Ethical Challenges for Grantmakers

The scenario goes like this: a group of funders come together out of concern for their grantees who are having financial troubles. One of the funders has decided one organization would be best served by merging with another organization which is also having budgetary deficits. Funders strategize about how that would work and how to go about it. Funders agree to support the costs of possible merging and will offer that “carrot” to the institution as a lifeline. The artistic directors of the institutions being discussed are in the dark about this discussion. Funders leave with a strategy to persuade merger consideration.

Question: Is this an appropriate and ethical action by funders?

One answer is yes. The funders have an investment they want to protect, institutions they believe should continue and a public they are attempting to serve. Keeping the organizations alive through a merger would seem the best for the community and the organizations.

The other answer is no. These funders have crossed the line from being a supportive partner to being a manipulative parent playing the game of “father knows best.” Had the organizations come to funders, the situation would be different.

Mergers are rarely successful unless there is a win-win for all organizations involved. And in my experience, most successful mergers happen because someone’s winning and someone else is not winning quite so much. But the merger is driven by mission and vision, not financial need. So the ethical implications here are big. The merger question is only one scenario.

There are groups of funders meeting everywhere talking about the health of their constituents. I’m not implying that they shouldn’t do this and, in fact, I have been urging more transparency and greater communication between funders. So, how do grantmakers work together to support their grantees? I suggest that we need some ground rules for these discussions, a few basic questions to ask ourselves as we discuss the organizations that we care about so strongly and that have served our communities well:

  1. Are we being supportive or directive? Are we acting as partners or parents?
  2. Have we developed a program that will throw a lifeline to all groups or just some and how do we justify that?
  3. How will our actions today affect working artists in our community?
  4. How will our actions today affect our community in five years?

We are passionate about the organizations and artists we support. Our passion may sometimes override our better objective judgment. It is a time for funders to be strong in their conviction to support the arts and for artists and arts managers to be confident in their missions and purpose in their community. Once in a while, everyone needs to step back and ask some questions about their role in the ecosystem.

Some organizations won’t survive; some funders won’t survive. I hope those that do, survive for the right reasons. And, as always, we make decisions and go about our work better, together.