(Illustration by Adam McCauley)
Editor’s Note: June 18 through 20, 2018, the Stanford Center on Philanthropy and Civil Society (Stanford PACS), the academic home of Stanford Social Innovation Review, hosted the annual Rockefeller Foundation Junior Scholars Forum at Stanford University. The event, now in its fifth year, brings together new researchers, including graduate students, postdoctoral fellows, and junior faculty, whose work covers civil society, the nonprofit sector, and philanthropy. Its purpose is to promote the scholarly community and to enhance the overall quality of research in the field. This report is one of four on research papers by scholars who participated in the forum.
When nonprofits around the world seek funding from foundations, they write grants based on what they think are the foundations’ motives for providing money. Instead, they might do better to emphasize what kind of difference the foundations could make, should they fund the grant, a new paper suggests.
Emily Bryant, a doctoral candidate in sociology at Boston University, examined how major US foundations make their decisions on which organizations and projects to fund. Researchers usually ascribe motives to foundations—altruism, self-interest, or a drive to be seen as legitimate—but Bryant found that another main driving force is how much impact the foundation could make toward solving a specific problem.
“This compels them to distribute funding in ways that produce sizable change and so employ various mechanisms of evaluation that allow them to assess where their impact can be greatest,” she writes.
For her research, she conducted 70 interviews with grantmakers at foundations and program officers at nonprofits, visiting them and attending industry conferences to meet with attendees.
She found that funders tend to use three sets of criteria to determine whether they will be able to make an impact if they allocate money to a particular cause or project. First, they look around to see which other grantmakers are putting money toward the cause, and whether it is over- or underfunded. Second, they consider whether there are geopolitical concerns, such as restrictions on foreign funding of nonprofits in countries such as India, China, and Egypt. Third, they make sure the groups and people seeking funding are dedicated and suited to the type of work the funders think will make a significant impact.
“Importantly, there must be sufficient qualified and capable organizations that can carry out the type of change foundations seek,” Bryant writes.
Looking at foundation grantmaking through the lens of impact marks a departure from the academic work of previous generations. Earlier foundations followed the Carnegie model, she says, with their giving “driven by whatever the benefactor’s interests are.” As the larger foundations have become more professional and bureaucratic over the years, the field has also shifted toward impact and related ideas, including impact investing, strategic philanthropy, and effective altruism.
The challenge for foundations is how to prove that their funding is having an impact in situations where it’s difficult to measure or takes a long time to show results. Some funders monitor their impact continuously, she says.
“You can have a long-term time horizon and still want to see where change is being made, knowing it’s going to take a decade or two or more,” she says. While foundations might find that Bryant’s research confirms what they already know about their practices, “this might help potential and current grantees gain insight into how foundations make decisions,” she says.
Bryant’s work contributes to the field’s understanding of how money flows from funders to grantees, says Michael Moody, the Frey Foundation chair for family philanthropy at the Dorothy A. Johnson Center for Philanthropy at Grand Valley State University. “The decisions they make will have a great impact on the lives of people around the globe,” he says.
Bryant’s research, according to Moody, also takes the challenging approach of conducting interviews with people who work for foundations, who aren’t always transparent about exactly how funding is allocated. “Her focus on decision making is brave, because it’s analytically and methodologically difficult,” Moody says.
The study will also change our understanding of how foundations give out money. Academics thought for years that foundations made grants based on their networks, watching other foundations whose work they respected and giving money to the same organizations and causes, Moody says.
“She’s showing that primarily what’s important is their assessment of how much difference they’re going to make, and that points to a trend in the field of major grantmaking,” he says.
Emily Bryant, “More Than Simply Motive: International Grantmakers and the Pursuit of Maximal Impact,” working paper, 2018.
Read more stories by Chana R. Schoenberger.