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.