Chairman’s Corner: November 2009

Here Comes the Sun, Part Two

by Mario Morino, Co-founder of VPP

This month, I want to pick up where I left off in my last column, “Here Comes the Sun.”

In that piece, I wrote about the inevitability of transparency. I focused on how citizen anxiety and powerful new technology tools are creating a Transparency Revolution that will force dramatic changes in how we operate in our public, private, and nonprofit worlds.

I focused on the positive—that is, how the new transparency will enable great things, from allowing consumers to make more-informed decisions to giving citizens the tools to hold their elected leaders more accountable.

The Dark Side of the Sun

But it is also important that we acknowledge the dark side of the sun—that is, the ways in which the same mix of anxiety and technology can produce explosive harm. For each application that expands transparency in positive ways, there are a like number of anti-social uses of the same technologies.

• The online database technologies that allow citizens to get more data than ever before on pollutants in their communities are equally useful for giving violent vigilantes access to the home addresses of doctors who provide abortions.
• The video and photo sharing tools that allow activists to bring human rights abuses out of the shadows are equally valuable to networks of pedophiles lurking in the shadows.
• The filtering technologies that allow us to customize our news feeds are equally effective for screening out views we don’t share and facts we don’t want. “The Polarization of Extremes,” by law professor and Obama official Cass Sunstein, is an excellent brief on how this self-sorting is so likely to accelerate the hyperpartisanship that has hamstrung our political system. “When people end up in enclaves of like-minded people,” he writes, “they usually move toward a more extreme point in the direction to which the group’s members were originally inclined.”
• The message boards and social networking sites that allow consumers to report on faulty products or blow the whistle on unethical corporate practices are equally useful for inciting violence and ruining careers. A recent law review article by University of Maryland Law Professor Danielle Keats Citron is packed with chilling accounts of how Web 2.0 technologies have made it easy for people to form digital mobs that hide behind anonymous online identities the way Klansmen hid behind their white hoods. These mobs prey on individuals—often women—with “a destructive combination of threats, damaging statements aimed to interfere with their employment opportunities, privacy invasions, and denial-of-service attacks.”

Anticipation and Mitigation

So, yes, there’s a dark side to the Transparency Revolution and the Web 2.0 tools that are powering it. We need to face that reality squarely—as many failed to do at the dawn of Web 1.0. I’ll never forget a meeting we hosted in 1995 to help a leading activist organization working to integrate the Internet into its arsenal of tools. I spoke of the opportunities and threats of the Internet—and the room was shocked by the latter concept. A well-known and highly effective political operative in the group asked, “What do you mean ‘threats?’” The dark side just hadn’t dawned on him or his colleagues. And he was by no means an outlier.

Fortunately, the organization’s leaders didn’t blow off the notion of threat. I’m convinced that the understanding they developed of both the bright and dark sides of the Internet made them far more effective in advocating for positive change in America over the next decade and a half.

Today, the message is the same: Those of us who care deeply about creating positive social change must devote time and energy to anticipating the dark-side subversion of the new tools. We can’t banish anti-social applications; history shows that’s just not possible. But we can be smart about mitigating the consequences and educating citizens about potential harms and how they can protect themselves and their children. A very good example of this is the way that children’s advocates such as Common Sense Media have worked constructively to address objectionable images and messages in popular music, films, television, and the Internet.

Seizing the Positives

As important as it is to be proactive about anticipating and minimizing the negatives, we must also work to seize the many positives.

Transparency done right can help us be more effective in achieving our missions. We often think about transparency for playing defense—that is, responding to attacks, being compliant for compliance sake, and defending our reputation. We need to spend more energy focusing on transparency for offense—that is, sharing information proactively in a way that gives us a better chance of meeting our goals.

For example, one of the most common aspirations of foundations and philanthropists is to be “catalytic” in their giving. Even the world’s largest givers, Bill and Melinda Gates, readily admit that their giving alone is far too small to solve the problems they care about. So explicitly or implicitly foundations build “theories of change” that require other actors—including governments and the private sector—to join the fight and help “scale up” solutions that work.

Yet most foundations are far too opaque about what they’re doing, what works, and what doesn’t. They make it needlessly hard for others to join their causes. And even when they do share some of this information, it’s often late in the game. Those few foundations that take the risk of being open about their strategies and results from the start have a much greater chance of engaging others and building broad ownership.

In the spirit of transparency, I should acknowledge that this is something I learned the hard way. Had I been more forthcoming in the formative years of Venture Philanthropy Partners, my colleagues and I would have engaged better with other foundations and public funders and benefited from their engagement. But better late than never. We learned our lesson, and now we find ourselves sharing candidly what has worked and what hasn’t.

The following suggestions represent an amalgam of what I’ve observed from some of the country’s most forward-thinking grantmakers using transparency to play great offense. No one grantmaker—certainly not VPP—does all of these things.

1. Share your goals and strategies. If you want other public and private funders to join you in addressing a major goal, you need to be transparent about the goal itself and how you’re trying to address it. As super-smart consultant Lucy Bernholz noted, the Lumina Foundation was remarkably open about the strategic planning process behind its goal of increasing the proportion of Americans with high-quality post-secondary degrees by 60 percent by 2025. The Center for Effective Philanthropy has concluded that clear communication of a foundation’s strategies is rare—despite the fact that it is one of the three most important drivers of quality relationships between funders and grantees.
2. Share your results—good and bad. If you want others to join your efforts, then show them where you drilled holes and found water—and, just as important, where you came up dry. We at VPP have worked hard to do this, as CEO Carol Thompson Cole wrote about in her column last month. The Edna McConnell Clark Foundation has justifiably earned a great reputation for transparency on performance—both the performance of grantees as well as its own performance. This is one important reason it has been successful in attracting co-investors. Another great example comes from Sean Stannard-Stockton and his blog Tactical Philanthropy, which I read regularly. Sean reported on how Kjerstin Erickson’s remarkably honest blogging about her mistakes as a young Bay Area social entrepreneur resulted in an outpouring of financial and strategic support. (One point of caution is essential: be extremely careful in how you discuss “bad results” to avoid inadvertent harm by placing blame on others. I will offer suggestions in a future column about how to find an appropriate balance between being fully transparent and “doing no harm.”)
3. Support efforts to create common methods for reporting results. Unquestionably, there is great value in individual foundations reporting more openly on their results. There is far greater value when multiple funders plowing similar fields report results using the same basic metrics, enabling meaningful comparisons across hundreds or thousands of grantees. The Acumen Fund, working with Google engineers and a host of other partners, has invested more than four years and $1M in developing PULSE, a system for comparing the performance of its investment partners. As FSG Social Impact Advisors reported in its excellent report on shared measurement systems, “A key factor driving Acumen’s effort to build the PULSE system was its belief that the lack of comparative performance data available in the social sector limited its effectiveness and potential for growth.”
4. Use transparency to tap the wisdom of crowds. This is the ultimate example of using transparency to play offense rather than defense. When the Packard Foundation was considering an initiative to stem nitrogen pollution, it created a wiki to seek innovative solutions from researchers around the world. The Packard Foundation and many others have also tapped the wisdom of their existing grantees, using the Center for Effective Philanthropy’s Grantee Perception Reports. The GPR has sparked improvements in foundations’ operating procedures by allowing foundation leaders to see their grantees’ anonymous (and therefore pretty honest) perceptions of their practices and impact—and to benchmark these results against other, similar foundations. And thanks to the Center for Effective Philanthropy, Keystone Accountability, and others, foundations are getting smarter about tapping the wisdom of those they hope will be the ultimate beneficiaries of their work.
5. Be transparent with applicants you choose not to fund. This is a hard one, because it can be unpleasant, time-consuming, and delicate. But it can be enormously beneficial to applicants to explain openly why they didn’t merit funding. This is as true in grantmaking as it is venture capital funding. I have had the good fortune of working with several venture capital and growth equity firms that have been deliberate about explaining to aspirants why they were not selected for funding. The results are not always well received initially. But when the VC shares the results with respect and candor, executives generally come around to understand and value the VC’s point of view.

Like the sun, the new transparency is incredibly powerful. It can and will burn. It can and will disinfect. It can and will give us energy to accomplish great things. The ratio of each is up to us.