Why Foundations Matter to the Social Ecosystem

Hilary Pearson

There is shouting at the gates of institutional philanthropy these days. Give more…give without conditions…give more equitably…give with urgency. We were hearing these shouts before 2020. The pandemic and its consequences have justifiably turned up the volume and multiplied the voices. And there has been a response. One of the most striking has been that of MacKenzie Scott, one of the wealthiest women in the world, who has given away over $8 billion in just over a year. She is giving not only in quantity but also in quality, with unconditional grants to multiple organizations, many of which have never received so much philanthropic support and many of which are working for racial and social justice. Is this a sign of more fundamental change coming to philanthropy or is she an outlier? In Canada, many foundations have responded to the urgency of now with more giving, fewer conditions, more core support and a necessary, if still insufficient, lean towards organizations and communities that have been historically underfunded. But the shouts for change go further than the amount and manner of funding. Some question the value of the long term and the legitimacy of endowments in a society confronted by the immediacy of challenges posed by inequality, injustice and environmental crisis. In this view, there is little merit to an institutional foundation model with a source of capital that is spent over time and with strategies that have impact over the long term. MacKenzie Scott’s approach certainly suggests that it is possible for philanthropy to move quickly, flexibly and at scale on today’s issues. But does it blow up the long term institutional model? No, it doesn’t.

Why is this model still valuable? Otherwise put, why do long life foundations matter? Because they are an important part of an ecosystem. In a balanced ecosystem, one element depends on and contributes to many others. Take one away and the ecosystem is damaged in unexpected ways. What part do foundations play in the social ecosystem? They contribute knowledge-building, convening and network creation, organization and infrastructure support, influence and connections. They act as signals to others around ideas and innovations that will matter not today but maybe five or ten years from today.  In a thoughtful recent blog for the Center for Effective Philanthropy, Ruth Levine illustrates how knowledge and infrastructure building by foundations contributed to MacKenzie Scott’s approach even if overlooked in the applause. As she notes, “Scott’s selection of grantees would not have been possible without the knowledge developed and shared by other funders with specialized expertise… Without the work done within staffed foundations, it’s unlikely that ready-made recommendations and knowledge about nonprofits’ strengths and needs would have been available to Scott…Foundations that provide support for evaluations of various kinds, collect and analyze feedback from communities served, and make investments in organizational capacity and culture-building create value that extends far beyond a one-time grant.” 

What matters to our social ecosystem is the continuity of foundation giving, and their ability to give sustainably to bring about outcomes that may only be realizable in the long term.  Some examples of valuable philanthropic long-term investments are longitudinal research studies, or experiments in designing and testing new social programming, or support for policy development studies, or core support to build networks and collective impact backbone organizations that require investment for years before generating maximum social benefit. Our country’s most complex challenges, such as developing solutions to addiction, homelessness, adaptation to climate change, and generational poverty, require a long-time horizon and much patient philanthropic capital.

Is there room for improvement? Can foundations be better at what they do? Of course. There could be more investment by foundations in their own staff capabilities and in more systematic learning and sharing. They could simplify their processes, reach out more to their communities of interest, listen better. They could strengthen their support for their own field infrastructure, including data infrastructure. Ruth Levine suggests that “given that the value of foundations’ due diligence and strategy development is greatest when it’s available to others, foundations can engage in funder collaboratives that facilitate knowledge sharing, and they can look for opportunities to build on, rather than duplicate, others’ due diligence activities.”

Would our social ecosystem be more fragile, less sustainable without institutional foundations? Yes. Let’s not lose it by throwing out the long life philanthropic model. We can do better but we should not do without.

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