A new report argues that foundations should spend more time assessing their organizational structures and operating models rather than simply judging themselves based on the successes and failures of the charities they support.
The report, called the Philanthropy Framework, encourages new and existing foundations to think about three core elements: charter, such as how founding ideals are being carried out today; social compact, including how the foundation works with others and why it deserves to exist; and operating model, or how the foundation uses resources and systems to carry out its strategy.
The report, by Rockefeller Philanthropy Advisors, is based on more than five years of research and interviews with roughly 75 foundations. Rockefeller is developing an online tool that helps philanthropists and foundations grapple with these structural questions, which typically receive far less attention than a foundation’s grant-making focus.
“A foundation is like a black box emitting cash,” says Melissa Berman, Rockefeller’s chief executive. “What happens to that cash is incredibly important, but there’s a whole bunch of other stuff that that doesn’t cover.”
Berman says Rockefeller Philanthropy Advisors is using the framework to encourage foundation leaders to work closely with their boards and make sure the appropriate framework is in place to support new grant-making approaches.
“We see some foundations that talk in their strategic plans about placing a much higher premium on advocacy and communication, but they have not built up the internal capacity to do that yet,” Berman says. “Their skills are not aligned with their strategy.”
A Clear Vision
The project began in 2013 and was inspired by management expert Peter Drucker, whose 1994 Harvard Business Review article, “The Theory of the Business,” called for all organizations to develop a clear theory to be successful and then continually reassess assumptions in response to changing conditions.
Berman concedes that the effort to build a philanthropic framework around Drucker’s ideas has been harder than Rockefeller anticipated — for example, early versions of the framework called for foundations to understand and continually refresh their mission statement. That didn’t work.
“We’ve held funeral services for some of our earlier models,” Berman says.
The William Grant Foundation, established in 2014 in Scotland, began using the framework in 2018 as it looked to expand its grant making, which had long focused primarily on Scottish culture. The “Philanthropy Framework” urges foundations to figure out where they sit on the charter continuum, ranging from founder-led to “open” — in which foundation professionals make decisions without considering the founders’ wishes.
Legacy vs. New Ideas
The Grant Foundation, which receives 1 percent of the pretax profits from the company that makes Glenfiddich scotch and Hendrick’s Gin, still considers itself “stewarded” (to use the language of the framework), according to Nick Addington, the foundation’s chief executive. That means the foundation is still led by people who feel a sense of responsibility to the founders. At Grant, the company and the foundation are largely overseen by the fifth generation of the family that started the company in 1887.
“We’re respectful of the legacy of those who have influenced the family-business philanthropy, but there’s nothing set in stone that says we have to give in particular areas,” Addington says. “There’s a genuine interest to give in new areas.”
Another key element of the framework — social compact — urges foundations to evaluate its relationships with society along six dimensions, including accountability, transparency, and independence. Legally, the Grant Foundation is not separate from the company, so it has few mandatory disclosures about its philanthropic activities. But the foundation has decided to be transparent about its grant making to gain respect from partners and grantees, Addington says.
And as it works to carry out its vision — “a future where everyone in Scotland has the opportunity to thrive” — the foundation is trying to gain input from the people it aims to help. A relatively new focus for the foundation is prenatal care and early childhood development. The foundation has contributed the equivalent of roughly $130,000 to the Listening Fund, which encourages youth-focused charities to get more input from young people.
“The principle of engaging with beneficiaries and co-designing services and solutions is something we are interested in and supportive of,” Addington says.
Some foundations relish their independence, even while establishing internal guideposts that hold them accountable to society. “By definition, we’re really not accountable to anybody,” Rip Rapson, the Kresge Foundation’s president, says in the report. But Kresge’s willingness to be transparent, listen to criticism, and adjust course when necessary “ultimately serves as a check on our innate authorities,” he says.
The final element of the Philanthropy Framework — operating model — explores how foundations approach grant making. Is the foundation proactive or responsive? Is decision-making centralized or do individual program officers have considerable latitude? Does the foundation build internal capacity for programming expertise or rely on outside consultants?
“We hope that foundations both through the report and the tools under development will find this a helpful way to start to talk before they ever get to strategy and implementation,” Berman says.
Correction: An earlier version of this article said incorrectly that the Listening Fund is a nonprofit.
