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This report summarizes the results of a series of focused interviews with executives, program staff, and consultants at U.S.-based foundations. The interviews were conducted between March and September 1998, by Graham Phaup, director of the Project on Ethics and Philanthropy at the Institute for Global Ethics under a grant from the David and Lucile Packard Foundation.
In September 1998, the Institute for Global Ethics received a two-year, $600,000 grant from the David and Lucile Packard Foundation in Los Altos, California, to produce an ethics training program for executives, program staff, and board members of the nation’s 42,000 charitable foundations.
Over the previous six months, under an earlier planning grant from the Packard Foundation, the Institute surveyed more than 40 foundations to gauge attitudes about ethics and values in philanthropy. This report sets out those findings, which include the following:
Overall, foundations generally consider themselves ethical. Within the foundation community, however, there is less opportunity to discuss ethical issues than most foundation staff and board members would like. The topics they want discussed include conflicts of interest; abuse of power and privilege; self-dealing; the need for transparency; issues of nepotism, diversity, and pluralism; arrogance in dealing with grantees; and questions of ethical investing.
The two-year grant supports the production of a CD-ROM„based interactive training module. The module is based on another Institute CD-ROM, Navigating the Waters, designed for corporate ethics training. That program is founded on the conceptual framework outlined in How Good People Make Tough Choices, a book by Institute founder and president Rushworth M. Kidder. The CD-ROM uses interactive segments of text, graphics, audio, and video clips to engage the user in ethical decision making. The new module was substantially redesigned, and incorporates actual case-study dilemmas from the foundation community.
The Institute for Global ethics, a nonprofit, nonpartisan, and nonsectarian organization, works with businesses, government, and schools from its offices in Camden, Maine, and London, England. With more than 1,100 members worldwide, the Institute publishes a quarterly periodical, Insights on Global Ethics; consults with corporations and educational institutions in the United States and overseas; and conducts frequent ethics seminars.
In order to test the response of the foundation community to the idea of an ethics training program, the Institute launched a sweep of interviews in April of 1998. The objectives of this survey were threefold:
The information reported below is based on 40 interviews conducted between April 12 and May 29, 1998.
The range of these interviews was kept as wide as possible. We talked to foundation heads, program officers, trustees, and consultants across the country. The interviews touched the opinions of leaders in private, community, corporate, operating, and family foundations. Particular attention was given to diversity, and the views of key minorities are included. This survey was not intended, obviously, as a random sample. It should be borne in mind, too, that the selection process tended to surface many individuals already known to be interested in ethics, who were chosen because they could be particularly useful in helping us determine the most effective format for the training.
Half of those people we interviewed head foundations, with program officers comprising another 30 percent. The remaining 20 percent was made up of consultants, trustees, and representatives from the regional association of grantmakers. The organizations polled employ more than 1,900 people, with combined assets of some $32 billion and a combined annual grant budget of more than $1.5 billion.
A preliminary list of interviewees was prepared at the Institute. We relied on referrals from other foundations in our search, to cast the net as widely as possible and in order to achieve as much impartiality as possible. Many interviewees were found through direct referral during the first few interviews.
Graham Phaup, director of the Project on Ethics and Philanthropy for the Institute, personally interviewed the participants. Among more than 40 approaches, only one person refused to participate (due to a heavy travel schedule), and only one call was terminated early. Most interviews were conducted over the telephone. The remaining meetings, some ten in all, took place in person at the April meeting of the Council on Foundations’s annual conference in Washington, D.C.
The length of the survey worked well, with most interviews completed within the allotted half hour. We were particularly careful not to overstay our welcome on each call. However, with most participants highly engaged in the topic, we were encouraged by the amount of time people gave us. The head of a major community foundation in Florida spoke of ethics as being "the hallmark of their operation," and was delighted that the Packard Foundation was "taking the lead"—a view echoed by many of those we interviewed. This survey, remarked one foundation consultant with more than 40 years’ experience, "cuts to the soul of the foundation community’s integrity." Percentages below are based on the proportion of the 40 participants giving that particular answer.
In general, how important do you feel ethics is as a topic of public concern these days?
Our respondents detect a critical public concern over ethical issues. Many commented on the lack of ethics among the nation’s public figures. Only 12.5 percent feel that the public’s concern is less than it was three years ago. The majority spoke of escalating concern among the public over ethical behavior.
Do you think people are clear about what is meant by the word ethics?
Most interviewees feel there is a clear gap in people’s understanding of the word ethics, and asked that whatever training program is eventually provided include a concise definition of ethics and values.
How important is the topic of ethics within the foundation community?
A nearly unanimous 98 percent find ethics to be very or somewhat important. In addition, a resounding 95 percent feel that ethics should be a topic of conversations within foundations, and 90 percent see the crucial role ethics can play in steadying the relationship between grantor and grantee. Most respondents, however, feel there could be difficulties in introducing ethics into their discussions with grantees, and feel the need for some firm guidelines.
A former officer of the Council on Foundations pointed to the nature of the right-versus-right ethical dilemmas in this field when he observed that "one of the most serious issues we face is that of perpetuity versus sustainability. If we look to the long term, we will conserve what we have today for tomorrow’s problems. But such are the problems today, that it can be argued that we must spend more of our wealth now."
The executive director of a major foundation in New York commented that "ethics should be part of each board meeting. We could do with examples to help us get the dialogue going; we could benefit from ethics language."
To what extent does ethics regularly play a role in the functioning of your organization?
By far the majority see their foundations as functioning ethically (90 percent), but conclude that ethical lapses in the field are damaging philanthropy’s good standing. Yet when asked the extent to which ethics plays a regular role in the running of their foundations, the answers are surprising: Only 55 percent said that ethics plays an extensive role in their organizations. This may hint that whereas foundations generally consider themselves ethical, there is less opportunity to discuss ethical issues than most would like.
Can you identify particular ethical issues you and/or your foundation has faced recently?
If we encountered any hesitation in answering our questions, it was in the sharing of personal ethical issues. Participants understandably found it more difficult to confide in us concerning the particular ethical issues they are facing. As the interviews proceeded, however, interviewees became more comfortable, and a number did share their concerns (see section 8).
Would it help you to have materials or programs on ethics available that are specific to foundation interests and needs?
A very large majority (90 percent) firmly grasps the need for ethics training throughout the foundation community. The executive director of a foundation in California pleaded that whatever we do "should prove provocative, and cause people to think about issues where there aren’t simple answers [in order to] generate a basic discussion and a questioning of behavior." Another trustee in Michigan added: "Both consciously and unconsciously, you have to know what you are dealing with. If a trustee is engaged in unethical behavior, this can be very difficult for the staff to deal with."
What training activities do you engage in within your foundation?
More than 60 percent have regular training programs for both staff and trustees, with some 80 percent participating in Council on Foundations educational programs. A healthy 77 percent participate in their RAG activities. One consultant with more than 16 years in philanthropy remarked, "Certainly there should be a refined sense of ethics. To begin with, for the new employee, there should be an ethics orientation, followed by a refresher."
Do you feel an ethics training module would be helpful for your own foundation?
Most participants see the program as delivering much-needed language skills to their colleagues, awakening a vital interest in ethical decision making. Foundation heads in particular feel their program officers would reach sounder decisions if they were more ethically aware. One program officer added that "ethics is part of the ocean we swim in. . . . We need that language to keep afloat." And a foundation president from Minnesota commented, "I would hope this would serve as a constant refresher."
In this section, we asked participants to comment on five generic dilemmas and assess their relevance and impact for the field. Briefly, the dilemmas were:
Virtually everyone reasons that self-dealing is abhorrent (Case D), with some 70 percent also seeing transparency as an issue of critical importance. We found that opinions divide where freebies (Case E) are concerned, with some 40 percent seeing the issue as only somewhat important.
It was at this point in the interviews that we found people alerting us to their chief concerns. These included topics of:
Let me tell you what we have in mind so far. We’re thinking of producing a CD-ROM„based module that would focus on ethical decision making. The framework we’re thinking of using would be drawn from materials we’ve developed in seminars over the last six years, and would be based on real-life ethical dilemmas told to us by members of the foundation community. The CD-ROM would be based on one we’re now using for corporate ethics training and designed for individuals to work through on their own schedule. It would also have materials for suggested group activities. After the training is completed, we would provide a program delivered over the Internet as a refresher. How does that sound to you?
Overwhelmingly, people were keen to get their hands on the product and to see it succeed. Among the favorable remarks we heard:
Great idea, and a useful tool for a board retreat.
—trustee, North Carolina
Terrific, I’d like to see it. . . . Widespread support for the idea.
—past president, Kansas
Sounds terrific . . . I would use it. You need to address the accessibility issue.
—trustee, Michigan
Great. Try to find ways to talk to the grantees to find out how they set the agenda. Get real-life conflicts and make it multilayered, sophisticated.
—executive director, California
Good; I like it. We need follow-up, and please remember ethics is best as a group experience.
—program officer, New York
Do your workstations routinely have multimedia capabilities (CD drive and speakers)?
As we suspected, some in the foundation community are still without ready access to the necessary technology. A healthy 72 percent, however, have the needed CD-ROM drives and speakers, and everyone said they have access to a CD-ROM drive either at work or at home. Interestingly, those without CD-ROM capacity at work are in some of the largest foundations. However, with computer upgrading and replacement plans in place, most feel that within 18 months they will be ready.
Do you think you and your colleagues would use such a module?
In describing the product above, more than 70 percent of
participants said they and their colleagues would use such a
module—a CD-ROM training module in ethics designed
specifically for the foundation
community.
We encountered widespread support for ethics training within philanthropy. Many participants spoke of the urgency with which the foundation community needs to be engaging much more actively in ethical decision making. Based on this survey, it appears that ethics training will be widely accepted in all areas of U.S. philanthropy. Participants clearly want the language of ethics to be part of the daily running of their foundations.
But how should it be presented? Time and again, participants voiced their concerns about the fuzziness of the current terms. The language of ethics needs to be given greater definition, needs to be crystallized, and needs to become part of their life blood. Building an ethical community within philanthropy, many felt, can build stronger, more enduring partnerships with grantees, where trust and openness become commonplace.
If we encountered any hesitation in the course of the survey, it was that the interviewees consistently wanted group exercises to accompany the CD-ROM. This suggests the need for follow-up programs that go beyond the CD-ROM module.
Copies of this report are available from the Institute for Global Ethics.