August 25, 2021
The COVID-19 pandemic and fights for racial justice highlighted questions about whether mission-driven organizations can effectively deliver on their social impact goals without engaging with the communities that they seek to impact. Philanthropic foundations, in particular, have come under scrutiny amidst recent and growing concerns about their undemocratic nature and shrouded grant-making processes.
Philanthropic foundations in the United States hold significant power in the policy landscape, as they can both define societal challenges and determine the manner in which those challenges are addressed. The work of foundations is tax subsidized, but they are held to few standards of accountability, leading to increasing calls for foundations to shift their power to affected communities, to democratize decision-making through greater stakeholder participation, and to be more accountable to those whose lives they affect.
As part of the University of Washington Philanthropy Project, Evans School researchers Kelly Husted, Emily Finchum-Mason, and David Suárez sought to understand how large philanthropic foundations – with substantial assets and power – engage the people they serve in their governance and grant-making policies and practices. They launched a survey of the 500 largest private and community foundations in the United States between May and December 2020 to answer this question. These are their key findings:
- Many foundations solicited and incorporated feedback from grantees, community-based organizations, beneficiaries, and the public directly into decisions regarding governance and grant-making, but true decision-making power was rarely given to these stakeholders.
- The vast majority of foundations are using stakeholder participation as a way to increase their innovativeness and effectiveness rather than to share power, despite the fact that rhetoric surrounding these practices is focused on breaking down power silos.
- For the largest foundations in this country, the primary impediment to stakeholder participation was a perceived lack of time and capacity to implement, despite the sheer volume of assets that these foundations wield.
By learning more about grantmaking practices that are currently in place, the motivations for using these approaches, and the key challenges to incorporating stakeholder participation, researchers hope to lower the barriers that some foundations may face in making stakeholder participation an integral part of their governance and grant-making.
Greater accountability from philanthropic foundations represents an important step to a more equitable future. When large, powerful foundations listen to those they aim to benefit, they can more effectively direct their giving in ways that align with community needs.
About the UW Philanthropy Project
The UW Philanthropy Project is a multiyear research program seeking to understand the many important roles that philanthropic foundations play in American society.