5 Ways To Position Your New Foundation For Success
You’re about to start on a new philanthropic adventure with a brand-new foundation. Perhaps it’s a family foundation that you’ve just created. Perhaps you’re taking the reins of a new corporate philanthropy. Or maybe you’re part of an exciting transition of assets from the sale of a public hospital into a new foundation.
circumstances, there are five key questions you can ask yourself now that will set your foundation on a successful course.
1. Is a foundation the best charitable-giving vehicle for us?Individuals who have created great wealth often want to establish foundations as a way to extend the family legacy into philanthropic endeavors. It is natural to want one’s name to live on and be honored with good works. But foundation donors should be careful not to confuse ego with effectiveness. Foundations operate within specific parameters and under regulations that may hamper a donor’s ability to achieve his or her vision.
For example, if you want to make philanthropic gifts to a handful of institutions that have great meaning to you, then direct giving to those institutions may be more effective than funneling them through a foundation. You can still put the family name on a new university building or hospital wing, after all.
Foundations also come with a level of administrative effort and cost that could make giving more of a hassle than you bargained for. A donor-advised fund at your area community foundation might give you the same tax benefits and giving flexibility at a fraction of the cost and headache.
However, if you wish to cultivate a growing corpus of charitable assets and want to be deeply engaged in how they are invested (in both the markets and your community), then a foundation is likely the right choice for your philanthropy. And if your foundation is already established, use the next four suggestions to make it as effective as possible.
2. What do we want to accomplish?It’s one thing to enter your work with a charitable intent, but another thing entirely to identify a set of clear, realistic goals based on your assets and your environment. This means thinking through
some hard choices about what to prioritize and what to let go.
It also means recognizing where you might make an impact and where your contributions might not even make a ripple. For example, many foundations are interested in improving health or education, but these are huge systems with myriad contributing factors. You won’t be able to have an impact on the entire healthcare system, but you may be able to improve the training of nurses or support cancer research. It’s daunting to try to improve the entire public education system, but you may be able to help raise the reading abilities of third graders in your school district. It should be no surprise that foundations with a clear sense of purpose are usually the ones that demonstrate the greatest impact.
3. How will we continue to learn?Some funders seem to have taken to heart that line from
Fiddler on the Roof
: When you’re rich, they think you really know. However, funders usually know much less about the issues they wish to address than do the nonprofit grantees and experts who are enmeshed deeply in those issues. And new funders rarely begin with a solid understanding of how their own processes and priorities can be most effective. Philanthropy is a fluid undertaking, and smart foundation trustees and staff recognize that they should find a way to continually learn and improve – both in their internal practices and culture and in their grantmaking
Learning doesn’t have to be a complex undertaking. It can be as simple as making time for discussions during staff or board meetings, regularly conducting and studying external evaluations of your work or producing reports about what your foundation has done to share with other funders and feed ongoing conversation. The most important thing to remember is to be consistent and intentional about learning so that you can constantly use your new knowledge to improve your effectiveness.
4. Who do we need
in our network?No foundation can change the world by itself. You’ll need partners and allies, not only to help make the changes you want to see but also to make them last. Create networks of advisors, other funders, trusted grantees, community leaders and others in your area who can enrich and leverage your philanthropic investments with their own financial, intellectual or social assets. Your network relationships can remain informal, or you could form an advisory committee or other more formal structure to support your work.
Never forget that while you may be new to the party, others around you have likely spent years addressing the issues you care about. Learn from them. Partner with them. Support them. Ask them to help you find the ways in which you can deliver the most value to your
5. How will we invest in our own success?Foundations can get so wrapped up in the concept of getting money into the community that they often forgo any investment in their own operations. I call this having a “poverty mentality” of philanthropy. Foundations that constantly strive to do more with less are well intentioned, but they also are hampering their own effectiveness.
This isn’t to say your foundation should give itself carte blanche for excessive expenses. But prudent management doesn’t
mean starving yourself of capacity. Don’t go overboard, but do think about what you’ll need to do your work well. Invest in the right equipment, hire the right people and find the right advisors to enhance your effectiveness. Responsible investments in your own operation are nothing to be afraid of or ashamed of.
Of course, there are many other considerations that go into making a new foundation run well. You’ll need to define grantmaking strategies, create a sensible grantmaking process and time line, develop an investment policy for your corpus and much more. But those steps will be more effective if you’ve first taken the time to consider the questions above.
This article was originally written for and published byForbes.com.