Are Foundations Inept, Boring & Scared to Fail?

Cheryl Dahle made a comment after her podcast that I want to share. Cheryl, along with Stephanie Strom at the New York Times, is one of the most highly regarded journalists in the field of philanthropy/social enterprise. That being said, I would guess a lot of readers won’t agree with Cheryl. Many of you will. Leave a comment and tell us what you think. The text below is Cheryl’s comment in its entirety.

I would probably write about foundations more frequently if I more commonly stumbled across innovation among their ranks. In the almost ten years I’ve been covering social entrepreneurship and the non-profit sector, I can name very few potentially game-changing innovations that have come out of foundations: venture philanthropy, venture funds (a la Rockefeller’s ProVeNex Fund or Google Foundation), and more broadly the movement toward investing endowments to eliminate the hypocrisy of funding non-profits to fight social and environmental ills while buying the stocks of companies contributing to those problems.

The number of foundations engaged in these practices is pretty small. The bulk of the sector seems content to be:

  • Completely unaccountable for the “social returns” on its donations. How many foundations develop sound metrics for the progress they’re accomplishing — without a wrongheaded transference of the burden onto the non-profits in which they invest?
  • Completely unresponsive to their “customer base” of non-profits. The cost to non-profits of chasing money – because the sector has not made a significant enough effort to streamline grant application, share information, or cooperate in any meaningful fashion – is shameful. Add to that the degree to which foundations tug organizations off mission to satisfy internal agendas, and you begin to see how much damage foundations actually cause.
  • Unaccountable for the overhead they spend to find and make investments. I know of no other industry that re-invents the wheel with such relish. How about sharing some due diligence? Anyone?
  • So afraid of failure that they continually play small, hide unsuccessful investments (which could produce great lessons learned) and virtually conspire to overlook terrific opportunities for collaboration.
  • More interested in building their own brands or bolstering their own flavor of the month approach to investment than in building great non-profits that can scale. (The whole movement around investment in capacity building is an antidote to this.)

Here’s what I’d like to write about:

  • A coalition of foundations who decide their next big thing is to choose the best solutions in three areas — homelessness, early education and climate change –- and then pool their fund behind common metrics and organizations. These would be big bets…at least $50 mil grants.. and organized much the way that so-called non-profit private placements have been set up. Find the proven solutions. Scale them. Fail gloriously in some cases so we can figure out what to try next.
  • More spend-down foundations. I would love to see more foundations incented by making the boldest change and biggest leap forward they can in a short period of time than a fleet of organizations motivated to stay in business by playing small.
  • Rampant socially responsible investing (SRI). In an age when so many hybrid organizations and for profit organizations with social missions are languishing for lack of capital, it’s criminal that foundations manage their endowments as they do.

All that being said… I agree with you that there are some smart foundations making wise investments in good programs. But handouts that wind up in the right pockets (without a game-changing approach) isn’t really a story to me.

I would be delighted to hear about good stuff I’m overlooking.

You can read more comments from the discussion here.


  1. Holden says:

    Cheryl, I would LOVE to see this rant as a story. Like you, I suspect foundations of constantly committing all the sins above and more – but I can’t prove or demonstrate this, because every single one of them is so completely opaque.

    To me, the opacity is a worse sin than everything else combined. If foundations really published what they did – how they chose to fund some grantees over others, what their research case was, what results they expected, how they measured these results, what they got (as opposed to 2 sentences on each grantee, plus a picture-packed & sugar-coated annual report) – it would at least be possible to criticize them (I would step up if no one else did!), and pressure them to do their job well.

    This would also immediately kill a lot of the “reinventing the wheel” problems, both for foundations and for applicants.

    With online publishing as easy as it is, there’s really nothing holding them back. But as long as they don’t talk meaningfully about what they’re doing, all they have to do is make timid grants and never discuss anything, and there will never be any consequences – not economic, not public opinion, not anything. And that’s what I’d guess is happening: given an opportunity to be completely unaccountable, they have taken it. That lets them do their jobs as well or as poorly as they like. I have no reason to expect anything good to come out of that situation.

    I want a way to make this strategy less safe – to create controversy over their opacity.

  2. I’m not sure what gets accomplished by asking people to say whether they agree or disagree with Cheryl’s comments–and which I think, posted as they are, are taken out of context (unless someone has read the full thread). As you know from the subsequent comment she made, she even characterized these remarks as ranting. I think much more could have been accomplished by combining Cheryl’s comments, along with others, into the same post, and encouraging a healthy discussion. That way we might find ways to close the gap between different points of view, rather than standing on either side of the divide and hurling stones at each other.

  3. Holden says:

    Bruce, I don’t know what you mean about “throwing stones” vs. “healthy discussion.” Instead of making that point in the abstract, why not facilitate the healthy discussion yourself, by giving the missing context and/or saying what you think?

    Personally, I read the whole thread (not just Sean’s post) before my comment above. But to me the most interesting part is Cheryl’s “rant,” because it matches so well with the suspicions I have, and ends with the same problem: we can’t say these things with any certainty because none of us has any clue whatsoever what is going on at foundations, because foundations disclose nothing of substance about what they do.

  4. I appreciate the question, Holden. I’ve already shared with Sean my concern that the post is missing something — in my view — in that it only contains the first part of the “conversation” I was having via this blog with Cheryl. As you saw, but what might not be clear to someone just reading the post, is that Cheryl did admit she went a bit far in making it sound like foundations aren’t worthy of coverage. And, as to your other question, about facilitating a healthy discussion, Cheryl has graciously agreed to participate in a conversation, perhaps online, and with other journalists, and members of the Communications Network (people who hold communications positions at foundations), to see if we can’t find some common ground. I’ll let you know if and when anything gets scheduled in case you want to take part.

  5. There are a number of points in Cheryl’s “rant” that are either overstated or flat out wrong. Let me take issue with just one. Cheryl writes that foundations are “completely unresponsive to their ‘customer base’ of non-profits.” More than 130 foundations, including seven of the largest 10 in the country, have participated over the past five years in the Center for Effective Philanthropy’s Grantee Perception Report (GPR) process and learned how their grantees perceive them on myriad dimensions, including many that Cheryl discusses. The GPR gives them not only an understanding of how their grantees rate them, but also how that compares to the ratings of their peer foundations.

    Foundations have implemented significant changes as a result of what they have learned, and thirty have already repeated the process to gauge their progress. A number have also made their results public as a statement of accountability and transparency. Links to those GPRs can be found at and a full list of GPR subscribers is available at

    We at the Center for Effective Philanthropy would agree that foundations can and should do more to increase their effectiveness and ultimate impact. There are still too many that lack clear goals, coherent strategies to achieve those goals, and relevant performance indicators against which they can gauge progress. But Cheryl’s caricature of foundations is unfair to the many that have taken the very steps she asserts they have not.

  6. Thanks for the feedback Phil. I’ve read a couple GPRs and think they are great.

    One thing that shouldn’t be lost in this discussion is that Cheryl is a member of the media and so her perceptions of foundations must be taken at face value since her perceptions are what drives media coverage. She’s not the only reporter that has the perceptions she does. By and large, my experience of talking with mainstream reporters is that they either don’t think philanthropy is an important area to cover or they do, but they readily admit that their editors and peers don’t.

  7. I think it’s time to cut Cheryl some slack. She has already admitted she was ranting. And it’s worth repeating here what she did say when I challenged her that her comments made it sound as though foundations aren’t worthy of coverage:

    “I would say this: foundations need to help reporters figure out how to sell these stories of good work in a way that meets newsworthiness criteria. Help build a context …. and be willing to provide on the record sources willing to speak comparatively. This has been a big sticking point for me. I’d have written a story about the above points long ago, but (not surprisingly) few want to go on the record sharing their critiques of foundations… particularly if that’s how they’re funded….Hope this is helpful. I would be open to a further conversation on how to help foundations sell stories.”

  8. Tidy Sum says:

    Philanthropy’s own media is not very enthusiastic about its own field.

    We are writing as if we are hacks for the Diletantes Daily, the Weekly Gadfly, the Monthly Dabbler.

    Where are our own stories about philanthropy helping to transform the world?

    I am not surprised that the field is off the radar.

    Who is addressing the big issues of the day? Who is changing the rules of the game? Who is teaming up to battle evil?

    If you don’t think that Cheryl and her colleagues have a good read on the field, what would you write about?

    I am coming up short.

    Unless we can come up with the content and spin that make for a good narrative, the field will always sound like yappy little dogs behind the fence.

    Yap, yap.

  9. Tidy, what do you think of the 14 things I listed as needing more media coverage in my response to Cheryl?

  10. Tidy Sum says:


    Those would be fantastic things to cover, but don’t you prove her point?

    Cheryl is not seeing who is really making those cool Stannard-Stockton type moves on the dance floor.

    Last I checked, nobody was doing those things in a big meaty super-sized way.

    If you don’t blip, you ain’t gonna show up on the radar, man.

    We are like my cousin Hector: All suit and no rhythm.

  11. I’m not sure I follow. You mean because those 14 things I listed are still small projects, they don’t deserve media coverage? In the for-profit world, the media covers startups and new projects all the time. It seems like you’re saying that the media shouldn’t cover the innovations until they become fully entrenched. But by then, they’re old news.