Ethical dimensions of international grantmaking: drawing the line in a borderless world.

By their very nature and purpose, foundations are powerful leaders in society. Pressure to maintain the public trust has consequently focused attention on their behavior. While codes of conduct have been produced, foundation officers have yet to make explicit the values that shape their work. The pressure and complexity of foundation decision making--the ways in which priorities are identified and strategies implemented--compel recognition of the multiple ethical dimensions that underlie those actions. This paper is thus proffered as a contribution toward developing the ethics of international grantmaking.

 
   The overriding purpose of the institution of 
   philanthropy is to improve the world and 
   all its aspects, particularly those that 
   pertain to values. This purpose cannot be 
   accomplished well if philanthropic agencies 
   do not themselves exemplify the highest 
   ideals and values. (Hooker, 1987) 

By their very nature and purpose, foundations are powerful leaders in society. The specific leadership role they occupy can be characterized in two ways: foundations are agenda-setters, driving social and political reform; and, they are financial investors whose sustained funding can "make or break" an idea, individual or field (Kuper, 2004). Foundations have the ability to set social and political agendas of national and international importance. Often, through the provision of financial, intellectual or professional support, they are a key force motivating social change over the long-term. Furthermore, the provision or cessation of funding from foundations can determine the sustained success of any one or a set of projects, ultimately leading to the victory or failure of nascent research, a path-breaking teaching approach, an innovative organization or a critical new field of study.

From the establishment of Carnegie Corporation in 1911 as the first general-purpose private foundation (Wall, 1989), it was recognized that philanthropies are privileged institutions. Not only do they maintain their own endowments, their fiscal survival is not dependent on external accountability. In 1984, Alan Pifer, president of the Corporation from 1967 to 1982, articulated the special prerogatives and freedoms afforded to private American foundations:

 
   First, the American foundation is a 
   highly privileged institution. Since it 
   is endowed, it does not have to use 
   valuable time or energy raising money 
   or shape its activities so as to appeal to 
   donors. Since it does not have to make 
   a profit, it is not subject to the 
   vicissitudes or disciplines of the 
   market ... it avoids accountability 
   except to itself. A second feature of 
   foundations is their dual private and 
   public nature. 
   They are private in the sense that they 
   are incorporated as private entities, 
   arise from private wealth and initiative 
   and are self-governing and self-perpetuating. 
   They are public in the 
   sense that, once they have been 
   granted tax-exempt status, they exist 
   solely for public benefit. A third 
   feature of foundations is that the funds 
   they have available for expenditure are 
   a particularly precious resource to the 
   society. This is not because of their 
   size, since the funds are quite small, 
   but because they are constantly 
   replenishable pools of organized but 
   uncommitted money that can be freely, 
   and if need be, quickly, deployed to 
   meet existing or new social needs. 
   (Pifer, 2001, pp. 2-3.) 

With this liberty comes great responsibility as well as intense public scrutiny. In the face of such corporate scandals as Enron, WorldCom and Parmalat, private U.S. foundations, such as the Irvine Foundation, have not been immune to concerns about their ethical practices. (1) Various echelons of the U.S. government, the media and the public have leveled increasing criticism of foundations regardless of size, ideology or focus (see Boston Globe, 2003; Strom, 2004). Government officials, academics and other critics have lodged increasingly vocal demands for foundations to spend their endowments more rapidly (Wooster, 1998; see Independent Sector, "CARE Act of 2003"). (2) The rationale is to tap into the financial resources of private foundations in order to meet pressing public problems during a period of economic recession and unemployment in the U.S. Philanthropic debate has turned on the issue of whether foundation resources should be deployed now, at the expense of future generations (Shuman, 1998). Some critics complain that the powers of foundations are too vast and foster an institutional culture that is not responsive to current needs and conditions. Nielsen suggests: "The foundations created for unlimited general purposes and endowed with enormous resources, their ultimate possibilities are so grave a menace, it would be desirable to recommend their abolition," (2002).

The unfolding discourse over ethical conduct in nonprofit and corporate America is not only about the acts of greed and ill-gotten gains of a few individuals. It also focuses attention on the ripple effects of such conduct. Corporate shareholders and nonprofit grantees are obviously affected by unethical conduct; yet it is the impact of such lapses of judgment on the public at large--through loss of public confidence--and the broader social forces put into motion as a result of such decisions that require examination (Christiansen, 2004). The ethical dimensions inherent in human interaction have long been the basis of religious creeds coded as far back as the early Egyptians ("Ethics," 2003). Given the increasingly global scale of human interaction, the urgency to examine and address both the effects and consequences to prevent unintended negative outcomes is imperative.

In response, foundation leaders have exhorted the sector to improve transparency and accountability. Vartan Gregorian, current president of Carnegie Corporation, has written:

 
   Foundations should stand for the best 
   ideas and impulses of the American 
   people, their idealism, altruism, and 
   generosity. Because of this, their 
   values and how they conduct 
   themselves must be higher than the 
   prevailing standards. We are 
   accountable not only before the law 
   and the court of public opinion, but 
   before history as well. (Gregorian, 
   2004, p. 43). 

Michael Bailin, president of the Edna McConnell Clark Foundation, has also made explicit the values that led to a reorientation of that foundation (2003). Regrettably, the recent literature on the ethical underpinnings of philanthropic decision making is sparse; too few practitioners of philanthropy have written about the values that shape their work in the field.

The pressure and complexity of foundation decision making, the ways in which priorities are identified, and strategies crafted and implemented, compel recognition of the multiple ethical dimensions that underlie those actions (Jones, 1991; Paine, 1997). The power of philanthropy, stemming from unequal access to resources, knowledge, and influential individuals, can make foundation decision making vulnerable to abuse if the guiding ethical dimensions of such decisions are not made explicit. The importance of maintaining the public trust, which has served to amplify the need for good philanthropic conduct, culminated in the release in January 2004 of a major statement of values and a code of ethics by Independent Sector, the professional association of nonprofit organizations in the United States (2004). Directed specifically at the nonprofit and philanthropic sectors, this statement now joins the cluster of ethical codes governing such fields as public relations, fundraising, and journalism as well as those produced within the private sector. Their common denominator is the mandate to set forth principles governing the way those institutions working on behalf of the public sector achieve and maintain the trust and confidence of their constituents: "Public trust is the single most important asset of the nonprofit and philanthropic community," according to Independent Sector (2002, p. 6). (3)

It could be argued that the relationship between ethics and philanthropy is a tautology. We define ethics as the system of moral values and principles that govern the conduct of individuals and institutions. Then philanthropy--by definition, the love of humankind--is at its core an ethical endeavor (Gregorian, 2004). The impetus to establish foundations, long before the popular rationale of tax benefits, is an acknowledgement of a distinct set of ethical principles articulated on behalf of the public good. The application of these ethical principles is particularly challenging when an American foundation works beyond U.S. borders in differing social, economic, political and institutional contexts. The debates about the injustices of globalization and the growing concerns about the "American empire" highlight the continuing importance of understanding differences in perspective and perception in making grants internationally.

To date, no foundation has undertaken a comprehensive reflexive analysis of the ethical dimensions of international grantmaking over a significant duration. This paper is thus proffered as a contribution toward developing the ethics of international grantmaking as a field of study to be applied in practice. Working within the general schema of sound philanthropic practices, we examine two cases that exemplify distinct approaches to international grantmaking, spanning different periods of Carnegie Corporation's history. The analyses reveal the deep complexities of such an undertaking; therefore, this examination can only be considered as propaedeutic (Kessel, 2004). We conclude with suggestions for further research to strengthen future inquiry and promote grantmaking that is ethically sound.

The paper is divided into the following parts: 1) a schematic for incorporating ethics into international grantmaking; 2) two distinctive case studies of Corporation grantmaking in sub-Saharan Africa; and, 3) a summary of lessons learned to inform ethical decision making, together with questions for future research. (4)

Decision Making Process: A Schema for Incorporating Ethics Into International Grantmaking

While traditional ethicists emphasize a consistent ethical stance from planning through action to evaluation, the ethics of philanthropic work is not dependent on adopting a single standpoint but rather on consistency in accordance with the major ethical traditions (see Anderson, 1996; Kuper, 2004). A promising approach, drawn from experience and review of the cases, is the development of a meta-framework building on, for example, Aristotle's moral perspective, Kant's notion of moral obligation, Mill's utilitarian perspective, Rawls' veil of ignorance, Gilligan's caring model and Kidder's global ethics model (Gordon, 2004; Kidder, 1999; Kuper, 2004; McNamee, 2001; Rawls, 1999; White, 2002).

In designing such an approach for ethical grantmaking, the first step is to focus on the nature of the deliberative process. As indicated in the schematic below, a wider range of questions must be asked. Ethical decision making relates to the types of questions asked during the review of proposals and the process by which they are answered, and it involves not just questioning the intent of a grant but also the results over the long term. Ethical grantmaking must necessarily take a longer-term view. It also requires "... vigilance--continual awareness of the forces that can cause decision making to veer from its intended course and continual adjustments to counteract them," (Banaji, 2003, p. 62). As elaborated by Independent Sector, "It is not only the ... law that challenges …