t byfield on Sat, 30 May 1998 21:41:18 +0200 (MET DST) |
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<nettime> OSF NF 5/5/98 letter |
May 5, 1998 To: The National Foundations From: George Soros A) A number of factors have come together to induce me to engage in a radical rethinking of my strategy for the foundation network. I want to encourage the people engaged in the foundations to participate in the process to the greatest possible extent. That is why I am distributing this paper now well in advance of the General Assembly in June. The paper and your response to it will then form the basis of discussion at the General Assembly. I want the process to produce radical changes in the way the network operates in the first decade of the next century. The various factors have come together because they are interconnected. They all have to do with the revolutionary transformation which has occurred in the region and the networkís role in it. Here they are: 1) The network came into existence to foster the transition from closed to open societies. It was meant to exploit to the full the opportunities presented by a revolutionary moment, and by and large it has succeeded in this endeavor. (My greatest disappointment was in Russia as I have explained elsewhere). It was not meant to be a permanent organization. The revolutionary moment has now passed. There are things for the foundations to do but we must decide what they are. We must engage in a kind of strategic thinking that was not necessary at the creation. Indeed if I had indulged in it, the network would not have come into existence. I have been encouraging the foundations to do some strategic thinking but I am now forced to do it myself because certain decisions cannot be taken within individual foundations. During the revolutionary moment, I empowered a group of people in each country to decide what the priorities of the foundation should be. This was an important element in our success. Not only did the local people know better what needs to be done than anybody from the outside but it also allowed the foundation to serve as a prototype of an open society. Conditions have changed. Different countries are not only in different stages of development but they are also moving in different directions. Some are well on the way to joining the European Union. Others are regressing. Foundations need to play different roles in different countries. While the people in the country concerned are still best qualified to decide what role the foundation ought to play, I must allocate my funds not only among different countries but also among different kinds of activities. This requires strategic decisions which only the donor can make. While I want to consult with the foundations I cannot leave these decisions in their hands. For instance, I hink it is more important to build up the provincial universities in Russia than to spend money on Hungarian universities. This is not a decision that can be made by the Hungarian or the Russian foundation on its own. 2) During the revolutionary period we were not confined by the lack of funds. I was willing to spend practically any amount of money provided it was well spent. I have continued to act on this principle even after the revolutionary moment has passed because I was determined to spend as much of my fortune during my lifetime as possible. I have deliberately created a situation where our spending exceeds my income. This is unsustainable. I have committed myself to keep the network in existence until the year 2010, but we cannot continue spending at an ever-increasing rate. Therefore we must establish a method of allocating funds in a way that allows for cutting as well as adding. Moreover the allocation process must be more closely correlated with the amount of available income. Since the flow of income is unpredictable, the allocation process must become more flexible than it is currently. I think I will be able to project the amounts available three years ahead so with proper planning there will be no need to make unpremeditated cuts. 3) I have always been aware of the danger of unintended consequences. It is an essential element in the concept of open society. It applies with particular force to philanthropic activities because they are not subject to the checks and balances that apply to other spheres of activity. Foundations need to subject themselves to constant critical reexamination. This constraint is better imposed by a live donor than a dead one. That is why I have deliberately created the conditions where a thorough rethinking and reorganization becomes necessary (I donít want to be like Mao Tse-Tung with his permanent cultural revolution. I hope the consequences will be less disastrous). Left to its own devices, every institution is driven by inertia. If I allowed the network to continue along its present path, it would be sure to disintegrate after the year 2010. That would be a pity because there are some institutions and activities supported by the foundations which ought to have a more enduring future. Perhaps also some aspects of the network itself, such as a new version of the East-East Program, ought to be supported beyond 2010. We must start thinking now about the longer range future. 4) I am very proud of what the network has accomplished. Whatever we do in the future, it is unlikely to equal in historical significance what we have done until now. Sometimes a glorious past can interfere with facing the future. Some programs need to be terminated exactly because they have succeeded. When I am asked which project pleases me most, I always mention the International Science Foundation not because it was better than others but because it has ended. I would therefore welcome an opportunity to draw a line under our accomplishments to date so that they will not be overshadowed by what we do hereafter. Such a dividing line would prevent the network from living on its accumulated goodwill and it would force the foundations to justify their continued existence by their current accomplishments. I am an advocate of a sunset clause for public and philanthropic institutions. I would have liked to see a sunset clause for the United Nations when it reached the age of 50. It would give me great satisfaction to demonstrate in practice how such a sunset clause works. I should like the foundations to start a new phase in 2001 by developing a strategy appropriate to the present conditions and continuing only those programs which can be justified by the new strategy. 5) Now that the revolutionary period has passed and I have extended my philanthropic activities to other parts of the world, it is not clear to me how much of my resources I should devote to the region and why. Although I retain an emotional involvement, I need better justification for spending my money than I needed during the moment of revolutionary opportunity. This could be achieved by foundations behaving more like grant seekers, justifying their requests. Where I differ from other donors is that I know what I donít know. I donít want long proposals. I donít want to understand programs better than the people engaged in them. Once I have decided my priorities I want to rely on the people involved to the greatest possible extent. B) Here are some preliminary thoughts on how these considerations could shape the next phase of the network: 1) The countries within the network are becoming increasingly differentiated. While each country is unique, we need to make some generalizations for strategic purposes. I should like to establish three major categories. First, there are the countries which are well on their way towards joining Europe. They include Poland, Hungary, the Czech Republic, the three Baltic Republics, and Slovenia, with Romania, Bulgaria, Bosnia and Croatia on the margin. Second, at the other extreme we find countries which are in a regressive or reactionary mode. These include Belarus, Yugoslavia, Croatia, Slovakia. Here the foundations operate in a hostile environment and generally speaking they know what needs to be done. Third, the large majority of foundations lie in between these two extremes. They should not be lumped together but differentiated according to the level of economic and political development. 2) As the transition from closed to open society made progress, the deficiencies of the prevailing form of open society, even in the West, have become increasingly apparent. I do not want to go into details; my views on the subject will soon become available in book form. Suffice it to say that there is a continuing role for a foundation even in an open society but its objectives and methods of operation ought to be radically different from what they are now. The way the Open Society Institute operates in the United States may be more relevant. It has a clearly formulated strategy and I would like to see a similar, albeit not identical, development in the countries concerned. For your information, the programs of OSI New York fall under three major headings: 1. What I would call the unintended adverse consequences of imperfect understanding. There are problems which have no solutions. Death is one, and drug abuse is another. Refusing to acknowledge the problem can make the situation worse than it would be otherwise. By refusing to accept death as the natural ending of life, we can make the pain and fear associated with dying worse than it needs to be. In the case of drugs, the war on drugs is doing more harm than drug abuse itself. 2. The deficiency of values characteristic of open society which has allowed market values to penetrate into areas where they do not properly belong such as politics, culture and the professions. This leads to issues of professionalism in medicine and law and campaign finance reform. In our region, the issues of corruption, corporate governance and conflicts of interest would fall into the same category. 3. There are certain areas of activity which ought not to be solely the domain of either State or market. These are the areas where philanthropy has been traditionally active such as education, culture and the disadvantaged. Based on these ideas we have established some really innovative and worthwhile activities. Since philanthropy in the United States is well developed, we have given priority to the first two topics because the field is less crowded. Even so the bulk of our spending has been in the third because I prefer to spend large amounts of money on programs which directly effect large numbers of people. (See # 5 below.) I can see even more justification for spending relatively more money on the third topic in the newly open societies of Eastern Europe because the needs are great and philanthropy is less well developed. I do have an emotional commitment to the region and to the foundations, and the foundations have carved out a respected position for themselves, but I feel strongly that I should not continue to be the sole source of support for certain programs in certain countries after the year 2000. In the first group of 7 countries, I want to restrict the kinds of programs for which I am willing to remain the sole source of support. For instance, I am willing to be the sole support of Roma programs but not necessarily the sole support for cultural journals. It will be the task of the working groups to advise me in formulating my strategy. The foundations in the first group of seven countries will have to decide whether they want to raise funds from other sources or restrict the scope of their activities. In the US, we have developed the concept of a ìselfless foundationî where we sponsor or inspire a project but do not claim ownership. For instance, in starting the ìAfter Schoolî project in New York I am going out of my way to get other funders involved from its inception. As for operating in a hostile environment, that is where the foundations flourish. I am heartened by the support they receive from mature foundations. In the transition countries, the present program areas are by and large well justified but the way we go about them needs to be improved. Professional competence needs to be given greater weight. To justify a program, we must bring more to the table than just money. Our role should be to foster innovation and systemic improvement. We are doing it now but we could do it better. I am looking for significant changes but I do not want to jump to any hasty conclusions. I do not want professionalism to be translated into bureaucracy. Foundations in transition countries must pay more attention to where these countries are heading. Many of them combine the ills of open society with those of closed society, creating a very unattractive brew. Take for instance Ukraine, a country which has given corruption a bad name. Transparency, corporate governance, protection of minority shareholders, clean government, prison reform, police reform ó these are just some of the topics these foundations could usefully address. 3) Having a regional network is one of our great assets and we ought to preserve it. It allows us to learn from each other and to establish best practices. We are also filling a unique role in fostering East-East relations and we ought to explore new approaches. 4) We must decide case-by-case what outcome we expect from our activities. (1) Some need to be endowed so as to assure them of a permanent existence, e.g.: the CEU. (2) Others may be continued as long as the network is in existence, e.g.: scholarships. (3) Yet others could become self-sustaining, e.g.: debate and Step-by-Step. (4) Some should be terminated, e.g.: subsidies to publishers. (5) Where we are entering a program area for a limited period in order to make a difference, we should have clear objectives and evaluation criteria and an exit strategy. Our role should be limited to demonstration programs, seed financing and bridge financing, e.g. education. (6) We must also respond to emergencies, e.g.: school feeding in Bulgaria. We must begin to differentiate between these various categories. 5) In order to give us the necessary flexibility, we need to keep our commitment to ongoing activities to a small budget and avoid dependency by the institutions we support. Generally speaking I feel more comfortable spending large amounts of money when they directly benefit a large number of people. In programs concerned with ideas and elites, money could be a source of corruption by building a clientele around the foundations. I have a feeling that the foundations have become far too preoccupied with the spending of money and have not given sufficient thought to what needs to be done. Ideas, principles and examples can be more important than the amount of money spent. C) Structural changes 1) To translate these ideas into practice, we must bring the strategic decision-making closer to the donor while keeping the decisions involved in the execution of programs as close to the ground as possible. This can be achieved by relatively modest modifications in the existing structure. The national foundation budgets would be broken up into line items. Discretionary funds designed to give the foundation flexibility would also become a line item. Matching funds for network programs would be another line item. The line items would cover the major program areas: higher education, lower education, publishing etc. Each program area would have its own decision-making process at the national level. For instance, when we spend significant amounts on education or public health or Roma, I would want a national foundation sub-board in charge of the program, not the national board. Members of the national board could of course be members of sub-boards as well. 2) In order to assist me in the strategic decision-making, I want to form sub-boards of the OSI Budapest Board. The membership of these sub-boards would be drawn from the national foundations and from the OSI Board, with the possible addition of one or two outside experts. They would be assisted by the network program coordinator. 3) In certain program areas national foundation strategies would have to be approved by the OSI sub-board before they can be implemented. In this way we would ensure that there is an overall strategy in the network. For instance, we will not spend money on supporting media or printing text books, except in countries where we decide to make an exception. 4) The role of the network program coordinators is liable to change. At present they assist the national foundations. In the future they will also assist the OSI sub-boards and through them exercise indirect control over some national foundation line items. This is an issue that needs to be carefully considered.** 5) In the case of network programs such as HESP, spending in particular countries would be subject to the advice, but not the approval, of the national foundation. The same applies to grants made directly by the OSI Board or a sub-board. This is already the case. 6) In this way there would be one particular body responsible for every item of spending, but I as the funder would have the benefit of advice from two sources: one national, one network. When the spending body is in the national foundation some network advice would be brought to bear, and when that body is regional there is an input from the national foundations. 7) I would not change the matching fund arrangement for network programs unless the foundations are dissatisfied with it but it will be specified which network program is available to which foundations. This should be a subject of discussion. 8) I recognize the need to clarify the relationship between national boards and national sub-boards for each country and each program area. This should be decided on a case-by-case basis, proposed by the national foundation boards, and agreed to by the OSI Budapest Board. We need professionalism but we also need to insure that the mission of the foundation takes precedence over professional interests. 9) National boards should be preoccupied with strategic thinking and the selection of people whom they can trust rather than spending decisions. In particular, I would expect them to pay more attention to network programs over which they do not have direct spending authority. 10) I very much hope that new program areas will be created. At the network level, we have entered micro-lending and small business development in the belief that a broad economic base is indispensable for a democratic society. The support of policy studies is another subject I should like to discuss. I look for new ideas and approaches from the national level. 11) The new structure should produce cooperation between network program coordinators and national foundations on program design but leave spending decisions to be exercised at the local level. The OSI Budapest board would allocate funds to program areas as well as national foundations. The funds would then be reallocated among the various countries according to their needs and the ability of the foundations to deliver. For instance, I want to give high priority to the development of provincial universities in Russia and I am willing to spend a lopsided amount both in the relation to the total spending in Russia and the total spending on universities, but I will not authorize any spending until I am satisfied both through the national foundation and the Educational Policy Institute that the program is in the right hands. (In this case the decision-making body in Russia may include a member of the Institute for Educational Policy or of HESP.) D) The General Assembly I should like the June General Assembly to start the strategic planning process for the next phase of the foundation. After a general discussion of this paper and any comments that may be circulated prior to the meeting, I should like the General Assembly to break up into the following working groups: 1. Higher Education incl. scholarships and research 2. School and Preschool Education 3. Non-school education and youth, e.g.: debate 4. Culture I: Internet Library Publishing 5. Culture II: Cultural periodicals SCCA and visual arts Theatre Documentaries Other cultural 6. Public Administration Law Criminal Justice 7. Economics + Business education 8. Roma 9. East-East + Conference + Travel 10. Public Health 11. Institution building 12. Disadvantaged Minorities Women Civil Society Their task with regard to specific program areas will be: 1. To take an inventory of existing programs. Classify them and rank them in order of priority specifying country or group of countries. I need to know what is the long-term outlook for each program, and particularly which programs will require funding beyond a 3 year time horizon including how to sunset. 2. To start considering a coherent strategy for the future. Here are my current thoughts on some of the main program areas which should be critically examined by the working groups. Education: This should remain a major focus of the foundation. The CEU needs permanent endowment. The HESP supported institutions also require long-term funding with a minimum 10 year time horizon. Scholarships should be an on-going activity as long as the foundations exist but the amounts can be varied according to the availability of funds with a 3 year time horizon. Other educational programs would be under the guidance of the Educational Policy Institute, resulting in specific line item allocations with no more than a 3 year time horizon. Specific attention should be paid to the uses of new technologies e.g.: Internet. Non-school educational programs should be supported out of the discretionary funds of national foundations. Non-school youth programs could also be considered by this working group. It should remain an area of priority and could be handled on both a national and network basis as they are presently. Culture: Internet, library and publishing could fall into another working group. I consider culture a legitimate sphere of activity for foundations in open societies but objectives and guidelines need to be clarified. I should like to see policy papers on (1) publishing, (2) Internet, (3) support of cultural periodicals, (4) SCCA and the visual arts, (5) theaters, (6) documentary films, (7) libraries and (8) the support of other cultural institutions and events prepared and circulated prior to the General Assembly. Public and local administration is becoming an increasingly important field of activity. I should like the working group to consider the role of policy institutes and policy fellows. This could become a key element in the new phase of the network. It could spearhead our entry into new areas such as prison reform or police reform, or how to deal with corruption. A policy paper may be prepared in advance. Law and legal education is shaping up well under the new direction of COLPI and could be merged with the previous working group. Our media strategy is clear and probably does not require a special working group. Roma. This is a festering issue which goes to the core of the open society mission and I should like to increase our involvement. There are special organizational and attitudinal problems that need to be addressed by the foundations concerned. I favor a pluralistic approach with two main threads: enabling Roma to develop a high culture and a sense of identity and encourage them in self-organization, and at the same time helping them to function better in modern society and even assimilate if they wish. At the same time, the attitude of non-Roma needs to be changed, stereotypes revised, and the rights of Roma protected. The various missions cannot be carried out by the same people. This creates organizational issues which need to be resolved. I propose a longer working group on June 24th prior to the General Assembly. East-East relations need to be reinforced and the parameters of existing programs enlarged. A policy paper had been commissioned and could be considered by the plenum. Civil society institution building presents important issues that need to be resolved. Particular attention should be paid to institutions sponsored by us such as the Open Society Clubs in Bulgaria and the Community Clubs in Yugoslavia. I also need to know which institutions require ongoing support beyond a 3 year horizon. I do not think that civil society other than institution building needs to be considered separately. It falls within the purview of the discretionary activities of national foundations. There are two major issues that remain unresolved in my mind on which I look for guidance from the foundation network. 1. Administration At this point, we have a tremendously complicated machinery, which is very expensive to maintain; there is an awful lot of communications and an awful lot of different levels of decision-making. The way in which I have tried to keep costs down has been by increasing the amount we spend ó by increasing the budget, the administrative portion seems less! However, since we never actually spend the budget ó we have spent on average 80% of the budget ó our administrative costs were effectively that much higher. The effect of the mega-projects has been to increase the size of the foundations beyond a sustainable level. A simple downsizing is likely to have very negative dynamics. Usually you cut programs without cutting staff and administration; and the continuation of existing programs takes precedence over the introduction of new programs. Cutting budgets usually hurts the performance of institutions, and I would like to avoid that. A discussion of the subject could start at the General Assembly between Stewart Paperin and the Executive Directors. 2. Governance The present organization of the foundation is based on my personal trust in individuals. This has served us well but it cannot be extended into the next phase of the foundationís life mainly because of my own inability to continue the level of involvement that I maintained during the revolutionary period. While commitment to the principles of open society has to remain the basis of our organization, we must strengthen an institutional mechanism for changing boards, sub-boards and executive directors. This is an issue that ought to be sorted out between the OSI Board and the Chairmen of the National Boards. The discussion could begin at the General Assembly. The governance of institutes sponsored by us and their relation to the national foundations also needs to be considered. Deborah Harding is preparing a timetable for the General Assembly in accordance with this paper. I look forward to seeing you there. --- # distributed via nettime-l : no commercial use without permission # <nettime> is a closed moderated mailinglist for net criticism, # collaborative text filtering and cultural politics of the nets # more info: majordomo@desk.nl and "info nettime-l" in the msg body # URL: http://www.desk.nl/~nettime/ contact: nettime-owner@desk.nl