Stephen Heintz, President, Rockefeller Brothers Fund: Philanthropy in an Interdependent World

February 3, 2006
Stephen Heintz, President, Rockefeller Brothers Fund: Philanthropy in an Interdependent World

For an ever-larger portion of the world's population, globalization — the increasing economic integration and interdependence of countries around the globe — is a fact of life. As New York Times columnist Thomas Friedman writes in the Lexus and the Olive Tree:"Globalization is not the only thing influencing events in the world today, but to the extent there is a North Star and a worldwide shaping force, it is this system."

But while the system may be new, power politics, clashing civilizations, and chaos are as old as Adam. The drama of the post-Cold War world, writes Friedman, is the interaction between the new system and all the old passions and aspirations. From factory floors in the Midwest, to the back alleys of Karachi and Kabul, to the studios of Al Jazeera and the bond pits of the Chicago Board of Trade, it's a drama whose first act has raised more questions than it has answered and whose second act is still being written.

In December, Philanthropy News Digest spoke with Stephen B. Heintz, president of the New York City-based Rockefeller Brothers Fund, about the role of philanthropy in an increasingly interdependent world, risk and the concept of failure in a philanthropic context, and the importance of leadership in a time of rapid change. The interview, the 75th in PND's ongoing series of Newsmaker Q&As, is also the first in a series, to be published in PND throughout 2006 as part of the Foundation Center's 50th anniversary celebration, that will illuminate both the current state and future of American philanthropy.

Before joining the Rockefeller Brothers Fund in 2001, Heintz, whom PND first interviewed in September 2000, served as founding president of Demos: A Network for Ideas & Action, a public policy research and advocacy organization working to enhance the vitality of American democracy. Prior to that, he served as executive vice president and chief operating officer of the EastWest Institute, where from 1990-1997 he lived in Eastern Europe and worked on issues of economic reform, civil society development, and international security. He began his career in the mid-1970s with a series of key assignments in Connecticut state government — first as chief of staff to then-state senate majority leader Joseph I. Lieberman (1974-76) and later as commissioner of the state's Department of Income Maintenance (1983-88) and Department of Economic Development (1988-90).

A magna cum laude graduate of Yale University, Mr. Heintz has published articles in theInternational Herald Tribune, theWashington Post, theWall Street Journal Europe, and several books and journals. He lives in New York City.

Philanthropy News Digest: We had the opportunity to speak with you in the fall of 2000 as you were preparing to leave a New York City-based organization called Demos to become the president of the Rockefeller Brothers Fund. Did you have certain expectations, as you were getting ready to make the move, about the Rockefeller Brothers Fund and what you might be able to accomplish as its president? And if so, have those expectations been met?

Stephen Heintz: I knew the Rockefeller Brothers Fund by reputation, as well as through direct experience as the president of a grantee organization that had enjoyed the fund's support for a number of years, so I had a pretty good sense of what this place was like. Among other things, I knew it to be a dynamic, professionally led institution with a superb staff and a deep commitment to the highest aspirations of what philanthropy should be. And I'm happy to say that my sense of what the RBF was has been confirmed since I've been here. In fact, in some ways, much of my experience here has exceeded the expectations with which I arrived.

PND: Has anything failed to meet your expectations or been different than you thought it would be?

[T]o give away money, and to do it strategically, effectively, efficiently, and transparently, is a lot more difficult than one would imagine....

SH: The most important difference, as it turns out, is that I've learned it's much more difficult to manage philanthropic assets in an excellent fashion than I thought it would be. I think those who work in the grantee community and struggle to raise funds and meet a budget year after year, as I did at Demos, often dream about working at a foundation, thinking that it must be easy to give away money. But it isn't. In fact, what I've learned over the last five years is that to give away money, and to do it strategically, effectively, efficiently, and transparently, is a lot more difficult than one would imagine.

PND: I can imagine some people hearing that and thinking, Really? How hard could it be? What are some of the challenges a foundation like the RBF must contend with as it tries to be strategic, effective, efficient, and transparent in its grantmaking?

SH: Finding high impact points of entry in a given field; leveraging additional resources; and evaluating results.

PND: About nine months after we spoke with you in the fall of 2000, New York City and Washington, D.C., suffered major terrorist attacks that resulted in the loss of almost three thousand lives. In the weeks and months after 9/11, it became fashionable for people to say that the attacks had changed everything. Do you believe the 9/11 attacks changed everything?

SH: I don't think they changed everything. I understand why people felt that way at the time. The shock of the experience, especially for those who live in New York or in Washington, D.C., was quite traumatic, even for those of us who did not face the tragedy of losing a family member or a friend. So I understand why people expressed that view at the time. But I do think the attacks changed a lot of things. They certainly changed our self-perception as a nation. Before 9/11, we essentially saw ourselves as being invincible, and now, I think, we're much more aware of our vulnerabilities. The attacks also changed, rather dramatically, our politics, especially with respect to our relationships with friendly countries and multilateral institutions around the world. In fact, we've seen some profound changes in our politics since 9/11, and not all of them have been for the better.

On a more reassuring note, there have been things that haven't changed. Americans continue to be an optimistic people. New Yorkers, who were most directly affected by the attacks, continue to go about their lives, almost as if nothing had happened. The city itself remains popular with tourists and people who love the opportunity and excitement it provides. That resiliency and optimism about the future is part of the American character, and I don't think that has changed.

The other thing I would say is that some things haven't changed enough. For example, we, as Americans, haven't changed how we think about the role of our country in an increasingly interdependent world, and we really haven't formulated a new approach to U.S. global engagement that is appropriate for the conditions and challenges of the 21st century, terrorism being one of those challenges. So, I guess I would say that the post-9/11 period has been an interesting mix of some things that did change, some things that maybe should have changed that haven't, and some things that have remained more or less the same.

PND: Global interdependence is a concept that you and your colleagues have given a lot of thought to — so much so, in fact, that you've incorporated it into a new tagline for the RBF: "Philanthropy for an interdependent world." In your view, what are the most critical challenges philanthropy should focus on in an increasingly interdependent world?

SH: Before I answer that, let me just say something about the tagline itself. When I came aboard in 2001, the RBF didn't have a tagline. Our visual identity was pretty traditional, in part because we had the word fund, rather than foundation, in our name, which leads many people, when they first hear about us, to think, Oh, it's an investment fund, or a hedge fund, or something like that. They don't know we have something to do with philanthropy. So the tagline became an important way of quickly alerting people to the fact that we are a philanthropic institution. And as we were struggling to come up with something that, in a few words, described what we're about, this notion of interdependence just popped to the surface and was more or less immediately adopted by our staff and board as an accurate expression of our approach to philanthropy.

Now, in terms of the kinds of issues I think should be at the top of philanthropy's agenda as a result of the phenomenon of global interdependence, clearly global warming is a high-priority issue, and it's also one of our top priorities. In fact, I'm pleased to be able to say this morning that last week our board of directors approved our budget for 2006, and the single largest increase in that budget is for the work we are doing on global warming.

How we address the continuing emergence of non-state actors and the threats they pose to international peace and security is something that philanthropy must be involved in....

Second, the whole 21st-century set of challenges to international security and peace is another major reflection of growing global interdependence. In previous centuries, going all the way back to the Treaty of Westphalia in 1648, international security was thought of in terms of relations between nation-states. But here at the beginning of the twenty-first century, we're seeing that nation-states, while continuing to be important actors on the global stage, are not the only actors on that stage. Over the last fifty years or so, we've witnessed the emergence of many new non-state actors that have the potential to help create the conditions of greater security and peace — multilateral institutions like the United Nations, the European Union, the World Trade Organization, and so on. But we've also witnessed the emergence of non-state actors, including global terrorist networks like al-Qaeda, that are intent on undermining existing international security arrangements. And how we address the continuing emergence of non-state actors and the threats they pose to international peace and security is something that philanthropy must be involved in.

The third challenge I would mention is the whole issue of equity in terms of globalization, economic development, and trade. We're seeing enormous economic gains in many formerly impoverished countries thanks to the acceleration and deepening of globalization. But we're also seeing many countries and tens of millions of people sinking deeper into poverty and being left even further behind. And unless we, in the developed world, collectively decide that there are better ways to manage globalization — ways that will create greater equity and opportunity and environmental sustainability in less developed countries — I think we're going to face major challenges and see a growing backlash against the economies and institutions perceived to be driving the process of globalization.

PND: The scope of the challenges you've outlined is, well, global. You and I both know that institutional philanthropy represents a relatively small percentage of the dollars available to address any issue, let alone issues that require action and cooperation on a global scale. Given the relatively limited resources at its disposal, what role, in your view, should philanthropy play in addressing these kinds of challenges?

SH: There are a variety of appropriate roles where the limited philanthropic resources you have noted can achieve significant impact. The first would be in the areas of education and advocacy. One of the things philanthropy can do, and already does fairly well, is to promote research, education, and advocacy to help the general public understand these issues and their implications more fully, to create a sense that there are solutions, and to highlight our collective progress in tackling them. That's a critical function that philanthropy can and should play.

The second thing has to do with philanthropy's role in helping to shape public policy and the public-policy debate. Ultimately, many of these kinds of global challenges will only be solved by changes made at the public-policy level, and one of the things philanthropy can do in this regard is to help develop the ideas for change. It can fund demonstration projects and new policy models, it can disseminate learnings from those projects and models, and it can help take the most successful of those projects and models to scale, so as to broaden their impact. We all know that the resources required to solve these problems will have to be provided through public-private partnerships. But philanthropy can be the leading edge of those investments, in the sense that it can help steer bigger players and deeper pockets into new fields and approaches to solving these enormous challenges.

Last but not least, I think it's up to philanthropy to really take risks as it tries to address these kinds of problems. There are experiments begging to be funded in all the areas I've mentioned, and, let's be honest, we don't know what the results of any of them are going to be. Unfortunately, it's increasingly difficult for business to fund these kinds of experiments, and government, which has always been risk-averse in some respects, has become even more so on account of the polarization of our politics. Yet we know that experimentation is a major driver of human progress. All of these things put more pressure on philanthropy, in my view, to embrace a greater level of risk, to fund more experimentation, and to disseminate the results and lessons of that experimentation to others.

PND: Are you suggesting that philanthropy may have lost some of its appetite for risk?

SH: There are all kinds of philanthropies, and some are more risk-averse than others. Generally speaking, though, I would say we probably have become more risk-averse as a field than is appropriate, given the kinds of problems we face and the growing aversion to risk we see in the private and public sectors. At a minimum, it's something philanthropy needs to examine. Here at the RBF we've asked ourselves: What is our risk profile, and do we need to recalibrate it? Partly as a result of that conversation, I think we have become willing to assume a higher level of risk, in a way that is prudent and careful but also appropriate to the times and challenges we face.

PND: Philanthropy's profile in the media and the public mind is higher today than it has been in decades, maybe ever. With that higher profile, however, has come heightened scrutiny of the field, which in turn has led foundations increasingly to value outcomes and measurement as a way of demonstrating impact and effectiveness. Is the growing emphasis on outcomes and measurement within the field a healthy development?

In the rush to quantify things, I think people sometimes end up measuring things that don't really tell them whether they're having impact or not....

SH: It's good that we're all thinking more seriously about how we evaluate our impact; that's a very healthy thing. But I'm not entirely convinced that quantitative measures are the best way to evaluate impact in philanthropy, and they're certainly not the only way. I'm reminded of something that Albert Einstein once said: "Not everything important can be measured, and not everything that can be measured is important." In the rush to quantify things, I think people sometimes end up measuring things that don't really tell them whether they're having impact or not. At the Rockefeller Brothers Fund, we ask ourselves whether there are aspects of a given program that can be measured, and if so, whether they're likely to tell us something meaningful. If the answer to both those questions is yes, we'll go ahead and measure them.

But we also ask what else we should be doing to evaluate a program's impact, and we're continually looking for ways to improve our capacity for qualitative evaluation, both internally and through the use of external assessments and third-party consultation. For example, for the last two years we've commissioned the Center for Effective Philanthropy to survey our grantees about their experience with the RBF, both positive and negative. We've also commissioned CEP to survey some of our unsuccessful grant applicants in order to get a better understanding of their experience; to survey our own employees as a way to identify internal management and organizational culture issues we might want to address; and to survey our trustees on a range of governance issues. All those surveys and the effort to acquire qualitative information about our policies and practices is in support of a key goal we have set for ourselves, which is to be a center of philanthropic excellence, in everything we do. In our grantmaking we want to strive for excellence in our relationships with our grantees, and we also want to be excellent in the way we manage our assets, treat our employees, and govern the work of the foundation. It's a big ambition, but one well worth pursuing.

PND: Do you plan to commission grantee perception reports from CEP on a regular basis?

SH: We do. I could see us commissioning a survey every three or four years. They really have provided us with valuable baseline information, and we've already used the results from the first survey to change some of our practices in terms of how we communicate with the grantee community, which was an area where we did not do as well as we might have hoped. In fact, we've hired a wonderful new communications officer to help us improve in that area, and we've also used the results in internal performance evaluations. So I do think conducting those surveys on a periodic basis will serve us well and will help us in our efforts to achieve continuous improvement.

PND: You've spoken eloquently in the past about the concept of failure in a philanthropic context. Are foundations as comfortable with the concept of failure as they should be?

SH: Well, obviously, nobody wants to fund failure. But I do think foundations have to be open to the notion that, if they are going to operate with an experimental disposition — which, as I said earlier, is something philanthropy should do — that in itself suggests there will be instances of failure. What's more, foundations need to embrace and learn from those failures. I'm a firm believer that failure can teach you as much as success. I believe that if we are not failing some of the time, we are not living up to our mandate; it means we're not pushing ourselves enough, experimenting enough, taking enough risks. So let's embrace failure when it happens, as it inevitably will.

To that end, there are a couple of things we can do. One is to just be open about it, to talk about it in the way we're talking about it right now, and to have people understand that we're going to fund some things that may fail, but we're going to fund them anyway because we think they're worth trying. Living up to our principles is also important, as is being transparent about our failures; that's absolutely essential — both in terms of acknowledging failure and in our willingness to disseminate lessons that may come out of it.

PND: What's the role of leadership in all of this?

SH: I'm a big believer in leadership. I'm a believer in both the importance of individual leadership, and in collective leadership. I believe that every person in an organization has the opportunity to be a leader in his or her sphere of activity. As the leader of an organization, what I want to try to do is enable the people who work for me to be the best leaders they can be and, in doing so, create an organization that rewards individual performance and impact. That's very, very important.

PND: What did you think of Time magazine's recent selection of Bill and Melinda Gates and U2 frontman Bono as Persons of the Year?

One of the things I've learned is that there's a real lack of understanding among the public about what philanthropy is, how it operates, and the challenges it faces....

SH: I think it was refreshing that Time chose individuals who earned their fame in other arenas and recognized their philanthropic contributions as the major reason for their selection. That's good. Anything that draws more attention to philanthropy and philanthropists is a good thing. One of the things I've learned in my time here is that there's a real lack of understanding among the public about what philanthropy is, how it operates, and the challenges it faces. Anything that helps to educate the public about the role of philanthropy in society and about the good work people in this sector are doing is a good thing.

PND: Media pundits have been busy the past few weeks eulogizing the John M. Olin Foundation, which closed its doors after fifty years of grantmaking. Conservative pundits, in particular, have used the occasion to celebrate the role of the foundation in mainstreaming the conservative movement. Would you agree that Olin and other conservative foundations — I'm thinking of the Lynde and Harry Bradley Foundation, the Scaife foundations, the Smith Richardson Foundation, and others — have been important players in the success of the conservative movement over the last quarter-century? And if so, what can foundations with a more progressive bent learn from the example of their conservative peers?

SH: I do think Olin and other foundations that share its philosophy have played a significant role in the political success of the conservative movement, although some of the pronouncements about Olin in recent weeks have overstated the case. Let's not forget, however, that there are other factors that have contributed to the rise of the conservative movement and its current position in the public policy arena.

As you probably know, the encomiums to Olin speak directly to an interesting debate under way in the mainstream foundation community about whether there's a need to invest in or create a group of avowedly progressive foundations to serve as a counter-balance to some of the conservative foundations. In fact, a number of efforts are already under way to organize that kind of philanthropy, including something called the Democracy Alliance, which is seeking to create a donor collaborative of wealthy individuals who work together to fund progressive infrastructure, progressive nonprofit organizations, and to develop, organize around, and advocate for new ideas with regard to various policy challenges. I think that's a good thing. I'm all for pluralism in philanthropy. I think it's one of the great strengths of philanthropy, and I think it's one of the reasons why philanthropy is important to the health of a vibrant democracy. Philanthropy should be part of the development and exchange of ideas in a democracy. But I also understand that there are lots of foundations that don't want to be pigeon-holed as either conservative or progressive, that want to approach tough issues in a less ideological way, and that want to continue working on issues in a framework with which they're comfortable. And that, too, is entirely appropriate.

PND: In our conversation this morning, you've given us a picture of a philanthropy that is outward-looking, inclusive, and committed to social change. You've also described a number of formidable challenges that, in your view, the field must come to grips with over the next decade or so. What would be the consequences if philanthropy fails to rise to those challenges?

SH: It would mean significantly less progress on the key global issues we've been discussing. I don't want to overstate the case. As you noted earlier, philanthropy is a relatively modest component of the resource base available to support work on major domestic and international challenges. But it's an important one, and it's one that has the capacity, both intellectually and financially, to leverage other resources. In fact, the real consequence of philanthropy's failure to rise to these challenges just might be the lessening of that leverage. If we don't improve our effectiveness, if we don't work in a more collaborative manner, if we avoid risk and forgo the lessons that failure can teach us, we will not exercise the kind of leverage we have the potential to exercise, and, as a result, we'll see less progress on some of these extraordinarily significant challenges than we would otherwise. And that will not only be a loss for philanthropy, it will be a loss for the global community.

PND: Well, thanks very much for your time this morning.

SH: Thank you.

Mitch Nauffts, PND's editorial director, spoke with Stephen Heintz in January. For more information on the Newsmakers series, contact Mitch at