The Art of Philanthropy: Understanding Power and Corrosion

William Keator

This is the first post in a series on “The Art of Philanthropy,” a high-altitude look at the power foundations hold, related issues, and potential solutions.

The art of philanthropy begins with balance and ends without it. Of course, any attempt for balance runs head first into the power dynamic that exists between grantor and grantee.

A grantmaker’s power in relation to any grant seeker is practically a natural law, and no foundation is exempt from the built-in imbalance. Therefore, all foundations should be mindful of the dynamic and understand how it influences every interaction they have with nonprofits. 

In case anyone thinks the foundation sector has made progress on this front, consider the following two quotations. Please note these were written 20 years apart.

In his 1994 Harvard University dissertation, Three Modes of Philanthropy: An Analysis of Foundations and the Disadvantaged, Greg Gross, the former president of the Michael Reese Health Trust and Jacksonville Jaguars Foundation, writes:

A fundamental tenet of negotiation is that parties believe that proceeding together is more advantageous than proceeding alone. Foundation representatives know that controlling funding decisions provides a type of unilateral power. But, perhaps those that are exceptionally effective over time in assisting disadvantaged populations, realize that without a more level playing field where grantees can be acknowledged for bringing essential ideas, commitments, and assets to the table, both funders and grantees will never realize their full potential.

It is hard to make a case against Gross’s points. Moving to the recent past, in “A Response to ‘Strategic Philanthropy for a Complex World’” in the Summer 2014 Stanford Social Innovation Review, Ford Foundation President Darren Walker writes:

I believe that philanthropy is at its best when we promote and protect a marketplace of ideas. Given free, full, and transparent conversation, the best idea ought to prevail…We absolutely must focus on outcomes…At the same time, we should support our grantees’ pursuit of these outcomes without being doctrinaire and directive about their precise technique…We in philanthropy need to reorient the way we see ourselves. We frequently assume that foundations are central protagonists in the story of social change, when, really, we are the supporting cast.

Over a two-decade span, Walker and Gross make compelling points about the sector’s struggle with power and ideas.

Good, Bad, or Indifferent

Prescriptive grantmaking practices are levers of foundation power that often lead to issues foundations can avoid. Foundations should maximize efficiency whenever possible and never compromise on the expectation for operational excellence on the part of their grantees. But non-prescriptive grantmaking practices and a “focus on outcomes,” as Walker emphasizes, are not mutually exclusive.

All foundations must understand the ways in which they operate have ramifications — good, bad, or indifferent — on their grant seekers and eventual grant recipients.  As seen in the quotes from Walker and Gross, how foundations choose to operate is about balance. And it always should be.

Here’s why.

He Had Them at Hello

A while ago, at a conference for grant writers, I attended a presentation by a program director from one of the largest foundations in the country, a long-established leader in the sector that hires accomplished experts to lead its programs. The presentation began with an overview of the foundation’s simple, clear, and ambitious goals for the program — one that would need high-capacity nonprofits. The room was filled with accomplished grant writers, including some of whom I had worked with for over a decade, and it was obvious the presenter had their interest. Phones, tablets, and laptops had lost their magnetic pull. Everyone’s eyes were up. And why not? This was a big dollar initiative.

The program director moved to his next PowerPoint slide and began to present his logic model to justify why, where, and how funding would be targeted. The first slide had a couple of big boxes and each had arrows to a few medium sized boxes, which also had arrows to even more small boxes — the ones where the dollars would actually flow. The room was still engaged.

That was until the next slide had the same number of boxes, followed by the next one, and the next one. This went on for about five or six slides! He had lost half of the room by the third slide, and almost everyone else with the fourth.

Later, one of my past grantees, who could have been perfect for this effort, put it simply to me, “I couldn’t figure out which one of those little boxes we could squeeze into.” Another jumped in quickly to say, “It’s obvious they have the answers, so they don’t need us.” These were talented, experienced professionals who were representing organizations among the best in the field that the program was targeting.

(Note: the story is deliberately vague to protect those involved. I also need to defend the program director, who made a well-intended effort to be transparent, and, if I remember correctly, had less than five years of experience as a grantmaker at the time.)

A Thorny Relationship

What is the point of this story? There are many takeaways, and you can probably come up with more.

  1. We see foundation power wielded in the opposite way from what Walker and Gross suggest. In this case, regardless of the quality of their organizations or the issues they needed to address, every grant seeker in the room was given a clear choice by the funder: you can dance to our tune or find another dance floor.
  2. The foundation lost high-capacity grant seekers that did not have an immediate need for funding. Meanwhile, other nonprofits, who operate at an equally high level but had a need for funding, were still likely to submit proposals, but their enthusiasm for the effort would never reach the level it could. And since the best possible grantees would either walk away or go through the motions, this foundation had built in a lesser potential impact right out of the gate.
  3. The program director clearly needed more experience in grantmaking. At best, the foundation made the assumption that his program area expertise would make up for his lack of expertise in grantmaking. At worst, the foundation’s higher ups did not understand the fundamental value a seasoned grantmaker would bring to the position. In either case, the success of the program was placed internally on the program-related expertise of this director, whereas a more seasoned grantmaker would have (or should have) designed an inclusive effort that tapped the expertise of others.
  4. There’s a thorny relationship between theory and practice. When a foundation decides to invest heavily in a program area, it always sounds logical to find the best expert possible to lead the program. But in practice, the best solutions almost never fit into well-designed boxes, especially all of those little ones at the bottom of a PowerPoint screen. 
  5. Finally, when a large, highly respected foundation models a misplaced prescriptive approach, the knock-on effect from other foundations, who will follow the leader, only multiplies the negative impact.

Corrosive Power

It would be cynical to say the power held in foundation funding decisions is absolute — even though it is — and then dive into the cliché that absolute power corrupts absolutely. Foundations are better than that. However, it is fair to say that foundation power can be corrosive. While the philanthropic sector has made great progress and matured considerably over the past several decades, the power dynamic — and the quest for balance it requires — will always need work.

William Keator spent 20 years in philanthropy. He is currently working on an education-related book.

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