A Great American Secret by Joel L. Fleishman

Published by: Public Affairs, 2007
Pages: 357 + xxiv pp
Price: $27.95

Warren Buffet’s recent announcement that he would donate the bulk of his assets, some $31 billion, to the Bill and Melinda Gates Foundation captured public attention not only about the size of the resultant wealthiest foundation in the world, but also about his lack of interest in memorializing his generosity in perpetuity. Joel Fleishman’s book identifies and explores many of the issues raised by Buffet’s remarkable decision to “outsource” his philanthropy and, as such, is the most important current analysis of a poorly understood, but highly influential, sector of today’s society — America’s 68,000 foundations — and one central to the leadership and impact of the nonprofit sector overall.

Fleishman is in a unique role to comment knowledgeably, but critically, about U.S. foundations. Formerly President of Atlantic Philanthropic Service Company, the U.S. program staff of Atlantic Philanthropies, and before then responsible for Duke University’s 1980s capital campaign, he now heads a foundation research center at Duke. Beyond his deep familiarity and respect for the field, he draws upon over 100 case studies and numerous interviews to lay out compelling evidence of the beneficial impacts of foundations, of which he argues there are many, as well as point out important shortcomings.

On the former, he discusses the three roles that foundations play — that of driver, partner and catalyst. He argues that it is in the active and directive role of driver, rather than the more passive role of catalyst or funder, that foundations can make their greatest contribution. He suggests, quite rightly, that foundations are “the operational secret” of the nonprofit (or “civic”) sector, providing the primary source of start-up capital for new nonprofit organizations, nurturing them into self-sustainability and providing a continuing supply of social venture capital. He gives an overview of the breadth of American foundations, a brief history of foundation approaches and styles and twelve superb case studies (drawn from his larger pool of 100) of high-impact foundation initiatives, ranging from the transformation of American medical education by the Flexner Report to the green revolution to Sesame Street to a sustainable energy program in China.

On the latter, Fleishman observes that “many of today’s foundations operate with an insulated culture that tolerates an inappropriate level of secrecy and even arrogance in their treatment of grant-seekers, grantreceivers, the wider civic sector and the public officials charged with oversight. This needs to change.” After summarizing the ways in which he believes foundations go awry, he suggests a trenchant set of ways for foundations to increase the impact of their funding — primarily to be more transparent and accountable in their decision-making processes and results (both positive and negative), more strategic in deploying their resources and better-focused on problems ripe for solution.

If such voluntary efforts on the part of foundations to improve transparency and accountability are not taken up within a reasonable period of time, he suggests governmental action that would impose legal requirements to create a culture of transparency among foundations — tough-minded counsel that is surely both reasonable and appropriate in view of the growing number and increasing assets of American foundations.

As a final note, Fleishman offers three major trends in philanthropy in the 21st century: America’s charitable giving will increase greatly; new forms and strategies for philanthropy will evolve in shapes and forms which cannot yet be fathomed; and venture philanthropy and social entrepreneurship will gradually come to dominate philanthropy in this century. Any leader who hopes to make a major foundation his or her partner would do well to understand Fleishman’s underscoring the heightened expectations of these institutions for their own performance, and, consequently, for their grantees. Because foundations are being propelled both by external demands for greater accountability and internal pressure for increased effectiveness, those expectations are unlikely to diminish.

STRATEGY MATTERS © No 3
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