Steven J. McCormick, President/CEO, Gordon and Betty Moore Foundation

June 19, 2008
Steven J. McCormick, President/CEO, Gordon and Betty Moore Foundation

Coming of age in California during the 1960s and 1970s, Steven J. McCormick was witness to many of the most significant early achievements of the environmental movement. An attorney by training, he later served as executive director of the California State Program of the Nature Conservancy (TNC), the world's largest environmental charity, where he led an organization-wide effort that resulted in Conservation by Design, the strategic framework that now guides the organization's work in the United States and twenty-nine other countries.

McCormick served as president and CEO of the Nature Conservancy from 2001 to 2007. A couple of years into his tenure, however, the organization found itself the subject of a critical series in the Washington Post that questioned, among other things, the propriety of conservation easements it had offered to certain trustees, its ties with major corporations, and loans made to executives. While the organization eventually was found not to have done anything illegal by the Senate Finance Committee and the Internal Revenue Service, it restructured its board and took measures to strengthen board accountability and oversight.

McCormick announced he was leaving the organization in October 2007 and a month later was named president and CEO of the Gordon and Betty Moore Foundation, the largest private funder in the United States of environmental issues.

Philanthropy News Digest spoke with McCormick recently about his tenure at TNC, his new role and responsibilities at the Moore Foundation, and the challenges facing environmental philanthropy.

Philanthropy News Digest: Your tenure at the Nature Conservancy was marked by intense media scrutiny with regard to the organization's governance and certain revenue-generating transactions. Do you think that scrutiny was fair and justified?

Steve McCormick: The Nature Conservancy is a big organization that has been around for a long time and is well known, so it's not surprising it would draw attention. It's a very decentralized enterprise with operations in every state and twenty-eight countries, and it handles lots of complicated transactions — not just real estate transactions. It also likes to push the envelope, in that it has explored a lot of unproven and even controversial approaches to conservation. Something that complex, big, and well-known is likely to draw attention to itself.

"...I believe nonprofit organizations have to hold themselves to extraordinarily high standards of propriety, not just in fact but in appearance as well...."

Was that scrutiny fair or justified? I believe nonprofit organizations have to hold themselves to extraordinarily high standards of propriety, not just in fact but in appearance as well. Over time, in its zeal to do great conservation, the Conservancy got into some imaginative things that pushed the bounds of innovation, though not of legality. I'm not going to say that scrutiny and criticism of those activities was fair or unfair, although at the time I thought the portrayal of the organization in the Washington Post focused on a small piece of what TNC does and gave a skewed portrait of the organization. I will say that the attention warranted a sober and serious response. Instead of being defensive, I thought it was important for us to say that, while we didn't agree with every implication suggested by the series in the Post, we took the criticism seriously and intended to do a thorough review of our activities to determine whether there were things we should jettison. Again, not because they were illegal, but because they might create the appearance of impropriety. We also considered it an opportunity for us to look at our internal practices and governance. We had never done that in an intensive way, and I'm proud to say that as a result of our actions, we tightened up our governance, tightened up how we managed risk, and became a better organization.

In the end, the Senate Finance Committee, which launched an almost two-year investigation of the conservancy, issued a report that said there had been no illegal activity. Although the report also said there were things in our operation that needed to be improved, it didn't find any significant transgressions. It was an agonizing way to improve, but we did improve.

PND: Some of the questions asked by the committee were related to the conservancy's relationships with corporations. Since then, public-private partnerships have become more commonplace. Do you think the conservancy's approach to partnering with for-profit businesses has been vindicated by that trend?

SM: I would like to think there is a greater appreciation for the potential for positive things to emerge from engagements between nonprofits and corporations. But what we did in that area certainly wasn't unique to the conservancy, and you see even more of those kinds of things happening now. For example, the Environmental Defense Fund is very imaginatively engaged with a number of corporations in a way that significantly influences legislation, and that's terrific. At the same time, we have to watch and be mindful of the appearance that can create, which might not always be in the best interest of a nonprofit.

PND: In fact, the Nature Conservancy was accused of providing "greenwash" for corporations through its cause-related marketing program.

SM: In some cases, that was the impression created. Some people even accused of us of selling out to corporations. I realize there are still people who feel that big corporations are inherently evil, but I believe most people are okay with the idea of nonprofits partnering with business. They want to see collaboration rather than confrontation. That said, we eventually dropped almost all of our cause-related marketing activities. Not because we felt corporations had gained too much leverage over the organization; at the time, we thought the cause-related marketing program was an opportunity for us to secure additional support we couldn't have secured through more traditional philanthropic channels. In the end, however, we realized that those kinds of affiliations could jeopardize the image of the Nature Conservancy. The public, justifiably so, holds nonprofit organizations to a high standard, and there's little tolerance for deviation from those standards. In the end, we decided that our image, our brand, was our most important asset.

PND: After many years working on the nonprofit side of things, what appealed to you about the opportunity to lead the Moore Foundation?

"...If you don't measure, you don't know whether you're really being effective in the allocation of your resources — be it people, time, or money...."

SM: Well, one of the things that appealed to me was the foundation's rigorous commitment to outcome-based philanthropy. There are some risks in that, of course. People often ask me how we can measure things that are inherently difficult to measure. On the other hand, my previous experience taught me the risks of not thinking in those terms. If you don't measure, you don't know whether you're really being effective in the allocation of your resources — be it people, time, or money. You can end up doing a lot of good things, but they may be on the margin. You run the risk of failing to maximize your opportunities and course correct over time if you're not doing some sort of measurement and evaluation.

Other foundations are thinking in these terms as well; I don't want to suggest that the Moore Foundation is alone in this regard. But I do admire that philosophy of grantmaking. You know, foundations occupy a privileged place in our society. We don't have to sell a product or service and are not subject to market discipline. We don't have to lobby legislatures and make a case for our budget allocation. We don't have to appeal to donors and make a case for support or defend the programs we've designed and are executing. Foundations have the money, and that gives us a lot of power and autonomy. But you run the risk of becoming complacent if you don't open yourself up to external factors that can drive improvement. And as I said a minute ago, looking at things through a quantitative lens contributes to continuous improvement over time.

That said, improvement also has to be internally imposed, and I've been impressed with this foundation and its commitment to continuous improvement, to continuous evaluation, to challenging itself. Now, one could ask, Are we improving? Are we getting better? And I'd have to say, It's too early to tell. We're still new, still struggling to find the right approaches, but in my brief time here I've been very impressed with the people who work here. They're not looking for a sinecure, they're not looking for something comfortable; they're looking to challenge themselves, and I love working with people like that.

PND: How is running a large grantmaking foundation different from running a large nonprofit?

SM: Well, the most obvious difference is that we don't do the work directly. So we have to be very thoughtful about connecting with a network of nonprofits to accomplish the desired outcomes, which means we need to be very strategic. Our focus areas are fairly narrowly defined and we've established rigorous plans for a long-term commitment to these initiatives — up to ten years. The foundation allocates funding to those initiatives and then identifies nonprofits and other stakeholders whose strengths and competencies complement one another. In other words, we strive to create a sort of portfolio of integrated efforts to accomplish more than we would if our grantees acted independently of each other.

PND: At the Nature Conservancy much of your time was spent raising support for the organization's programs. What is it like to be on the other side of the fence?

SM: Actually, it's quite liberating not to have to spend an enormous amount of time raising money. As CEO of the Nature Conservancy, I spent well over half my time trying to raise money. In contrast, our total annual payout at the Moore Foundation is about $300 million. I'd like to leverage those resources by convincing other foundations — and maybe even individual donors — to engage with some of our strategic initiatives at the beginning so that they help shape them. In that sense, we would be doing some fundraising.

"...Another benefit of having the resources [of a foundation] is that we can take on projects that are risky and may even fail entirely...."

Of course, another benefit of having the resources, which I hope all foundations realize, is that we can take on projects that are risky and may even fail entirely. When you're in the position of having to raise money, you're always looking for activities that will appeal to a donor's desire to get something accomplished. You may even find yourself looking to create a safe bet for a donor just to get their money. Given his background as a scientist, Gordon [Moore] believes in philanthropy that probes and takes risks, as long as those risks are well thought out. Because it's our money, we can put money into untested ventures, knowing that we'll learn something even if we fail. We can also place big bets. It's a big foundation, and rather than just taking our funding and spreading it around lots and lots of small initiatives, we can be strategically opportunistic when we see a chance to really make a difference. That's enormously satisfying.

But providing funding is a different kind of business than being directly involved in project development. It doesn't take long to understand how popular — or at least sought out — one becomes in a job like this. And because we are a big foundation, I can reach out to anyone in the sector — the head of another foundation, say, or even an individual donor — and count on having a friendly and productive engagement.

PND: Can you elaborate on some of the collaborative efforts with other foundations you're involved in?

SM: Bear in mind, I've only been here a couple months, so I didn't launch any of these initiatives. But our staff has engaged with Google.org, which, as you know, is an offshoot of the online search company and is a very creative organization. We've begun to talk to them about creating what in essence would be a global, open-source database of information spanning fields that traditionally haven't been linked. For example, it might include biological diversity as well as economic indicators such as poverty. I love the idea because we're not just talking about an environmental database; it really would cover a broad spectrum of concerns. Of course, Google, with its experience in Web-based platforms, brings a lot to the table. The project is still in its R&D phase, but I think it could be a very powerful tool without costing a lot of money.

We're also working in collaboration with several foundations to support former Costa Rican president Oscar Arias's initiative to create permanent financing for that country's protected areas. Roughly $20 million from foundations will, we think, generate another $30 or so million from other private donors and make it possible for the initiative to lock in an additional $400 million from the government of Costa Rica. That would be an extraordinary, unprecedented outcome, and we hope it would create an incentive for other nations to do the same.

PND: As you mentioned, you've only been at the foundation a few months. Does it take time to get a feel for the culture of what is still a young organization?

SM: It does. Fortunately, there are only eighty or so people on staff and they all work in the same building. At the Nature Conservancy we had about thirty-five hundred people scattered all over the United States and around the world. So, it has been comforting for me to be able to learn everybody's name, learn what they do, what they're like, and how they work in just a couple of months. On the other hand, we do everything from health care to pure science, including building a thirty-meter telescope and funding work in the field of astrophysics, in addition to our work in the Andes-Amazon region and in the waters off the West Coast of the United States. They're all very different activities, and it's a challenge to get up to speed on them and to be able to provide support to staff. But because this is a philanthropic organization, the culture is not all that different from the culture at the Nature Conservancy. In both cases, you have people who are very cause-driven, hard-working, and creative.

PND: The foundation's program objectives are fairly broad. How do you determine which initiatives to support and which to leave for other groups to pursue?

SM: The foundation has three broad program areas: the environment, science, and the Bay Area. A big part of the Bay Area program is our nursing initiative, which was an interest of Mrs. Moore. Gordon is a scientist, and has a lot of enthusiasm for "curiosity-driven" science conducted by competent institutions. As you said, that's awfully open-ended. So the foundation has developed a set of filters through which we consider proposals.

First, it has to be something important; that, in turn, forces us to think about importance in relative terms. The second filter involves determining whether this foundation can make a difference in a specific area. Take education in the United States, an incredibly important issue for all of us. We've concluded, however, that we cannot make a big difference in education reform; it's just too overwhelming an issue. Related to that is the third filter, which is whether we can measure the results of a funded activity. It doesn't have to be hard metrics, but we have to have some confidence that we'll be able to evaluate the consequences of our engagement with an issue or organization.

"...In other words, can we leverage a new initiative or engagement? If we get involved, will it encourage others to do the same?..."

The final filter is framed by our desire to create a portfolio effect. In other words, can we leverage a new initiative or engagement? If we get involved, will it encourage others to do the same? Can we move into something that's really important, make a difference, measure the impact of our engagement, and, by being the first mover, stimulate others to follow?

PND: Some of the riskier projects you fund exist in a gray area between science and technology or in areas of research that are emerging. How do you evaluate fields for which there are not yet adequate metrics?

SM: That's a good question. Science is a discipline of inquiry based on an initial hypothesis. Although we would like to have at least some kind of directional sense of what the consequences of an inquiry would be, we also have to be comfortable with the process of iteration that comes from the testing of a hypothesis — seeing what happens and then making adjustments. While I've never heard it expressed explicitly here at the foundation, I believe the general sentiment is that there is a lot of private money pursuing interesting research in technology in anticipation of turning it into a profitable business. Although we think that's terrific, our orientation has been to support science that is driven by a sense of discovery rather than potential profit.

PND: While the Moore Foundation is the largest private funder of environmental programs in the United States, you haven't focused on climate change. Do you plan to?

SM: To answer that, I need to provide more background about our Environmental Conservation program. Very early on in the foundation's existence, when everything was still on the table, there was a desire to commit about half of the foundation's payout to environment-related activities. Several exploratory analyses were conducted, but there was no overarching theme or principle. Ultimately, the three initiatives that were developed revolved around the interests of the family. Gordon is interested in conservation inside the United States and the importance of tropical rain forests, so one of the first initiatives focused on the Amazon Basin — actually, we call it the Andes-Amazon initiative because we want to make sure we include the headwaters of the Amazon — and identifying outcomes expressed in terms of areas to be set aside and protected. Another is our Wild Salmon Ecosystems initiative, which focuses on major watersheds outside the United States. Gordon was interested in watersheds in British Columbia, Alaska, and Russia that were pristine and in trying to ensure they stayed that way.

The third and newest initiative in the Environmental Conservation program reflects the family's interest in oceans. Again, it's an awfully broad category and from the outset the foundation moved into it in a careful, thoughtful, and exploratory manner by focusing on near-shore environments off the coast of the United States, where you have relatively understandable governmental and economic institutions and traditions. It's still tough, but it isn't like working in a developing part of the world.

But getting back to your question. Yes, climate change has emerged as theenvironmental issue, and in a sense, climate change is already woven into our Andes-Amazon and Marine Conservation initiatives. For example, a lot of the forest in the Amazon Basin that is being conserved will ensure that carbon is not released into the atmosphere. Over 20 percent of greenhouse gas emissions are generated by deforestation, principally in the tropics. So, large-scale forest conservation like we are doing in the Amazon can contribute significantly to reduction of these emissions. That initiative is actually moving to take advantage of the interest in climate change and in some of the political attention the issue is receiving in Brazil.

Similarly, in the Marine Conservation initiative we're seeing big changes in oxygen depletion in various marine habitats, and that has obvious consequences for fisheries. So we're putting money into understanding "oxygen-minimum zones," trying to figure out what's causing them, and determining whether we can monitor the situation, develop some predictive models of what might happen over time, and then maybe make some decisions with respect to adaptive management of those zones. It's not climate change work per se, but it's related.

"...A lot of funders are rushing into climate change work — admirably, if not necessarily strategically...."

That said, understanding that climate change is a critical issue and will affect everything we're currently doing in the Environmental Conservation program, the foundation is examining how we can make a difference. A lot of funders are rushing into climate change work — admirably, if not necessarily strategically. We're looking at what is going on and are trying to identify funding gaps and opportunities for us to do something that could really make a difference. It's a huge problem, and ultimately the public sector — in this country and elsewhere — is going to have to step up to the plate. In the meantime, we're trying to figure out what we might add to the mix of funding and where those funds would add the most value.

PND: From where you sit, is the influx of grantmakers into the environmental area helpful?

SM: The foundations in that space that I'm familiar with are all very committed. Clearly, that's a benefit. The challenge for us is to figure out what can we do as a private grantmaker to increase our impact. The climate change issue actually is causing a lot of foundations to work collaboratively. Look at something like the Design to Win project that the Hewlett, Packard, Doris Duke, and Energy foundations supported last year. Working together, those four foundations commissioned California Environmental Associates to do a study of the scientific and economic literature on climate change and, based on that study, made recommendations as to what the philanthropic community should do to address the issue. It's a good study, though it doesn't get into any policy recommendations. But this is a big issue and in all likelihood we're still in the early innings in terms of how it's going to unfold.

In terms of environmental issues more broadly, there's a lot of discussion happening around what foundations should engage in and how they should do their work. Do you focus on public awareness, which can help create a climate that makes it easier for politicians to pass good policy? Do you participate in trying to advance alternative energy technology? Do you work on protecting forests and reducing deforestation? Do you promote energy conservation? All these things are necessary and there's a lot of noise about which one is most important or should be our number-one priority. The Design to Win campaign was set up to recommend a set of complementary actions that a coalition of foundations could take on collectively, with individual participating foundations focusing on different elements within that set of actions.

PND: Considering its position among environmental funders, does the Moore Foundation feel pressured to do more with regard to climate change?

SM: I won't say we feel an overt pressure, but there are many activists — including some of the grantees we've supported over time — who feel we should do more to address the issue. Acknowledging that it is the overarching environmental issue, acknowledging that some of our initiatives have the potential to be profoundly and adversely affected by global warming, the question for us then becomes what or where is the best point of entry. Even though we are a large foundation, our funding pales in comparison to the resources controlled by the public sector. So we're looking to identify opportunities that will create the so-called portfolio effect I mentioned: Where can we make a difference and how can that difference be magnified well beyond the actual amount we put in. We haven't found it yet, but we're very eager and interested in the issue, and we will get there.

PND: You're a baby boomer. Do you worry that future generations will judge boomers and those, like myself, following in the boomers' footsteps on our willingness and ability to confront climate change — and that we might fail the test?

SM: Yes, I do worry that my generation, which in my college days professed a commitment to do better than "the establishment," has become the new establishment and is more concerned about personal gratification than the public good. But I also see my daughters' generation emerging with a much greater, more sophisticated understanding of the world and, frankly, a more mature, less hedonistic lifestyle than was characteristic of boomers at the same age. They're the future, so I'm really very hopeful.

PND: Well, thank you for speaking with us, Steve.

SM:Thank you.

Matt Sinclair, PND's editor, spoke with Steven McCormick in April. For more information on the Newsmakers series, contact Mitch Nauffts, PND's editorial director, at mfn@foundationcenter.org.