June/July 2014 Update
One of the goals that I have heard loud and clear from the Digital Trust Foundation (DTF) board is to set up a transparent and accountable grant-making process. In May and June, the board took steps to implement that goal by adopting a conflict of interest policy and deciding to hire an evaluator.
Conflict of Interest Policy
Adopting a conflict of interest policy is standard practice for foundations and other charitable organizations. These policies promote transparency by providing a process for employees and leadership to declare and consider actual or perceived conflicts of interest in financial decision-making. In the context of a foundation, this process is important when making grant decisions. Foundations should not give grants that will directly benefit individual board members, and they should avoid giving grants to organizations to which board members have close affiliations. The Internal Revenue Service does not require these policies as a condition of tax exempt status for non-profits, but it does strongly encourage them.
In developing and revising the policy, DTF consulted the policies of highly-respected foundations, including The William and Flora Hewlett Foundation, Bill & Melinda Gates Foundation, and MacArthur Foundation. DTF has adopted a conflict of interest policy that does three things:
- Requires board members and consultants to declare relationships with potential grantees that are or could be perceived as conflicts of interest. The policy provides a process for the board to determine whether a conflict of interest exists and guides the board in making decisions involving a real or perceived conflict.
- Prohibits the foundation from giving grants to organizations for which board members or consultants serve as principal executive officers and from giving grants that would financially benefit a board member or consultant.
- Requires board members and consultants to sign annual statements that acknowledge awareness and understanding of the conflict of interest policy.
Hiring an Evaluator
The board recently decided to engage an evaluator to work with me to develop a basic evaluation plan for the foundation’s grant portfolio and to design some simple, cost-effective evaluation tools. Most foundations conduct some form of evaluation of their grant making, which is often used internally by foundations to improve their grant-making. Grantees commonly complain that they are subject to evaluation requirements by funders but don’t benefit from the lessons learned. Since DTF is a spend-down foundation, we can take an evaluation approach that focuses on benefitting the privacy field and the foundation’s grantees.
Our goals for the evaluation are:
- Document program investments and results.
The foundation’s board has a strong desire to be accountable to privacy stakeholders. It also has a mandate from the Lane et al. v. Facebook, Inc. settlement agreement “to fund projects and initiatives that promote the cause of online privacy, safety, and security.” At a minimum, the foundation must demonstrate how it spent the settlement funds and how those investments accomplished the goals of the settlement agreement.
- Support privacy organizations and researchers in identifying and refining promising strategies to protect online privacy.
Most foundations use evaluation to improve their internal processes and grant-making. Given the limited lifespan of DTF, we can put our evaluation resources towards helping privacy organizations learn from their work. Our evaluation plan should primarily benefit grantees and the field, not the foundation.
- Inform future public and private investment in DTF’s program areas.
We can shape our evaluation plan to document and share lessons learned from funded projects. Evaluation results can be used by funders to inform future investments and by organizations to craft future programs and strategies.
We plan to select and engage an experienced evaluator quickly so that the consultant can contribute to the development of our first round of requests for proposals. This will ensure that we collect the right information from grantees from the beginning.
The DTF board approved five broad funding areas at the end of May. I am now in the process of working with the board to refine those funding areas and develop implementation plans for each funding stream. We aren’t quite ready to announce the areas, but I can say a bit more about our process.
We expect to issue two rounds of requests for proposals (RFPs): one in the fall and one in early 2015. We will post more specific dates approximately a month before we release the RFPs so that potential grantees can plan ahead. We will try to make the application process as simple as possible, while also conducting due diligence—i.e., gathering sufficient information to ensure that we’re making grants to legitimate and sound entities that are well positioned to accomplish the goals of the grants.