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Amazon CEO Jeff Bezos recently summed up in a tweet a challenge many foundation leaders confront. He wrote, “I’m thinking I want much of my philanthropic activity to be helping people in the here and now — short term — at the intersection of urgent need and lasting impact.”
Foundation leaders often ask us a variation of this question. They wonder: Should we be “strategic” and try to increase our impact by focusing on a few well-defined objectives. Or should we be “responsive” and fund requests from the community that will have an immediate, though limited, effect?
To have a major impact, a grant maker must concentrate its resources on a limited number of objectives and pursue them with steely determination. The history of philanthropy is filled with examples of foundations that have had great impact by focusing their spending on a few priorities and sticking with them.
Think of the Carnegie Corporation of New York (largely responsible for the nation’s public libraries), the Robert Wood Johnson Foundation (its decade-long campaign helped reduce youth smoking), and the Commonwealth Fund (it helped lay the groundwork for the Affordable Care Act with its fight for a “high-performing health care system”). Other foundations fostered breakthroughs in AIDS research and spawned political movements.
Accomplishments such as these often take time and may be preceded by years of discouragement. But perseverance can pay off. To take one example, the California Endowment followed a carefully crafted research and advocacy strategy in pursuit of a statewide ban on the sale of junk food in public schools.
For nearly six years, the effort seemed to be going nowhere. Then, out of the blue, a chance encounter between then-Gov. Arnold Schwarzenegger and an influential state senator generated the political will that led the legislature to pass a law imposing the ban in 2005. The change took several years, but focused grant making and patience paid off.
Seek the ‘Golden Mean’
However, foundations with a laser focus on strategic goals can easily find themselves closed off from ideas generated by the very people they are supposed to be serving. Being open to outside ideas enables a foundation to explore approaches that may not have occurred to its staff and to address problems that are important to community members — even if those problems fall outside the foundation’s priority areas.
There’s nothing wrong with using a foundation’s funds to fix a crack in the Boys & Girls Club swimming pool. It can make a big difference to the kids who are able to use the pool and generate a lot of good will in the bargain — good will the foundation can call upon if it ever runs into opposition.
For these reasons, we recommend that foundations seeking to effect social change adopt a balanced approach, using most of their payout to concentrate on a few strategic objectives while reserving a smaller percentage to respond to ideas from the community.
How much should go to strategic and how much to responsive grant making? There is no right answer. As a general rule, dedicating 20 percent to 30 percent of a foundation’s payout to responsive grants gives a foundation the ability to concentrate on a few priority areas and also handle community needs that arise.
One example of such a balance: The Ottumwa Regional Legacy Foundation allocates about 80 percent of its payout to an audacious strategic plan aimed at turning around a down-and-nearly-out southeastern Iowa community. When its leaders adopted the plan, they also established a Bright Ideas Community Enrichment Fund that awards relatively small grants to local organizations. Recipients include a woman’s shelter, the local YMCA, legal-aid groups, and an area music association.
These grants do good and generate good will in the community, and they have provided an unexpected bonus: an opportunity to vet potential board members. Community leaders who serve on the Bright Ideas fund awards panel and who show promise are sometimes tapped for seats on the foundation’s board.
In sum, foundations seeking to advance social change should concentrate their resources on a few priority issues. Focus is the key to impact, dispersion of resources its enemy. Yet even the most strategic grant makers should devote a portion of their payout to responding to community needs. In philanthropy, as in life, following Aristotle’s golden mean can be a wise policy.
The writers are founding partners of Isaacs/Jellinek, a consulting company that works with foundations, and the authors of “ Foundations 101: How to Start and Run a Great Foundation .”