Making progress: An essay, Part 1

[Editor’s note: This article first appeared in the 2004 annual report of the Z. Smith Reynolds Foundation in Winston-Salem, N.C.]

By Todd Cohen

Philanthropy in North Carolina is a work in progress in a state of change.

Rooted in a legacy of righting social wrongs and enriching civic life, philanthropy in our state over the last 25 years has grown quickly, become more targeted and strategic, and helped build one of the strongest nonprofit sectors in the United States.

Now, as the economy stumbles, social problems escalate and government retreats from seeking and delivering solutions, the job of healing and repairing our communities increasingly falls to charitable foundations, donors, corporate givers, nonprofits and volunteers.

And as innovation and technology transform how we live and work, philanthropy must move beyond business as usual, embrace the urgent job of strengthening nonprofit operations and shaping public policy, and unleash new sources of charitable wealth, knowledge and volunteerism.

Compared to a generation ago, North Carolina now is home to more philanthropic assets and organizations. More of those organizations are staffed and professionally run. They look more like our state, led by women, minorities, entrepreneurs and young adults. And they have worked hard to be more effective and innovative in the way they support nonprofits and spur social change.

But huge challenges remain. Philanthropy can do much more to equip nonprofits to be more productive, collaborative and entrepreneurial, and get more involved in attacking social problems at their roots.

Those social ills are enormous. Many North Carolinians struggle without food, shelter, health care, education or jobs. And true progress on the entrenched and complex issues of race, intolerance, violence and social justice will remain a dream unless we overhaul how we think about and take part in policy-making.

Because the supply of charitable resources cannot begin to meet demand for basic services, funders must prod nonprofits, government and business to work together to broaden access to resources and services most of us take for granted, a big challenge as government gridlock and near-sightedness clog efforts to change flawed and outdated policies.

Foundations, corporate-giving programs and individual donors also can foster innovative research and thinking to expand the very idea of philanthropy and spur new ways to give, volunteer, work together and share knowledge.

Despite its strengths, philanthropy is hurting and needs to heal itself. Cases of wrongdoing and excess resulting from poor business judgment at foundations and nonprofits have eroded trust and drawn closer scrutiny from regulators and lawmakers likely to toughen their policing of charitable organizations. Charities must restore trust and clear up confusion about what went wrong, from bad audits to poor board oversight of managers.

Whatever government does, philanthropy must get its own house in order. Funders must take stock of themselves with brutal honesty, a rare commodity in a business in which wealth and the power it creates foster an unearned sense of wisdom and righteousness. To help restore trust as they retool, funders should enlist outside board members who reflect their communities and can question business as usual.

Funders exercise enormous power over how nonprofits operate and deliver services. By cleaning up their own act, funders can be more informed and trusted partners to guide new donors and help nonprofits become more accountable and plug into and work with new sources of wealth.

Despite its mistakes, philanthropy in North Carolina has continued to build on its legacy of social justice and progress. The challenge now for philanthropy is to keep improving its practices, better prepare nonprofits to take on social ills and become a more effective voice and force for change.

Other articles in the series:

Part 2: Philanthropic legacy rooted in wealth from traditional industries.
Part 3: Philanthropy plows new ground to address critical problems.
Part 4: Philanthropy expands to engage new markets.
Part 5: Philanthropy moves to help nonprofits gear for change.
Part 6: Philanthropy changes to help guide the ‘invisible hand’.
Part 7: Philanthropy without borders emerges as new model for change.

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