Foundations that break the rules


Kristin Majeska

The other day the founder of an innovative medical research foundation described how they had received an important early grant from a very large and well-reputed foundation. He confided that: ‘They had to break their rules to do it. That foundation isn’t allowed to fund research, which is exactly what we do. But they figured out a way around that because they really, really wanted to fund us. They ended up restricting their grant to supporting our administration. Technically the foundation wasn’t funding research, yet they were able to support our model and were very happy with the results.’

Whether you’re a fundraiser or a foundation trustee or staff person, you probably have your own favorite ‘breaking the rules’ story. I’m not talking about breaking regulatory rules, self dealing or anything categorically ‘bad’, I’m talking about when we dare to be flexible, to experiment, to ‘bend the rules’ because deep down we believe it’s right thing to do.

There’s a whole cast of foundations who pride themselves on funding ‘innovation’, ‘breakthroughs’ and entrepreneurs. But even they have their rules and definitions. As a non-profit board member, I remember trying to convince the program officer of a venture philanthropy foundation that funded early-stage social entrepreneurs that just because the non-profit was led by three passionate women with relevant skills, rather than the traditional paradigm of a single male entrepreneur, they should not be disqualified for funding. I failed.

I contrast this rigidity with the philosophy of the founder of a for-profit venture fund with the decidedly social mission of creating well-paying jobs in northern New England. He describes his focus as manufacturing companies within a two-hour drive of his office… but he’s also very clear that ‘it’s my company … I can break my own rules when I want’. He goes back his original purpose – job creation.

Nobody ‘owns’ a foundation – whether it’s private or public, those funds are being stewarded for the public good. But we can demonstrate ‘ownership’ that’s every bit as bold as that the venture fund owner. If we’re hamstrung by a policy or guideline, we need to go back to the mission of the foundation and the founders’ intent. Are we staying focused and being true to the mission? Or are we just too scared to rock the boat or to take a risk we won’t be able to defend if things go south? In a recent interview Matthew Bishop, Economist Bureau Chief and author of Philanthrocapitalism, shared with me his concern that foundation staff and family members who aren’t the original wealth creators often see themselves as caretakers, rather than fully vested owners of foundations, so they don’t take nearly enough risks.

Yes, taking a risk with a grant can be, well, risky. But if you’re focused on the mission, have done your homework, are grounded in reality and can get the buy-in you need from others in your organization, taking that risk might be just what the founder would have wanted you to do!

Kristin Majeska is a partner at Philanthropic Intelligence

Further articles from Alliance magazine related to these topics:

Tagged in: Foundations Mission drift Risk Social entrepreneurship strategy

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