FAIRFIELD, CT—November 7, 2013—Foundation Source, the nation’s largest provider of support services for private foundations, is sharing key findings from a recent survey of private foundation donors. Issued earlier this month to its 1,100 private foundation clients, the survey collected feedback from donors about their beliefs and perceptions about some of philanthropy’s current “hot-button” issues.
Results were derived from 198 respondents, the majority of whom have private foundations with less than $50 million in assets. Foundations of this size account for 98% of the approximately 86,000 private foundations in the U.S.
According to Page Snow, Chief Philanthropic Officer, “The topic of philanthropy is receiving more than its usual share of media attention these days. Much is written in the popular press about ‘what donors believe’ and ‘how modern foundations work.’ However, we felt that the voice of the philanthropist was missing. To help inform the discussion, we asked our clients to weigh in on issues that have received a lot of attention.”
IN THE NEWS: STRATEGIC PHILANTHROPY
Context: There is ongoing debate about how foundations should work with nonprofits to solve social problems and effect change. Some experts, like William Schambra of the Hudson Institute in Washington, DC, argue that foundations “should just write checks” and let the nonprofits do what they’re good at. Others, like Paul Brest, former president of the Hewlett Foundation and co-author of Money Well Spent: A Strategic Plan for Smart Philanthropy, believe that foundations should drive the agenda, asking nonprofits to carry out their vision.
Our survey found: Most of our clients trust their nonprofit grantees to take the lead. Just 22.5% opted for a more entrepreneurial approach, agreeing that “Foundations should direct nonprofits to carry out the foundation’s own vision and ideas.” An overwhelming majority of survey respondents (77.5%) agreed with this statement: “Foundations should support nonprofits without telling them what to do because it negates the value of nonprofits’ ‘on the ground’ knowledge.”
IN THE NEWS: FUNDER COLLABORATION
Context: In philanthropy circles, collaboration among foundations for greater impact is viewed to be a “transformative trend.” But to what extent do private foundations currently collaborate?
Our survey found: Funder interest in collaboration is mixed. When asked, “Over the past year, did you collaborate with other foundations on your philanthropy?” 24.9% indicated that they had and 20.8% said they had not, but “planned on doing so in the near future.” Over half of those surveyed (54.3%) indicated that they have not collaborated with other foundations, nor have plans to do so in the future. Interestingly, no respondents said that they had worked with other foundations in the past year, but would never collaborate again, suggesting that those who partner with other foundations find the experience worthwhile.
IN THE NEWS: EVIDENCE-BASED PHILANTHROPY
Context: Many in the philanthropic sector believe that if nonprofits could provide hard evidence of results, donors would give more to the best performing organizations, thereby increasing impact in the sector. Indeed, this assumption is the basis for Charity Navigator’s new direction, which enjoins nonprofits to report their results. However, there’s been considerable debate in the media as to whether reporting results is likely to influence donor behavior.
Our survey found: Evidence of results is important to donors, but they put more faith in their own experience. When asked, “What is the most important factor in determining whether to grant to a nonprofit?” 37.4% said “personal knowledge of/previous experience with the organization.” “Clear evidence of demonstrable impact” (25.6%) was the second most popular response.
IN THE NEWS: GENERAL OPERATING SUPPORT
Context: One criticism of foundations is that they too often support specific programs only, and don’t offer much-needed general operating support to grantees. In fact, one commentator went so far as to call the dearth of operating support from foundations “a breach of trust.”
Our survey found: Nearly half of the foundations responding to our survey said they provide unrestricted, general operating grants: 48.7% of respondents “typically provide general support to nonprofits without restrictions.”
INVESTMENTS AREN’T JUST ABOUT FINANCIAL RETURNS
It’s no surprise that impact investing, the practice of investing a foundation’s assets to generate a positive social or environmental impact in addition to providing a financial returns, is a hot topic. What is surprising is how highly the “social dividends” are valued:
Nearly half of our survey sample said the social impact of their investments mattered more to them than the financial returns. Although the majority (53.9%) said “getting the greatest returns on our investment” was of prime importance, 46.1% said “choosing investments that further our foundation’s mission” was even more important.
FOUNDATIONS FIND THEIR OWN GRANTEES AND ARE LOYAL TO THEM
Foundations prefer to find grantees themselves rather than solicit grant requests. When asked, “How do you typically identify organizations for potential grants?” 85.6% said, “We mostly find and choose organizations ourselves.” Just 7.9% said, “We mostly fund organizations that submit proposals/requests to our foundation” (6.4% provided other responses). And once funders find nonprofits that they trust, they tend to repeat their grants. Almost two thirds of respondents estimated that at least 75% of their annual grantmaking went to the organizations they had supported in the prior year.
FOUNDATIONS THINK NONPROFITS ARE WELL-RUN
Although some have charged that charities are “where business-like efficiency goes to die,” donors in our survey think well of nonprofit leadership. When asked, “How well-run are nonprofits?” 96.4% of respondents ranked them between “fair” and “excellent.”
About Foundation Source (www.foundationsource.com)
Foundation Source is the nation’s largest provider of comprehensive support services for private foundations, bringing unparalleled knowledge, and expertise to clients across the country. The company’s administrative services, online foundation management tools, and philanthropic advisory services provide a total outsourced solution for private foundations. The result: better-run and more effective foundations. Our clients supply the funds, the vision, and the philanthropic goals; we take care of everything else.
Today, Foundation Source provides its services to more than 1,100 family, corporate, and professionally staffed foundations, of all sizes, nationwide. The company provides its services directly to philanthropically focused businesses and families as well as in partnership with the nation’s leading private wealth management firms, law firms, and accounting firms. Foundation Source is headquartered in Fairfield, Connecticut, with offices in Denver, Los Angeles, New York City, Philadelphia, San Francisco, South Florida, Washington, D.C., and Winston-Salem.