Big Foundations

In response to my comment:

We are in the midst of a tidal shift from institutions towards individuals. But this shift is not about a zero sum game where individuals take power from institutions. Instead, it is about a growing pie, as the role of philanthropy gains importance in our culture and participation rates soar.

PhilanthropyBeat writes:

I respectfully disagree. We live in a quick response world. The faster we can make something happen the more impact we can have. Individuals can do that. Foundations can’t. Sure, there’s always room for well-thought-out solutions to seemingly intractable problems, but private foundations think themselves to death. In the current age, private foundations are the dinosaurs, for the most part unable and unwilling to adapt to how the world works, hoping they can still throw their weight around enough to maintain influence. They may continue to have a big piece of the pie, but it’ll be so stale it won’t be worth eating.

I’d make a horribly talk show host. I’m unable to think in black and white terms. Ever notice how frequently I use words like, “however”, “but”, “on the other hand”? For anyone who lived through the stock market boom/bust and tried to learn the lessons, one thing is clear. The internet WAS a major transformational development that changed the way we live and the way businesses operate. However, the excitement around many of the innovators and the assumption that the traditional “dinosaurs” faced extinction was entirely misplaced. It is tempting when something new is occurring to assume that “this will change everything”. In reality, that rarely happens.

Remember “internet banks”? They were supposed to put traditional banks out of business. They had almost no operating costs and they could offer high interest rates on checking accounts. Guess who’s the biggest online bank now? Bank of America. The innovation was spot on, but the innovators were trumped by the strength and depth of experience of the “dinosaurs”. On the other hand, for every idea that stuck with us there are hundreds of internet driven ideas that died with the boom.

I do think that we are in the midst of a truly transformational moment as philanthropy transitions from The First Great Wave to The Second Great Wave. But are we witnessing the imminent death of the big foundation? No way. When Bill Gates decided, at age 50, to leave the corporate world and focus on philanthropy I think we saw a moment of cultural importance that can’t be underestimated. Running a mega corporation used to be the pinnacle of accomplishment. But Gates said he wanted to be remembered more for his philanthropy than his business accomplishments. The San Francisco Chronicle’s technology blog wrote at the time:

Hey, I seem to recall that some other tech hotshot has just announced that he is going to retire to get into charity. I wonder when or whether Jobs will ever follow suit? Does he keep turning out gadgets until he goes to that great hard drive in the sky? Or does he respond to some higher calling — and if so, what might it be?

Before Gates, the idea the running Apple computer might not be the most anyone could wish for was almost unthinkable. After Gates, the idea that the most successful, wealthy people in the world would give up their business careers and turn to philanthropy while still in the prime of life doesn’t even seem like such a surprising idea.

The Second Great Wave of Philanthropy will be characterized by the emergence of small, widely disbursed donors who co-create the social sector. But big foundations are going nowhere will continue to be a major force in philanthropy. I hope that they can learn from the innovators, adopting their best ideas, while at the same time providing the wisdom of what works and what doesn’t that comes from experience.