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Are Annual Reports Less Glossy This Year?

Call this eating humble pie. I find myself in the odd position of wanting to point out  — and applaud — three examples of how the annual report can be used to help convey important messages and further understanding among key audiences about the vital work foundations do around the nation and world, especially in these trying times.  

In the past, I’ve been among those critical of foundation annual reports, mostly because of the low — if any — return on investment they seem to yield.  Either I’ve been wrong in making such a blanket criticism or — and hopefully so — the conversations that many of us in the field have been having about annual reports has lead toa rethinking of how they can serve a more strategic purpose and go the extra length to do a better job informing people about the power and promise of philanthropy.  It also could be that the tough year we’ve been through has necessitated slightly less “glossy” messages than in the past.

The three reports, all selected at random from email announcements I’ve received over the past few weeks, are from the C.S. Mott, Teagle and Hewlett Foundations.  In each of these reports, presidents of the respective foundations go beyond the typical year-in-review presentations to deliver compelling messages that are worth reading and reflecting on.

The Mott 2008 annual report describes how it is “responding to the twin challenge of declining assets and greater need, with a particular focus on Flint and southeastern Michigan, a region the national media has sometimes dubbed ‘ground zero’ for the country’s economic crisis.”  In his message, Mott President William White notes that the foundation does not have the resources to solve all of the world’s problems, let alone Flint’s, “but what we can do is figure out where we can have impact to bring about some fundamental changes that will improve the lives of people.”  Previewing the content that makes up the bulk of the report, White says, “In the material that follows, we have tried to paint a realistic picture of our hometown, acknowledging its challenges, but also highlighting the many good things that are taking place.”

For its annual report, Teagle Foundation President W. Robert Connor writes that “The Big Question for the Teagle Foundation over the past year, as for so many other organizations, has been whether it is possible to do good work in bad times.

The financial crisis, often described as being of historic proportions, could be bad enough to push aside hope for holding on, let alone making improvements. It’s been a rough time financially, especially for the poor, the unemployed, the homeless, families trying to make ends meet, kids hoping to get to college, and colleges trying to serve them well. Even immensely wealthy universities have felt the pain: along with storefront community organizations, tuition-dependent colleges, vulnerable associations and collaboratives, they have had to ask whether it is possible to do what needs to be done when red ink is spilling.”

Connor also notes that while the nation is going through a dismal time, “the history of other periods of severe economic difficulty shows, we believe, that these can be times when creativity is energized, new approaches and products developed, and sustainable solutions found for perennially difficult problems. Taking a cue from business and industry, we find that judicious risk-taking during bad times has a long history of success: according to a report from the Kauffman Foundation, more than 50% of Fortune 500 companies were started during recessions or bear markets.”  Connor adds that for Teagle, whose mission is to “ensure that today’s students have access to challenging, wide-ranging, and enriching college educations,” the work of “improving student learning requires just such judicious—and creative—approaches. It is, in my view, the most important challenge facing higher education today and it can’t wait for the top of the next business cycle, the next capital campaign, or the next bubble.”

Finally, Paul Brest, president of the William and Hewlett Foundation, devotes his essay to tackling the question “Should Donors Fund Projects or Give General Operating Support?” Brest writes that “general support is the most effective grantmaking tool when an organization’s mission is essentially identical with, or contained within, the funder’s goals in a field. Clearly, a funder interested in cancer research would greatly dilute its grant by providing general support to a university, which devotes only a tiny fraction of its work to this research. But the funder could achieve its goal through either a project grant or through general support to an institution exclusively devoted to such research.”

On the flip side, Brest says “for all of the value of general support, however, there are often good reasons to fund specific projects. Proponents of unrestricted support tend to be so single-mindedly focused on its benefits that they forget that it is not an end in itself but rather one of a number of tools of philanthropy, useful for some purposes but not others.”

Brest notes that while “grantees usually prefer to receive general support because it maximizes their flexibility to use funds as they deem necessary to serve their missions…it is important to understand that forms of philanthropic support are never ends in themselves but only tools-albeit important ones-for achieving social impact. Funders would do well to follow the clichéd adage: the right tool for the right job.”

It is refreshing in each of these annual reports — and I presume many others like them being issued this year — to see foundations going the extra effort to raise tough questions, show the work they are doing is meant to address the problems the nation is facing, and also to use the opportunity to shed more light on their inner workings and the thinking guiding their decision making and grantmaking.

Of course, messages like these need not wait until the annual report. They should be part of the regular communications from foundations, especially those committed to helping broaden the public’s understanding of the work of foundations.


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