Hurst on SSIR: Surdna CEO on Philanthropic Isolation

I recently interviewed my colleague Phillip Henderson for the Stanford Social Innovation Review about the challenges he faces as the president of the Surdna Foundation, a $755 million charitable family foundation known for its innovative work.

Prior to his appointment at Surdna, Henderson was vice president at the German Marshall Fund of the United States (GMF), a trans-Atlantic public policy and grantmaking institution that he joined after an early groundbreaking career in Eastern Europe.

Aaron Hurst: I’m a little distressed about something random that I wanted to bring up with you because I think you might be an expert in the topic. The whole idea of Europe sharing a single currency gave me so much hope. Try to imagine in our current political system ever agreeing to anything like that. But I’ve been reading that the odds of the euro lasting another 10 years are not that great.

Phil Henderson: The euro turns out to not be strong enough to tie together all these disparate political actors. Even as the euro fails, it’s hard to imagine that undoes all the progress that is being made.

I arrived in Eastern Europe in 1992, and all these countries were groping for the what-the-hell-do-we-do-now? The notion that these countries would one day be normal seemed far-fetched. The West did two things: step one was they opened the gates to NATO, and step two was allowing membership in the European Union which was a slightly more difficult step. Those seemed unreal in 1992. Now it is 20 years later, and it’s hard to imagine what was unimaginable back then.

I still go to Romania a couple times a year, which is where I first landed in 1992, and it is night and day between now and then. But for people who are going there now, all they say is, ‘Holy crap, what a crazy country,’ and I say, ‘Well, yeah, but so much less crazy than it was 20 years ago.’

AH: Fast forward 20 years. What ends up defining the collaboration at this level? Is it the United Nations? Is it another body that’s emerging now?

PH: My guess is that no new institutions of consequence will be invented, and it’s probably because the kind of political consensus that existed in the world in the post-1945 era, when the IMF and the World Bank and the UN and all these places became what they are, is unlikely to be repeated.

So you end up with things like efforts to create a World Court and other things that, notably the U.S., almost as a knee-jerk reaction, reacts to negatively, no matter what the thing is. You kind of have to think about the institutional structures that exist, and that’s one reason that NATO continues to perform a viable service: because it’s an organization that the U.S. largely controls and trusts.

I don’t know what the future holds, but the landscape of institutions will not change. I have a hard time hazarding a guess of fast-forward 20 years.

AH: You can draw parallels to the nonprofit sector in the U.S., which is dominated by legacy organizations like the United Way that have been around for decades. These organizations created tremendous social impact in their prime but were developed out of the necessity of a different time. They now have so much inertia and so many large funding institutional bodies supporting them that, even though other players have since entered the sector, they still maintain a large role despite all the frustrations and challenges with their relevance.

PH: I think ‘inertia’ is the right word.

There was an interesting article in the June issue of The Economist comparing IBM and Carnegie Corporation, both of which are turning 100. The takeaway for me was just how prolific the Carnegie Corporation was in creating an institutional presence in the first half of the twentieth century and how that seems to have waned significantly.

It’s hard to lay that at the feet of the Carnegie Corporation, but it certainly suggests there’s something different now about the scale at which any individual actor can work. We’ve spent a century churning out all of these huge social service organizations and foundations that are not scaled to close down in our lifetimes, but the landscape has changed since then. The United Ways are no longer the spark of innovation; they are now the legacy of whatever that innovative moment was. Now it seems the landscape is so crowded that it either stifles or crowds out the creative minds, or maybe just creates a different context from which we start.

AH: There has been a push to get some of the larger legacy foundations to spend down their endowments. But in the few examples you see, it seems like there’s a lot of dysfunction with that as well. What is your stance on the issue?

PH: I’ve reached the same conclusion, having just watched the abrupt leadership change at Atlantic and some of the churn that’s going on at the Soros Foundations. It’s messy, but I take a more measured view. I think giving away money is really hard, and there’s no easy formula. Just increasing your giving to do really big things in a really short period of time doesn’t make you any smarter. You may get more creative out of necessity because you’re panicked, but I’m not sure that necessarily leads to better outcomes. It can be messy in a spend-down scenario, just like it can be messy in a different way in perpetuity. I don’t think there’s a clear-cut solution that if we just do this, then all philanthropy will get better. It just doesn’t work that way.

As a family foundation, Surdna has discussed the spend-down strategy before, and the current family members say, ‘why would we deprive a future generation of our family the ability to affect cultural change as much as we have?’ We think our problems are the most important problems, but so did the generation before us, and probably the generation after us will reach the same conclusions, so who are we to say?

Aaron Hurst is the President & CEO at the Taproot Foundation. Discover more about Taproot’s work with nonprofits here.