Whether you have founded your own family foundation or serve as a board member of a grant making foundation, the question of if and how the organization should focus its grant dollars is an important discussion to have. Some founders have provided clear guidance on where grant funding should go, other foundations find it challenging when the next generation comes onto the board and has ideas about broadening the organization’s mission.
In thinking about an organization’s focus and mission in grantmaking, a fundamental question iswhether a foundation should continue in perpetuity or commit to spend down its funds within a specific time frame. This discussion goes back to Andrew Carnegie’s essay published in 1901 which put forth an argument for giving away wealth during one’s lifetime.
Alice Buhl, a senior fellow to the National Center for Family Philanthropy, has suggested board members or trustees ask at least once a decade – What can we do in a limited lifetime that we could not do, or could not do as well, if we continued in perpetuity? What can we do with a perpetual endowment that we could not do, or could not do as well, if we put the full endowment to use in a limited time? And which of these two alternatives produces the greatest value?
Regardless of the timeframe for spending the funds, organizations may focus grantmaking dollars on specific areas, such as the arts, homelessness, and/or geographical areas. Sometimes the founder has outlined parameters, but if not, the board should discuss whether focused grantmaking is appropriate and if it would yield a more significant impact. Working together with other grantmaking organizations or with recipient organizations can result in greater efficiency and better outcomes for everyone. San Diego Grantmakers provides a network of grantmaking leaders who can collectively learn about issues, such as Education, Social Equity or Military Family Support, and leverage their resources together to fund innovative and effective programs. For more information, check out their website at http://www.sdgrantmakers.org/.
Bringing the next generation of family members onto the foundation board can be an opportunity to revisit the grantmaking focus of the organization. If the primary focus of the organization cannot be adapted to include new areas, the board may determine a small percentage of the grantmaking budget that each board member can use for grants in areas outside the main focus of the organization.
We will continue this series next month with some insights on how to evaluate grant proposals and conduct site visits.