Rethinking leadership principles and strategies can help foundations find a way forward in a changing environment. But leadership is not always about leaders

As the Covid-19 pandemic reached Switzerland, prompting a nationwide lockdown, certain foundations responded swiftly by establishing relief funds for freelance artists to address social and living costs. Amid the ongoing societal distress in Europe since 2019, grantmaking foundations are uniquely positioned to contribute resources to alleviate the multifaceted challenges. However, despite having dedicated resources for social issues, these foundations encounter inherent obstacles in funding innovative projects and individuals. These can be mitigated through the implementation of clear governance and leadership processes.

Foundations have a unique organisational structure. They have no owner and are solely reliant on the founding charter and the foundation’s stated purpose. This leaves the board of trustees with great power and discretionary decision-making. In spite of this, foundations are often criticised for risk aversion and limited innovativeness, yet this contradiction is rooted in that very organisational structure.

First of all, the purpose of the foundation defines its field of action. Even with a broadly formulated purpose, one will never cover all aspects of interest – especially not those of the future. With new social problems arising, every existing foundation has to check if and how its purpose allows it to become active in this area. Second, foundations face nearly no external pressure. A founder might have a say in the foundation, but with time, the influence of the founder – or people who knew the founder – vanishes. To remain true to the founder’s memory, foundation staff are more likely to look back than forward. Third, foundation assets arise from abundance, but in the pursuit of the social purpose, resources become scarce. The excess demand cannot be satisfied and foundation boards always have to make a selection. Aiming at doing it right, foundation boards tend to favour projects with a successful history or which are similar to previous projects. To overcome or reduce these obstacles, this article suggests some general principles of governance and current development in the leadership of grantmaking foundations.