A Practical Look at Foundation Practices

A good book on philanthropy is hard to find. Those who write about foundations tend either to extol or excoriate them. Academic studies lack the pragmatism of real-world experience, and the reminiscences of those who have run a foundation are often overlaid with an unnaturally rosy hue.

Happily, Joel Fleishman’s new book, The Foundation: A Great American Secret — How Private Wealth Is Changing the World, departs from this genre, offering instead an honest and enthusiastic assessment of the role foundations play and the ways they play it best.

Anchored by solid research from more than 100 interviews with foundation leaders, informed by deep personal experience, suffused with humility, and enlivened by Mr. Fleishman’s passion for the subject that is his life’s work, this book offers a balanced view of foundations’ virtues and faults, along with clear guidance on how to manage a foundation effectively. His book is the most important addition to the literature on philanthropy in many years.

Mr. Fleishman sets out to accomplish three things. The first is to demonstrate by example the powerful positive influence that foundations have achieved, and their essential contribution to the robustness and vitality of the nonprofit world.

The second is to identify the key factors behind foundations’ successes and failures in order to provide practical advice for donors, trustees, and foundation managers.

And the third is to offer recommendations on how to make philanthropy more open, accountable, and effective.

The same observations would carry far less weight from a different author, but Mr. Fleishman is so widely known and respected throughout philanthropy that it is difficult to separate the book from the man.

During his 45-year career, Mr. Fleishman has led, studied, worked with, and sought grants from foundations in every imaginable capacity. For seven years, he served as president of the $3-billion Atlantic Philanthropies. He founded and runs the Terry Sanford Institute of Public Policy at Duke University, within which he has built a program that focuses on how foundations operate.

Mr. Fleishman is the board chair of the Urban Institute, a trustee of the John and Mary R. Markle Foundation, chair of the Visiting Committee of Harvard University’s John F. Kennedy School of Government, and a board member of several major corporations.

When Michael Porter and I founded the Center for Effective Philanthropy, Mr. Fleishman steered the earliest grants to us, and he continues to guide that organization as well.

In the first section of the book, Mr. Fleishman identifies a dozen major foundation innovations that have taken root in our society, culled from 100 case studies of foundation successes available on the Sanford Institute’s Web site. His research makes clear that much of what we take for granted as part of the nonprofit landscape today was born through foundation efforts.

The power of his examples is undeniable, but this book is no mere homage to philanthropy. Mr. Fleishman devotes an entire section to foundation failures, something rarely seen in print. His goal is neither to praise nor condemn, but to tease out the factors that lead foundations to succeed or fail.

This he does with simple clarity. The second part of the book offers a step-by-step operating manual for how to run a foundation well. There is no magic or arcane jargon in Mr. Fleishman’s advice, just sensible and practical suggestions that define the ways foundations have consistently made a difference over time — whether by establishing new institutions, investing in human capital, or influencing public opinion.

Others have offered advice on how to run a foundation, but what most distinguishes Mr. Fleishman’s approach is the way he ties his advice to real-life examples, demonstrating the predictable consequences of foundation behavior, both good and bad.

Mr. Fleishman also draws a connection between the self-imposed secrecy with which foundations choose to operate and their failure to realize the full potential he envisions.

Woven throughout the book is the idea that foundations, were they more open about their processes, achievements, and failures, would be better understood and supported by the public.

But Mr. Fleishman also argues persuasively that such added pressure would lead foundations to do a better job of serving society.

In the final section, Mr. Fleishman offers concrete recommendations for a self-regulatory system that would hold foundations to a far higher standard of public scrutiny, though he acknowledges that it would require a considerable change of heart by many grant makers to adopt such measures.

Mr. Fleishman’s clear advice and careful research will be an invaluable resource for those who lead or study foundations.

It is less apparent whether his examples will fully demonstrate the value of foundations to the general public, as he intends them to. None of the cases he cites involve small foundations and nearly half of the 100 examples on his supporting Web site are drawn from just four foundations: Rockefeller, Ford, Carnegie and the Commonwealth Fund. That these great institutions have contributed to our society seems an easy case to make. Whether that same blanket of virtue should be spread over the 60,000-odd small foundations with no professional staff members is a separate question.

The benefit that Mr. Fleishman sees in such proliferation is the virtue of “polyarchy,” the idea of many separate sources of power in a society, and the safeguards against government control that it provides.

He sees the multitude of foundations, each pursuing different — and sometimes contradictory — visions of social welfare as one of the great strengths of American philanthropy. And yet, one can’t help wondering whether polyarchy is really the best way to get things done.

Armies don’t win battles by letting every soldier fight whichever enemy he chooses. This rich diversity in perspective, untempered by any public measure of performance, may actually hold us back from solving society’s challenges.

Mark Kramer is a co-founder and managing director of FSG Social Impact Advisors, a nonprofit consulting firm, a senior fellow at Harvard University’s John F. Kennedy School of Government, and a co-founder of the Center for Effective Philanthropy. He can be reached at Mark.Kramer@FSG-impact.org.