The Latest in Foundation Funding

Editor's Note: This post was originally appeared on the Connective Impact blog. 

By Joanne Sonenshine

With last week’s release of its 2014 Annual Report, the John D. and Catherine T. MacArthur Foundation announced plans to ‘retool’ its grant-making efforts in order to better ensure that its $6.4 billion in assets produce "transformative" change.

In practice, this announcement implies a greater emphasis on programs that have the potential to deliver real impact. For MacArthur, these are: addressing global climate change and overhauling the criminal justice system in the United States, as well as potentially investing in ways to reduce threats posed by nuclear weapons and developing reform agendas in Nigeria. The MacArthur Foundation also articulated a new approach to impact investing, leveraging social programs for greater return. Long-standing programs focused on the juvenile justice system and housing challenges in the United States, population and reproductive health concerns in Nigeria, India and Mexico, digital media and learning opportunities, plus a suite of other programs including strengthening America’s democracy, are being phased out.

This recalibration is an example of a juggernaut in the grant-making space insinuating that focused engagement around just a few issues may deliver a bigger bang for the buck than spreading resources thin over too many programs. By making this shift, grant-making can be more targeted and streamlined, yet still deliver strong results that offer seismic solutions.

Charitable giving from foundations is critical for non-governmental organizations (NGOs) and governments to deliver more experimental and unique programs to populations in need of help. Unlike government or public funding, or in many cases corporate funding, foundation funding comes with fewer strings attached and can be pivotal for organizations testing new approaches without having to adjust regulatory frameworks or business processes. With nearly 100,000 foundations in the United States alone, and more than $50 billion in giving accessible to grantees, the opportunity to utilize foundation dollars has never been more ripe.

Foundations have different approaches to grant-making depending on their founders’ interests, board of directors and experiences in grant-making. Some foundations may be investing in a multitude of programs across hundreds of countries. Others may be focused on one or two issues, like the Rockefeller Foundation, which is only investing in health, energy and resilience initiatives.

Certainly maintaining a focus and streamlining investment dollars toward programs in education, health, hunger and poverty has made the Bill and Melinda Gates Foundation one of the (if not the) most successful models of foundation impact delivery in our lifetime. Since inception in 2000, the Gates Foundation has granted over $33 billion in more than 100 countries. What’s more, the Foundation has brought attention to some of the world’s biggest and most pressing challenges, like access to vaccines, girls’ education and family planning.

Being able to shift the way in which governments address their populations’ challenges is not easy, and foundations are in a unique position to be able to do so, given the weight of their dollar and the opportunity to leverage other donations. The concept of leverage is becoming increasingly popular as government agencies and corporate foundations look for ways to amplify their investments. Even public funding agencies, like the Inter-American Development Bank, have created public-private partnership models for funding that rely on one-for-one matches, often relying upon foundation funding to make this work.

According to the Chronicle of Philanthropy, the MacArthur Foundation is not the only grant-making organization shifting its portfolio. Announced this June, the Ford Foundation will be prioritizing investments that have equality aims, including curbing financial, racial, gender and other gaps. Additionally, and as a welcome change to grantees, the Ford Foundation will double its unrestricted grants for operational support, which means organizations that are in need of help to build infrastructure, hire staff and invest in pilot projects, can be more creative and nimble when designing programs. By reframing the way the Ford Foundation provides funding, it can measure greater gains.

The Clinton Foundation takes a different approach. With investments in five areas (climate change, economic development, girls and women, global health, and health and wellness) and nine related initiatives including the Clinton Global Initiative and Clinton Climate Initiative, the Clinton Foundation has spread its assets and programs far and wide. As an operating foundation, the Clinton Foundation spends all of its assets on programs, not as grants to other operators. The impact has been measurable, though the Clinton Foundation has received some criticism for the way in which it operates. For example, some have argued that the Foundation is simply a vehicle for the Clinton Family to fund its political aspirations, particularly those of Hillary, as she embarks on a presidential run in 2016. The Clinton Global Initiative, by any measure, may be one of the greatest opportunities for collaboration, as I argued after attending my first meeting. The real potential to effect change is there, and the power and draw of the Clinton Foundation coffers and connections is not to be ignored, despite the wide reach and potential lack of focus.

Given the breadth and depth of scope of our nation’s foundations, and charitable giving at an all time high (see graph to the right via National Philanthropic Trust), it is in every NGO's and other operator’s interest to consider foundation funding as part of a diversified fundraising strategy.

The benefits derived from those foundations streamlining their focus and being more intent on impact can only be positive for those organizations working to address the challenges we face over the next generation.

Image credits: 1) MannaPack 2) National Philanthropic Trust

Joanne Sonenshine is Founder + CEO of Connective Impact, aiding organizations in strategic goal development, partnership creation, coalition building and collective thinking in order to solve some of the most complex problems of our time. Immediately prior to launching Connective Impact in January 2014, Joanne was a Director at Conservation International where she managed programs focused on climate mitigation and adaptation, climate smart agriculture, responsible sourcing and effective land use. Joanne is a trained development economist and has been living and working in the Washington, DC area for eleven years. Her professional experiences have included working at the U.S. Department of Commerce International Trade Association and as a registered lobbyist advocating for more comprehensive environmental sustainability regulations.