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Friday, January 19, 2018

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The Philanthropic-Consultant Industrial Complex
Jan Masaoka

November, 2011

You've probably heard of the 5% payout requirement for foundations . . . but most people mistakenly believe this means that foundations must grant out 5% of their assets each year.  Actually, foundations must spend 5% of their assets each year . . . which can include their own salaries, office rents, and so forth.

But perhaps the least examined of all foundation spending is what they spend on consultants, such as consultants to themselves and their initiatives, contract staff, consultants to nonprofits (the $200K strategic planning grant that goes 100% to the consultant, none to you), and so forth.

In fact, in the blink of 15 years, we've gone from a time when there was hardly any nonprofit infrastructure support to one where it feels as if the infrastructure -- we coined the term Philanthropic-Consultant Industrial Complex -- outweighs the nonprofits doing the actual work.

Even more than the money, the philanthropic-consultant infrastructure is changing who's running the show: rather than supporting nonprofits, foundations and consultants are increasing telling nonprofits what nonprofits should be doing.

(Of course we recognize the value of infrastructure . . . Blue Avocado is even part of that infrastructure. It's the relative size and the shifting center of gravity we're concerned about here.)

These days when a foundation announces it is starting an initiative for low income seniors, we now assume that much of the money will go to regrantors, researchers and consultants rather than to on-the-ground nonprofits and the seniors themselves.

And doesn't it sometimes seem as if the best and the brightest young people in the nonprofit sector want to be foundation program officers, consultants, or donation app makers? To tell the truth, we have enough program officers, enough (so often unsatisfying) consultants (really!), and enough start-up apps. We don't have enough people who aspire to run homeless clinics or foster care homes, to raise money for ethnic theaters or rights for prisoners, to be executive directors working the front lines of domestic violence rather than program officers addressing domestic violence issues.

Our sector is in danger of hollowing-out. In fact, innovation comes from the ground up, and that's also where the real work takes place. Let's start by honoring, celebrating, and paying more to the people on the ground above how much we honor and pay the people in the infrastructure. Grantmakers and consultants: are you listening?

Thanks to Jan Masaoka and the Blue Avaocado e-newsletter for allowiung us to publish this great commentary. Please find Blue Avocado at


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