How relevant are Foundations to the public good in today’s stressed and complex environment?
I have been thinking about this question lately as I speak to Canadian foundation leaders across the country for a new book.
The Canadian philanthropic scene shares many elements with philanthropy in the US and in Europe:
You could also say that across countries we share many of the same challenges: the chaotic impacts of climate change; inequality of access to economic opportunity; threats to democratic norms and to human rights; the disruptions caused by technological change such as AI.
We often look to the south, to our American neighbours, for ideas and examples of philanthropic approaches to these shared challenges. But as with so much else today, our neighbours are arguing about the legitimacy and credibility of philanthropy and foundations. Many American foundations are extraordinarily wealthy, whether long-established or newly-created. This puts them in the spotlight of public opinion. And it puts pressure on their performance.
Advisors and allies, such as Phil Buchanan at the Center for Effective Philanthropy, are rising to defend the foundation as a force for good. In a recent blog, Buchanan argued that “given the challenges the country faces right now, what they decide to fund and at what levels — and how they do it — is especially relevant. At a time when so many institutions seem to be failing us, larger, staffed foundations, in particular, have a unique opportunity to use their perches, and their resources, for good. Foundations, perhaps unexpectedly, are more important than ever.”
Critical friends such as David Callahan at Inside Philanthropy have a rejoinder: “the influence of foundations remains enormous, as Buchanan notes. And a big question before these institutions is how to sustain that influence even as the philanthropic order rapidly changes. This sector can do great work and move the needle on important issues, especially with the right leadership. But ultimately, its resources are limited and, inevitably, many of its efforts won’t have the desired impact — or it may even miss key challenges altogether.”
In the United States, a combination of factors is making it difficult to “move the needle”, as Callahan puts it. Political and regional polarization and suspicion of elites, as well as government hostility, are causing many foundations to question their ability to perform. In this circumstance, both Callahan and Buchanan have pointed to the importance of leadership. I agree. Foundation leaders today need specific skills and qualities to be effective that go well beyond the traditional management competencies. These include relationship and collaboration management, calculated risk-taking, good listening, proactive communication, and adaptability. Personal traits such as courage, humility, open-mindedness, pragmatism, curiosity and humour are equally important.
Without such qualities of leadership, it is possible that foundations will be perceived as less relevant to today’s problems. The traditionally opaque and unilateral funding model will not be adequate to address more complex social issues. Without collaborative input from communities and those with direct experience, foundation strategies will not have the impact that they could have.
Here is where I venture to say that Canadian philanthropy is operating in a context that differs from other countries. Our history of institutional philanthropy (foundations) is already long. In the 20th century, much as in the United States, Canada’s wealthy donors created trusts or foundations to build the social infrastructure of their communities (universities, colleges, hospitals, social services etc). But in the present day, many foundation priorities have shifted to more systemic social and environmental challenges. These are the challenges that require the qualities and skills of leadership listed above.
And this is where we may have an advantage. In Canada we have a history of pragmatic collaboration, local action, and collective approaches that facilitates modern philanthropic work. Cross-sectoral strategies are common, especially at local level. Government is not the enemy. Businesses take on social responsibility. Relationships are sought and valued. Foundations know and work with partners in the philanthropic networks that cross the country. And, encouragingly, I see the increasing presence of a generation of foundation leaders, many of whom have roots in community and local action and have the listening skills needed to build relationships and work with others at the same table.
If foundations are going to be relevant in the next decade, they are going to need to spot the right challenges, as David Callahan puts it, and to do their work differently, as Buchanan suggests. This means giving more, giving flexibly, investing deeply in community capacity, sharing decision-making directly with partners and taking on new roles such as convening, advocating and financing through community finance structures. I know that Canadian foundation leaders are stepping up to these roles. Our history of practical cooperation and problem-solving gives us an edge in overcoming the tensions and suspicions that are challenging society. With a dash of creativity and risk-taking, Canadian foundations have the resources and opportunities to pursue solutions for and with their partners in this decade of generational change.
NB. The path to staying relevant is continually improving your practice. One of the best books on improving practice that I have read lately is Please Be Good At Philanthropy by Jen Ford Reedy (accompanied by an excellent workbook). I comment on it in my June blog on Philanthropy’s New Mindset.
I have been thinking lately about mindset in the practice of philanthropy. This is a major theme in a new book that I recently reviewed, Control: Why Big Giving Falls Short by Glen Galaich, a prominent foundation leader in the United States. Galaich makes an interesting point about the consequences of what he calls the prevailing mindset of control in so-called big philanthropy. The control he speaks of is control over the money, resources, governance and decisions of giving vehicles such as private foundations or donor-advised funds (DAFs). In his view, the mindset of control has narrowed and constrained the aspirations and contributions of philanthropic giving, no matter how generous its intentions. He makes a strong argument for changing this mindset, faced with the urgency of the current moment.
Mindset in this case is a shorthand term for a way of thinking about your work in philanthropy. Donors, foundation board members and staff members all take their cue from a dominant approach or mindset to the work they do. In the mindset of control, to paraphrase Galaich, the donor or funder controls the money…..and many decisions flow from that: the choice of what to fund, how to access funds, how to shape what is funded, how and when to track progress and who gets recognition. Galaich extends the application of the control mindset beyond giving to investing philanthropic funds: what and how to invest, when and how to take returns on investment, and what time frame to apply.
It is true that most foundation donors and their boards and staff function within this mindset partly, as Galaich points out, because they continue to believe that it is their money even if it is given to a foundation. Even if it was never their money, they believe they owe a duty to manage (or control) it on behalf of the donor or foundation. There is no argument that good governance is founded on fiduciary duty or a responsibility to steward an organization with prudence. But what if that duty, combined with a sense of continued ownership, leads to a mindset of control that impedes rather than advances philanthropy? When you add the fact that foundations with money hold power over fundseekers who need that money, that mix of stewardship, ownership and power can pose quite a barrier to the practice of effective philanthropy.
The mindset of control is not inherently bad. Depending on a foundation or donor’s philanthropic purpose, it may be appropriate to put guardrails or conditions on giving, to ensure that it is going to the cause or issue that is important to the donor. But control can be applied in unnecessary or unjustifiable ways: overly rigid application or reporting requirements, too short time frames, inflexible goal setting or program intervention. The mindset of control when taken too far inhibits imagination, elevates risk aversion, prevents innovation and limits impact.
The rising interest in trust-based philanthropy and collaborative philanthropy indicates that some funders are breaking away from the mindset of control. Galaich has steered the foundation he leads (the Stupski Foundation of San Francisco) towards a mindset of what he calls community engagement. The purpose of the Stupski Foundation is to “work toward the day when our health, food, and postsecondary systems collectively promote well-being and abundance for everyone.” The Foundation works with communities in the San Francisco Bay Area and in Hawaii. The logic of Stupski’s approach is that it is the community not the foundation that understand best what the challenges are for that community and how to determine where funds will make a lasting change. Following on that logic, Stupski is going all in and is committed to transferring all its resources to the communities by 2029. This spend down approach and the way in which Stupski is doing it make sense in relation to their overall philanthropic purpose.
This is a point made by a second book which I reviewed recently, Please be Good At Philanthropy by Jen Ford Reedy, who runs the Bush Foundation in Minnesota. Reedy makes the case for a “competency-first mindset” in practicing philanthropy. In her words, “I believe that we as a field are under-oriented toward being good at what we do. We tend to focus on the impact we hope to have without equal focus on what it takes to do the work well. Bringing a competency-first mindset could dramatically increase our individual and collective impact as a field while dramatically reducing our chances of causing harm.” Reedy asserts that funder control over impact is only an illusion. In most cases, unless they are operating foundations, funders are dependent on their grantees, partners and third parties to create the impact that they wish for. She suggests that rather than achieving or retaining control, funders focus on being competent at making their choices of partner and aligning their purpose and their approach. She provides many practical examples of what competent alignment looks like. In the end it comes down to being thoughtful and diligent. With discipline, funders can competently manage the decisions they make around approach, which she identifies as making trade-offs around targeting, sourcing ideas, innovation, intent, proximity, duration, dosage and flexibility.
Both Galaich and Reedy are helping us see how important it is to be conscious of the underlying mindset that we adopt in practicing philanthropy. And both are believers that we can be better givers. It starts with being aware of how our mindset shapes our choices. Mindfulness, as in most disciplines, is what leads to better outcomes.