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83 percent of large American foundations seek input from other people, organizations or communities directly affected by their funding, as well as some nonprofits. But foundations, which aim to serve the public interest through the funds they give, rarely empower these stakeholders to make decisions—either to help them set priorities or to tell them where to fund. where it flows.
That’s what philanthropic scholars Kelly Husted, David Suarez and I found in a study that assessed the practices of the 500 largest American foundations. Our findings suggest that the foundation, which faces increasing pressure to make more grants to underserved communities as part of a wider calculation on running race in America, has incorporated some stakeholder outreach into its work.
We surveyed foundation leaders from May to December 2020, asking them to estimate the extent to which their organizations encouraged participation from outside stakeholders. Overall, 148 of the 500 largest foundations in the United States responded. We cannot name anyone as we have agreed to keep them anonymous.
We predicted that participation would decrease along a spectrum, and that’s what we found. At a lower level, we saw that many foundations collect information, such as through surveys. At the high end, some foundations actually have at least some say to stakeholders, for example, giving community members the power to evaluate particular grant applications or make decisions on grant awards.
While most foundations said they received input from at least one person or organization affected by their work, only 10% said they entrust any authority to their grantees, community-based organizations, members of those communities, or the public. those they serve.
why it matters
Until now, the people who work for and run the foundation have generally not been representative of the communities they wish to serve. As a result, they may lack insight about the challenges facing those communities.
Whether foundations serve the public also matters because the government subsidizes foundations by allowing them to operate tax-free. In return, they have to give at least 5% of their assets annually to charitable purposes. Foundations also file an annual tax form, called 990-PF, which shows their financial activities and the grants they make.
The public has a few other ways to hold the foundation accountable.
One way that foundations can increase their public accountability is through participatory grants: any process that transfers decision-making power from foundation leaders and employees to those who will be affected by the money being given.
The Haymarket People’s Fund, for example, relies on a panel of community organizers to make its grants.
what is not yet known
Does stakeholder participation make a difference? Some foundations are looking for evidence to help answer this good question.
For example, the Ford Foundation has funded a round of research projects, including our study, to better understand how participant grants can look in practice and the impact it has on everyone. Some new findings from the Urban Institute suggest that foundations doing this work are more immersed in their communities. However, other findings suggest that recruiting diverse participants can be challenging.
Other foundations are experimenting with stakeholder participation and sharing what they have learned. For example, the John D. and Catherine T. MacArthur Foundation used a participatory approach in their Culture, Equality and the Arts program in 2019 and then documented the benefits and challenges of the process.
what will happen next
We are researching how the Foundation engages with stakeholders, documenting different perspectives and describing the challenges that lie ahead.
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