The National Committee for Responsive Philanthropy (NCRP), a national foundation watchdog organization, recently released a report titled Criteria for Philanthropy at its Best: Benchmarks to Assess and Enhance Grantmaker Impact. The report recommends four criteria and ten accompanying benchmarks for how grantmakers should improve their giving and management.

NCRP developed the criteria after "rigorous research, literature reviews, original data analysis and robust debates among some 50 people over 15 months." The criteria are intended to serve as a way for foundations to have the utmost impact on society, with a set of measurable guidelines that funders can use.

Criteria for Philanthropy at Its Best focuses on four criteria; values, effectiveness, ethics, and commitment. Each area has its own set of benchmarks on issues such as payout for grants, general operating support, board composition, advocacy, disclosure, mission investing, and support for underserved communities. The NCRP press release states that the report "is the first ever set of measurable guidelines that foundations and other institutional grantmakers can use to maximize their contributions to society and to make a positive difference in the world today."

The benchmarks include recommendations such as providing 50 percent of grant dollars for general operating support, 25 percent to support advocacy efforts, 25 percent of assets in investments related to the foundation's mission, and disbursing a total of six percent of assets in grants each year.

The benchmark calling for 25 percent of grant dollars to go to advocacy, organizing, and civic engagement is reassuring to a wide variety of nonprofit advocacy organizations. The benchmark's language is strong and direct: "Advocacy and policy work are integral to the country's nonprofits' role of providing a 'voice to the voiceless,' making this work all the more resonant for many institutional grantmakers that seek to impact the structures and systems that can move American society closer to equality of achievement."

In addition, the discussion of advocacy seems to be interchanged with social justice. The authors define social justice philanthropy as "the practice of making contributions to nonprofit organizations that work for structural change and increase the opportunity of those who are less well off politically, economically and socially." However, many causes that groups advocate for do not fit into this description.

Another benchmark, under the "Values" criteria, encourages foundations to provide at least 50 percent of their grant dollars to benefit lower-income communities, communities of color, and other marginalized groups, broadly defined. NCRP defines "marginalized or vulnerable" as groups including "economically disadvantaged, racial or ethnic minorities, women and girls, people with AIDS, people with disabilities, aging, elderly, and senior citizens, immigrants and refugees, crime/abuse victims, offenders and ex-offenders, single parents, and LGBTQ citizens." Thirteen percent of the foundations NCRP examined meet this benchmark.

It is this benchmark that has caused the most controversy. While many see it as necessary and valuable to support underserved communities, especially at a time of economic hardship, they also worry about setting such mandates for all of philanthropy. Many are also concerned about the independence of the sector and the ability of foundations to support issues they care about.

For example, the Council on Foundations has not endorsed the criteria, and president Steve Gunderson issued a press statement regarding the report. "While the Council on Foundations shares NCRP’s goal of building a strong sector, we reject the use of a single template to promote effective philanthropy," said Gunderson. "Each foundation is different in its structure, mission, place of work, and pursuit of goals."

Paul Brest, president of the William and Flora Hewlett Foundation, was also critical and wrote an article in the Huffington Post to express his misgivings. Brest noted, "Even for someone who shares NCRP's concerns about marginalized communities, its hierarchy of ends is breathtakingly arrogant."

The last three areas of criteria and their benchmarks include:

Effectiveness

• Provides at least 50 percent of its grant dollars for general operating support
• Provides at least 50 percent of its grant dollars as multi-year grants
• Ensures that the time to apply for and report on the grant is commensurate with grant size

Ethics

• Maintains an engaged board of at least five people who include among them a diversity of perspectives – including of the communities it serves – and who serve without compensation
• Maintains policies and practices that support ethical behavior
• Discloses information freely

Commitment

• Pays out at least six percent of its assets annually in grants
• Invests at least 25 percent of its assets in ways that support its mission

Rep. Xavier Becerra (D-CA), a member of the House Ways and Means Committee, supports the recommendations. Becerra said the criteria will help members of Congress examine how foundations are performing, and some members may call for hearings to explore how foundations are spending their money.

NCRP executive director Aaron Dorfman said that the organization is not seeking greater regulation of foundations but will be sending the report to lawmakers. He added that the criteria are meant to start a discussion and to provoke debate. NCRP will also soon have available an online a self-assessment for foundations to use.