Giving while living a big bet?

Interview with John R Healy, former CEO of The Atlantic Philanthropies Three years ago, in early 2002, a decision was made that The Atlantic Philanthropies would spend down their then almost $4 billion endowment over a period of 12-15 years. If a foundation is going to go out of business in that time, it will naturally want to ensure that it achieves as much as possible in its chosen fields, leaving a lasting and visible legacy behind it. So how has the decision to spend down affected the style of grantmaking, the grantmaking decisions, the way you approach things, Alliance asked John Healy, Chief Executive of The Atlantic Philanthropies. ‘Very profoundly’ is his short answer. ‘It introduces an urgency into our work. The timescale that we have decided to operate within means that we are looking to do things where we can potentially have a very substantial impact within a limited period of time. And whatever we do, a judgement will be passed on the organization.’ Healy sees this as ‘enormously productive’. ‘It really concentrates the mind.’ Too much in a hurry? Is there a danger that the limited timescale can skew decisions by making you too much in a hurry? ‘I hope not,’ says Healy. ‘What is too much in a hurry, anyway?’ But the timescale undoubtedly influences decisions very markedly, he confirms. ‘There are certain problems or issues that we have considered taking on but have decided not to because we believe they would require a longer period of sustained investment than we’re going to be able to give them. If you have a limited life ahead of you, there are certain things that it’s probably best that you don’t get into.’ For example, says Healy, ‘sometimes a foundation takes up an issue and it looks around the non-profit landscape and it doesn’t find exactly the organization to take on that issue or mission. The foundation may then see if it can create a new organization. We don’t see that as a realistic option for us in many instances because we would be creating an organization which we couldn’t sustain.’ This may sound like something that wouldn’t crop up a lot, but Healy says there have been one or two instances where they have decided not to go ahead for this very reason. While they haven’t created new organizations a lot in the past, they have done it ‘on a number of occasions’. ‘I think most foundations would have done that,’ says Healy, ‘would have grandfathered something into existence and sustained it for a number of years. We don’t think that that’s possible now.’ The sustainability issue According to John Healy, sustainability is now a much more important issue than it was before. ‘When we are contemplating entering into a grantmaking relationship with a non-profit organization, we’ve got to start thinking right up front about how we exit, because we know that we will not be around for a long period. This is a little bit counterintuitive,’ he admits, ‘but it’s nevertheless necessary. We also feel it’s necessary to be absolutely candid with grantees and remind them that we are only around for a certain number of years and they won’t be able to rely on us thereafter.’ So what extra things would Atlantic do to ensure the grantee non-profit’s sustainability that it wouldn’t have before? Helping grantees in their fundraising seems to be a key thing here. This might involve discussing with them ‘ways that we can help them secure support from a wider base of supporters’ or brokering meetings or relationships with other funders for them. ‘We’ve always been willing to do that,’ says Healy, ‘but we’re doing it more now.’ More unusually, it might in some cases involve investing in fundraising departments ‘which might not be as strong as they could be’. As Healy rightly observes, ‘These are investments that are not typically very attractive to foundations. But we think that in our circumstances they make sense.’ They are, of course, just the sort of investments that a ‘high-engagement grantmaker’ or a venture philanthropy fund like New Profit Inc would make. Of course it is not just the sustainability of the grantee organization that Atlantic is concerned about. ‘We want our impact to be sustained as well. What we would like to think is that the work that we do will continue to have impact after we’ve closed our door.’ The frequency with which John Healy uses expressions like ‘closing our door’ and ‘being around for a limited time’ is eloquent testimony to the pervasive influence of the decision to spend down on the organization’s thinking. What about risk? The discussion of sustainability leads naturally to the question of risk. Does the overriding need for lasting impact have the effect of making The Atlantic Philanthropies more risk averse? While John Healy readily agrees that this is something ‘we have to guard against’, he also points out that the spend-down itself is ‘a huge risk’. He likens it to ‘a big bet’. ‘We’re betting our endowment, if you like, and that’s a massive risk. Our bet is that we can have more impact or our grantees can have more impact, because that’s really the important thing if we invest very heavily in them over a short period of time as opposed to providing them with a lesser volume of funds over longer periods of time. In the future our typical grants will therefore be rather larger than those made by the average foundation.’ This is where the risk aversion issue comes in. The size of grants in turn requires Atlantic to do more intensive due diligence ‘and we must not make our due diligence into a process that causes us to be averse to risk. I say to our staff that if we don’t have some failures in our grantmaking then we’re not making the right grants. So that’s a thing to be managed constantly.’ So it sounds as if, even within The Atlantic Philanthropies’ very limited timescale, some failure is not just inevitable but almost desirable. But it’s not as simple as that. ‘And yet, paradoxically, we don’t have time to make major errors of judgement in terms of our whole programme because we have a limited period of time in which we can take a false direction. If we get it fundamentally wrong, it’s going to be quite difficult to pause and start all over again if we are to remain within our desired timetable.’ A bit like walking a tightrope, he agrees. However, there’s little risk that Atlantic will end up making boring, safe grants that are never going to achieve anything very exciting in order to avoid falling flat on their faces. ‘If your mission is bringing about lasting change to the lives of disadvantaged and vulnerable people,’ Healy stresses, ‘and if you’re really going to be faithful to that, you won’t be making too many boring grants which don’t achieve very much, because that’s a pretty challenging mission.’ Does attribution matter? If one of the pressures of spending down is the need to leave a visible legacy behind you, how important is it that the lasting change should be attributable to The Atlantic Philanthropies? One of Atlantic’s programmes has a mission ‘to achieve lasting improvements in the lives of older adults’ and a programme objective ‘within five years to achieve a measurable improvement in the attitudes of different groups to older people in Ireland’. A baseline survey with follow-up surveys over the five years can measure changes in attitudes; better coverage in the media and better enforcement of legislation can also be measured. But none of this can establish a direct causal link between Atlantic’s programme and changing attitudes to ageing in Ireland. Does this matter? ‘This is the age-old dilemma of philanthropy,’ says Healy, ‘and there’s no easy answer.’ He offers a recent example that illustrates the issue well. In the week before last (the first week of March), the US Supreme Court handed down a judgement which declared unconstitutional the execution of people who had committed a crime when they were under the age of 18. ‘Such executions had until then been permitted in quite a number of states. This is an issue of great interest to us.’ Atlantic joined with two other foundations (Open Society and JEHT) in funding a campaign carried out by ‘a wonderful group of US non-profit organizations’. Their collective investment was just over $2 million, of which Atlantic put up about half. The campaign was successful, the case was won in the Supreme Court, ‘so we felt pretty good about that. And the non-profits, which did the real work, were fully entitled to feel exceptionally good about it. But can I look you in the eye and tell you that if we hadn’t spent that money that decision would not have been handed down? I can’t, I’m afraid, we’ll never know. We like to think that our money was critical in the achievement of the objective that we sought, but there’s no causal link that can be scientifically established, and I think that’s a daily problem in philanthropy.’ It seems, then, that attribution is an issue that affects all foundations that want to achieve lasting change. ‘I think all foundations struggle with this,’ says Healy. ‘We measure what we can measure, but we’re not going to engage in a bean-counting accounting style. Where there isn’t a direct measure we take a proxy measure, and sometimes we don’t bother measuring because there’s just no point. And yet we believe that it is necessary to invest in those things even if we can’t demonstrate the causality.’ This doesn’t of course apply if you are making straightforward service delivery grants: if a foundation is paying for so many beds in a shelter for ex-offenders, it knows exactly what it is paying for. But it seems that if you’re trying to achieve real change, which inevitably involves advocacy, then you can’t establish a causal link in that way. The importance of advocacy ‘Advocacy is an increasing component of the work that we do across all of the programmes and in most of the geographical areas that we work in,’ Healy points out. ‘It’s an uncomfortable area for foundations to be involved in but we’re convinced that it’s important because we believe that our grantees have great potential to engage effectively in public policy discussion and to influence the allocation of public resources, and at the end of the day that’s really the way you bring about lasting change.’ US foundations seem to be extremely nervous about advocacy at the moment, and it’s sometimes suggested that they’re more nervous than they need to be. (This is not a view Healy agrees with, however. ‘US foundations are quite constrained by the law and also by IRS Regulations,’ he says. ‘It’s an uncomfortable time for them so I would not be critical.’) The Atlantic Philanthropies isn’t a US foundation most of the organizations within the Atlantic Philanthropies family are registered in Bermuda. Does this affect their ability to support advocacy? ‘Yes, we have some possibilities that aren’t open to mainstream US foundations,’ says Healy. ‘For example, it is possible for us to more easily provide support to so-called 501(c)(4) organizations (advocacy organizations) in the US. But our advocacy possibilities are probably not much different in the other countries in which we operate from those of our peer foundations.’ Acknowledging the real heroes For many years, The Atlantic Philanthropies’ policy was to operate anonymously its name was never publicly associated with its grantees. The policy of anonymity was abandoned in 2001 but how does the desire for a visible legacy sit alongside a long tradition of keeping a low profile? John Healy admits he’s not particularly attached to the word legacy. ‘If Atlantic leaves anything behind it, it will leave organizations that have done things because of some support we’ve been able to offer them. The real heroes of this story, if there are any, are the non-profit organizations who do the work, not the funders.’ The low-profile culture has clearly shifted a little but only a little. ‘We’d like to close the door eventually feeling that we’ve been able to make a difference, and perhaps in a way with a wider recognition that we’ve been able to make a difference, but we will continue with our longstanding policy of not seeking to draw attention to ourselves. We don’t put our names on anything we still have some regulations that mean we eschew that and we don’t intend that that is going to change. But we are hoping to communicate a little bit more with the non-profit world, in the spaces in which we operate, so that others can better understand the values, the drivers, the objectives that we set ourselves so that we can have more fruitful collaborations with the people who do the real work.’