The Philanthropic-Consultant Industrial Complex . . . editor notes issue #74

You've probably heard of the 5% payout requirement for foundations . . . but most people mistakenly believe this means that foundations must grant out 5% of their assets each year. Actually, foundations must spend 5% of their assets each year . . . which can include their own salaries, office rents, and so forth.

But perhaps the least examined of all foundation spending is what they spend on consultants, such as consultants to themselves and their initiatives, contract staff, consultants to nonprofits (the $200K strategic planning grant that goes 100% to the consultant, none to you), and so forth.

In fact, in the blink of 15 years, we've gone from a time when there was hardly any nonprofit infrastructure support to one where it feels as if the infrastructure -- we coined the term Philanthropic-Consultant Industrial Complex -- outweighs the nonprofits doing the actual work.

Even more than the money, the philanthropic-consultant infrastructure is changing who's running the show: rather than supporting nonprofits, foundations and consultants are increasing telling nonprofits what nonprofits should be doing.

(Of course we recognize the value of infrastructure . . . Blue Avocado is even part of that infrastructure. It's the relative size and the shifting center of gravity we're concerned about here.)

These days when a foundation announces it is starting an initiative for low income seniors, we now assume that much of the money will go to regrantors, researchers and consultants rather than to on-the-ground nonprofits and the seniors themselves.

And doesn't it sometimes seem as if the best and the brightest young people in the nonprofit sector want to be foundation program officers, consultants, or donation app makers? To tell the truth, we have enough program officers, enough (so often unsatisfying) consultants (really!), and enough start-up apps. We don't have enough people who aspire to run homeless clinics or foster care homes, to raise money for ethnic theaters or rights for prisoners, to be teachers rather than program officers making grants in education.

Our sector is in danger of hollowing-out. In fact, innovation comes from the ground up, and that's also where the real work takes place. Let's start by honoring, celebrating, and paying more to the people on the ground above how much we honor and pay the people in the infrastructure. Grantmakers and consultants: are you listening?

  • This issue you'll find an executive director evaluation form, an update to the Vanguard Foundation story, a 3-Minute Vacation to Nonprofit AcronymLand, a legal guide to the latest in nonprofit social media,
  • How corny . . . but let's be grateful this month of Thanksgiving. I'm very grateful to have the opportunity to work on Blue Avocado. -- Jan Masaoka

Comments (51)

  • Anonymous

    Check out the comment he made to my rensopse on his blog: they MAY dial down the emphasis on overhead. I understand that it's important for you, your project and your funders to play nice here, but it's frustrating to watch you call out organizations like Kiva/Acumen fund who are a hell of a lot better than most and then applaud while an organization that misleads millions of donors/dollars annually makes a verbal commitment to potentially change.So he signed on for your pledge, that's awesome. You know what would be better? Shutting down his site until they have something worthy of the hard working people who try to make an impact every day. Don't get off his back now the non-profit sector and the people we serve deserve better.

    Aug 17, 2012

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