Recently, a colleague who works closely with foundations in emerging markets put a question to some of her peers: ‘What makes a foundation great?’ My own response to this question, simply worded but rather knotty, is that ‘greatness’ requires a number of elements, six of which I believe are essential.
1 Taking on major challenges
Great foundations have a mission that seeks to address a major challenge or challenges. A foundation can take on whatever issues it chooses, but to be considered great, a foundation’s mission must focus on issues of great importance. This often requires a foundation to be bold and take risks: timid foundations are seldom great, while bold foundations have the potential to achieve greatness.
2 Working for systemic change
Great foundations take a programmatic approach that seeks to bring about the foundation’s mission through systemic change and through addressing the root causes of the challenge at hand. Again, there is nothing wrong with programmatic work that is more charity-oriented than systemic change-oriented. In fact, charity – feeding programmes, orphanages, etc – is often very important. But great foundations seek long-term change rather than short-term alleviation. This demands patience and a willingness to invest for the long term.
3 Flexible financial strategies
Great foundations demonstrate thoughtful flexibility in applying a range of financial strategies based on their suitability to achieving goals. Most often, goals are best met through making grants to NGOs, CBOS and other independent organizations. Sometimes goals are best met through making loans (sometimes referred to as impact investing). Sometimes venture philanthropy (financial as well as technical and capacity-building support) is the most effective approach. On rare occasions, goals are best met when a foundation sets up its own operating programme.
Great foundations start with an analysis of how a challenge can most effectively be met. They then choose a financial strategy or strategies based on that analysis: grants where grants will be the most effective strategy, loans where loans will be the most effective, etc.
4 Deploying all the foundation’s assets
Related to the above, great foundations deploy their resources to the fullest extent possible to achieve their mission. Different national laws govern how a foundation’s financial assets may be used, but where they allow programme-related investment, mission-related investment and other such tools, these should be used to the fullest extent possible. In the US, for example, this means going well beyond the mandatory 5 per cent payout to tap into, as much as possible, the other 95 per cent of a private foundation’s financial assets.
5 Accountability to their constituents
Great foundations are fully accountable to the constituencies they serve. A foundation’s activities have the potential to change the lives of other people, for better or for worse. Accountability to those people is absolutely fundamental, and great foundations understand this, placing grantees and beneficiary communities at the top of their list of priority stakeholders. Great foundations also understand that accountability to beneficiary communities is essential to effectiveness: where there is no community support, projects will most certainly fail.
6 High levels of professionalism
Great foundations put in place strong business and talent management practices. Great foundations are working to address some of the world’s most difficult problems: it is highly unlikely that informally run, unprofessionally staffed foundations could ever rise to the challenge. Rather, taking on such massive challenges demands a high level of professionalism: the attraction and retention of highest quality staff, working within a culture and utilizing strong business practices that allow them to excel in their work.
Admittedly, these are high standards. Alas, I know of no foundation that rises to the challenges of all six. Some manage at least a few well enough but pay short shrift to others. Additionally, so much of a foundation’s identity depends upon its leadership, and foundations that one year are ‘great’ may cease to be so when a new, less effective leader steps in, and vice versa. In my own career in philanthropy, I’ve witnessed and worked with some ‘very good’ foundations – if not, by these high standards, truly ‘great’ ones. I’m convinced, though, that foundations have all the tools they need to build truly great institutions. How much greater would philanthropy’s impact be if more foundations strove for greatness.
John Harvey is an independent global philanthropy professional.