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The Role of Foundations in the Changing World of Philanthropy: a Houston Perspective

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The Role of Foundations in the Changing World of Philanthropy: a Houston Perspective THE ROLE OF FOUNDATIONS IN THE CHANGING WORLD OF PHILANTHROPY: A HOUSTON PERSPECTIVE RONNIE HAGERTY A DISSERTATION Submitted to the Ph.D. in Leadership & Change Program of Antioch University in partial fulfillment of the requirements for the degree of Doctor of Philosophy January, 2012 This is to certify that the dissertation entitled: THE ROLE OF FOUNDATIONS IN THE CHANGING WORLD OF PHILANTHROPY: A HOUSTON PERSPECTIVE prepared by Ronnie Hagerty is approved in partial fulfillment of the requirements for the degree of Doctor of Philosophy in Leadership & Change. Approved by: Mitchell Kusy, Ph.D., Chair date Dr. Lize Booysen, Ph.D., Committee Member date Laurien Alexandre, Ph.D., Committee Member date Sandie Taylor, Ph.D., External Reader date Copyright 2012 Ronnie Hagerty All rights reserved Acknowledgements I am deeply grateful to the Houston foundation leaders who welcomed me into their world. It was a privilege to tap into their expertise and to learn from their experience. Their commitment to the community continues the rich philanthropic tradition that has long defined Houston. These dedicated practitioners change lives every day. I want to thank my committee for their wise counsel throughout this unexpectedly long and often disorienting dissertation journey. Special thanks to my chair, Dr. Mitchell Kusy, who responded rapidly to every inquiry with great insight, ending many missives with the level- setting “LOL.” Dr. Mitchell Kusy, Chair Dr. Lize Booysen, Committee Member Dr. Laurien Alexandre, Committee Member Dr. Sandie Taylor, External Reader Dr. Norman Vincent Peale’s Have a Great Day has been my daily meditation. His words pushed me forward when I was positive I could not write another page, cite another reference, or punctuate another sentence in proper APA style. He reminded me, “when you get discouraged, when you cannot seem to make it, there is one thing you cannot do without. It is that priceless ingredient of success called relentless effort. You just never give up, never quit.” I pass these words along to the next generation of learners and leaders. With much love, this work is dedicated to: Anastasia and Cecilia Dylan and Evan i Abstract From the earliest days of the American nation, philanthropy has had a defining role in leading change. Philanthropy has provided vision and voice for nascent social movements ranging from civil rights and the women’s movement to AIDS research and environmentalism. As the 21st century has moved into its second decade, philanthropy finds itself facing significant pressures that threaten to compromise its ability to innovate and advocate for issues and individuals whose voices cannot be heard over the public rhetoric of the day. Once perceived as the purview of the rich and well connected, modern philanthropy cuts across social, economic, and ethnic classifications. Historically, private foundations have played a defining role in philanthropic investment. These tax-exempt charitable organizations, typically funded by a single source (individual, family, or corporation), were created to serve the common good, primarily through grantmaking. As philanthropy continues to evolve through new models and methodologies that enrich, extend, and question traditional giving parameters, foundations are exploring new paradigms for redefining and reinforcing their leadership capabilities. The purpose of this study was to examine the impact of economic and social forces defining the environment in which private foundations operate in the 21st century, and to learn how Houston foundations are adapting to this new reality. Further, the research captured their individual and collective vision for the future of foundation philanthropy. The dissertation provides a brief overview history of philanthropy to position it in a 21st century context. Within this construct, the study has assessed the nature and impact of current philanthropic challenges, and sought an understanding of future learning and leadership strategies as defined of by members of the Houston foundation community. This qualitative, multicase research study is comprised of in-depth interviews with Houston foundation leaders. Rather than setting out to illustrate a particular theory, the study has ii been designed to capture the perceptions of foundation leaders as they assess and adapt to a rapidly changing philanthropic environment. The electronic version of this dissertation is at OhioLink ETD Center, www.ohiolink.edu/etd iii TABLE OF CONTENTS Acknowledgements i Abstract ii Table of Contents iv List of Tables ix List of Figures x Chapter I: Introduction 1 Background on Philanthropy 1 History of Philanthropy 2 Gates Billionaire Challenge 4 The Language of Philanthropy 8 What is a Foundation? 9 Philanthropy and a Changing World 11 Creating a Context for This Study 12 Positioning the Researcher 13 Purpose of the Study 14 Rationale for Investigating This Topic 14 Focusing the Research Questions 16 Why Houston? 16 Focusing the Research 19 Proposed Method for This Study 19 Epistemology 20 Ethical Issues in This Study 21 Organization of This Work 23 Chapter II: Literature Review 25 Setting the Stage—Why Philanthropy? 25 Field of Philanthropy 27 Focus on Philanthropic Foundations 28 Creating a Context 28 Meaning of Philanthropy 29 Chronological Perspective 30 Differentiating Between Charity and Philanthropy 32 Positioning Philanthropy in the 21st Century 33 Types of Philanthropy 33 Gender and Philanthropy 33 Generational Perspective 35 Youth and Philanthropy 36 Ethnic Giving Patterns 37 Emerging Trends in Philanthropy 39 Impact of Technology 39 Globalization of Philanthropy 41 New Models of Philanthropy 42 Strategic Philanthropy 42 iv Corporate Social Responsibility (CSR) 43 Social Entrepreneurship 44 Social Justice Grantmaking 45 Cause-Related Marketing (CRM) 45 Societal Impact 46 Change Agent 46 Social Return on Investment 48 Freedom and Responsibility 48 Defining Content—Foundation Philanthropy 49 Situating the Researcher 50 Definitions 51 History of Foundations 51 Critical Issues Facing Foundations 52 Call for Transparency 53 Effectiveness and Accountability 54 Impact of 2009 Recession 56 New Challenges Facing Philanthropic Foundations 56 Elimination of the Philanthropic Deduction 56 Public Versus Private Money Debate 58 Regulatory Issues 58 Limited Life and Endowment Spend-Down 59 Emergence of New Philanthropic Models 60 Study of Philanthropy 61 Information Resources 61 Formal Research on Foundations 62 Industry Representation 63 Emerging Expertise 63 New Realities 65 Ideological Perspectives 65 Value Creation 66 Knowledge Creation 67 Culture of Innovation 68 Adaptive Change 68 Preserving the Role of Philanthropy 70 Reflecting Diverse Perspectives 70 Value of Foundation Philanthropy 71 Gaps in the Literature 72 Implications for Future Study 73 Chapter III: Methodology 76 Personal History With Opinion Research 76 New World of Academic Research 77 Evaluating the Options 79 Pilot Study 80 Rationale for Study 82 Research Questions 83 v Gaps in the Literature 83 Implications for Future Study 83 Theory and Philanthropy 85 Rationale for Research Design 87 Epistemology 87 Researcher as Instrument of Inquiry 88 Creating an Emergent and Flexible Design 88 Process of Mindful Inquiry 89 Taking a Phenomenological Perspective 89 Choice of the Case Study Method 91 Rationale for Multicase Study 91 Research Problem 93 Nature of Information Sought 93 Research Sample to be Studied 94 Specific Sample Selection 97 Data Collection Methods 99 Research Process 101 Data Analysis Strategy 104 Reliability and Credibility 106 Transferability 108 Ethical Considerations 109 Limitations of Methodology 112 Chapter Summary 113 Chapter IV: Research Findings 114 Introduction 114 Overview of Individual Interview Findings 115 The Maple Foundation 117 Introduction and Background 117 Founder Vision or Intent 118 Grantmaking Focus 119 Leadership 121 Resources That Guide Practice 121 Positive and Negative Aspects of Work 121 Trends and Influences That Define the Current Philanthropic Sector 122 Future Vision 122 The Hawthorn Foundation 124 Introduction and Background 124 Founder Vision or Intent 124 Grantmaking Focus 125 Leadership 127 Resources That Guide Practice 128 Positive and Negative Aspects of Work 129 Trends and Influences That Define the Current Philanthropic Sector 130 Future vision. 130 The Oak Foundation 131 vi Introduction and Background 131 Founder Vision or Intent 132 Grantmaking Focus 133 Leadership 133 Resources That Guide Practice 134 Positive and Negative Aspects of Work 135 Trends and Influences That Define the Current Philanthropic Sector 135 Future Vision 136 The Spruce Foundation 137 Background and Introduction 137 Founder Vision or Intent 137 Grantmaking Focus 138 Leadership 138 Resources That Guide Practice 139 Positive and Negative Aspects of Work 143 Trends and Influences That Define the Current Philanthropic Sector 144 Future Vision 146 The Birch Foundation 148 Background and Introduction 148 Founder Vision or Intent 148 Grantmaking Focus 149 Leadership 150 Resources That Guide Practice 152 Positive and Negative Aspects of Work 153 Trends and Influences That Define the Current Philanthropic Sector 154 Future Vision 154 The Cedar Foundation 155 Background and Introduction 155 Founder Vision or Intent 156 Grantmaking Focus 157 Leadership 158 Resources That Guide Practice 158 Positive and Negative Aspects of Work 159 Trends and Influences That Define the Current Philanthropic Sector 159 Future Vision 160 The Cypress Foundation 161 Background
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