As president of the John Templeton Foundation, Dr. Jack Templeton has an unusual array of subject areas to tackle: science and religion; enterprise-based solutions to world poverty; character education; and more. The foundation’s approach to these large topics is also unusual; it combines humility about its own knowledge with “an extraordinary boldness in asking cosmic questions,” as one observer puts it. Even the foundation’s grantmaking process is out of the ordinary, harnessing competition through the use of requests for proposals and prize contests.
A final peculiarity of the foundation is the elaborate process it has created to keep its donor’s intent firmly institutionalized. That donor is Dr. Templeton’s father, Sir John Templeton, who recently stepped down as chairman at the age of 93. In late 2004, Sir John donated $550 million to the foundation, more than doubling its assets and making it one of the 65 largest foundations in the country. He has been called “arguably the greatest global stock picker of the century” by Money magazine, and may best be known as the creator of the world’s richest annual award, the $1 million-plus Templeton Prize for Progress Toward Research or Discoveries about Spiritual Realities.
Dr. Jack Templeton joined the foundation full time as its president in 1995, after more than 25 years as a pediatric and trauma surgeon. Earning his medical degree from Harvard Medical School, he went on to specialize in pediatric surgery under Dr. C. Everett Koop at the Children’s Hospital of Philadelphia. He then served for two years in the U.S. Navy before returning to the Children’s Hospital in 1977, where he worked as a pediatric surgeon and trauma program director. He also taught at the University of Pennsylvania as a professor of pediatric surgery.
Dr. Templeton has published numerous papers in medical and professional journals, in addition to two books: A Searcher’s Life and Thrift and Generosity: The Joy of Giving. He recently spoke with Philanthropy about donor intent, humility in grantmaking, and the moral argument for free enterprise.
PHILANTHROPY: How will you ensure that your father’s intent as the original donor is carried out over time?
DR. TEMPLETON: My father has seen many large and famous foundations deviate severely from anything their founder would have supported; he has taken substantive measures to ensure such deviation doesn’t happen at the John Templeton Foundation.
First of all, our charter and bylaws spell out clearly what we fund and don’t fund. With any grant, whether it’s developed internally or is submitted externally, we always ask, “How does this grant correlate to a specific section in the charter?” This focus is reinforced in various ways; for example, for our family member donation advisories program, the designated beneficiary program must be in one of the foundation’s designated funding areas. Also, we wouldn’t provide matching funds for an endowment to one’s alma mater, for example, because the charter puts endowments off limits, but we would provide matching funds for a science and religion course at one’s alma mater. Second, the trustees are required to read the charter and bylaws every year, because once my father is no longer involved, they will be the governing authority for the foundation. Third, the trustees oversee each grant and program that is funded and examine its congruence with donor intent. And finally, every five years, the trustees oversee an external audit process to evaluate whether our grantmaking is faithful to the provisions in the charter and bylaws.
PHILANTHROPY: The biggest news for your foundation has been the large increase in your corpus. How has that affected your giving, and what sort of challenges and opportunities does the larger corpus present you with?
DR. TEMPLETON: It means we’ve had to look seriously at how we can continue to assure quality in everything that we fund while increasing our grantmaking and continuing to develop new programs. We have launched some very large and innovative programs, such as our new Fundamental Questions in Cosmology research initiative that will disburse grants for four or five years. By investing in larger programs with the potential for significant impact, we think we will best take advantage of the opportunity that comes with larger assets.
Our challenge is to do this while respecting my father’s belief that a philanthropy should not build up large internal bureaucracies, but instead find ways to outsource the programs it supports. Many of the areas in which we fund are not the most popular in philanthropy, such as the interplay of science and religion. It’s hard for us to find what we call “outsource platforms” to run some of these major grants and programs. In time, we are building closer ties with academic bases such as Cambridge University, but it’s a growing problem at this point, and we have to find more platforms for running programs. We may even create the programs and do much of the start-up, but we still need to find competent people or competent organizations to run the programs.
In terms of opportunities, we have learned from experience—such as the major global research endeavor we had on the nature and efficacy of forgiveness—that we can harness the power of competition for our grantmaking by setting up an “RFP factory.” This process uses a Request For Proposals (RFP) to help us select grantees both efficiently and objectively. We also believe that the competition generated by RFPs improves the quality of what we fund. We’ll soon use this method to launch major research initiatives on the nature of wisdom and its beneficial impact, and we’re looking to use the method in other areas as well.
PHILANTHROPY: What do you look for in these outsource platforms?
DR. TEMPLETON: Three things. First, at least some people in the outside organization have to have demonstrated core competency in the field. If the program involves science and religion, they must have a strong science or science and religion background and understand the subject matter well, so they can handle questions of content that may come up. Second, they must be enthusiastic about the project. They must see it as a great opportunity and not a burden. And third, they must have administrative competence and a diligent attention to detail.
This last requirement is often one of our challenges. We sometimes find someone or some center that has the academic competence and enthusiasm, but they really don’t want to spend their time in administration, running a program.
PHILANTHROPY: For those who haven’t tried the Request For Proposals route before, are there pitfalls to beware of?
DR. TEMPLETON: I think the most important lesson is to work very hard to shape the program. What’s particularly critical is the clarity of the RFP language, which should have no ambiguity about what you’re looking for. The second critical component is a first-class group of judges to evaluate the submissions. Although there are other challenges, you need those two core elements to have a successful RFP process.
PHILANTHROPY: The Templeton Foundation stresses the moral case to be made for free enterprise, rather than just lauding the free market’s efficiency. Could you explain why and tell us what you see as the most important aspects of the moral argument for free enterprise?
DR. TEMPLETON: If you look at people who’ve made profound contributions to our understanding of free enterprise, like Adam Smith or Friedrich von Hayek, they understood that free enterprise can never succeed unless it has a clear moral framework built on trust. And that trust only comes from knowing that you’re dealing with a system that is based on morality, such as trusting that laws will be fair and fairly applied.
There also needs to be trust in contracts, that they mean what they say and will be enforced. Another necessity is that producers and consumers trust each other to behave honorably. And finally, we have to understand that there will never be enough laws and regulations to take the place of a strong moral inner compass in all members of society.
PHILANTHROPY: So in addition to making a moral argument for free enterprise, you also want to argue that free enterprise must recognize its need to foster morality among citizens?
DR. TEMPLETON: Yes, to have a successful free enterprise system, a strong moral framework must exist in the marketplace, and in the laws, and inside citizens. Otherwise it will collapse. Look at the collapse of the economic system in Russia, after the fall of the Soviet Union. They suffered significantly from a culture of “kleptocracy” (rule by thieves). Their economy had little moral foundation as it attempted to shift from communism to capitalism. The result sadly has been a takeover of the economy, once again, by hyper-regulation from the government downwards.
PHILANTHROPY: Could you give us an example of grants you’ve made that shore up this understanding of the moral argument for free enterprise?
DR. TEMPLETON: The first thing that comes to mind is a project that demonstrates the practical value of having personal responsibility built into a private initiative, namely, a research project we’ve funded to study for-profit schools in slums around the world. There are thousands and thousands of these schools. By “for-profit schools” I don’t just mean they’re not government schools. These schools are a business for the owners who make all their money from fees they collect from very poor families who barely have enough to live on, yet are willing to sacrifice to provide their children a quality education. In the slums of Calcutta, for instance, a child can attend school full time for $15 a semester. It’s hard on a poor family to come up with $15, but they know that the state schools in India, as in many other places, are such a scandal that on any given day 30 percent of the teachers never show up, and they’re never held accountable for it. So trust is non-existent at the state schools. A TV crew from the BBC surveyed some for-profit schools and noted their academic success. Then they said, “Let’s go see that nice state school two blocks from here.” They went into the state school, and the students got all excited. But the teacher was sound asleep at the front desk. Even with all the commotion, the teacher never awakened the whole time the TV crew was in the classroom.
It’s not surprising, then, that academic achievement at these for-profit schools are about 40 percent better than at the state schools. The owners and the teachers in the for-profit system recognize that if they don’t deliver a high-quality education, parents will move their children to another school. Ironically, India has vastly more school choice than we have in the United States. And the Indian experience demonstrates the practical value of personal responsibility, which is at the core of all morality. This emphasis on personal responsibility for results has to exist inside the persons who work in an organization. There has to be a higher accountability than union rules or government authority.
PHILANTHROPY: Ten years hence, how would you like to see the world be different because of what the Templeton Foundation is doing now?
DR. TEMPLETON: One of our core missions deals with gathering new information through science about the practical benefits that can come from spiritual realities like love, forgiveness, gratitude, generosity, diligence, faithfulness, and loyalty. We want to dramatically expand the scientific understanding of these things by underwriting objective analyses both of the nature of these things and also their efficacy in peoples’ lives.
When we started our major RFP initiative on forgiveness years ago, people in the media shrugged and said, “Sure, religious folks believe in forgiveness, but where’s the proof?” It wasn’t until the research started to come in that the media began to pay attention. As a result, in just nine years’ time, forgiveness has grown from a very small, embryonic field with only a few scholarly citations each year, to several hundred citations every year, and now to the point that it’s become a self-sustaining field of endeavor.
Our hope is that ten years from now we’ll begin to see the final results of those research projects. But like many research projects, they may answer two core questions only to come up with four new questions. So we don’t expect to be out of a job anytime soon.
Another important project is the construction of a scientific framework to understand the relationship between one’s worldview and the behavior that results from that worldview. We also want to know what bearing those behaviors have on actual outcomes.
I learned something about this during my many years in medicine. As a trauma program director connected to an emergency room, I saw that if a person believes he’s loved by God and important to other people, he’s more inclined to do something as ordinary as buckling up every time he gets in a car. Otherwise he’s risking harm not only to himself but to those who love him. So studying the connection between worldview and behavior and between behavior and outcome are things we’ll be looking at more and more over the next decade.
PHILANTHROPY: An old model of foundation grantmaking says, “Create a model program and hope the government adopts it,” but you seem to envision supporting new models of research that could be adapted by numerous other private funders and grantees, but not necessarily by the government.
DR. TEMPLETON: Yes. We have to recognize that the problems we’re working on don’t always stay exactly the same. My father has always believed, and we agree, that private agents can respond to changes more efficiently than the government. The government is so encumbered, so sluggish, that it will continue to fund something that offers a “solution” that is no longer needed, just because of momentum and vested interests.
We would argue that the vigor and innovativeness of private philanthropy is vital to maintaining what free enterprise and a free democratic society are all about, namely, people with similar commitments forming free associations to address a problem—whether it’s designing a new hospital or a school or whatever—and then providing resources to solve the problem.
There will be cases where the government will take over in some way or at least provide grants for running a project. We’re not saying there shouldn’t be a very constructive spirit in public/private ventures, which can be creative in some situations. It’s almost always the case, though, that the best innovations come from private philanthropies, because they are the laboratories for testing out new ideas, and the laboratories can show whether something is worth doing before the government throws incredible amounts of money at something that hasn’t even been tested.
PHILANTHROPY: A number of proposals for new regulations that would affect both foundations and grantees are swirling around Capitol Hill. Do you see some of these proposals as particularly helpful or unhelpful?
DR. TEMPLETON: The first thing to remember is that in any human enterprise, no system made up of human beings is ever perfect. There will always be some outliers or miscreants. The world of philanthropy and charity in the United States is made up of some 66,000 foundations and many hundreds of thousands of charities. And yet very intensive investigative work, particularly in the media, has in the last five years found only 94 examples of malfeasance. More importantly, in 92 of those cases, there are already laws in existence to address the wrongs. So it would seem the first logical thing is to apply the laws that are already in hand to identify misbehavior and apply clear punishments.
The second point is that the U.S. Treasury receives $500 million a year in excise taxes from foundations, and the IRS only gets $50 million of that to oversee foundations. So it’s vital to allot more of that $500 million to the IRS for investigation and enforcement of the laws already on the books. We don’t need excessive new regulations that may strangle the philanthropic spirit.
Finally, after one’s internal moral beliefs, the greatest contributor to proper behavior is transparency. That’s why we support efforts to improve the annual 990 forms foundations must file with the IRS in ways that will enhance transparency.
The overall challenge is to foster greater entrepreneurship in the field of philanthropy, which has had a wonderful role in American society from its beginning, and to emphasize personal charity as the most efficient and effective way to meet needs and respond to new opportunities. Anything Congress does should foster a stronger spirit of philanthropy, a greater enthusiasm to contribute charitably.
PHILANTHROPY: How important is it for grantmakers to have ways to come together to discuss their work and/or discuss threats to the sector? How can they best assist each other?
DR. TEMPLETON: You can pour lots of money into something, but if you don’t build networks among those who are providing resources and those who are using resources, it’s not likely to succeed. For example, five foundations may be involved in a common endeavor; individual foundations will have ideas and resources that others may not have. But if these foundations work as a network and they begin to share their ideas and resources with each other, the project is much more likely to be successful. Grantmakers especially need to learn from each others’ successes and failures. Finally, we can also benefit when we create formal frameworks around particular interest areas such as education.
PHILANTHROPY: What are the most important lessons your father taught you about philanthropy?
DR. TEMPLETON: First, you’re much more likely to make progress if you have competition. Second, if you approach a subject in which there is limited knowledge with a spirit of humility and open-mindedness, you’re much more likely to see ideas that others put forward but you haven’t thought of. For that reason, we adopted the motto of the John Templeton Foundation from my father: “How little we know, how eager to learn.”
As we enter into different grant areas, we try to identify all of the components that should be involved. We try to learn whether our assumptions are correct, and if not, how we can efficiently change the framework for a grant we’re making so that it will succeed. We emphasize the need to be a learning organization, but we also try to set high standards for excellence and quality of results, and the sharing of these results.
This interview was originally published in the March / April 2006 issue of Philanthropy magazine.