This interview has been edited for clarity.
Foundations are often taken to task for being too risk-averse but no one could apply that epithet to the Rockefeller Brothers Fund. RBF, a 76-year-old foundation, played a huge and long-term role in brokering the U.S. and Iran nuclear agreement — which is now perhaps the most prominent and most committed philanthropic initiative to cease investing in oil, coal, and gas.
In this segment from the Business of Giving, Stephen Heintz, the fund’s president, tells the story behind its decision to divest from fossil fuels, despite its wealth being derived from one of America’s great oil fortunes. He also shares his thoughts on the Iran deal, how foundations can leverage and maximize its influence, their learning from grantees, the challenge of measuring the unquantifiable, and the history of Rockefeller family philanthropy.
The following is the full transript of the conversation between Stephen Heintz, President of the Rockefeller Brothers Fund and Denver Frederick, host of The Business of Giving on AM970 The Answer in New York City.
Denver: We have had many guests on The Business of Giving who have expressed the wish their foundation would be bolder, take more risks, and not be so afraid of failure. They believe bold action is necessary to achieve the transformative social breakthroughs that the world so desperately needs. However, risk taking is not a problem for the the Rockefeller Brothers Fund. In fact, far from it. And it’s a great pleasure to have with us this evening their president, Stephen Heintz.
Good evening Stephen and welcome to The Business of Giving.
Stephen: Denver, thank you. I’m very happy to be here.
Denver: Before we get in into the work of the Rockefeller Brothers Fund, I wanted to take a moment to discuss John D. Rockefeller. I don’t think many people have much of an idea of who John D. Rockefeller was, and even less so about his philanthropy. Tell us a bit about his story.
Stephen: It’s a wonderful story, so I am delighted that you’re interested. John D. Rockefeller was born in 1839 in upstate New York. He was born into a very modest family. He left home when he was 16 years old and went to Ohio; started work at that age, and in his first year of work, he made a total of $45. We know this because we actually have his ledger book because he kept very detailed ledgers from the very beginning.
Denver: Right from the very start… [laughter]
Stephen: So, he made $45 in income, and he gave away $5 in that first year. So he was already contributing more than 10% of his income to charitable causes because of his devout Baptist faith.
Denver: How interesting is that!
Stephen: It’s amazing, and then of course– so this was 1855…
By 1900, he is the wealthiest man in the world. A short period of time. He was an extraordinary entrepreneur and a visionary. He saw the future, and he saw that this newly discovered substance called petroleum was going to be transformative. He got to the head of the line and pushed through. And then of course, you know he’s been rightly criticized for very ruthless business practices along the way, but this was in an unregulated environment. He didn’t violate laws that we know of because the law didn’t exist.
But he also was giving away more and more of his wealth from the very beginning. And then of course, the wealth was just so enormous that a very close adviser of his said to him, “Mr. Rockefeller, if you don’t give away this money, it will ruin you and your family!” So, he set up the mechanisms to give most of it away.
Denver: And he gave it away to a whole host of institutions. One of the things that I never realized was that he actually started the University of Chicago, and he did it in an anonymous way. He never even set foot on the campus.
Stephen: Exactly. And that was in the late 1890s. I think the size of his gift was something like $245 million. You know, today would be a huge, huge sum of money.
And of course, it’s one of the premiere educational institutions in the world…
Denver: That’s right.
Stephen: They wanted to name it after him. They kept inviting him but he just said, “No, I want it to be on its own. I want it to succeed. I’ll provide the support, but I don’t need the recognition” — which I have to say is somewhat different than a lot of philanthropists today…
We started from this notion of global interdependence. We are living in an era in which we are more interdependent around the world than ever before in human history. We’re also more interdependent on nature and we need to think about this interdependence in a very systemic way.
Denver: I would second that. When you arrived at the Rockefeller Brothers Fund back in 2001, at that time the institution may have been spread a little thin. I think they had eight focus areas , and through a very deliberate and strategic process, you and the board were able to narrow it down to three. What are those three primary areas of focus?
Stephen: This was a really exciting process because we spent a year and a half thinking that through and engaging with experts, and listening, and learning, and hearing from our own staff and our grantees. What we concluded was we were doing too many things, in too many places around the world, and with too little money.
Denver: [laughter] Yeah… that’s a bad combination.
Stephen: Yeah, it’s a very bad combination because you can’t have real impact. And that’s the whole name of the game, of course—impact. We started from this notion of global interdependence. We are living in an era in which we are more interdependent around the world than ever before in human history. We’re also more interdependent on nature and we need to think about this interdependence in a very systemic way.
There are three areas in which we believe the interdependence becomes the most critical. The first is in governance, and we’re really interested in strengthening the quality of democracy. The second is in sustainable development—how we manage the environment in a way that is sustainable for future generations. And the third is peace building. And you can’t really make significant progress on any one of these individual areas without seeing the connections to the other two. That was what got the board and the staff to agree “yes.” Those should be the three principle areas of focus.
But what we’ve learned because of interdependence is that governments alone are not able to solve these problems. One of the distinguishing characteristics of the Paris Agreement is what I call its “polylateral nature.” It involves government. It involves the private sector and investors. It involves the scientific community and it involves civil society which is that part of society that philanthropy works with.
Denver: Very smart. Well, let’s take each one of those. Rockefeller Brothers played a very significant role in the Paris Agreement on climate change this past December. And I think that exceeded just about everybody’s expectations particularly after what happened in Copenhagen. What were some of the key points. albeit non-binding, that came out of the Paris Agreement?
Stephen: I want to say as we get into this topic that I think it’s quite wonderful that this relatively small foundation was one of the first American foundations to get engaged in the climate. This goes back to the mid 1980s when few people in the philanthropic world were talking about climate change…
Denver: That’s for sure.
Stephen: And the RBF started funding scientific research and then tried to connect the scientific discourse with the policy discourse…
…And we’ve stuck with this all the way from the mid-1980s to Paris, and I think that’s part of the reason why we’ve been able to have some impact coming out of Paris. What is really important about Paris… There are two things I wanna say:
First, we watched the global system achieve what we call multi-lateral agreements — agreements among nation states. Governments around the world agreeing to certain things whether it’s a peace treaty, whether it’s an environmental agreement. That’s very important.
But what we’ve learned because of interdependence is that governments alone are not able to solve these problems. One of the distinguishing characteristics of the Paris Agreement is what I call its “polylateral nature.” It involves government. It involves the private sector and investors. It involves the scientific community and it involves civil society which is that part of society that philanthropy works with. So, that’s the first thing.
The second thing is that it is the first time in that kind of polylateral setting that all of the players have agreed to the target which is: we have to keep the rise in average global temperatures below 2 degree Celsius over pre-industrial levels. We’re already at about 1 degree.
Stephen: So we’ve got work to do. Now 188 nations made commitments in Paris to reduce their greenhouse gas emissions— their global warming pollution— over the next several decades. That was real progress but if we continue business as usual, global temperatures are going to rise about 4.5 degrees…above pre-industrial levels. With the Paris Agreements, they’re going to rise about 3.5 degrees. So we’ve closed it, but we still have got 1.5 degrees to go.
So coming out of Paris were some very important agreements but we’ve got a lot of work to make sure they get implemented effectively. And we have to ratchet up the ambition rapidly over the next period of years.
Denver: That’s very interesting. I think not many people realized that if all the commitments of Paris were met, we would still fall short of the over-all commitment they made of a 2 degree Celsius level. Well, it is ironic that after an agreement like that, civil society doesn’t have less to do, they actually have more to do! So, what are NGOs and nonprofits, businesses and others doing to see that these commitments are not only met, but as you just suggested, are actually exceeded?
Stephen: Yes, exactly, I really do agree with you that civil society is more important, even after Paris than it was leading up to Paris. Civil society contributed remarkably to the success of Paris. In my view, civil society now has the following tasks ahead of them. One is to hold governments’ to account…
And this is in the big emitting countries like the US, and China and India and Brazil and the European Union. Civil society groups in those places need to be monitoring progress, need to be very public in reporting on where they see progress and where they see slippage. And we need to hold governments to account. So that’s point one.
Point two, we need to ratchet up ambition as we go along. So, we’ve got to be both implementing and setting tougher targets…And the advocacy of civil society and the policy development that comes out of the think tanks and academic centers that are supported in civil society will be critical to going to the next level of ambition and achievement.
And the third point is working with the business and investor community because meeting these goals is going to require a radical shift in our economy, a radical shift in the way we conduct business and major, major investments across the world which also bring in enormous economic opportunity if done right. And civil society can be the kind of glue that helps move these other sectors along to get us where we need to be.
And then I was growing more and more uncomfortable with the kind of moral ambiguity…of being invested in a fossil fuel companies while trying to move the climate change agenda. It was like we were funding research in the lung cancer area and still holding stocks in tobacco companies…
Denver: A very tall order but a tremendous opportunity at the same time. Well, sticking with climate, you made some significant news in September 2014, maybe even more than you thought you were going to make, when Rockefeller Brothers said it was going to divest itself of all fossil fuel holdings. Now, I know, Stephen, these decisions do not come easily, particularly as you said before with an institution whose wealth was based on fossil fuels …but take us inside that process and how you ultimately came to that decision.
Stephen: Well, it was actually a longer process than it looked. We started having discussions about our endowment assets going back to about 2005 because I was increasingly interested in trying to find ways to align our investments of the endowment— which are now about somewhere around $825 million —to align those investments with our mission. So we began what is now known as impact investing. That’s looking for market rate investments that have both social benefit and produce economic returns. Because we are, like all foundations, entirely dependent on the income from our investments for all the work that we do.
Denver: That’s right.
Stephen: We have no other source of revenue. So we have to manage this very carefully. But increasingly, there are opportunities to invest in things that produce social returns and also produce economic returns. So that started really in about 2005 or so. In 2010, we got the board to agree to a target of 10% of the total endowment for these kinds of impact investments — largely focused on the clean energy economy because that is a central focus of our philanthropic work. And then I was growing more and more uncomfortable with the kind of moral ambiguity…of being invested in a fossil fuel companies while trying to move the climate change agenda. It was like we were funding research in the lung cancer area and still holding stocks in tobacco companies…
Denver: Kind of undoing all the good you’re doing on one hand with the other.
Stephen: Yeah! Exactly. And there was advocacy, people were encouraging us to think about this from the advocacy community, including our own grantees and others. And so we started the conversation with the board in early 2014 about divesting. As you said, Denver, this is a foundation created with oil wealth and half of the board are members of the Rockefeller family, so having a conversation with them about moving out of the stocks in the very company that their great grandfather and great, great grandfather…
Denver: Well, it’s personal!
Stephen: Yeah! Exactly! But you know, they also are also deeply, deeply committed people, and they are extraordinarily smart and generous and not afraid to take leadership. But they also very careful and rigorous, so it was a good conversation. They asked all the tough questions.They put us through the right interrogation…
Stephen: …and they came out at the right place.
Denver: And it really wasn’t just a moral decision…
Denver: There was also an economic one as well. Why don’t you tell us a little bit about that!
Stephen: That’s right. And in fact, Denver, that was what, I think, actually got the consensus. The moral argument only got us so far.
Stephen: You know, it’s compelling…because this is a huge moral question of our time. But we had also funded through our grantmaking some research by NGOs into the economics of the fossil fuel industry’s future. And a wonderful organization in London called The Carbon Tracker initiative…
Denver: Familiar with them… yes.
Stephen: …A group of investors who came out of the city of London decided they were going to form an NGO to focus on this question because it is so important. And their research, based on very careful modeling and rigorous investment analysis shows that if we have any chance of remaining within this 2 degree Celsius cap, 60% to 80% of the known reserves of fossil fuels — oil, gas and coal— have to remain in the ground, unburned.
Denver: That’s a remarkable stat.
Stephen: It is and those reserves are now on the books as assets…
Stephen: …in these fossil-fuel companies. So what it means over the long term is those assets are going to lose value…
Denver: That’s exactly right.
Stephen: And the businesses…the companies are going to lose value, so they are not good long-term investments. So there was a really good economic case to begin divesting. I’m very excited about it, and I’m very grateful to our board for making this decision.
Denver: From my perception, there was a real slow pick up on it by other institutions, but the momentum has really accelerated here in the last 6 months or a year. I am really happy to see that.
Stephen: I want to just give credit to another colleague. A wonderful leader named Ellen Dorsey at the Wallace Global Fund. Somebody you might have on this program, in fact. Because she has been a tireless advocate and I believe the leader of what’s called the Divest-Invest movement.
Stephen: And she’s done a great job and helped build this extraordinary momentum.
Denver: Yeah, that’s a very nice mention.
Let’s move on to your work in the Middle East. People probably suspect that any foundation—particularly one with relatively modest size—trying to influence events in that part of the world, is truly a fool’s errand. But the work you have done in creating a dialogue between Americans and Iranians has been quite effective. Tell us about the Iran project and how it got started and how it’s developed.
Stephen: Well, this has been one of the most challenging, important and satisfying projects that I’ve ever worked with. Because back to 2002…
Denver: Mm-hmm. Such a long time —
Stephen: A long time…and we were all still trying to sort out what the events of 9/11 really meant, and I was not an expert on the Middle East like most people. I knew something about it, but I would say my level of knowledge was basically that of a passionate reader of the New York Times, [laughter], other magazines and newspapers. Certainly not an expert, and I began to look at the region and see that one really important, large country in that region—volatile, tragic and hugely important region— was outside of the diplomatic process, outside of any relationship with the United States— and that is the Islamic Republic of Iran.
Denver: That’s right.
Stephen: Now, it’s important to note that the Islamic Republic of Iran had nothing to do with 9/11. In fact, they are Shia Islam, and all of the terrorists of Al Qaeda are Sunni Islam so there was no connection. But looking at the dynamics in the region, one had to realize that Iran was hugely important and yet the United States had no official diplomatic relations because of the Islamic Republic revolution in 1979 and the hostage crisis. So for all those years, 30-some years, absolutely no diplomatic discourse —
Denver: Not a word.
Stephen: Not a word. And yet we have enormous issues with them.
Denver: It’s a big country. 75 million people or something?
Stephen: Something like that and, you know, thousand years of civilization, instability in a lot of ways. I mean it’s a very important country, and they were beginning to develop a nuclear program —that people were very worried about —that was designed to produce nuclear weapons. I started talking to friends and colleagues about this, and the person who became the most important partner in the effort is former ambassador, William Luers, who at the time in 2002 was the president of the United Nations Association of the USA. And he had a wonderful colleague named Suzanne DiMaggio, and the three of us went to see the Iranian ambassador at the United Nations to discusses US-Iran relations. The only way you could talk to an Iranian diplomat was at the U.N. And he was very interested in this notion, and we said we’d like to get an unofficial dialogue, bring some senior influential Americans into a private, quiet, off-the-record conversation with some senior and influential Iranians to begin to understand each other. And he was very much interested in this idea and so the process began. It took us a full year of laying the groundwork before the first meeting could take place. The meeting is over in Stockholm, Sweden because we needed the quiet place —
Denver: Quiet, under the radar a little bit–
Stephen: Under the radar. A place that’s know for managing these kinds of projects, and it was hard. The first few meetings were extremely difficult. There was a lot of posturing, a lot of grievance being expressed, a lot of anger, and we decided to be patient and sit through it. We had our own grievances going back to the hostage crisis but other things as well, and deep worries about their nuclear activities, but over time–
Denver: And you got those aired.
Stephen: We got them aired. We kept working at it. We kept listening. We kept asking questions. We were building trust slowly and gradually, but we did. And we were keeping in very close touch with the Bush administration. They were keeping close touch with the leadership in Iran. Over time our goal was to try to help create the conditions for formal diplomatic discussion. And I do think we helped move that along and of course, we now have — we’re just at the one year mark of the results of the formal diplomatic discussions about their nuclear program which really have taken away their capability to create nuclear weapons at least for the next 15 years, and hopefully for much longer.
Denver: Right and I think there has been a lot of criticisms about some of the things Iran has done, but they have adhered to the letter of the law they agreed to and that has been the test.
Stephen: Exactly. In terms of the nuclear program, they have done absolutely everything.
Stephen: And this has been verified by the International Atomic Energy Agency, which is a tough and completely independent organization.
I think the only way to really conduct philanthropy in a high impact manner is to develop very close relationships with your grantees and to understand the conditions in which they work, to understand their goals and aspirations and to support their work. Not to impose some concept of your own on them.
Denver: I’m going to stick with the Mid East for just a moment, and I know you cannot understand the work unless you’re in the work and I think you believe that. That’s why you’re on the road so much out visiting grantees, but you have even gotten your board out there as evidenced by a trip that they took to Israel and Palestine back in 2014. Tell us about that trip and what you think it achieved.
Stephen: Well, Denver, you’re absolutely right. I think the only way to really conduct philanthropy in a high impact manner is to develop very close relationships with your grantees and to understand the conditions in which they work, to understand their goals and aspirations and to support their work. Not to impose some concept of your own on them. And in a place as complex as Israel and Palestine, you simply have to be there. So we did. We took a large group of our board and we had an extraordinary 10 days in the region, and we really met with the full range of actors. We met with very conservative political leadership in Israel and the Likud party. We met with leadership in the Palestinian Authority in Ramallah. We met with the Labor Party in Israel, which is the main opposition party, and we met with opposition figures in the Palestinian politics. We met with grassroots activists in both geography.
Denver: Quite the spectrum.
Stephen: And you know, Orthodox Jewish leaders, settlers in the West Bank, and advocates who are opposing the occupation of the West Bank. And it was a profound experience for all of us. It really changed a lot of our thinking and a lot of our lives because of the —
Denver: — just the level of understanding.
Stephen: Absolutely. And when you see it on the ground, when you actually experience it, you understand how Israelis feel absolutely worried about their security on a day-to-day basis.
And on the other hand, when you visit the West Bank, you can see how Palestinians feel that their rights are not fully respected, that they’re living under an occupation that is a constant reminder that they are second-class citizens.
Stephen: And so you can see the depth of this challenge, and that is helpful as you then begin to think, “Okay, what are the right ways over time —with a long-term view —to support efforts to build constituencies for a peaceful settlement of the conflict?”
Denver: Yeah. You pick up nuances that you just don’t get from reading the New York Times.
It’s about empowering global civil society to be participants and actors in those institutional settings, and it is about helping people think about new concepts of global governance for the 21st century the same way people thought about it at the end of the second world war when everybody realized we needed some new global institutions to help us prevent another world war.
Denver: You know, your work in democracy is not only to try to strengthen it and make it more vibrant at the nation-state level, but you’ve also been focusing on bringing democracy to global governance to solve these interdependent 21st century problems that you’ve talked about. What are some of the work you’re doing there, Stephen?
Stephen: Well, this is a particularly challenging portfolio because as we’ve been talking about, Denver, so many of global problems of the 21st century require these global solutions. A single country no longer has complete control over its fate.
Stephen: We have one climate and United States may want to take action, but if we take action alone, it won’t be enough and our environment is going to be affected by it.
These institutions of global decision-making are much more important now than they were at the beginning of the 20th century when most of them were invented… and yet they are not very democratic. We don’t know how they work as a citizen of the world. We don’t know who really runs them. We don’t have access to the information, and yet they are making decisions that impact our individual lives everyday.
Denver: And not that transparent.
Stephen: Very, very much so. So that’s the kind of work we’re doing is to try to help make these institutions more transparent, more accountable, and more inclusive in order that we can all have greater confidence that the decisions they are making will help produce a more peaceful and sustainable world. So it’s about reforms to the institutions. It’s about empowering global civil society to be participants and actors in those institutional settings, and it is about helping people think about new concepts of global governance for the 21st century the same way people thought about it at the end of the second world war when everybody realized we needed some new global institutions to help us prevent another world war.
Denver: Absolutely. You know, Rockefeller Brothers, you have a significant endowment. It’s about $825 million and you give $25 to $30 million away in grants, but in the scheme of things, it’s really not one of the big, big large foundations on the American landscape, but you have played a very significant and influential role in the world of philanthropy and beyond. Tell us the strategies and tools that you have used in order to achieve this level of influence.
Stephen: Well, I think the brand name counts for a lot. Being one of the Rockefeller philanthropic institutions— and there are many— is a great asset for us ,and I would also say the fact that we have so many Rockefeller family members on the board is an enormous asset for us. And that is distinctive. The other major Rockefeller like the Rockefeller Foundation does not have that many Rockefeller family members on the board anymore. The second thing is that we recognize that we’re kind of modest in scale, and yet we have very big ambitions.
Denver: Yes. You’ve taken on the biggest of all the challenges.
Stephen: So, that means we have to really look for those places where you can take considered risks and invest with the possibility of really having disproportionate impact. I think of it as acupuncture. All we have available to us are these tiny little needles, and the question is where do you insert the needle?
Denver: That is a great analogy.
Stephen:So that it triggers some systemic change, right?
Stephen: And that’s the challenge. That’s the art of it, but the combination of very smart staff— and my theory is hire the very best people you can and then give them lots of space to do their best work.
Denver: Good theory.
Stephen: Having a terrific board.
And being rigorous about monitoring your results, and we fail from time to time, and we try to learn from that. We try to get better and we try to improve. But it’s really looking for those — like the Iran project that you just described— didn’t cost a lot of money even over all those years. It was a few million dollars…
Denver: Yeah, $4-5 million.
Stephen: But it really had a significant imprint. So that’s what we look for because those are opportunities to leverage. And one last thing I’ll say about it, Denver, is that I think the role of philanthropy, the other analogy I use— I’m a simple-minded person [laughter]— is we’re the tugboats in the harbor, right?
Stephen: And we’ve got this huuuuge ships. One is known as the private sector, and the other one is known as the public sector…government. And they’re huge! I mean if you add up all of US foundation giving in 2014— which is the last year we have the data so far—it’s $54 billion, which is not insignificant. But the US government spends about $4 trillion a year. And the economy, the private sector, is about $18 trillion. So we’re tiny even collectively. But if we can nudge those other two ships…
Denver: [The old judo]… got to get that leverage!
Stephen: If we can get them into the right places in the harbor, we can really have impact.
I think it’s fundamentally important so that people have faith in us. They can believe in us. They can disagree with us which happens and that helps us to do a better job.
Denver: That’s a great description. Let’s turn to transparency. You deeply, deeply believe that we need more and more of it. And transparency is a word for me that’s kind of thrown around. It’s never really, really defined. Tell me how you define transparency and why you think it’s so important.
Stephen: Well, it’s important in philanthropy…I think it’s important in society…especially with public institutions. This is part of democracy …to be transparent and accountable so that the citizenry know what you’re doing. In philanthropy, we are private institutions. We are very modestly regulated. We are not really accountable to anyone, and yet we are operating with tax-advantaged funding. The funds that create all these wonderful American institutions of philanthropy are done because of tax breaks.
So I passionately believe that we owe it to the American public and increasingly to the global community to let them know what we’re doing, how we’re doing it, and why we’re doing it. And so transparency becomes the vehicle to create the accountability that doesn’t exist by law.
And I think it’s fundamentally important so that people have faith in us. They can believe in us. They can disagree with us which happens [laughter], and that helps us to do a better job.
Denver: And also I think it probably helps you to collaborate with others when you know what they’re doing.
Stephen: Of course. Absolutely. And collaboration —because of the scale issues— is also an important part of leveraging.
Denver: You know, you said at Rockefeller Brothers, you hold yourself accountable to results. So let me know talk to you about measuring impact of your philanthropy. Probably somewhat tough to do when you have so many actors and such a large stage on which you’re playing around with issues like democracy and climate. On the other hand, you don’t want to let yourself off the hook. My concern sometimes about measuring impact is that I think we’re losing a little bit of our humanity, and I just get concerned that we are going to get too short-term like Wall Street by giving money and expecting people to have a return immediately when the problems you’re dealing with are long-term. What’s your philosophy on measuring impact.
Stephen: Well, essentially I agree with what you just said, Denver. I think that we need to evaluate our work and have it evaluated by independent–
Denver: Third party.
Stephen: — third party…
Stephen: …evaluators. But we have to do it in the long-term. As you said, these problems of strengthening democracy or solving a climate crisis or building peace don’t happen overnight, and they don’t easily produce metrics in the way that a business can monitor data, to tell them how well they’re doing. So we have to look for qualitative evidence, not just quantitative evidence. And I always like to rely on a brilliant scientist for guidance in this regard and the one I rely on is Albert Einstein. [laughter]
Denver: Good choice.
Stephen: Yeah. Who said, “Not everything that is important can be measured, and not everything that can be measured is important.”
Denver: It’s a great quote.
Stephen: It is. And it is a philosophy that we try to follow. But that doesn’t leave us off the hook. In fact, it just makes the work evaluation tougher but all the more important. What we try to do is not evaluate every individual grant, and we don’t try to do this every year. We try to look at bodies of work over a number of years. And then we engage outside evaluators to meet with our grantees, to go out in the field, to look at all the documentary evidence, and to look at additional evidence drawn from other sources— to put in context the work that we’ve been supporting— and tell us how well we’re doing.
In philanthropy we have the capacity to take risks that business isn’t going to take because it’s not economically viable. Government won’t take it because it’s not politically viable… So we have a kind of moral responsibility to take some risk. We have to be careful about it and prudent and evaluate it, but if we’re not failing some of the time, I don’t think we’re doing our job.
Denver: You know, Stephen, I mentioned at the opening that the foundations need to be bolder and take more risks and not have such a fear of failure. So, I thought it was interesting to see that Rockefeller Brothers Fund took a page really right out of Silicon Valley’s book and celebrated failure on the occasion of your 75th anniversary. Tell us about that.
Stephen: That was some fun experience. At our 75th anniversary which occurred in the fall of last year 2015, we had a wonderful evening event to kind of share a little bit of this history going back to John D. Rockefeller and his grandchildren who started our foundation in 1940… and the story of how it has evolved during that 75 years. One of the parts of that evening was a paneled discussion moderated by Bill Moyers…who asked a lot of tough questions. [laughter], and the panel was two of my predecessors—presidents of the Rockefeller Brothers Fund— and two of the board chairs—the current and the previous board chair. And he asked each of us to talk about a failure on our watch, and that was a really great question.
Denver: Yeah. And it’s refreshing to hear.
Stephen: It is. And it is important for us to do. And I told the story, and I take personal responsibility for this failure…I can’t blame it on the staff unfortunately. This was in the early days in the Western Balkans where we’ve seen so much conflict over centuries —but clearly in the 1990s with the wars of the Yugoslav dissolution— and we got very active in trying to help promote peace and democracy and stability in that region. And shortly after the wars were over, I thought it might be useful to create with leaders in the region a truth process like what occurred in South Africa— which was so important in the South African context. We actually brought the vice chairman of the South African Truth and Reconciliation Commission into this process in the former Yugoslavia in the Balkans, and he too thought it was an essential part of the process. And so we invested some money in it. He spent some time with local leaders but it turned out it just wasn’t going to work. It was too soon. It was a regional problem, not a one-country problem, and there was just too much resistance and so it failed. But we learned from that failure.
Denver: Yes, that’s what counts.
Stephen: And years later we saw a bottom-up process of students and others in the various countries in the region now beginning to demand an accounting for what happened in those tragic years of conflict and war that we’ve been supporting. And that is showing some real promise. So failure is an important part of having an experimental disposition. In philanthropy we have the capacity to take risks that business isn’t going to take because it’s not economically viable. Government won’t take it because it’s not politically viable and so, if we don’t take some risk —
Denver: It’s a neat niche.
Stephen: Right. So we have a kind of moral responsibility to take some risk. We have to be careful about it and prudent and evaluate it, but if we’re not failing some of the time, I don’t think we’re doing our job.
Denver: I think you’re absolutely right. You have been at the helm of Rockefeller Brothers for about 15 years now and have been very skilled at working with the board— which is never easy and I think especially in an organization where half the board members are comprised of family members. I don’t think people appreciate how important a board is and particularly in an institution like yours. What are some of the things that you have done and your thinking around what a CEO needs to do to constructively engage with the board?
Stephen: Well, I am very fortunate I have a fantastic board and I’ve had a fantastic board all through the 15 years. Both the family members and non-family members who have served and are currently serving on the board are just outstanding individuals. But I also had an important lesson earlier in my career. I spent 15 years in politics and state government work in Connecticut, including running two majors state agencies. During those years I had to work with the legislature.
And if I was going to accomplish any major changes, I had to get the approval of the governor and the legislature. So I came into philanthropy kind of thinking “Well, the board is my legislature.”
Stephen: And I need to work with them. I need to educate them —
Denver: Another one of your analogies.
Stephen: Yeah. Here I go again. [laughter] I need to listen to them.
Stephen: I need to follow their guidance. I need to bring them out to see the work. I need to share with them the evaluations of when we’re making progress and when we’re not in a very open and honest way. And I need to be accessible to them and get to know them personally. What inspires them? What motivates them? Why do they want to be on this board? And what can we do together. As a result of just constantly nurturing those relationships and being very open and honest with them, we’ve developed a really extraordinary relationship between board and staff.
But here’s the thing about the Rockefeller family that I think is so wonderful. They worked through it in family circles. They had some tough conversations. They actually had forums within the family to hear each other out. They had some skilled facilitators work with them, including some from the family itself who had gone into the practice of facilitation. They really worked because they were committed to each other. They were committed to the family and it’s values and they worked through it.
Denver: Yeah. You’ve done a marvelous job. We opened our conversation with John D. Rockefeller, so I want to close it with the Rockefeller family. I know you have a tremendous admiration for the family, and they are one of the great American families over the last century or two. But like any family, they’ve had some pretty public intergenerational disputes along the way. Give us a little bit of the dynamics that go on in the Rockefeller family.
Stephen: I think the wonderful thing is how they have sustained this deep commitment to philanthropy for so many generations.
The current chair of our board is Valerie Rockefeller Wayne. She’s the first chair of the fifth generation of the family. We’re working now with fourth and fifth generation members,and they have the same passionate commitment to the importance of philanthropy that John D. Rockefeller developed and John D. Jr. clearly had …and the brothers themselves who founded us in 1940. Each generation has the responsibility of defining the actual engagement of the philanthropy to meet the conditions of their times…and their own personal interest as board members. But they are, as I said earlier, smart, generous with their time and with their own resources and deeply engaged and very humble. That’s a wonderful combination of things, but as you said, Denver, it has not always been easy.
There was a kind of existential crisis in the mid 1970s during the period of having come through the civil rights movement and into the Vietnam War… And younger members of the Rockefeller family like younger members of all families, including myself.
Denver: And including mine.
Stephen: You know, we were on the streets demonstrating and felt that our parents’ generation had made some terrible mistakes, and this created some really intergenerational tension on the board of the Rockefeller Brothers Fund. And Nelson Rockefeller, having just completed his term as Vice President of the United States, came back to New York and became chair of the board again. He was so distressed by this intergenerational set of issues that he believed that the Rockefeller Brothers Fund ought to spend down.
Denver: I recall. Yeah.
Stephen: And go out of business by making major grants to support the institutions that he and his brothers had cared very deeply about.
Denver: He would have been one of the firsts who have done that! [laughter]
Stephen: That’s right. Exactly. Fortunately, this created a huge debate on the board, including between brothers who took different sides. And among the non-family members including one John Gardner, one of the great leaders of America who resigned from the board because of this dispute. But the net effect of this struggle was a compromise where they spent down half of the assets and agreed that the other half would continue for this next generation to take leadership of. And they’ve done a brilliant job, and we’ve built the assets back up in a variety of ways. But it was a very tough period. But here’s the thing about the Rockefeller family that I think is so wonderful. They worked through it in family circles. They had some tough conversations. They actually had forums within the family to hear each other out. They had some skilled facilitators work with them, including some from the family itself who had gone into the practice of facilitation. They really worked because they were committed to each other. They were committed to the family and it’s values and they worked through it.
Denver: Yeah and in a somewhat public way, so even more credit to them for doing that.
Stephen: Exactly. Absolutely. It’s a remarkable story and very inspiring.
Denver: You have some great information on your website which is rbf.org. If there was one thing that you would encourage listeners to read or check on, what would it be?
Stephen: That’s a tough question but I’m going to say that because we celebrated our 75th anniversary, we have what I consider to be a really fascinating historical timeline now on the website where you can actually look at the history of the foundation’s work and pull out documents and photographs and stories that give you the whole sweep of this in a very accessible and interesting way, and I think there’s a lot there. Certainly, I learned a lot as we were assembling it, and I think there’s a lot there for the general public that would be very interesting.
Denver: Yeah. I did it. It’s very cool.
Stephen: Good. I’m glad you liked it. [laughter]
Denver: Well, Stephen Heintz, the president of the Rockefeller Brothers Fund. Thank you for the most interesting and far-reaching conversation. Your tagline is “Philanthropy for an interdependent world,” and you have certainly brought that slogan to life this evening. It was a real pleasure to have you on the program.
Stephen: Thank you, Denver. It was a pleasure for me.
Stephen Heintz is president of the Rockefeller Brothers Fund.
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