Heinz Family Philanthropies - New Directions in Philanthropy

The following remarks were delivered by Mrs. Teresa Heinz at the Friday Forum on June 7, 1995. Entitled "New Directions in Philanthropy," the thoughts and concepts put forth here continue to reflect our philosophy on giving.

Thank you. I want to begin by thanking Bob Hohler for thinking of me and asking me to come and speak with you today. It isn't often these days that I get to talk about what I do for a living, so this is nice.

It is also, I think, important. Collectively, you represent an endeavor that, in my opinion, has never been more important than it is now. There is a wide range of organizations represented in this room—ranging from the arts and education, to health care and human services, to the environment and community development. But as I see it, whatever their differences, all of these organizations are really in the leadership business. And what I would like to do today is to talk about philanthropy as a form of leadership, leadership which our country greatly needs right now.

Now, Bob Hohler asked me to speak about some of my own experiences, so let me do that—being mindful of what Oscar Wilde once said, that experience is the name we give our mistakes.

In reflecting on my own life, I have realized that my first lesson in philanthropy did not come when I assumed the leadership of the Heinz Endowments following my late husband's death in 1991. My first taste of philanthropy came much earlier, when I was a child.

I grew up in Mozambique, in East Africa. My dad was a doctor—a very proficient one who worked in prominent hospitals in Europe and the United States and who founded the cancer clinic in Mozambique. And yet my father had an inspiring personal side. On weekends, we sometimes traveled to a little cottage in the bush country on the coast where we used to go as a family to rest. There were no doctors there, only missions and priests, and it took my father two years to get people to come and see him on weekends. Finally, they began to bring sick children. And I used to help him—five o'clock in the morning, under the perbula, there would be a sea of mothers and children, no one crying. And my father would do his one bit of cooking—which was to boil water, put Nescafe in it and think he cooked himself breakfast—and we would go down and start taking care of children.

I used to think what my father gave was his knowledge, his medicine. But as I grew older, I really began to see what my father was giving to these people were the hugs, the time, the listening—those gifts which are not based on costs or money, but on the time and generosity and interest. Those gifts made my father more than just a doctor—they made him a healer.

And I think that kind of personal generosity has been a reminder to me throughout my life—a reminder that has been reinforced time and again by my experiences as a woman responsible for raising a family. Those experiences taught me about adapting, about coping, about offering support—that there is such a thing as too little, and too much—that's important. And the other thing that it taught me was communication by deed rather than mouth—the same lesson my father taught me. I think anyone who has raised children knows what's involved. Children demand a lot from us. They need our time; they need our attention. They don't really need our money—until they're teenagers maybe—but they really want our hearts and our minds.

I mention all of this because I think those lessons relate very much to a definition of good philanthropy. Good philanthropy is properly guided by many of the same sensibilities you might bring to any relationship that you care about—whether it be with your children, your spouse, your clients, your co-workers or your employees.

Money, of course, is critical. But one of the great misconceptions about this philanthropy is that its impact is purely a function of dollars. I have had the opportunity in the last five years to be exposed to different sizes of philanthropy. I am the chairman of a very large philanthropy, the Howard Heinz Endowment. And I'm very proud of the work we do there. But I also head up a group of much smaller foundations—the Heinz Family Philanthropies. And I have come to believe that the extent of the mental, physical and spiritual energy spent on a particular issue is what ultimately defines success.

Let me give you an example of an instance in which a small amount of money made a big difference. When NAFTA, the North American Free Trade Act, was being discussed, those of us who consider ourselves to be environmentalists were concerned by Mexico's atrocious environmental record. The fear was that American companies, which had certain standards to abide by, would be unfairly penalized and that we would be importing materials from Mexico that were produced in ways that damaged the environment.

There were questions of political will in Mexico, which were clearly beyond me to address. But the Mexicans also suffered from a lack of knowledge about good and cost-effective environmental practices. So I sent a top professor from Carnegie Mellon University, which has a strong science and management capability, to meet with Mexican officials and suggest a series of seminars for graduate students, engineers, business professionals and academics. The result was a partnership between Carnegie Mellon and ITSCM—basically, the MIT of Mexico ... a university with 53 campuses connected by satellite. A year ago, that partnership was expanded and now, ITSCM has an environment course studied by over 100,000 students.

Now am I telling you that this changed Mexico and the environment? No. But is it beginning to make a change? I think so. And the point is, it all started with a very small grant—it was really more of an idea.

I'll give you another example, and again, not involving a lot of money. Several years ago, I challenged a group of student environmentalists at Yale who had approached me for funding to put together a conference of environmental leaders from around the world. And of course, they wanted to do what kids like to do, which is rabble-rousing politics. And I said, "Well, how about if we focus on problem-solving first?" So we worked together, and what developed was an amazing conference of student environmental leaders from 160 institutions, and 24 countries, and they were so uplifted by coming together this way. The product of that conference was a blueprint for campus action, which has since been widely distributed. We also established an Internet address for them so they could be in touch with one another around the world, and they're all now keeping up with each other and exchanging information.

This did not take much money. It took ideas, interest, and contacts. And the effect on the students was fascinating. In preparing for the conference, which took about a year and a half to do, the students at Yale saved the school a million dollars by suggesting more energy-efficient lighting. This is what comes of approaching a project not as an end-point, but as a process.

Now all of this can begin to sound pollyanna-ish in light of the difficult challenges we face as a society, many of which seem intractable at times. And I don't mean to suggest that small grants such as these are going to save the world. It won't happen. But these grants do tell us something about the importance of personal involvement. And they also tell us something about what good philanthropy is—that it's about creativity and energy and thoughtfulness.

Now, how does this apply to challenges on a larger scale? The truth is, most of the major problems that we face today are exceptionally complex. An analogy that I like comes from nature in the form of ecosystems, the intricate web of relationships that tie together seemingly unrelated species and phenomena. There are human ecosystems as well, and in their complexity they humble us in our attempts to tackle issues piecemeal.

The reality is that none, not one, of the compelling crises of our times exists in isolation. Crime, drugs, family disintegration, community disintegration, school failure, unemployment, environmental degradation, poverty—these all exist within the context of vast social ecosystems. And unless they are addressed within that context, every one of them will remain impervious to change.

Realizing this, to me, even though I have worked on a lot of issues throughout my life, was a rite of passage. When people outside the field discuss philanthropy, they are often struck by how much money foundations have. But talk to anyone who is active in philanthropy, even at a large foundation, and she will speak quite differently; she likely will comment on how scarce resources are. In this field, you know you have truly arrived when you start thinking not in terms of how much money there is, but how little.

That can be a fairly depressing moment, and it may seem to fly in the face of what I said earlier about the impact that even small grants can have. But this moment of truth about the enormity of the challenges we confront can also be extremely hopeful and enlightening. It is at that moment, when you come face-to-face with the bitter complexity of the world, that you also appreciate the beauty of the opportunity you have been given. What you realize is that you are being called upon to reach down inside yourself, to be creative, and then finally to reach out beyond yourself.

That's a realization that applies to the entire philanthropic enterprise, in all its many shapes and sizes. At the Heinz Endowments, we don't support causes, we support ideas. One of the words that we have adopted as an organizing theme for our work is "enterprise." It's a word you don't often hear associated with philanthropy, which continues to be perceived in many people's minds as charity. But like many foundations around the country, we have realized that the open hand of charity, while honorable in every respect, is generally less effective than the helping hand of strategy. You can simply do more by thinking through problems, reaching out and finding partners than you can simply by reacting to proposals that come in the front door.

Approached this way, philanthropy is about more than good deeds; it is about good deeds that work. And the mechanisms for ensuring success, in my experience, include accountability, collaboration, leveraging and—strange as it may seem—risk-taking. I want to touch briefly on each of these.

Accountability is essentially tough love. At the Heinz Endowments, we recently went through a process with one of our major cultural institutions that was quite instructive. The institution wanted us to provide the lead gift in a $70 million endowment drive. But as we began asking questions, we learned that the institution was drawing too much on its endowment and was doing nothing in the way of outreach. We agreed to provide the gift on the condition that the institution get its financial house in order and improve its outreach, both of which have happened as a result.

We have since adopted new guidelines for operating support in the arts that stress accountability. And more generally, we are supporting efforts to train non-profit board members and trustees in good financial practices. The point is not to micro-manage our grantees, but to help them become more stable and self-sustaining. In these times of scarce resources, non-profits must be doing everything in their power to maximize their impact, and this includes being disciplined financially and recognizing that choices have to be made.

But good philanthropy is also the art of thinking broadly and openly about challenges and then forming diverse coalitions of approaches and capabilities in response. Complex challenges require collaborative responses. At the Heinz Endowments, we are nearing the end of a five-year pilot project that we undertook with the Pew Charitable Trusts in Philadelphia and with the state of Pennsylvania. The project was designed to improve women's utilization of prenatal care services, and it has been a dramatic success. But it would never have been possible without our partnership with Pew and the state.

This sort of collaboration is in effect a form of leveraging resources. And I think the idea of leveraging, especially at a time when resources are so tight, is critical. Through the Heinz Family Philanthropies, we have developed a collaboration with the Earth Communications Office in Los Angeles, Kodak Film and the National Association of Theater Owners. What we do is produce movie trailers on environmental themes, and these trailers have reached literally millions of moviegoers. But what's also interesting is that our initial investment leveraged contributions from our partners that totaled 19 times our contribution. That's quite a return on investment.

But while all of these things—accountability, collaboration and leveraging—are important concepts, I don't mean to suggest that they are meant to make philanthropy safe. They can help us to increase our impact, but for me, a pre-condition of all good philanthropy is a willingness to take risks. Earlier, I mentioned the word "enterprise," which the dictionary defines as "a project or undertaking that is especially difficult, complicated or risky." That describes the appropriate work of foundations and non-profits. When it comes to the arts, education, the environment, human services, community renewal, economic opportunity, we are -- or at least we should be -- society's risk takers. In a way that not even government can any more, we fund and even create the laboratory in which new ideas are tested and applied.

Philanthropies have a tremendous opportunity, very often in collaboration with corporate and civic leaders, to take risks on new ideas, something which government generally cannot afford to do these days. We have in a sense become the labs of societal change. At the Heinz Endowments, we see our funds as risk capital, and we see our work as a kind of social investment. Rather than simply fund projects with which we are sympathetic, we set broad goals for our grant-making programs, seek out organizations capable of carrying them out and look for a return.

Earlier this week, the Heinz Endowments joined with the United Way in announcing an unprecedented public/private partnership to double the number of poor children in the Pittsburgh area with access to high quality child care and early education services. This is a risky investment for us, and an extremely risky undertaking for the United Way. Success is far from guaranteed. But we recognize that making these services available to the children who need them most is something that has never really been tried on this level. And if we're not willing to initiate this experiment, who will be?

Most of you are probably familiar with the grant-making tool known as a program-related investment, or PRI. With PRIs, successful programs can actually return money to a foundation, and of course we then have to reinvest it in something else. PRIs have become a regular part of our grant-making at the Endowments, and we actually expect a number of them to fail. One of the assumptions we make is that if none of our PRIs are failing, we are not being daring enough. Society does not need us to make safe investments on sure bets. Now we should be smart about this, which is where accountability, collaboration and leveraging come in. But in addition to smart, we must be daring.

That's why I have to laugh when I hear people say that we shouldn't worry about deep cuts in important government programs in the arts and education and other areas, because private philanthropy will take up the slack. That's just plain silly, because the resources simply aren't there. But perhaps more important, the people who make this argument profoundly misunderstand the essential role of modern philanthropy, which is not to make up for government's shirking of its responsibilities.

Government has an essential and legitimate role in uplifting the disadvantaged, safeguarding the environment, and setting standards for our future in countless other areas. We can make government smarter, better, and more cost-effective—reform it—but that's altogether different from wanting to tear government down, the fruits of which ultimately are dictatorship or libertarian anarchy.

What foundations and nonprofits have to do, I believe, is to remind our society of what works and of what we truly value. By being both daring and smart, we can help to identify new paths. Foundations are not banks. Ideally, we represent the collective principles, ideals and aspirations of families and, hopefully, of communities. Our mission is to act as responsible vessels of those principles, ideals, and aspirations.

This talk today was billed as being about new directions in philanthropy. But what I am suggesting is an idea as old as this country. For me, the backbone of American democracy is a people driven by the simple belief that they have it within them the capacity to make a difference and the almost magical notion that they should, therefore, try. They are people who see beyond the labels of liberal and conservative, people who think hard, act honestly, show compassion, look for new directions, take risks and deliver superior performance. They change our world for the better, in ways both great and small. And by their example rather than by exhortation, they bid us do the same.

This is what I think philanthropy ought to be, what the organizations we all represent ought to be. In closing, I would like to leave you with two requests. First, be energized by the importance of the work you do. It is the work of leaders. I know that there are a lot of you who have been at this a lot longer than I have, so it sounds almost arrogant for me to say that. But I'm up here, so I hope you'll indulge me.

Second, remember that the quality of your time and the quality of your thoughtfulness will probably determine how much of an impact you have. The best thing you can invest is yourself.

With that, I want to thank you again for having me here. I would welcome any questions you might have.

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