At the Foundation

GUEST: Peter Goldmark
VTR: 2/13/96

I’m Richard Heffner, your host on The Open Mind. And my guest today is Peter Goldmark, president of the Rockefeller Foundation. Now, when he first sat at this table some half-dozen years ago, I described Mr. Goldmark as Rockefeller’s challenging and energetic new leader, noting that, in this half of the century, three of his predecessors had joined me on the air: Dean Rusk, who was still to become John F. Kennedy’s and Lyndon Johnson’s Secretary of State; George Hurrar, who helped me examine science and the foundation world; and the charismatic John Knowles, who led Rockefeller from a physician’s perspective. The point is that Peter Goldmark came here at the very beginning of his turn at the helm. And I asked him right off, “Who says, to such a wealthy enterprise, ‘This is your job?’ Who authorizes the foundation to do what it does?” Now, in a new decade, with new challenges, I want to ask my guest what American foundations’ job has been, will and should they move on from what they’ve been doing, and will the giants among them likely journey together to the same place? Peter?

GOLDMARK: Hello, Dick.

HEFFNER: Are you going to join together with your fellow biggies?

GOLDMARK: We have joined together in a couple of very interesting ways. And these were not things that were even little specks on the horizon when you and I last talked. Let me tell you the story of one of them very briefly, because it turned out to be the largest coalition, we believe, in the history of American philanthropy.

There are things in this country called “community development corporations,” and we don’t hear much about them. When the president of the United States talks about the condition of urban America, he doesn’t mention community development corporations. There are many of them in the city. In the South Bronx, a neighborhood that has been rebuilt and come back, most of that wonderful rebirth that took the place of all those bombed out blocks with the rubble bricks where President Reagan and President Carter stood and campaigned, most of that rebirth was accomplished by community development corporations, which are small, neighborhood-based, community-driven investing vehicles that take over a building and rehabilitate it.

Well, this was something that worked on America’s landscapes. And most things don’t work in that ravaged landscape of American social experiments. And what we did was put together an alliance of seven foundations, two insurance companies, and J.P. Morgan and Company, a large, money center bank. And that became a living, breathing coalition of charitably minded organizations—not all philanthropic—who said, “This is a good idea, and we’re going to take it to scale.” So I would offer that to you as an example of foundations joining with private-sector institutions in this country to form a partnership to take something that made sense and to infuse into it money and effort to help its spread, or “go to scale,” as we say.

HEFFNER: Now, I’ll accept that, of course, as an example of the way in which the big foundations, along with non-public organizations, can work together. Now, is this a trend? Does this pose a plan for the future? Is it exceptional?

GOLDMARK: I think it is exceptional in that not a lot of things like that happen. I think it is a trend in this sense: that is, I think you will find in the foundation world today more attention and effort into finding possible areas of cooperation. And notice I stop one step short of say, “it has resulted in cooperation.” That turns out to be a very tough row to hoe for some reasons that are not very flattering to the foundation world.

HEFFNER: What do you mean?

GOLDMARK: Well, one of them is a lot of foundations have as part of their motivation the desire to have their stamp or their name on something. And in a world without market tests, where failure and success are judged ten, 20 years after you start something, sometimes, let’s say, you can feel the pressure in the foundation world, “Well, I’m going to do it my way and call it my innovation or my demonstration,” rather than make that compromise or find common ground and do it with other people. Many of the senior people in the foundation world when I joined it, advised me privately, they said, “Goldmark, don’t waste your time trying to do this partnership number. It won’t work.” There have been a couple that worked. Another one is the Energy Foundation, which is a joint effort of the MacArthur Foundation in Chicago, the Pugh Charitable Trusts in Philadelphia, and the Rockefeller Foundation. And a lot of people said that one wouldn’t work. And it is a joint effort. We three came together and funded an operating foundation essential that works on energy efficiency and environmental work in this country. So I’ll go so far as to say it’s a trend in that it has become an issue around which foundations organize their thinking. In other words, it is, you have talked in the past about the standards and the norms against which foundations operate. There is a bit of a norm out there now that you at least ought to think through about whether you can’t be more effective by joining with others as opposed to only having your own little plot of daisies that you grow or your specialized orchids and show to the wandering visitors.

HEFFNER: Now, are there any common denominators to the area in which foundations can work together?

GOLDMARK: I think there’s a good rule of thumb, and that’s this: I think cooperation makes the least sense when you’re in the most experimental, adventurous area. Because what, remember, when we’re talking experiment and adventure we’re talking about something that, by and large, somebody else hasn’t done, the odds are against, it’s not clear it will work. As a matter of fact, there may be a lot of conventional wisdom that says it won’t work. So there you find those first steps, those first, pioneering actions of seeding the ground sometimes have to be taken by one or possibly two alone.

Where cooperation seems to make sense is where you have something that’s effective and you want to talk more about implementation and dissemination or taking it to scale. And there the case for cooperation is very strong, because each of us by ourselves is small.

HEFFNER: But bravery doesn’t sound as though it has much of a role in that kind of structure.

GOLEMARK: The implementation structure?

HEFFNER: Yeah, in saying, “Well, someone has stepped forward. Now let’s the three of us or the four of us…” or whatever.

GOLEMARK: No, I don’t think that’s an issue of bravery. I think that’s something quite different: that’s discipline.

HEFFNER: Discipline.

GOLEMARK: Discipline.

HEFFNER: You mean in being able to get along with your fellows?

GOLEMARK: More than getting along. Being able to define a common purpose, being able to be disciplined enough to say, “I’m going to be part of this drama. I’m not going to be the solo on stage, in the spotlight all the time.” Discipline in the sense of creating a structure that can marshal various resources of different kinds and fit them together well in a useful, effective framework. Now, I really focus on that word “discipline” because I think, in the world of philanthropy or charitable innovation, discipline is always the most widely seen commodity.

HEFFNER: Well, someone has said to me that, in fact, the foundations have stepped aback, which I think would make it easier to share the blame as well as to share the kudos that go with having made an accomplishment. I mean, is there something to do that notion that foundations are a little bit leery of becoming too prominently identified with one cause or another?

GOLDMARK: I think not in the terms in which you state it. I think there is something else going on. And let me describe that, and you might say that’s closer to what the spirit of what you’re asking than I’m understanding you to be asking. There is what I would call a great deal of care now in reading the political climate. We are in a period in which part—I believe this very deeply—part of the dominant political mood in the country, expressed primarily through the Congress, is to tear things down and to attack institutions, and to say, “This institution or this set of agencies is part of the problems that’s making everything wrong in this country.” And I think there is a great deal of care and thought going on in some foundations to saying, “Everybody’s in a little bit of a minefield.” Now, that is slightly different from saying, “We’re going to pull in our horns and we’re not going to back things because they may be adventurous or they may get us in trouble.”

HEFFNER: How different, Peter? How different?

GOLDMARK: Different in this way: you may prepare your defenses better and you may think through something more thoroughly in terms of how could this be criticized or misunderstood.

HEFFNER: Well, how do you explain the fact—and I think it is a fact, though you may say otherwise—that in this period of attach—and I recognize the situation you describe—it seems to me the foundations have not been attacked. It’s not like, what, when it was 20 years ago, 30 years ago that foundations came into so much trouble in the Congress. Now, how do you account for that? You fellows aren’t doing what could rouse the ire of the Congress or any other group?

GOLDMARK: I don’t think that’s a question either you or I can answer. Why, as of this moment, you know, has there not been a political attack on foundations? I don’t know the answer to that.

HEFFNER: There hasn’t been, has there?

GOLDMARK: There has not, as of now. There have been certainly, there have been groups, most of them associated with the far right, who have been quite volubly critical of some of what the foundations have done. And we came in, Rockefeller, came in for a spate of criticism from the American Family Association and others, very conservative groups, who had misinterpreted and publicized what we did around funding some works of art during the NEA ruckus.

HEFFNER: Oh, I remember that.

GOLEMARK: So, I would say the atmosphere is charged out there. Where that goes next, I don’t know. I’m not here as a mind-reader. But I think part of what you’re seeing is foundations thinking through with more care than they might have done 15 years ago, when I think the only test was, “Is this an interesting experiment? Let’s do a thinking through. Is this something that could generate the level of criticism that would become a real factor in the political landscape? And, if it could, how do we prepare for that? How do we anticipate that?”

HEFFNER: You prefer thinking through to running scared?
GOLDMARK: Yes, I do.

HEFFNER: Because you’re the president of one of the largest foundations?

GOLDMARK: Probably that, and probably by temperament, and partly because I believe very much that the foundation’s role in our society is really to be the venture capital of ideas and social change. Now, that’s a very broad definition, but the venture capitalist has to take risks.

HEFFNER: Okay. But that’s the point. I’m so glad that you put it that way, Peter, because I’m asking you now whether you could look at foundations, 1996, the bog ones, and say they are playing the role that venture capitalists should play.

GOLDMARK: Yes, I think they are. And I think they’re doing it, for instance, in the area of family planning, both overseas and in the United States. Very controversial. I would argue to you that we human beings have crossed a threshold from which we will never go back. The human animal will always contracept from now on. I don’t mean all humans at all times. But as a species, we have left the period when there was not much contraception. And, by and large, as we live out in the centuries ahead on this planet, contraception is going to be a fundamental part of human life together. That’s a tremendous change, a tremendous adventure, and you see foundations playing a really strong and important role in that. And I could give you two or three other examples of where the foundations are playing that venture capital role.

HEFFNER: And do you pay a price.

GOLDMARK: We don’t pay a price as of now. That could come under attack. It could become caught up in the unthinking attack mode that tries to attack any institution that’s taking a longer view of the future than what’s good for me tomorrow.

HEFFNER: Peter, going to the question of who tells you, “Do this, do that” – and I don’t mean your relationship with your board; I mean foundations—where do you get off to do what you do? And you’ve just talked about a very controversial, though it hasn’t stormed over, talking about an extremely important future topic.

GOLDMARK: I’ve really thought about that as a lot. I was thinking as a beginning student, when you and I had our conversation six years ago, and I hope I progressed at least to fifth or sixth grade since then in terms of thinking about this, although there are heads much wiser than I.

The reason I like the venture capital analogy is because I think it helps to provide a framework for this accountability question: Who says you can do that? We live in a society that has said, “Progress comes in many different ways. And one of the ways in which progress and human advancement comes is to allow free reign for experimentation and venturing by independent institutions over whom the body politic will have no control.” And, as a matter of fact, as a collectivity, the country, feel that this is so important that if they do it for charitable purposes we will exempt them from taxes. Now, that is a remarkable and generous and far-seeing statement. And I will argue to you that it has paid off in terms of what has come from those investments in the past.

So I think it is part of the compact between foundations and the larger society of which we’re part that we are expected to venture our knowledge, or capital, and our resources on behalf of risk investments that we think, as professionals and experts, will make sense, and that history and time will be the judge. And, in that sense, it is the same accountability standard as the venture capitalist in the business area. Which is, the real test is: Does it work?

Let me go way back to something the Rockefeller Foundation did in the Fifties and Sixties. It actually began in 1940, and is a lesson in long-term sticking with the subject. But that’s the green revolution. In this bloody, sad century with its world wars and human tragedy, one of the great things the human animal did during the Twentieth Century was, for the most part, figure out how to feed itself on this planet. And the air was filled with predictions of starvation and famine in the streets of India and China. Asia is feeding itself, and it’s feeding itself because of something we call today, “the green revolution”: a high-yielding wheat and corn. Who said, in the 1940’s, that it was okay for the Rockefeller Foundation to spend its money, exempt from taxes, on that? Now, when I ask it in retrospect, the question answers itself. So my answer to you today is that that investment was okay because thoughtful, caring professionals put their best judgment on the line that that was a risk to take. And I will say to you on this program today that the ten parallel investments that didn’t work out were also okay, and that that bundle of high-risk venture capital for the good of mankind as opposed to sell more hula-hoops tomorrow, which is the business analogy, is a yeasty and powerful engine of advancement in our society.

HEFFNER: Why do you add that the ten that work out…okay too?

GOLDMARK: Because it’s too easy to sit here and mention to you the one that did work out, that has become a symbol of human progress. If you’re going to take risks, you have to buy the whole bundle. And you have to allow—now, I’m talking to you, as Citizen Heffner—you have to allow this foundations, this engine of social venture capital, to make investments that don’t work in order to get the ones that do. That’s what being at the cutting edge of human advancement means.

HEFFNER: I suppose in a way this is a meaningless question. For me it is, in a sense, but I’m going to ask…

GOLDMARK: I’ve learned to be very careful when you say that. (Laughter)

HEFFNER: (Laughter) Peter, if we were faced with the choice today…I don’t think, by the way, that you can get away with the notion that a compact was arrived at between the American people and the world of foundations. You would grant, wouldn’t you, that that was a function of wealth and power of the very people whose names adorn the largest foundations: Rockefeller, Ford, Carnegie?

GOLDMARK: That’s how they were founded. But I would argue the law that has build up around them says, does represent a kind of contract, a deal between the foundations and society. Society says, “Under the law, we will grant you tax exemption. And, in return, you will do only charitable things. You won’t invest in things that return to your own financial benefit, and you won’t get involved in partisan politics.” That’s a deal. And that deal has held now for 80-90 years.

HEFFNER: Yes, but if you go back to 80-90 years ago, again it was a matter of the power structure in this country. And you talk about the laws. Yes, the laws have not torn apart, have not torn asunder that arrangement that was made by Mr. Rockefeller, Mr. Carnegie, Mr. Ford, etcetera. The reason I say this may be a meaningless question is because I’m afraid of the answer. And the question is: If we were to try to strike such a deal today, do you think we’d be able to do it? I was going to say “get away with it.” But do it.

GOLDMARK: Very, in the present moment, with the divisiveness and the short time horizon and the mean spiritedness that I think infects our political debate today, be very hard to imagine. Take the year 1995. It would be very hard to imagine our national government in Washington in 1995 arranging into anything that large-spirited or far-minded.

HEFFNER: Is there anything that indicates that the contributions that have been made by the major foundations, by the arrangement that you’re talking about, the compact, is appreciated by the American people?

GOLDMARK: I don’t know the answer to that. Certainly my impression, I assume, like yours, is that there is very little public awareness of what foundations do. And when somebody is aware it’s normally of the local foundation that’s supporting their symphony or their local museum. That’s more, they can touch it or feel it and go visit it. Somebody supporting research on an AIDS vaccine or, you know, self-renewal corporations in the central cities of this country, that’s a little harder to get in touch with.

HEFFNER: But what is the foundation world then waiting for? Until there will be a movement, as there was 20-30 years ago, that’s anti-foundation?

GOLDMARK: I think it’s a very fine question, and I don’t have a good answer to this, on whether it is part of the job of the foundation world to promote itself.

HEFFNER: To perpetuate itself?

GOLDMARK: No, promote itself. In effect, to say to the American public, “Here’s…”—like so many other institutions do now—“Here’s why what we’re doing is good for your health.” They have not traditionally done that.

HEFFNER: Yes, but when I say “perpetuate,” you say, “No, promote.” How do you perpetuate yourself? That seems to me to be acceptable to you, the notion of self-perpetuation. But when I ask you about to do you manage to perpetuate the thrust of the foundation/societal relationship in this country, you quickly make it into promotion, and you feel uneasy about that.

GOLDMARK: Well, that’s because we were talking about public awareness of what foundations do. How do we keep the compact I described alive? The central ingredient has to be performance. I would argue that a foundation has to be able to say, “Here’s why what we’re doing is important. Here is the calculation we have made.” They have to be willing, even if it’s only a handful who want to know, to, in effect, be totally transparent and say, “We are investing essentially taxpayer-subsidized dollars, and we’re investing in the following six or seven ways, and here’s why. And we are willing, in that sense, to be held accountable for that. And over time, some of it should bear fruit. Some of it will not.” So I think that’s the first, central ingredient of earning public confidence and, in your sense of the word, perpetuating the compact.

HEFFNER: Does the word “perpetuate” bother you at all?

GOLDMARK: It bothers me a little because it normally comes up in another context, which is those who attack some foundations because their charter says they will be a perpetual trust. And there are other foundations whose founders said, “Thou shalt spend down within X-years, spend down all your capital.” I think both are defensible courses of action, and I’m willing to respect the donor’s wishes in either case.

HEFFNER: Willing to respect the donor’s wishes.

GOLDMARK: The founder of the foundation. When these people set up these foundations, some said, like the Diamond Foundation…

HEFFNER: Right.

GOLDMARK: …right here in New York City, “This will be spent down within ten years of you opening your doors.”

HEFFNER: Now, to what degree do donors intentions and commands resound in foundation halls today? I mean, the one you give as an example, the Diamond Foundation, is very, very exceptional. In other words, Mr. Carnegie, Mr. Ford, Mr. Rockefeller, to what degree—in the minute I think we have left—to what degree do and should their wishes prevail today?

GOLDMARK: I think the answer to that is very simple. Each one of those founders decided how restrictive he or she was going to be. And in effect, that decision as to how much guidance would be in the founding deed of trust determined how much the successors had to follow what that person said. Where you have a general charter, like the Rockefeller Foundation, it was explicitly designed so that each generation of leadership would rethink what it means to work for the general well-being of mankind. You have other foundations that have said, “The purpose of this foundation, forever and a day, shall be to do research on cancer.” And that guides. That’s as fundamental as contract law in this country. That is a deed of a trust of the person who gave the assets off which the whole enterprise operates.

HEFFNER: Now, last question. Now we have a minute left. Whither foundations?
GOLDMARK: I think we’re at a time of real turbulence and uncertainty both in our domestic affairs and in the searching for what the post-Cold War world order is. So I think foundations, as much or more than all our other institutions, are challenged, and, I would say, required, to make the most far-seeing and sound and disciplined investments they can in helping us over this paradigm shift. We’re going to live differently, think differently, and run our institutions differently. And the role of foundations is to prepare, with the longest time horizon any human institution is capable of.

HEFFNER: And you think this is being done sufficiently?
GOLDMARK: I’m never satisfied. I will never say yes to that question, no matter how many ways you put it to me.

HEFFNER: I asked it. It was just a softball…

GOLDMARK: (Laughter)

HEFFNER: …but, Peter Goldmark, thank you so much for joining me on The Open Mind today.

GOLDMARK: Thank you, Richard.

HEFFNER: And thanks, too, to you in the audience. I hope you join us again next time. And if you’d like to share your thoughts about our program today, please write: The Open Mind, P.O. Box 7977, FDR Station, New York NY 10150. For transcripts, send $4 in check or money order.

Meanwhile, as an old friend used to say, “Good night, and good luck.”

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