Über die Autorinnen und Autoren

<div><p><b>Helmut K. Anheier</b> is dean of the Hertie School of Governance, Berlin, academic director of the Center for Social Investment at Heidelberg University, and professor of public policy and social welfare at UCLA. He was previously a Centennial Professor at the London School of Economics, and a researcher at Johns Hopkins University. His publications include <i>Creative Philanthropy</i>, written with Diana Leat (Routledge, 2006) and <i>Nonprofit Organizations</i> (Routledge, 2010).</p><p><b>David C. Hammack</b> is Hiram C. Haydn Professor of History at Case Western Reserve University, where he is also a leader of the Faculty Council of the Mandel Center for Nonprofit Organizations. He is past president of the Association for Research on Nonprofit Organizations and Voluntary Action. His books include <i>Globalization, Philanthropy, and Civil Society</i>, edited with Steven Heydemann (Indiana, 2009) and <i>Making the Nonprofit Sector in the United States</i> (Indiana, 2000).</p></div>

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American Foundations

Brookings Institution Press

Chapter One

What have independent grant-making foundations contributed to the United States? What roles have foundations played over time, and what distinctive roles-if any-do they fill today? Are new roles for foundations currently emerging? This volume presents the product of a three-year effort to answer these questions.

America's grant-making foundations are significant by many measures. They numbered more than 112,000 in 2008, held more than $627 billion in assets, and had grown substantially over more than two decades. They command substantial resources even in the midst of the 2008-09 financial crisis. Entitled to considerable tax benefits and exemptions, and free from direct responsibility to shareholders and voters, foundations enjoy exceptional independence. They can invest the assets they hold, subject to modest restrictions and to an annual tax, generally 2 percent of investment income. So long as they give a minimum amount each year for "charitable purposes" defined in very broad terms, avoid enriching their donors or staffs, and do not directly support candidates for political office or lobby directly for specific legislation, American foundations can largely do as they please.

American law and practice define charity in wide terms. As the Internal Revenue Service puts it, "The term charitable is used in its generally accepted legal sense," which "includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency." Unlike an operating charity such as a school, hospital, research institute, social service agency, or museum, a foundation's board may, in almost all U.S. states, shift funds from one activity to another at any time. And foundation grants add up to a considerable total: the Foundation Center has estimated that in 2007, American foundations gave away more than $42 billion.

Among all industrial societies, the United States has long granted the most scope to philanthropy. While foundations exist in many countries-most prominently in Germany, the United Kingdom, Italy, the Netherlands, and Japan-the United States stands out: in no modern society are foundations more numerous, and nowhere have they become so prominent and visible. Compared with their counterparts in Europe and Asia, the philanthropic foundations of the United States look back to a longer and more continuous history.

In this book, however, our concern is not to explain why so many foundations have appeared in the United States or why they are more numerous and more influential here than in other countries. Instead, we ask, What difference have they made over time, and what difference are they making today? What have they contributed to American society over time, and what are they contributing today? How did foundations achieve impact in the past, and how are they attempting to make a difference today?

The Approach Taken in This Volume

In seeking answers to these questions, we asked each of our collaborators in this book to evaluate several hypotheses advanced by previous research, presented more fully below, paying particular attention to the resources available to foundations, the fields they engage, and the contributions of other institutions, whether government agencies, nonprofits, professionals, or business firms, to those fields. Research on the roles, performance, and contributions of businesses and public agencies fills libraries and is the focus of distinct academic disciplines. A more limited but rapidly growing literature considers nonprofit organizations. By contrast, the foundation, as a distinct organizational form, has received much less scholarly attention. Whereas foundations have from time to time been praised or damned in sweeping terms from one perspective or another, we contend that precisely because foundations have sought to do many different things over several distinct periods of American history, broad generalizations are neither illuminating nor useful. In this book, we are taking a more nuanced approach, being mindful also of heightened policy interest in foundations-in the causes they choose to support, in their potential to advance fields ranging from culture, education, and health to religion, the arts, social services, and effective government, and in their potential abuse.

When we began to explore foundations' roles and gauge their contributions, we quickly concluded that foundation impact, whatever it might be, could best be assessed in the context of particular fields at particular times. Ideally, we see "impact" in causal terms, as a measure of the effectiveness of specific activities intended to bring about sustained and observable change. But given the wide range of foundation purposes, the complexity of the changes they seek, the small size of foundation funds in relation to their fields of action, the limitations of the available data, and also the limited resources available for this project, we decided to combine qualitative and quantitative approaches by focusing on large grant-making foundations, while also noting other types such as community foundations; considering several quite diverse fields over extended periods of time; and using consistent approaches that take account of the best current analyses of work in the fields that foundations address.

The larger independent and community grant-making foundations are at the core of discussions about the contribution of foundations to American society. More than half of all independent grant-making foundations have less than a million dollars in assets. We focus not on these small foundations, which are numerous but whose total assets amount to just 3 percent of all foundation holdings, but on the largest 5 percent, which hold the bulk of philanthropic assets.

Foundations as Institutions

Large grant-making foundations are important not just for their wealth but also because they are notable institutions. Institutions make ideas and practices regular, routine, almost solid. They can provide a measure of predictability and a sense of consequence. Institutions define realities, concert resources, enhance or frustrate the power of those who work through them and with them, and generally help shape their environments.

Foundations are important institutions because they enable donors to reserve and invest charitable funds, to set terms for their distribution, to provide funds to one or many grantees over time, and to shift funds from one charitable activity to another. Foundations are also important because they focus grant-seekers' attention. In their financial capacity, foundations contribute in a minor way, together with individual and corporate donors and certain government agencies, to what some describe as a grants economy that provides about a fifth of the income of America's nonprofit organizations. In their civic capacity, foundations (like associations and nonprofit organizations) constitute sources of wealth,...