It’s difficult, and somewhat unfair, to generalize about foundation philanthropy. If I have learned anything after two decades of working with foundations, it’s that generalizations quickly find their contradictions. There are great differences among foundations in motivation, strategies and governance.
That said, there is reason to focus on one big generalization right now. It’s about the shared environment in which philanthropies operate. No matter its mission, or target population, or size, or beliefs, a philanthropic foundation is profoundly affected by the urgency of the many systemic global crises we now face – what some are calling a “polycrisis”. In Canada, these overlapping systemic crises are exemplified by our summer of wildfires and floods, along with longer-term concerns about the impact of climate change on the North, on biodiversity, on agriculture and water. We must figure out how to get to greater sustainability without leaving people behind and while trying to put equity and access to opportunity first. We are also still dealing with the after-effects of the pandemic, including long-term health impacts and economic disruptions. The world certainly feels unstable.
In a world of change, philanthropy is hearing a call for even greater change, even for transformation, within philanthropy itself. A new initiative from WINGS, the global philanthropy network, sets out to challenge the field to respond more boldly to the polycrisis. The Philanthropy Transformation Initiative (PTI) calls on foundations to transform their own practices, with the aim of becoming more effective organizations, better able to rise to what it describes as the existential threat that humanity faces.
Transformation is a daunting word. But the group of philanthropy networks, advisors, academics and funders assembled by WINGS for the PTI argues that “the current polycrisis presents a radically new situation – one that will force us all to rethink the short, middle, and long-term view of our existence on this planet. This requires us to make radical changes to the ways in which we think about philanthropy (and many other areas of our lives and societies). As practitioners embodying the love of humanity we cannot ignore existential threats, even if doing so may mean significant changes to what we do and how we do it in the short-term.”
But what can we do? The PTI has put together a report that provides a handbook of sorts for foundations trying to come to grips with what must be done. Understanding that transformation is too big an idea without more definition, the PTI has tried to break it down into three messages and ten principles. The three messages are straightforward:
These messages are the PTI answer to what it captures as the three paradoxes of philanthropy:
These paradoxes are often cited by the more radical critics of institutional philanthropy to justify their call for philanthropy to spend down and/or be dismantled. But the PTI suggests that they can be used as a catalyst for positive change, “with philanthropy actors understanding how they can adopt models and methods that maximise their potential as a force for positive social change whilst minimising the capacity to cause unintended harms.”
This entails a change in mindset, which is where the three messages come in. The PTI suggests a mindset shift from being achievers to being enablers of others to contribute to social change; from separating operations and endowments from values and wealth generation, to aligning them; from thinking more about the short-term and the local to thinking about the longer-term and the global.
Yes, much easier described than done. So, to break it down into more do-able steps to transformation, the PTI names ten principles to guide practice:
For each principle, the 87-page PTI report offers a so-called “catalogue of resources, recommendations, and insights”. It discusses specifics, recommends practices, and lists resources and tools. For instance, under the first principle on transparency and accountability, the report defines the terms, discusses why funders should pay attention, suggests how to get started and how to go beyond, lists potential obstacles and possible solutions, and then adds a digitally-linked list of resources on the topic, sourced from around the world. In addition, WINGS has produced a separate and more detailed guide to transparency and accountability which I referenced in my June 2023 blog. What I appreciate about this guide is that it’s not all or nothing. Canadian foundation boards, leaders, and staff can choose one or more steps. Transformation isn’t immediate or all at once. The idea is to start on the steps, using this as a route map of sorts. To encourage and inspire, WINGS has created an opportunity for storytelling and case studies through the PTI website. One of the ambitious WINGS goals for the PTI is to create a global framework for philanthropy, to which funders can add evidence of changing practice under one or more of the ten principles. The case studies today come from Indonesia, Egypt, Brazil, Colombia, China, the UK, Australia and China. Will there be a Canadian foundation case study listed there soon?
Do we need to open the curtains in the house of philanthropy? Many would say yes. But easier said than done. What does that look like? Who decides? And how far to go?
WINGS, the global network of philanthropy associations, offers some answers, or at least some ways of getting to answers, with a new publication for foundation leaders, boards and staff. It is ambitiously titled Moving From Reflection to Action: A Guide on Transparency and Accountability for Philanthropic Organizations. This title tells us why transparency should be considered by foundations and other philanthropic organizations: transparency is part of accountability. WINGS suggests that both are a “precondition for building trust, legitimacy, and community support for each organisation's work.”
Governments are also raising the bar on philanthropic organizations to prove their legitimacy. Government regulation of philanthropy is justified by the need to protect the public interest. Particularly in those places where donors receive tax benefits for their giving, there is public interest in ensuring that philanthropy benefits public and not private causes. It is interesting that this WINGS publication was funded by the European Union. It comes as the European Commission has just released its proposal for member states to provide tax incentives for the social economy, including corporate tax exemptions and income tax incentives for individual donors, as well as facilitating cross-border giving within the EU.
In Canada, regulators and policy makers are under pressure to gather more data on philanthropic activity. The federal government is preparing new questions for charitable funders to answer later this year in their annual report of disbursements and investments. The curtains are being pulled open, by community partners who want to know more about their philanthropic funders, and by governments who want to know more about how the public interest is being served.
So, this guide from WINGS comes at an opportune time. But what does it address? The guide defines transparency as “the state that results from making information available from inside an organisation to a wider public, either through proactive publication or by responding to requests for information.” It defines accountability as “a readiness to take responsibility for actions, achieved by being transparent about those actions against a pre-defined framework of values and indicators, and responding to the findings of any evaluation and/or the feedback received from stakeholders.”
Many Canadian philanthropies passively meet the test of transparency by making information on governance, financials, and charitable activity available through the annual disclosure to government. However, this information is usually at least a year out of date when it is published on a public database by the Canada Revenue Agency. This is remedied to some degree by maintaining up to date websites and reports which some foundations publish proactively. But the published information varies from detailed to scanty. There are few guidelines on what should be made public, with the exception of those provided in the voluntary Imagine Canada Standards Program.
The WINGS guide provides a helpful mapping list of topics and documents that could be made public and discusses some of those that should remain private such as employment records and personal data. It also suggests some useful criteria for discussion internally around what information to provide and under what circumstances. The guide adds suggestions on how to make a transparency policy stick, including designating a responsible person for ensuring that transparency rules are followed, and regular reporting and evaluation of the transparency policy. This will seem onerous to smaller organizations. But the guide is rigorous in its description of what make a transparency commitment more than just words on paper.
Similarly, in its description of a path towards greater accountability, the guide recommends an accountability plan that engages everyone from the board to the most junior staff member. Such an accountability plan has many developmental steps and is arguably more challenging to formulate than the transparency action plan as it involves identifying to whom and for what the philanthropic organization is accountable. The brave organization will also consider how to deliver that account and what to do when it is not meeting expectations. Recognizing this challenge, the guide does its best to describe each step and provides checklists to help along the way. It doesn’t provide any models or examples of organizations who have attempted to walk the path and who can share success and failure. This would be very helpful. WINGS is inviting organizations to tell their stories and we may see more of these as this guide is taken up and implemented.
This is a valuable tool for philanthropic foundation boards and leaders of organizations of any size. And it comes at the right time. I do see Canadian funders creating and making public their data and reports on goals and outcomes as well as activities.
A couple of recent examples:
And there are other examples! We are seeing more opening curtains in Canadian philanthropy. What would be interesting would be to have one of these foundations measure their reporting against the WINGS guide suggestions and let us know how they are doing and what may come next.
More than a thousand people gathered in Brussels in the last week of April to talk about philanthropy – striking evidence of a pent-up demand for conversation and learning about the role of philanthropy today. The convenor of the sold-out gathering BePhilanthropy was itself a major philanthropic player, the King Baudouin Foundation, Belgium’s most significant foundation. The Brussels conference was the largest of several in person gatherings planned by the Foundation in 2023 to convene philanthropy not only in Belgium but also in other parts of Europe. The meeting brought together a diverse group of European foundation leaders, donors, advisors, researchers, intermediaries and a few nonprofit leaders and fundraisers.
Much has changed in the world since March 2020 when this conference, then optimistically titled The Spring of Philanthropy, was first scheduled. Pandemic, war, inflation and social unrest have darkened the mood in Europe. The climate crisis and global migration are putting great pressures on European societies. As the conference program noted, “today’s challenges are complex and require creative approaches”. Perhaps sensing the need to energize a philanthropic sector in need of encouragement, the organizers structured their program around four exhortations to philanthropy: Be…Responsible, Enabled, Innovative, and Engaged.
European philanthropy itself is in strong shape, despite the effects of the pandemic. According to the Global Philanthropy Environment Index 2022 from the Lilly Family School of Philanthropy, Western and Northern Europe continue to score very highly in global measures of philanthropy. The policy context and the socio-cultural environment generally support philanthropy. Philea, the European network of foundations and donor associations, confirms this in its own report on the Philanthropy Environment in Europe, from December 2022.
The conference opening speeches of Belgian leaders, including Queen Mathilde and the Deputy Prime Minister and Minister of Finance, reaffirmed the importance of a strong civil society and the value of philanthropy in supporting that society. The President of the National Bank of Belgium (the central bank) who also serves as the Chair of the King Baudouin Foundation, spoke eloquently about the advantages and opportunities for philanthropy to work with policy makers in creating dialogues, contributing diverse voices to policy debate, and supporting a just economic transition. Canadian philanthropy, I believe, would be only too pleased to have its unique role similarly recognized by key national policy leaders.
That said, there were plenty of speakers to point out the challenges that European philanthropy must overcome. For example, there are regulatory obstacles. While there is a common market for goods and services in Europe, there isn’t one for philanthropy. This makes cross-border funding and operations more difficult and costly. Philea advocates in its European Philanthropy Manifesto for a EU philanthropy common market, to allow donors and foundations to operate across borders. The European Commission (EC) is now consulting on a possible European Statute for associations and nonprofit organizations. An EC representative at the conference spoke about the importance of sharing with philanthropy a joint purpose around transforming and decarbonizing the continental economy in a just and sustainable way. The EC also recently presented a proposal for a Defence of Democracy which “will include measures to foster an enabling civic space and promote inclusive and effective engagement by public authorities with civil society and citizens in order to bolster resilience from within”. If the EC is beginning to recognize the need to develop new forms of engagement with philanthropy, this will open important possibilities.
Another set of challenges for European philanthropy focus on accountability and the need to build trust. Delphine Moralis, the Chief Executive of Philea, pointed out at the conference that the crisis of trust in philanthropy is present in Europe as well as in Anglo-Saxon countries. This will require an agile and determined response by philanthropy. The flexible and collaborative approaches to working with community that were forced on philanthropy by the pandemic will need to continue. European philanthropy must use lenses of social justice and equity in designing their funding and work more closely with communities to build their resilience and foster social solidarity. Citing a philanthropic accountability model that combines transparency with performance and democratic accountability, Ludwig Forrest, Head of Philanthropy at the KBF, spoke of the need to share knowledge, engage beneficiaries and also maintain accountability to donors who trust public foundations such as KBF for philanthropic advice and expertise.
The conference identified key issues for the future of philanthropy that we share across the Atlantic: cross-sectoral collaboration; corporate partnerships and social investment; global giving; localisation; the formalization of philanthropic infrastructure, including advice and advocacy; and the digital revolution in philanthropic giving. My sense was that some important topics did not get enough airtime (in contrast to many current philanthropic dialogues in North America): power, privilege and the importance of decolonializing and diversifying philanthropy. The perspectives shared were notably those of funders and donors, less so those of charities and community partners. But there were twelve separate discussions during this very full conference day and these views may have been expressed in sessions I did not attend. The KBF will continue generously to share the content of the day through recordings of every discussion, so we will have a chance to find out.
I came away feeling that European and Canadian philanthropy have much in common. Giving is a universal human activity….and as one conference speaker said, “philanthropy gives purpose to life”. To be purposefully philanthropic, to be boldly engaged, as this conference reminded us, we need courage and an openness to listening and learning from each other.
Since 2020, there has been no hotter topic in institutional philanthropy than the need for change to the traditional or standard model of grantmaking. Across the spectrum, from those who focus on equity and power shifting to those simply interested in greater impact, we hear talk about transforming practices and culture within foundations.
Much talk – but what action? There has certainly been movement in the foundation community towards public commitments to change. Many funders since 2020 have signed pledges to change their practices and to move towards more flexible funding, more support for operating costs, more multi-year grants and fewer reports and evaluations. These changes are advocated most prominently by the movement towards “trust-based philanthropy”. But such changes in practice don’t necessarily lead to the internal deep cultural change that is transformational. The underlying dynamic of funders, to maintain control as a matter of accountability and often as a matter of donor preference, limits more fundamental change.
This is not easy, to say the least. Changing granting practices to respond to a sense of urgency and crisis does not lead to deeper change without committed leadership, an investment of time, and a willingness to examine internal assumptions.
More funders in the United States and Europe are following the external changes in their relationships with grantees with internal changes in their culture, with significant encouragement and learning from their peers. Since 2020, the development of peer networks in philanthropy has created space for exchange and learning on the difficult work of internal change. They are supporting the growth of philanthropic “learning” organizations.
In the United Kingdom, the Open and Trusting Grantmakers community of practice was set up in 2021. It is made up of over 100 funders who have committed to a set of principles and practices aimed at shifting relationships onto a more trusting footing.
In Germany, Trust Creates Impact, a peer network of more than 30 German-speaking foundations form Germany and Switzerland, has been active for over four years.
In the United States, the Trust Based Philanthropy Project was launched in 2020 as a five-year peer-to-peer funder learning initiative. In 2022, the Center for Effective Philanthropy created a 9 month Trust Based Philanthropy Learning Cohort which has already sold out.
Recognizing this trend, Alliance Magazine, the global magazine for philanthropy, devoted part of its March 2023 issue to the theme of Transformation on the Agenda. Introducing this issue, Alliance’s editor, Charles Keidan, notes that “for change to be truly enduring, it’s said that it needs to start from within….Transformation requires a more thoroughgoing shakeup of what we do and how we do it, reconsidering not only how we relate to the rest of society but how we behave and see ourselves.”
These are all indications of the interest that institutional funders are demonstrating in learning about how to drive change from within foundations, with the aim of becoming more effective and more equitable.
In Canada, we have been slower to create a peer learning network for institutional funders although a community of practice focused on philanthropy and equity was started in 2021 by two non-profit fundaisers, Tanya Rumble and Nicole McVan. Some webinars and research publications have been organized by the organized philanthropy networks such as Philanthropic Foundations Canada, specifically on the changes suggested by trust-based philanthropy. But there is less evidence in the funder community of a commitment to a more systematic and internal commitment to learning. One of the lessons of the past three years is that learning is a key to funder internal transformation and to more effective funder strategies. The new peer networks in other parts of the world are focused on learning collectively, overcoming barriers and sharing examples of what works with each other as they move forward.
What do these networks have to share about the key factors in becoming a learning organization?
The peer networks are generous in sharing their resources. Here are links to recent YouTube webinar conversations about transformation and learning in foundations that are worth listening to:
There are also some excellent tools available now that could help to kickstart conversations about internal changes within foundations who want to increase their strategic impact. In my 2022 blog Thinking Hard About Trust I link to the provocative and searching questions for foundation boards and staff provided by the German Maecenata Institute. The Institute for Voluntary Action Research (IVAR) in the United Kingdom has an excellent paper Giving Learning a Seat at the Board Table. The Trust Based Philanthropy Project shares a very good webinar on a trust-based framework for learning and evaluation in philanthropy.
Some Canadian public and private funders are already moving down this path of internal change and learning: Trillium, Vancouver, Chagnon, McConnell, Hallman, United Way/Centraide, some of the arts councils. Perhaps 2023 will see the emergence of a dedicated Canadian funder peer learning network that embraces the idea of internal transformation in philanthropy and puts actions to words about change.
It’s January again, time for forward looks (and a backward glance or two). In this post, I do some of both. In a similar post at the beginning of 2022, I noted that others looking at the coming year were cautiously avoiding predictions, given the uncertainties in our world. That uncertainty dominated 2022. Perhaps 2023 will be no different.
So, for 2023, rather than predictions, I suggest new hopes and reluctant fears for the work of philanthropy, building on what I suggested in early 2022.
My starting point for these hopes and fears is the belief that philanthropy is an act of relationship. Not just a handover and hand-off but a mutual exchange. Not a choice between trusting or controlling but a productive combining of assets.
I share this belief with Phil Buchanan of the Centre for Effective Philanthropy. Towards the end of 2022, he described his hopes (and some fears) for grantmaking philanthropy in the United States in a long public essay. This essay summarizes very effectively the questions posed by changes in the philanthropic landscape over the last three years. Buchanan puts his finger on an important question provoked by the calls for less control by funders over their grants. Many of these calls suggest that funders should simply trust their grantees and give with no conditions. This did not consider the need for ongoing and mutual accountability, so necessary to relationship.
Must there be a choice between trust and accountability? No, according to Buchanan. “Thoughtful donors and foundations”, he says, “reject the notion that there need be a dichotomy between strategy, assessment, evidence, and learning on the one hand and trust, listening and flexible support on the other. They recognize that trust develops over time. They embrace mutual accountability. They realize that, while the knowledge and expertise of those closest to issues should be respected, foundation staff and donors do often possess useful knowledge, too.”
The key to this is the assumption that there is value in ongoing relationship between funder and fund receiver. In the Canadian context we too hear calls for more trusting, more flexible, more responsive philanthropy. The overlapping crises of the last three years have lent urgency to these calls. Many funders have responded by providing more general and unconditional support and by relaxing their reporting requirements. These changes should endure. But there is more to do if funders are going to build more effective relations with a broader range of communities and partners.
In that vein…. I hope in 2023
I fear in 2023
A Wild Guess
Last January 2022 I guessed that the federal government would act to reform the Income Tax Act and guidance restricting the ways in which charities grant to non-charities, in Canada or beyond borders. And the government did indeed move toward change in this area, after enormous advocacy efforts by the charitable sector. My hope for 2023 is that the federal government (through the Canada Revenue Agency) will put out guidance that truly responds to the sector’s needs for clarity and flexibility and that expands accessibility to funding. A wilder guess is that the federal government will agree to have an open dialogue about the wider definition of charitable purpose, with a goal of modernizing our regulations.
Final Note: You will find many more examples of foundations changing their strategies and building more effective relationships in my new book From Charity To Change: Inside the World of Canadian Foundations, out now from McGill Queen’s University Press.
This blog was posted initially on the site of the Center for Effective Philanthropy.
Copies of my book can be ordered from McGill Queens University Press
What’s the story on foundations? A simple question, with surprisingly many answers.
A story is the way we interpret the meaning of actions and events. We tell stories about actions to make sense of intentions. Inevitably, stories are subjective and rooted in context. So, depending on context, the story told about foundations can be benign (foundations exist to help those in need) or conspiratorial (foundations are anti-democratic vehicles for the wealthy), critical (foundations wrongly sequester urgently needed resources for today’s problems) or aspirational (foundations are the risk capital for much-needed social innovation).
Can there be a single story? Probably not. Philanthropic foundations are as diverse as the sources and uses of their capital. But the compelling question for philanthropy in the 21st century is, do foundations still matter? Is there a convincing story to tell about that?
Endowed foundations as institutions can be traced back over a thousand years in Western societies. Philanthropic capital endowed in Islamic waqfs or Christian monasteries and churches permitted continuous charity, with funds dedicated in perpetuity for a charitable purpose. This is well-documented in Paul Vallely’s comprehensive 2020 history Philanthropy From Aristotle to Zuckerberg. It’s a model that has been developed over centuries. What has changed, of course is the understanding of charitable purpose, and the role of independently funded philanthropic institutions in a modern society.
Charity itself has not changed in meaning. At its most basic, the foundation story is about charity, caring for others. Most endowed foundations would claim that story. They are using their endowed funds to provide a stream of grants to operating nonprofits for community good. But this story alone is not sufficient to explain or to legitimate the role of foundations in 2022. Community needs are greater than ever, and the importance of equity as well as compassion is changing philanthropic priorities. Is the story only about charity, or should it also be about change?
Over close to two decades as leader of a national network for philanthropic foundations in Canada, I got to know many grantmaking and endowed foundations and their work. One of my goals in that role was to tell a convincing story about the reasons that foundations matter. There are many audiences for this story: policy and lawmakers, opinion leaders and influencers, advisors, donors, and foundations themselves. The audience is also increasingly the community. Community leaders are asking for a compelling rationale for the perpetual or continuous charitable foundation, at a time when justice and inclusion are as important as charity. How must the story itself change in this context?
Reflecting on my experience in a new book From Charity To Change, I have written about how the story is evolving away from foundations as charitable givers. In the early 2000s, when I started in my post, the new story about foundations was that they were social “investors”. According to this story, foundations, with their unrestricted funds and higher risk tolerance, play an important role as the “angel investors” of the nonprofit sector. Like early-stage business investors, they can take on risk and fund the development of good ideas and models for social change by supporting experimentation and demonstration pilots. But the angel investor model of philanthropy doesn’t capture how social change is made. Nor can it profit from the exit strategies available to private investors.
Another story popular in the early 2000s was that of the “strategic” foundation, sometimes called the “philanthrocapitalist” foundation. So-called strategic foundations were interested in bringing about social change, using models and theories to determine and measure specific social outcomes and impacts. This story suggested that foundations, somewhat like businesses, could be data-driven and efficient. But, as with the idea of the social investor, this approach was controlling. It did not open the way to more collaborative approaches, even if it was appealing for a foundation to run its own show. And it did not consider the great complexities of social change.
A recent and more widely popular story is that of the trusted partner or collaborator, in which a foundation works hand in hand with community partners to achieve mutually agreed goals. This is a more inclusive story that lends itself more readily to the idea that foundations play a role, together with others, in making changes which bring about a more socially just community.
Yet questions of power and inequality linger beneath all these stories. Foundations are privileged. Their endowments give them power. May would argue that the power is unfairly earned or used. Lack of transparency, closely held governance and conditional granting all give more weight to the negative generalized description of foundations as vehicles for dispensing charity, not contributing to the changes that might make charity less necessary.
In the end, generalizations never make for good stories. Foundations need to create better stories through their specific actions, not their words. These kinds of stories need details to stick in the mind. In my book, I use details to tell the story of twenty Canadian foundations. I chose to describe them by their actions: field makers, community capacity builders, power shifters, public policy strengtheners, convenors and connectors. These foundations represent themselves, not anyone else. And they can’t be pigeon-holed as investors, strategists, or innovators. They might be all three in fact. No one story fits them all. No generalization does them justice. But their stories add up to something. They’re not just a collection of separate anecdotes but a portrait that answers that question: why do foundations matter?
The diversity and breadth of their work shows us that in our social ecosystem, foundations contribute many important things: knowledge-building, social research and development, network creation and convening, organization and infrastructure support, influence, and advocacy. They act as signals to others around ideas and innovations that will matter not today but maybe five or ten years from today. These contributions can and even should be made with others. What differentiates the foundation contribution is its continuity over time and the ability to give with patience for outcomes that may only be realizable in the long term. Philanthropic investments in designing and testing new social programming, or support for policy development studies, or core support to build networks and develop leaders, can be maintained for several years to generate maximum social benefit.
Finally, foundations matter because they can change themselves. As organizations with a history and a future, they can evolve. They have adaptative capacity. All the foundations whose stories I tell are remarkable because they have learned and changed themselves as well as changing the world around them. Flexible, risk-tolerant, and long-sighted philanthropic capital can be critical to solving our world’s most complex challenges.
That’s a story worth telling.
@hilarypearson20
https://www.linkedin.com/in/hilary-pearson-71373313/
This is a more personal post than usual. It’s about Canadian foundation philanthropy, as may of my posts are. But it is also sharing some of my personal reflections as I look forward to the publication at the end of November of my book From Charity To Change: Inside The World of Canadian Foundations.
Why did I write a book about Canadian foundations? It’s something that I have thought about for fifteen years, although the writing took only two. Over those fifteen years, I have seen a lot of change in the foundation world. Some of it was driven by outside events. Some of it built on the connections and inspirations provided by the growth of personal and digital networks. Some of it has come through internal change as foundations have learned from their own experiences. There has been enough change to make an interesting story that I thought worth telling.
This book is based on stories of individual foundations. But it is also a story about a story itself. One of the reasons I felt compelled to write was that I had been working on telling a good story about the role of foundations for many years. Of course, I should say immediately that generalized narratives about foundations founder quickly on the diversity of foundation behaviours and actions. It’s difficult and inaccurate to say that all foundations play a specific and similar role beyond that of provider of capital for social good.
But in the absence of details or data, stories are built around assumptions. Narratives are built around what can be seen, such as foundation grants. Or about what is not seen, such as how foundations make decisions or what their motives are. There is a public interest in what foundations do and why because there is a public investment in them, through tax subsidies offered to donors. But there is also a default to suspicion in the absence of information, or in the presence of wealth for public benefit without public input on its distribution. In the worst Interpretation, foundations are institutions used by wealthy people to impose their own priorities or to subvert public priorities around social change, while maintaining their own privilege.
I had a motive to develop a more positive story about the role of foundation philanthropy. As the leader of Philanthropic Foundations Canada, it was my job to craft it. I was also more than curious about the unique role that foundations could play in our society. Over the years, I worked on various stories about the roles of foundations, ranging from social investor to strategic risk-taker, to social R&D funder, to convenor and catalyst of change and to community partner. What I understood as I learned more about the realities of foundation philanthropy was that no one description was going to fit. Foundations themselves were changing their missions and roles.
This is what I wanted to capture in a book. I chose to write about foundations in Canada who are generally independent and run by autonomous boards, whether connected through family or not. In talking about foundation philanthropy, I did not focus on public foundations which fundraise for their institutions or communities, although many do extraordinary work. I also chose to write about foundations whose work has evolved over a period of 20 years or more, because this provides a track record of change. And I chose to write about foundations who already understand the importance of communicating what they do and how and why. So, my twenty-plus foundation stories are not representative of all foundations or even of a majority. But they are stories that I hope provide a richness of detail which will nuance the prevailing narrative on foundations. I hope to dispel the mystery, to show that foundations are run by serious people who have humility about their roles and curiosity about their communities, who are willing to change course and to learn from their actions, who are committed to working and sharing with others.
It could be said that I chose only the most positive stories. But I am not uncritical in the book. I am well aware that foundations in Canada are being reproached, as they are in the United States and elsewhere, for not moving quickly, for not responding to the needs of the present, in a world of rapid climate change and increasing inequality. Foundations, just like other organizations, must focus more on equity and inclusion. And they need to be more transparent. That means sharing data more proactively, not only because the regulators ask for it. To show themselves accountable, foundations need to explain what change, what social impact, they seek and how they are going about it. The foundation leaders who I interviewed know this. And many others who I haven’t included directly in the book but to whom I have spoken know it too. Younger generations of families on boards, new leaders of recently-created foundations and donors who have emerged in the last decade are responding to the world of 2022 with creative strategies for deploying capital for public good. A book written five years from now may well include them.
What I wanted to show in this book was that while foundations may vary in their missions and roles, there are common characteristics shared by those who have grown in their social impact over the years:
These are what make the stories in this book relevant beyond Canada. Yes, this is an insider account about Canadian foundations. But it is informed by, and I believe, important to the work of foundations in the United States, the United Kingdom, and other parts of the world. Foundations in all these places are doing the work that I describe in Canada: strengthening communities, building fields, advancing public policy, confronting climate change. What I hope is that by giving some depth to the story of what these foundations do, I also have shown why foundations matter and why we should care. I am as curious and eager as ever to find out what happens next.
Why do foundations matter? I have spent decades thinking about this question in a Canadian context. To try to answer it, I wrote a book about the work of Canadian foundations and their impact today, called From Charity To Change (MQUP, 2022). I interviewed over 30 foundation leaders for their insights about the work they do and how they think foundation philanthropy is evolving. With a similar intent, my colleague Michael Alberg-Seberich of Wider Sense in Berlin has interviewed many European foundation leaders in the last two years. Together during the recent conference of Philanthropic Foundations Canada in Montreal, we spoke about what we have learned. This is a summary of our conversation.
Philanthropic foundations contribute a unique value to our social and political ecosystem. It’s true that in the sub-ecosystem of philanthropy, foundations are only some of the players, joining individual donors, giving circles, mutual aid associations, and online giving intermediaries. So, what is their special contribution to the ecosystem? It’s not their capital, not that alone, but the way in which it is deployed. Foundations create a unique value when they apply their assets of risk tolerance, long(er) life and independence of thought and action to the challenges we face as a society. We need foundations because when they take risks, hang in for the long term with their support and choose to act on the complex problems we face…when they become crucial agents and sources of creativity and innovation for society, as Michael put it, quoting the European foundation theorists Helmut Anheier and Diana Leat in their 2006 book Creative Philanthropy: Towards a New Philanthropy for the 21st Century. This is a hard thing to do for many foundations and many are not comfortable with this role. But it is a powerful one when foundations choose to aspire it.
Admittedly, foundations can’t focus exclusively on risk, time and innovation when today’s problems are so urgent. Michael and I discussed the urgency of the situation in Europe, with war, pressures on migration and energy supply, compounded by inflation, climate change, and the lingering effects of the pandemic. How are European foundations responding? He emphasized the impetus that the pandemic and the war have given to collaboration among foundations, and between foundations, government, and civil society. We have seen a similar growth in collaborative funding in Canada, and this is not likely to decrease post-crisis. Michael also gave examples of German foundations rising creatively to the present challenge to support civil society infrastructure: supporting national platforms for Ukrainian refugees to find housing (UnterkunftUkraine), supporting Ukrainian investigative journalism and countering disinformation (JX Fund), and other collaborative initiatives.
In Canada and in European societies, democratic institutions and practices are threatened today by polarization, populism, and civic disengagement. There is a growing lack of trust in institutions and leaders. Economic and social inequalities fuel this distrust which extends to foundations across North America and Europe. The response of foundations is to find new ways to fund and counter disinformation. Michael noted that all large European foundations now have portfolio commitments to nonprofits working to counter disinformation, through nonprofits keeping watch on algorithmic decision-making (AlgorithmWatch), pursuing strategic litigation against people and platforms which infringe on privacy and press freedom (Society for Civil Rights) and funding for infrastructure to support public benefit journalism (Publix). Again, we see some (although not as much) of this activity by foundations in Canada. A good example is the Atkinson.
Both Michael and I have had long conversations with foundation leaders over the last year and we have heard that they are thinking more creatively about taking risks. There are many risks for these leaders to manage: financial, operational, regulatory compliance, reputation, and impact. Foundations may focus too much on risk particularly when considering impact investing, or more participatory and trust-based grantmaking strategies. How can foundation leaders think more creatively about risk and avoid retreating into what is safe? Michael noted that foundation management teams need to think about their attitude to risk, and the need to accept “failure” not as a risk but as a learning opportunity. There is no change without risk, and no learning without failure. Foundations can deliver value through performing an R&D role for society. Arguably, foundations are social institution that are better positioned than any other to try, fail, reflect, and share. This is how innovation happens. Michael and I also discussed the idea of trust-based giving. There are many different interpretations of this type of giving, but at the core is the idea of partnership: funders acting as partners with organizations to achieve a common purpose, trusting each other to collaborate effectively. How is trust created and sustained when funders and their partners occupy very different contexts and roles? Michael discussed Trust Creates Impact, an initiative in Germany, Switzerland and Austria to bring together over 40 foundations to discuss philanthropic principles and practices that create trust and impact, with a focus on listening, learning and approaches to funding with fewer conditions and longer time frames. These approaches are also gaining traction within foundations in Canada, as I have discussed in recent pieces on trust and on listening practices.
We concluded that the conversations that many of us are having today about the philanthropic model are both more profound and more urgent than they have ever been. There has been enormous change in the foundation world in Canada and in Germany over the last decade and continuing deep reflection about questions of power, partnership, and legitimacy. Foundations do matter hugely. We need to make the case and create the narrative around the value that foundations bring, as bridgemakers, innovators and sources of ideas that will contribute to a better future for us all.
We are living in urgent times. Needs and uncertainties multiply in the context of energy and food insecurity, inflation, war, and attacks on democracy. The expectations and pressures on funders understandably continue to grow in the face of this urgency. The question of the value of the endowed foundation model must be posed again. When the world is on fire, should long-life foundations reconsider their time span and focus on the present?
One of the advantages of an endowed foundation is that it can make an independent decision about the temporal nature of its work. And this is a question it should ask itself repeatedly. In 1966, McGeorge Bundy, the president of the Ford Foundation, said that “a foundation should regularly ask itself if it could do more good dead than alive.” He concluded then on behalf of Ford that “we find that there is no present reason to believe that the world will have less need of a large foundation in 1980 than in 1967; the forces we help to counterbalance are not likely to be smaller – the need for an independent agency not likely to be less.”
Bundy was not wrong. The Ford Foundation continues to this day to contribute in significant ways to the struggle for social justice under its leader Darren Walker. But it doesn’t mean that the question should not be raised or the answer not tested.
Nor is the question unique to Canadian and American philanthropy. It is being posed on both sides of the Atlantic. At the Philanthropic Foundations Canada Conference on October 4 in Montreal, I will be speaking in a session on the legitimacy and temporal challenges of foundations in Canada and in Europe with my colleague Michael Alberg-Seberich of Wider Sense a philanthropy consultancy in Berlin. In Europe, philanthropy is being challenged by the consequences of war, with its pressures on migration and energy supply compounded by inflation. We in Canada face similar pressures from inflation. The increasing costs of climate emergency are also creating enormous negative impact, which falls disproportionately on those most in need. Both in Canada and in Europe there are increasing worries about the strength of democratic institutions. The rise of social media, the narrowing or polarization of public opinion, the lack of trust in leaders and institutions, the decrease in volunteering and civic engagement are all contributing factors to the weakening of democracy. We are seeing low turnout in our elections. Europe is facing shifts to the right and to extremist political views.
The urgency of the present is clear. Foundations must respond, in ways that support their social legitimacy. How should foundations change in reaction to these pressures and what can, or must they do to help our societies adapt? What is the role of foundations today in supporting democracy and civic engagement? Should foundations engage more directly in activism and what might that mean for foundation public accountability? Should they simply spend down? Are we facing a call for radical change in the long-life philanthropic model?
There are no easy answers. But one question that foundation leaders could ask themselves now is whether to think differently about risk. Michael and I have both had long conversations with foundation leaders over the last year. Risk came up frequently. There are many risks for foundation leaders to manage: financial, administrative, legal, regulatory, and reputational. Foundations arguably focus too much on risk particularly when considering impact investing, or unconditional funding, or more participatory and trust-based grantmaking strategies. In the public eye, many foundations are seen as too risk-averse, and this limits their responsiveness. How can foundation leaders think more creatively about risk in turbulent times and avoid retreating into what is safer? Should we think of risk as being something for foundations to embrace as fundamental to the unique value they bring to society? So many important questions. Our conversation at the PFC Conference promises to be a lively one. More to come.