A Fourth Industrial Revolution is well underway, but philanthropy is not poised to fully benefit from the opportunities it has to offer. Innovations like generative AI are highly dependent on the collection, analysis, and sharing of high-quality data — and that’s an area where our sector lags badly.
Many foundations collect a wealth of information, but almost all of it lives in internal documents collecting dust. That means missing out on innovations in learning and improvement and squandering one of our sector’s biggest natural advantages: the ability to join forces with others without risking the loss of trade secrets, profits, or market share. Just as important, the lack of philanthropic transparency sends mixed signals to the public at a time when trust in institutions is shockingly low.
These concerns and opportunities around transparency drove us to become the founding investors of a new Transparency Working Group within Confluence Philanthropy. Our foundations, The Rockefeller Brothers Fund and Nathan Cummings Foundation, have already been joined by these transparency fellow-travelers: The California Wellness Foundation, The Educational Foundation of America, The David Rockefeller Fund, The George Gund Foundation, Marguerite Casey Foundation, Mary Reynolds Babcock Foundation, Surdna Foundation, and Woodcock Foundation. While we do not yet have meaningful progress to report at this early juncture, we wanted to share the value proposition for transparency at the core of this effort — in the hope that others might want to join us.
Transparency for Effectiveness
Transparency is key to unlocking the door to an ecosystem of knowledge that can enhance and accelerate shared impact. In this way, we’re interested in transparency for a simple purpose: to do our craft better and provide evidence of the value of our efforts. At our foundations, we’ve seen concrete examples of how greater transparency improved our work and helped push fields forward.
For example, individuals and organizations candidly shared their experiences and knowledge to help the RBF divest from fossil fuels in 2014, knowing that foundations—especially one with the Rockefeller name — could help legitimize the Divest-Invest movement and spur asset managers to create more fossil fuel-free investment options. We took up that culture of transparency to demonstrate how a divested portfolio can actually outperform standard investment approaches. Today, the movement we joined and have helped nurture has significant momentum, and it’s become much easier to find attractive clean-energy investments.
Additionally, the Nathan Cummings Foundation embraced transparency to share learnings from its mission-aligned investing journey in a public report providing a window into our decision-making and a breakdown of where our portfolio stood. We wanted to give our peers a clear signal that the impact investing waters are warm and that they could jump in without sacrificing financial returns.
Over time, we hope that transparency among a growing number of impact investors will demonstrate the broad success of impact portfolios against traditional investment benchmarks and have a significant positive impact on the quantity and quality of deal flow. Our dream is to see enough funders pooling data so that every foundation, staffed and unstaffed, can find proactive opportunities for doing good—not just with investments but with other foundation tools like grantmaking, shareholder advocacy, and communications.
Transparency for Accountability
The philanthropic sector owes it to the public to open our windows and doors. Our funds come from tax-privileged private wealth that is expected to provide public benefit. If we are transparent about our processes and results, we allow the public to judge for themselves whether we provide that benefit or not.
There are some good examples of giving with “glass pockets,” especially cases in which pledges and commitments have spurred transparency on demographic diversity in our grant and endowment investments. Stemming from the 2019 report that firms owned by women and minorities manage just a dismal 1.3% of the multi-trillion-dollar asset management industry, The Rockefeller Brothers Fund and Nathan Cummings Foundation have both pledged to hold philanthropy accountable for manager diversity.
The Rockefeller Brothers Fund committed to seeking investments with firms where women and/or people of color hold majority equity ownership and publishing our investments that met this criterion. The Nathan Cummings Foundation made a similar commitment by signing the Due Diligence 2.0 Commitment, to help catalyze movement of capital to Black, Indigenous, and people of color managers and provide them candid information about the selection process and feedback on their fundraising tactics.
These commitments — and others like them — are all worthy endeavors. However, we can do more to further accountability. This starts with embracing transparency on the outcomes of our grantmaking and investments. We often ask this of our grantees and investment partners, but we don’t always put that same mirror on ourselves. We aspire to a future in which mutual accountability to achieve shared goals is not only the gold standard but a core aspect of philanthropic practice.
Conclusion
The call for greater transparency is nothing new. However, the exponential rate of improvement in technology tools is increasing the value of transparency for effectiveness with each passing day. Simultaneously, the rising mistrust in our society is increasing the importance of transparency for public accountability. If you share our sense of opportunity and urgency, we encourage you to join us.
Stephen Heintz, President and CEO, Rockefeller Brothers Fund
Rey Ramsey, CEO and President, Nathan Cummings Foundation
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