Academic journal article Generations

How American Foundations Plan and Make Decisions: A Guide for the Perplexed

Academic journal article Generations

How American Foundations Plan and Make Decisions: A Guide for the Perplexed

Article excerpt

If you've seen one foundation, you've seen one foundation," is an expression that aptly characterizes the diversity of American philanthropies. Even though there are tens of thousands of foundations, no two are exactly the same. This diversity is accounted for by type (private, family, community, corporate, and operating) ; size (small, medium, and large) ; and the philosophies and styles of founders, boards, and staffs. With philanthropies playing a growing and increasingly visible role in important aspects of American life, including the field of aging, a guide to this complex-and (to those seeking funds) Derolexine-field is lone overdue.


The numbers are daunting. The Foundation Center (2006) estimates that in 2005, there were nearly 68,000 active grant-making foundations in the United States, with a combined giving total of $33.6 billion-almost triple the $12.5 billion in giving total in 1995. However, only a third of these foundations had assets of $i million or more or gave at least $100,000 or more. And only approximately a quarter of those with assets of at least $i million had at least one full-time staffperson and accounted for two-thirds of all foundation assets (Foundation Center, 2005). This discussion is most relevant for these staffed foundations.


How do foundations choose their priorities? For a private foundation, the mandates stated in the founder's incorporation papers form the basis for the foundation's funding priorities. The specificity of these mandates varies widely (Freeman, Edie, and Nober, 2005). Founders often provide only general guidelines, to allow for flexibility in a changing world. In such cases it is often left up to the foundation's board of trustees to define and form a particular set of priorities and programs. (In family foundations, some or all of the board members belong to the founding family.) A corporate foundation almost always funds projects that will promote the corporation and help the bottom line. Community foundations determine and respond to the pressing issues in their locale. In each case, the interests and priorities of board members are influential.

"Mission drift" is a risk for foundations. Sometimes it arises from a loss of focus on one or more priority areas. Other times, a foundation's programs become internal fiefdoms and the respective managers do not work together to advance the foundation's mission. In an attempt to correct mission drift or simply to achieve greater impact, most foundations periodically rethink their priorities and revamp their programs. Recent notable examples of course corrections and reorganizations within philanthropy include the Ford and Rockefeller Foundations and the Carnegie Corporation. Some observers believe these reorganizations have been spurred in part by a desire to achieve the kind of public visibility and perception of significant impact that has characterized recent activities of the very large Bill and Melinda Gates Foundation (Strom, 2007).

Strategic vs. nonstrategic grant making. Strategy is a key factor influencing how foundation priorities are implemented. In strategic grantmaking, the foundation wants to bring about significant social change and establishes specific objectives to achieve social change through its grants. Strategic grant-making foundations tend to be highly focused on a very limited set of issues and specific objectives.

For example, a community foundation that did practice strategic grant making dedicated itself to reducing poverty among older adults in its community by 50 percent and planned to do so through three strategies: (i) linkage with existing benefits and services; (2) development of new services in the community; and (3) advocacy. To implement these strategies, projects the community foundation funded included the promotion locally of BenefitsCheckUp, the National Council on Aging Internet-based tool that links older adults with federal, state, and local benefits to which they are entitled but not receiving; development of major new affordable housing projects for older adults; and grass-roots advocacy efforts to increase the priority given to low-income older-adult issues by the local mayor's office and the state office on aging. …

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