What do dialing 911, food production in India, and Big Bird all have in common? Their existence depends largely on foundations. What are foundations? The United States alone has more than 68,000 of them, and one of the most exciting developments in China’s philanthropic landscape is the emergence of private foundations. Despite their quantity and ubiquity across cultures, controversy and mystery often cloak these institutions.
When SVG was first getting off the ground, a close friend and mentor to Grace in the US recommended this book to us, and we have found it to be very informative and helpful in our interactions with our overseas foundation clients. In The Foundation Joel L. Fleishman explains the place of foundations in U.S. history and brings us up to speed on the important role these organizations play both in America and around the world.
The extremely wealthy were the first to found these charitable organizations, and continue to be the primary founders today. Rockefeller and Carnegie were among the first to use their wealth for the public good, as responsible use of their wealth, and they have set an example that continues today most notably with the formation of the Bill and Melinda Gates Foundation. Foundations have expanded the civil sector in ways that would be unthinkable without them, and have influenced every part of society from poverty to education to technology for more than a century yet little is known about them.
Traditionally, it is the wealthy who start foundations. While this is not always the case (an exception in China would be some of the GONGO foundations started by the Chinese government), few people have enough funds and resources to start such an organization on their own. For donors, a foundation is a way to “give back” and fund causes about which he or she is passionate. Foundations can exist indefinitely (as long as there are funds) or they can be limited to the lifetime of the founder or other criteria. A board of trustees manages the money and decides to whom and to what causes to award grants. These awards are sometimes, but not always, directed to a particular type of organization which the founder specifies at the formation of the foundation. With few government regulations directed at them, foundations donate a certain percentage of their bank annually. With billions of dollars in foundation funds, they are powerful and diverse institutions that affect every area of society. Foundations are responsible for alleviating social ills yet they are not darlings of the public. In fact, they are coming under the magnifying glass more now than ever.
While Fleishman is definitely in favor of foundations, he is not blind to their faults. He writes that foundations are “among our most powerful, least accountable, and significantly tax-benefited institutions.” That being the case, their relative secrecy casts a shadow over their good deeds. Who’s to say that these organizations are not corrupt and hoarding money for their board of upper-crust trustees? Seldom admitting failures, their lack of transparency has raised the ire of many in the media and public alike who want to know how, when, and to what effect foundations are employing their funds. Fleishman believes in what foundations do and says fraudulent activity is a rarity; however, he also emphasizes the need for these institutions to step out of the shadows. Accountability is key, and it would reduce the public’s suspicion, the very people who stand to benefit from these organizations. We believe that new up and coming private foundations in China would do well to learn from these same lessons from the beginning.
Fleishman, who did a case study of one hundred foundations mainly in the US, suggests a number of strategies to make these organizations more successful and less criticized. He expends considerable energy evaluating the impact of foundations, delving into their structure and practices. The author admits that the outcome of granting may not be easily measurable; nonetheless, foundations have a responsibility to use resources wisely. This involves stepping up their leadership, giving strategically instead of expressively, and evaluating their effectiveness. With these suggestions, the book becomes as much for the everyday person who is trying to make sense of these organizations as it is for the foundation who wants to become more relevant and accessible to the public.
Ultimately, the future of foundations is up to them. As private entities in the US, they do not have many regulations imposed on them by the government (though there is often talk of changing this). The public can pressure on them to open up, but they must make the decision to change their practices. The thing is, they are doing good things that benefit the community as Fleishman points out through the course of his book; therefore, they have little to lose by being transparent. As foundations everywhere and especially China continue to develop in the twenty-first century, it will be interesting to see what innovations arise and whether or not these innovations will include some of Fleishman’s wise advice.
For more information on foundations in China see our previous post here.
- Georgia and Grace