Acting as an Entrepreneur: Excerpts From Essay

Carl J. Schramm, the embattled chief executive of the Ewing Marion Kauffman Foundation, published an essay

in May outlining how foundations can benefit from the innovative thinking evinced by entrepreneurs. Following are excerpts:

“The innovative foundation, in my view, has an entrepreneurial culture. . . . For instance, rather than mainly reviewing grant proposals or business plans submitted by others, it initiates activity. . . . It avoids lapsing into bureaucracy or complacency. . . . It looks beyond simply meeting demands and knows how to create markets. . . . Unfortunately, the consensus I hear within the field is that not many large foundations are able to measure up consistently on these counts. . . . “

“In order to justify the continued existence of foundations as unique social institutions, there must also be a significant amount of the kind of activity that only an organized, entrepreneurial foundation can carry out — namely, systematic and sustained innovative activity. . . . And while the process of innovation can never be perfect, there must be enough high-impact results to show that the ‘opportunity cost’ of forgoing this activity would be too high to consider. . . .”

“Foundations are not businesses. They are not out to maximize financial returns from grant making, dominate markets, or beat the pants off one another in a quest for survival. They can, however, learn to use competitive market methods to good ends for innovation. A very simple example, yet one not used as often as it could be, is the request-for-proposals method. A proactive grant maker can conceive a worthy idea or purpose in general terms, then solicit competing bids as to how to execute it.”