Dreamers of small dreams

Diana Leat

Diana LeatMany foundations have grand missions stating wildly optimistic aspirations rather than recipes for direction and action. In some cases the mission is so all-encompassing that nothing short of global revolution, combined with divine intervention, is required if it is to be achieved.

Other foundations have more modest missions, or choose to interpret their missions more modestly to focus on one or more issues. But how many foundations are willing to change course in order to respond to emerging issues? How many are prepared to go all the way to address an urgent issue in today’s – not yesterday’s – world? And what would ‘going all the way’ actually mean? If a foundation madly, passionately, seriously wanted to make a dramatic difference to climate change, peace, poverty or health, what would it do?

Marvin and Marjie’s way

One answer to that question comes from J K Galbraith in his novel A Tenured Professor, published in 1990, but acutely relevant to 2008. The hero, Marvin, is a young economics professor at Harvard who invents the Index of Irrational Expectations – the gap between the real worth of a company and its market price. (Marvin’s Index is closely related to what in October 2008 is known in financial circles as the Greater Fool Theory, ie there’s always another fool behind who will pay more for something than you paid for it.)

Using this Index, he engages in short trading to make more and more money for good causes. His wife Marjie is the driving force in spending the money. They begin relatively conventionally with some research on barriers to women in top jobs. From there, they move on to funding a scheme whereby products are required to display a measure of their women-friendly employment and promotion policies.

More ambitiously, they move on to a concern with peace. Rather than preach to the converted they decide to fund chairs in leading military colleges; the colleges argue that they study war in order to win and achieve peace so Marvin and Marjie fund Peace Professorships to encourage the study of peace in order to avoid war.

Marjie is still unhappy and says at one point: ‘We didn’t get rich in order to influence people. We got rich in order to control people – the Positive Power of Wealth.’ Marvin and Marjie move on to use the power of their investment assets, deciding to take over an electrical company with links to the Pentagon and Defense Department contracts. Having achieved the takeover, Marvin and Marjie issue a ban on bidding for contracts for any military purpose ‘that its own scientists and engineers regard as manifestly unnecessary, unsound or presumptively insane’.

Throughout this period, Marvin is being investigated by various government bodies not for their charitable activities but for ‘un-American’ activities in the market – doubting the value of major US companies (!).

Marvin and Marjie provide one version of what it might mean to ‘go all the way’, but for real rather than fictional foundations what might be the options? If you really care about an urgent issue, what would or could you do?

Going all out for a cause

Focusing on just one issue
One obvious answer would be to focus on one – just one – urgent issue and devote all of your disposable income to it until it is resolved. This is a course of action adopted by some foundations but – depending on the scale of the issue – it clearly sits somewhat uncomfortably with the fashion for exit strategies and often requires a long-term sophisticated approach to performance measures – as well as copious quantities of courage and patience to weather the troughs and peaks of progress. Peter Coltman’s piece on p52 clearly illustrates the dilemmas here.

Focusing on a couple of key issues
A small number of foundations do this but most, out of concern for fairness or perhaps fear of failure, opt for a couple of key issues on which to focus. Even those foundations that do commit themselves to a very small number of priority issues tend to change these every five years or so, possibly as frustration is added to fairness and fear. A slightly different approach is illustrated by Uday Khemka, who suggests that a variety of programme areas all be seen through the overarching prism of climate change as THE issue – in addition to foundations’ having separate climate programmes.

Focusing grantmaking and assets on a single issue
Even this approach is, arguably, only a tiny 5 per cent step to all the way. A bigger step would be to focus all grantmaking/income and all of the foundation’s assets on its chosen key issue. Again, some foundations are taking steps in this direction (see, for example, Peter Heller and the Canopus Foundation, p43) – but going all the way with all of the assets seems to be rare and perceived by foundations to be a risky venture.

Deciding to spend out
At the far end of this particular spectrum are those foundations that have decided to spend out in order to give all they have now to a chosen issue seen as requiring immediate action. Suicide for a cause. The Brainerd Foundation provides a rare example here.

Tackling root causes
There are, of course, a variety of other approaches to going all the way to address a particular issue. One is to seek to identify and address the root causes of an issue, rather than merely dealing with the symptoms or manifestations. Again this is only a step along the way – not least because knowing the cause of something does not magically translate into knowing what to do about it or to actually doing it.

Influencing policy
A much smaller number of foundations go a step further and attempt to influence policy and practice, working at the edge of the ‘political’, challenging the comfortable, and possibly jeopardizing charitable status and tax advantages. For a few foundations, going to the edge is preferable to tinkering at a safe distance from it.

So what’s the problem?

So why do so many foundations appear to be timid tinkerers, lacking passion and commitment to any grand, immediate cause? One answer might be that foundations spread their bets because that it is, in effect, what their deed encourages them to do. Charged with ‘working for the benefit of mankind’, foundations try to be all things to all people, doing a little bit of this and a little bit of that.

Taking safe risks?
Foundations like to describe themselves as risk-takers. But what does this actually mean, and what sorts of risk are they prepared to take? At a deeper level, grantmaking – the preferred practice of many foundations – is both inherently risky and a protection against risks. Grantmaking is risky because it involves a loss of direct oversight and control and a correspondingly high degree of trust in the grantee.

At the same time, it largely confines the foundation’s risk to the financial. The operational and reputational risks are more likely to be borne by the grantee than the foundation. The foundation may lose some money but, in any one case, the amount is likely to be small relative to its total assets, as well as being confined rather than open-ended. Foundations may have ‘failures’ but they tend not to have spectacular failures – not least because grantmaking protects them from responsibility for, and visibility of, those failures.

There is another aspect to risk-taking by foundations that comes across clearly in a number of contributions. Innovation, collaboration, putting all your eggs in one basket are all inherently risky. As Peter Coltman remarks: ‘You have to be self-confident, moving towards foolhardy, verging on reckless, to engage in a one-off project that uses your entire endowment.’

And, as Rayna Gavrilova and others point out, we ask foundations to take risks but we also expect them to be prudent and to exercise due diligence. We want them to be good stewards, assessors of risks, realists not dreamers. It seems that many foundations handle these contradictory expectations by having lots of small dreams rather than one big one.

Poverty of imagination
Another potential explanation of foundations’ small dreams is that they are so steeped in the conventional wisdoms and the everyday mundanities of grantmaking that they lack the imagination to dream big dreams. Or is it that foundations work with assumptions about their roles that, in effect, leave change to others? Their job is not to have ideas or passions but simply to fund others to have them. If those they fund have no big dreams, then that is their problem, not the foundations’. Foundations sometimes complain about the dearth of truly creative proposals  – but maybe grant applicants/grantees are simply too accustomed to the austerity of foundations ‘make do and mend’ approach.

Assumptions about change
For many foundations, change happens from the bottom up – change, like hot air, rises. Fund the poor, the powerless and those without a voice and those disadvantages will disappear. But how many foundations really do effectively fund social movements?

Furthermore, the notion that in many cases those with the real power to effect change sit at the top – in the legal system, in structures and processes, in government and in business – is seriously addressed by relatively few foundations. How many foundations have even debated Kofi Annan’s suggestion that ‘good governance is the single most important factor in eradicating poverty and promoting development’. And how many have had the imagination and the courage to devise ways of addressing this? Mo Ibrahim’s prize for excellence in African leadership is one obvious exception.

Power – the elephant in the foundation room
Arguably, one of the biggest elephants in the foundation room is power. Foundations rarely discuss power – their own or that of others. Failing to analyse the power of others, many foundations continue to live in a cosy world in which change can be achieved without engaging with either power or politics. Failing to analyse their own power, foundations either overestimate their own power or under-exploit their full range of power-tools, or both (and often prefer not to address the issue of the power they have over grantees).

One of the interesting underlying issues in some of the contributions is an implicit divergence of opinion about the real power of foundations. For example, Rick Cohen talks about money as foundations’ ‘most important asset’ while Astrid Bonfield emphasizes the need to be constantly aware of foundations’ tiny spend relative to aid and trade flows and the corresponding need to exploit foundations’ ‘independent niche’. Analysing the real power of foundations and that of others in achieving change has profound implications for any discussion of the roles and strategies of foundations in addressing urgent problems today and tomorrow.

Fear of taking a stand
There are two other obstacles to foundations’ going all the way related to the above. One is the view that foundations are not the place for dreams or values; foundations are merely morally neutral conduits for money. There are, of course, understandable historical political reasons for this stance – but arguably it is nothing more than a stance. All choices entail values, and foundations are in the business of making choices – between competing priorities, between ways of working, between terms of funding, between applications and so on. The problem with having hidden values is that you never take them out and examine them.

Foundations are, above all, polite. They know their place – somewhere in the shadows of wealth and power. Again for understandable reasons, foundations are generally reluctant to bite the hands of the systems that feed and tolerate them. Some of the greatest heroes of the foundation world were, in their own practices and lifetimes, a long way from being the saviours of the poor and powerless.

More recently, the great philanthropists may have more admirable records but most foundations appear to choose to ignore the ways in which business and governments contribute to some of the very problems foundations seek to address. How many foundations have ever considered that employment may play as great a part in poverty as does unemployment? The Rosenberg Foundation is one that has, by challenging Wal-Mart’s employment practices, and there are certainly others who, as Bonfield notes, recognize the role of aid and trade flows in, for example, issues around HIV/AIDS. But on the whole it seems that foundations are just too polite to meddle in things that are not their business. Few would subscribe to the view that: ‘If you can’t comfort the afflicted, you can at least afflict the comfortable.’

Some, of course, register their protest via their investment policies – but with a few exceptions these tend to be silent protests.

Legal restrictions
Underlying many foundations’ reticence in going all the way is the long arm of the law. What is within and without the boundaries of charity law varies between countries but it is probably fair to say that few foundations go to the edge of those boundaries – and many imagine, or perhaps prefer to imagine, that the restrictions are greater than they actually are. Peter Heller provides an interesting case here, noting the restrictions on mission related investing within the framework of German foundation law and the penalties for losing charitable status.

But if you really cared passionately about an issue, wouldn’t you be willing to forgo some tax advantages for that issue? In the UK, for example, Joseph Rowntree set up not one but three foundations of which one is non-charitable, giving it the freedom to work outside charity law. Charitable status may indeed confer a halo of goodness (unrelated to the amount of good that is actually achieved); but lack of charitable status is not a crime, it is a condition that may be freely chosen.

Lack of knowledge
In addition to, or instead of, the obstacles above, foundations may be hampered in going all the way by the very human problem that they simply don’t know what to do. As Peter Coltman notes, we live in an age that has lost the optimism and self-confidence of previous generations, and we recognize that the solution to today’s problems may contain the seeds of tomorrow’s.

As a broad generalization,  foundations frequently deal with the issues that, for one reason or another, are too difficult, or too inconvenient, for business and governments. Governments and many operating non-profit organizations are generally happy to conspire in the myth that the only reason why the problems of the world cannot be solved is lack of money. But in many cases the problem is not so much lack of money as lack of knowledge – we simply don’t know how to do it, and if we did we would have done it already. This is the secret that many foundations know only too well.

The lure of the comfortable
When challenged with their apparent reluctance to ‘go all the way’, foundation staff are wont to blame it all on board members: ‘The board wouldn’t like it.’ Maybe so – but how many have been asked? As the case studies reported in Creative Philanthropy[1] suggest, some boards clearly do find it more satisfying to attempt to really get to grips with an issue rather than dealing with the same proposals dealing with basically the same problems decade after decade.

Could it be that staff also have an interest in not going all the way, in not devoting all of the foundation’s resources to one issue? Could it be that staff are reluctant to let go of their particular programme areas, or to develop new skills and ways of working? Or, could it be, as Nicholas Borsinger suggests, that both staff and trustees have rather narrow comfort zones and are reluctant to engage in the exertion of trudging up steep learning curves?

Desire for survival
Arguably the biggest obstacle of all in going all the way is the desire, or requirement, for survival. In an important sense, foundations need to take care with their legal status, their reputations and their money because they need, or want, to live for ever. And, as several contributors note, if you know that you will live for ever then tomorrow will always do.

But although foundations may have endless dawns, some people and some issues can’t wait. As the Brainerd Foundation suggests: ‘Waiting can be a very dangerous strategy, as can relying on halfway measures.’ The dilemma, of course, is that waiting may be dangerous, but not waiting requires enormous courage, confidence, and a willingness to be hideously, hopelessly wrong.

1 Helmut K Anheier and Diana Leat (2006) Creative Philanthropy, London and New York: Routledge.

Diana Leat is guest editor for the Alliance special feature ‘How far will they go?’ She is visiting Professor at the Centre for Charity Effectiveness, Cass Business School London, acts as a consultant to foundations and other grantmakers, and is a member of the Board of the Diana, Princess of Wales Memorial Fund. Email dianaleat@hotmail.com


Ten reasons why foundations so rarely go all out for a cause

  • Foundations are not as willing to take risks as they like to think they are – partly because they are also expected to be good and prudent stewards.
  • They lack the imagination to dream big dreams, and assume it is not their role to do so anyway.
  • Few are willing either to effectively fund social movements or to influence those at the top who can effect change.
  • Through failing to analyse their own power and that of others, they fail to understand their own role in achieving change.
  • They are afraid to take a stand and own up to their values.
  • They are generally too polite to bite the hands of the systems that feed and tolerate them.
  • They are unnecessarily constrained by the boundaries of charity law.
  • They simply don’t know how to address the problem they want to solve.
  • Both staff and trustees are reluctant to leave their rather narrow comfort zones.
    Above all else, foundations want to survive.

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