current thinking and process of hiring foundation leaders.  He cites the increasing reliance on professional recruiters to fill the top slots from external candidate pools, a practice that is pervasive today.

Eisenberg argues that problems exist with this process.  First, executive recruiters normally would not promote a candidate that is “edgy” or a risk taker. And by weeding out such candidates, the executive recruiter basically substitutes its judgment for that of the Board. Mr. Eisenberg blames this practice for “the selection of so many mediocre, lackluster people in the nonprofit world.” Second, the process ignores the well qualified talent within, such as successful program officers who already have great relationships with donors and grantees.

What's Wrong With Charitable Giving - And How To Fix It (Post #1)

In the November 9th issue of the Wall Street Journal, Pablo Eisenberg, a senior fellow in the Center for Public and Nonprofit Leadership at Georgetown Public Policy Institute in Washington, D.C., wrote an article entitled “What's Wrong With Charitable Giving—And How To Fix It.” This is the FIRST in a series of posts about that article.

The foundation world is being asked to take a hard look at its grant making policies and practices. Are we giving nonprofits enough, and are we funding the most critical needs of the region? In this recent WSJ article, Eisenberg answers both questions with a resounding NO. Caught in the squeeze between reduced funding and increased demand for services, nonprofits are being forced to cut essential health and social services.

Eisenberg therefore lists 9 changes donors and foundations could do to fix this problem.  Here are the first three.

1. Increase the Distribution Percentage

Even when foundation endowments were increasingover the last 20 years, the minimum required payout rate for foundation net assets stayed at 5%. Eisenberg advocates an increase in the payout rate to 6%. He estimates that one additional percentage point would add approximately $10 billion to total annual nonprofit grant making.

2. Increase General Operating Support

Like Rick Cohen, Eisenberg advocates flexible capital for nonprofits, recommending that at least 50% of our grants be unrestricted. Give nonprofits the “lifeblood” they needs to hire and maintain staff so they can build internal capacity and improve community impact.

3. Increase Multiyear Funding

As any nonprofit executive will tell you, planning is virtually impossible without multiyear commitments from funders. Fund the best nonprofits out there, and let them achieve long term success that only multiyear funding can promote.