Close Close

Financial Planning > Charitable Giving > SRI Impact Investing

Donors’ Surprising Thoughts on Hot Topics in Philanthropy

Your article was successfully shared with the contacts you provided.

Should foundations get a say in grantees’ operations, or butt out? How much does a charity’s effectiveness affect giving decisions? A Foundation Source survey tackled these and other questions.

Charitable giving in the U.S. has garnered much mainstream media attention in recent years, and with it commentary about key issues such as strategic philanthropy, impact investing and collaboration.

Foundation Source, which provides support services for 1,100 private foundations, released a study on Thursday of donors’ beliefs and perceptions about some of philanthropy’s current hot-button issues.

The survey derived results 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., Foundation Source said in a statement.

Debate continues within the philanthropic sector whether foundations should simply write a check to nonprofits and butt out of their business, or drive the agenda, asking nonprofits to carry out their vision.

An overwhelming 77.5% of respondents preferred to support nonprofits without telling them what to do because that would negate the value of their “on-the-ground” knowledge. Only 22.5% of foundations preferred a more entrepreneurial approach.

Foundation respondents were ambivalent about collaboration with other foundations, considered a “transformative trend” by many in philanthropic circles.

The survey found that 24.9% of foundations had collaborated with other foundations, while 20.8% had not done so but planned to in the near future. More than half of respondents had neither collaborated nor had plans to do so in the future.

Interestingly, no respondents who had worked with other foundations in the past year said they would never collaborate again, suggesting that those who partnered with other foundations found the experience worthwhile.

Does hard evidence of results by nonprofits prompt donors to give more the best-performing groups? Many folks in the philanthropy world think so.

Survey respondents said otherwise. Most important to 37.4% of foundations in determining whether to grant to a nonprofit was personal knowledge of or previous experience with the organization. Clear evidence of demonstrable effect was the choice of 25.6% respondents.

A very touchy subject in philanthropy is support for specific programs versus grants of much-needed general operating funds. In the survey, 48.7% of participants said they typically provided unrestricted, general operating grants.

The study also polled foundations about the increasingly popular impact investing, the practice of investing a foundation’s assets to generate a positive social or environmental impact in addition to providing a financial return.

Although 53.9% of respondents gave prime importance to receiving the greatest returns on their investments, 46.1% said that selecting investments that advanced their foundation’s mission was even more important.

The survey also showed that 85.6% of foundations preferred to find grantees on their own rather than solicit grant requests, and having found a trusted grantee, they tended to repeat their grants. Nearly two-thirds of respondents estimated that at least 75% of their annual grantmaking went to the organizations they had supported in the previous year.

Finally, 96.4% of donors in the survey thought well of nonprofit leadership, ranking them between “fair” and “excellent.”

Check out 10 Tech Trends That’ll Rattle the Advisory Industry on ThinkAdvisor.