Everyone who has spent time in the nonprofit sector is familiar with the role played by large foundations. But because we’re so accustomed to them as a part of the landscape, we rarely take time to step back and ask why foundations exist or how they could be improved as a category of organizations.

Later this week, Insight Labs is asking just those questions with a group of thinkers convened on behalf of Boeing Global Corporate Citizenship. To prepare for the session, we wanted to talk to someone with a diverse experience of foundations and how they work, so we turned to Salin G. Geevarghese.

Currently a senior adviser at the federal Office of Sustainable Housing and Communities, Geevarghese has previously served in organizations such as the Annie E. Casey Foundation and the BellSouth Foundation. As a consultant and thinker in the field, he has also worked with groups such as the John S. and James L. Knight Foundation, the Prudential Foundation, and the National Urban League. He and Labs Content Director Andrew Benedict-Nelson recently discussed the nature of foundations, their role in America’s political economy, and the problems they are best suited to address in the communities where they live. Their conversation follows:

Andrew Benedict-Nelson: So let’s pretend that you’re trying to explain foundations to a Martian. Let’s say that on Mars they have private businesses, they have very wealthy individuals, and they have nonprofits, but they’ve never heard of foundations. How would you describe what they do and how they fit in with those other categories?

Salin G. Geevarghese: I would say that foundations are organizations within the non-profit sector – or charitable or social sector or however they on Mars classify non-profits – but in contrast to many non-profits they don’t need to raise money. Instead, they have endowments that enable them to invest resources into the non-profit sector or other things. I might use an investor frame, but I would place them within the non-profit sector.

In my own experience working across sectors, the fundraising challenge was one of the main dividing lines. Non-profits look at foundations and say, “They have the money we need.” So that’s probably where I’d start.

ABN: So let’s say the Martian says, okay, that makes sense to me as a logical proposition, but why do you have these foundations? What purpose do they serve?

SG: I would probably focus on the wealthy individual or business and their motives in bringing a foundation into existence. Whether it’s leaving a legacy for posterity or supporting a certain set of non-profits, foundations exist to accomplish a certain set of missions or objectives that their founders want to do. They want to use the assets they have accumulated to meet that mark. But I’ll fully admit that that’s all based on a very traditional way of explaining how foundations get created, the purpose they serve, and how they define their relationship to the rest of the sector. Whether that is what it should be, I don’t know.

ABN: Let’s say that on Mars they have the concept of endowments for non-profits. So people can give away all their money through this particular vehicle of investment, but they always do it in association with existing non-profits. How would you explain why people feel the need to create these new entities?

SG: I don’t think organizations in this space, foundations included, always have much clarity on what it is they’re trying to accomplish. There are plenty of people who would be perfectly satisfied by giving to their college endowment. If you ask them what they were after, they may say, “I really just wanted to support my college.” But if there is ever a moment where they want to pursue a larger set of values or objectives, that’s a different conversation.

If you’re telling me that the reason that college was important was that it helped you get on a particular pathway to opportunity, or you believe college access is critical, then we should have a very different conversation about what you want to do. I think that once you start having that kind of conversation,  your toolbox of philanthropy changes. It could be a donation to an endowment. It could be that a scholarship program helps you achieve the outcome you want to see. It may be that you don’t want to be limited to giving grants.

You may see that there are certain gaps in the system and no one is moving to fill in those gaps. Foundations can be tools for that if you’re open to it.

ABN: So let’s say you’ve given them this code for what a foundation is and they’re about to get on the spaceship and bring it back to Mars. But then they read a story about, say, the MacArthur “genius” grants and they say, “Wait a minute – it looks like foundations are doing something more than giving away money.” How would you explain that extra piece to them?

SG: Some of these tools are highly branded, the “genius” prize being among them. I’d say that beyond their grant-making activities, foundations seem to be very interested in high-capacity people. They believe leadership matters, that there is a set of skills or expertise or wiring or character that individuals bring that can fundamentally change the trajectory of an organization or neighborhood or whatever it is. You will often find that foundations make a huge investment in identifying this kind of talent. 

This is even more the case when a majority of the people on a foundation’s board or staff have come from the private sector, where there has been an enormous amount of work on leadership. You’ll get someone on a board who says that if you only got the right team or the right leader, you could solve the problem. And they’ll build a whole program around it. Invariably in every kind of program they do there will be some embrace of talent and leadership as key.

I have been a part of a number of foundations that ran fellowship programs. They are highly predicated on this set of assumptions – building networks, cultivating talent, that sort of thing. The challenge for those programs and the foundational sector overall is what happens when you plop that very talented individual into a completely different set of circumstances. Will they be able to achieve at the same level? Are we building capacity toward specific things or is there a general leadership capacity? Is there a kind of leadership template? But I guarantee that this is something that often gets talked about and invested in.

ABN: You know, i think you’re absolutely right that this a common belief across a wide range of foundations. Why do you think they hold this belief?

SG: I’ll start at the top of these organizations. There are often notions that are hard-wired into a foundation that start with the founder: beliefs about what the path to success looks like or what problem-solving looks like. Foundations are often the legacy or vestige of people who were very successful, so they breathe into the foundation a belief in the importance of individuals who take risks and can accomplish things through the quality of leadership as long as they have the resources and network and support to do so.

Look at the number of new foundations that come into existence. This has no relationship to the fact that people can take a deduction on their taxes. It’s about what people believe their contribution to the world can be given what they’ve seen and experienced. Whether it’s the founder or the board or senior staff, that belief trickles down. Even if you think of “bottom-up” strategies, foundations seem to seek out people who have been extraordinary in some way. It’s in their DNA.

ABN: I’m sure Rockefeller and Carnegie had that belief. I’d say you could go even further and say that they showed it was a good belief to have. The point I’m trying to make is that it’s not just a result of a recent fascination with leadership on behalf of the private sector. It wasn’t invented by Forbes or CNBC. And there certainly are situations where the right leader in non-profit can change everything.

SG: When you move outside the American context, you have some places where people who have made huge investments and you do have a burgeoning non-profit sector, but there is this gap, because they lack a philanthropic sector. One of the other things that is interesting about foundations is the ways in which they can be conscious and systematic about their role in a larger ecosystem. They can see certain gaps in society and make themselves the players to move into those gaps. That’s the kind of role Carnegie had with libraries. It’s a role that is not completely in the public realm and it’s not completely in the private realm. There are opportunities for extraordinary contributions to society.

ABN: You can see that now with the Gates and Clinton foundations, particularly with the roles they are taking on in the international scene and their relationship to governments. You talked about leadership as a belief that foundations have. But it seems as if for foundations with a certain cache in society, you could talk about individual leadership as a resource they have, or perhaps as a way of being. Bill Clinton could not have exercised the relationship he currently has to his philanthropy without creating a new foundation.

SG: Go back to your earlier idea of what the purpose of foundations is if you take grant-making off the table. Think about the move Bill Gates has made from full-time Microsoft CEO to full-time philanthropist. It’s not just a matter of the resources they deploy. It’s even more true for the Clinton Foundation. I don’t know how much money they actually have, but everyone knows what they’re doing and what they’re up to.

ABN: Right, I’m assuming you could find plenty of CEOs and corporate vice presidents we’ve never heard of who have given more to charity than Bill Clinton. But they couldn’t create the Clinton Foundation.

SG: Another tool that foundations increasingly use is their convening authority. You see that with Clinton too – he has a certain authority to bring folks together. Gates could pull that off, and so could Rockefeller and Carnegie.

ABN: So it seems like foundations have this extra trait of “personality” that can deploy in their work. So far we’ve treated it as an asset. Do you think there are cases where it can be a liability?

SG: I think it can be. Some people say this only happens as smaller foundations, but you can see plenty of cases at foundations where the personality of the founder or founding president or another leader is hard-wired into the place. Some people who are from organizations who do not have a well-known leader like Bill Clinton may look at that type of organization and say, “I think everything they do is about him..” They have a visceral response. An organization can rapidly lose its purpose if it is so tied up with the leader. Then, on the other extreme, you have anonymous donors who give millions of dollars and don’t want their personalities to have anything to do with it. I think that somewhere in the midst of those two extremes there must be some kind of balance.

ABN: Well, and you would think that most foundations, even in the founder has a strong influence, they wouldn’t have the kind of role in society that someone like Gates or Clinton has. 

SG: Also, in successive generations  — with places like Rockefeller and Carnegie — what emerges is what can be called “institutional philanthropy,” which is a little removed from that particular founder and their vision. It will be interesting to see how newer organizations like the Gates Foundation will change with a new generation of leadership, because they inevitably do.

ABN: So we’ve mainly talked about foundations associated with individuals. How do you think the ideas we’ve talked about look different at corporate foundations? How about this role of “personality” for example?

SG: For corporate partner foundations, what’s always interesting is the notion of mission and how it relates to the brand of the company. Corporate foundations will often struggle with how much distance there should be from the mission of the company. You have had cases where the corporation can very much have a “personality” role like a Rockefeller. But over time there are always questions. For example, if the company is in the technology space, should the foundation also commit itself to being in the technology space? It’s almost always a question of the corporate brand and where it can create the most value.

But then there are also corporate foundations that see themselves as participants in a much broader conversation about corporate citizenship, social responsibility and philanthropy. They may be interested in making an impact on issues in the areas in which they work or invest, or perhaps in the places where their employees live. They believe that philanthropic interests are aligned in this broader way to the long-term interests of the company. For example, you have many companies who say they are interested in education for their long-term health, and the corporate foundation takes on a more independent problem-solving role in the community in the name of education.

So I think that space between the company and the foundation is one of those things that gets negotiated. Even when the founding CEO has a notion of an independent, externally directed foundation, when you see a new CEO come in, you’ll see a recalibration of the corporate foundation based on that CEO’s beliefs. Given the fact that the corporate foundation bears the company name, they may very well say, this needs to be a part of our larger corporate strategy and add value to what we do.

ABN: It seems like you have given an account of the corporate brand as an aspect of foundations with parallel assets and liabilities to the “personality” factor we discussed earlier. I think that’s interesting, because people often see it only as a liability. They assume that the foundation is tied by the corporation’s interests. But you seem to be saying that those interests could also give the personality a different and interesting vision of what’s good for society than, say, the public sector. And it seems good to have lots of competing visions.

SG:  I think that’s a great, great point, if you believe that it’s best for democracy to have a mix of opinions. There is a sense of not just self-interest, but enlightened self-interest. There is a sense that the corporation is asking, “What does this company need and why are we engaged in philanthropy? What is our long-term point of view?”

ABN: That way of putting it – a point of view – seems exactly right. It’s more accurate than “self-interest.”

So I’m going to turn this exercise around a little bit. Let’s say we were mistaken, and Earth was Mars and Mars was Earth. And you in fact are the alien visitor coming to this society that has social institutions with this particular mix of assets and liabilities. They are as foreign to you as, say, medieval guilds or a feudal estate. What would you imagine would be the best thing to do in society with this weird type of institution you’ve encountered.

SG: Well, I would probably start talking to Martians and find out what the situation is like there, with an eye on the tools for change I actually have. I would try to start figuring out if there is a gap in their society that fits something in my toolbox.

ABN: But what about our society? What big problems in our society, our cities, our communities, seem like a natural fit for foundations as we’ve described them?

SG: So any problem we face now?

ABN: Sure, anything. If you think it’s getting Kim Kardashian off TV, that’s fine – just any problem you think this set of tools is particularly well-suited to solve.

SG: I think the notion of a non-profit sector or “third sector” that includes foundations is even more important now given our increasing public-private divide. There has been a wholesale abandonment of certain projects in the public realm based on what is thought to be fiscally feasible. In many places, people are going to foundations and asking them to fill the gap. I think that doesn’t necessarily appreciate the gravity of the issues with this abandonment. And it overestimates the amount of resources that philanthropy can actually bring to bear. There are many situations where government is looking to foundations to take on things like workforce development, and among their responses is that they simply do not have enough money to do it.

But here’s what they can do – given the growing gap between what we expect from government and what we expect from the private sector, foundations can occupy a sort of middle ground. If they’re willing to do it, they can get around a lot of the hyperbolic rhetoric of today and build a safe haven from which we can chart a new trajectory. And we’re going to need to redefine public and private roles. If that safe space doesn’t get created, it’s hard to chart a new path nowadays, because there is such suspicion on both sides of the other. I think that’s a good role, particularly for philanthropies that are strongly rooted in a particular place. They have an ability to bring people together, and that’s necessary now. 

ABN: I think you’re almost talking about something like the role that Demond Tutu played in South Africa or Pope John Paul II played in Poland at the end of communism. It’s not just being a negotiator – it’s opening up the idea of a conversation in the first place. So I totally agree that there’s that need. And I’ll even buy that foundations have played that role in the past. But I don’t get it theoretically. What does giving away a bunch of money have to do with becoming the elder statesman of a community?

SG: In the past, I was given portfolios at foundations that were not performing well, and where it was explicitly stated that the budgets would not increase, and would in fact even decrease. But you’re still expected to have huge, heroic impacts. So I actually had to start thinking about what the money enabled me to do. I couldn’t just let my value be defined by the money.

Now we’re also not on Mars – we’re here. There is usually enough understanding of what the word “foundation” means when it’s attached to a name. Most people have the “cha-ching” factor when they think of foundations. I’d be lying to you if I didn’t say that calling someone and saying you’re from a foundation didn’t make their ears perk up, even if you had a poorly performing, declining portfolio. They still think they might get a grant or something out of it.

ABN: There’s also that enlightened self-interest you talked about. Think back to the Pope in Poland. He wasn’t taking on communism simply because he didn’t like it – he was interested in the future of a major Catholic population. There was a convergence of interests.

SG: Right, so there may be something associated with the identity of a company or a brand that has power. That power is undeniable, and independent of the resources and the cha-ching factor. It’s something that can be used to bring people together.

So early on in that kind of work, I tried to start open and honest conversations about where it was actually right to make an investment. I said to colleagues early on that I was not going to be an ATM machine. But I could bring together networks and invest in research, all those kinds of tools. Someone might say that there is a question where we don’t have enough evidence and ask us to invest.

But I think it’s really hard for foundations to start that kind of conversation simply based on their authority, given the size of their endowment assets. That’s often how they define themselves, though. A very large foundation can crowd out a room, because everyone is looking at them and thinking that they have the most power, authority, and resources to throw at the problem. I think that folks from very large foundations try desperately for that not to happen.

ABN: So this is interesting to me – you’re talking about a kind of expertise you developed as a program officer that is different from the formal job description. What if this was a part of the program officer’s job description? Or what if fountains hired a different class of people, people like community organizers or sociologists who actually had the skill set of convening these conversations? What if it was completely normal for every foundation to have a “Convening Department”? What would the world look like?

SG: Part of the way I thought of myself in that convening role was having a full appreciation that even with our resources and knowledge, we had to have a sense of humility and treat what we were doing as a learning enterprise. We were using the convening authority because we had questions we were struggling with. I think it would be extraordinary for foundations to realize that a learning posture is a good one to adopt while still fully appreciating the resources they wield.  It would be nice for staff members at any level to think of themselves as part of a societal problem-solving unit.

ABN: You know, I’m thinking back to this problem you raised earlier about the public-private divide. I think that one of the things that trips up people from the private sector who want to make changes in the public sphere is that no matter how much money you spend on something, you can’t really “own” it. Many of these CEOs have probably acquired competing companies or hired away employees from other places – they strategically deployed their money based on a paradigm of ownership. But you never own an inner-city public school, no matter how much money  you throw at it.

SG: I have seen many cases where the questions of “Who gets the credit?” and “What is our unique value?” and “Can we own the space?” are overwhelming. People ask what the purpose of doing something was if no one knows they were involved. I understand where that comes from – there are companies where brand is so critical that it’s important to say exactly with which part of a project the company is associated. But we should also have moments where we step back and appreciate just being a part of something larger, even if we don’t know exactly how it got done or what we did specifically to bring it about. This issue trips up foundations when they do evaluations that try to tease out their unique contribution and that desire to learn from their work might result in a narrowing of what they do.

I know many foundations now who are really struggling with this question of their unique value-add. That can lead to an emphasis on the smallest possible question, maybe one that no one else is working on. That leads to the perception that that one element out of, say, 20 is the most important and deserves all resources.

ABN: It sounds like picking a dissertation topic. You may think the most important author of all time was Shakespeare, but because you’re trying to define yourself, you look for a minor writer that no one has ever heard of. It may be fine for a dissertation, but it’s not good for coming to an understanding of English literature as a whole.

SG: I think foundations need someone to ask the Insight Labs types of questions – “What are we really after? Is this the best way to accomplish it?” It doesn’t happen a lot. You’ll have foundations who will organize an entire program around one element that they are invested in. And they’ll get a lot of other people invested in that one element. Maybe over time one of those partners will say to the foundation, “Hey guys, what you’re doing is great, but don’t you know that there are 19 other steps to do this and you’re just investing in the one step? Don’t you know that there are dozens of other actors and constituents?” But many times the foundation comes to believe that the one step they’re invested in is simply the silver bullet.

ABN: Sure, that’s a very natural sort of bias – you come to believe that the thing you spend all of your time thinking about is necessary.

SG: So go back to the idea of the foundation as part of a community problem-solving team. Let’s say the issue is literacy. Let’s say we’re trying to solve some aspect of the problem that can be measured in a certain way. The foundation could bring something to that, but could they also share what they’re doing with other foundations and groups in the space? Can they be comfortable with that?

ABN: So later this week we’re going to be bringing together a group of people to think about the highest and best use of foundations in our society. One of the things that annoys me most in the world is when smart people get together only to find out they’ve reinvented the wheel. What are some of the common fallacies or false conclusions people reach about the world of foundations you think we should avoid? What are some of the attributes we absolutely must keep in mind as we design a solution?

SG: There are a couple of things. The philanthropic sector in general is very insular, for many of the reasons we’ve talked about. They’re sometimes secretive and don’t want to be open to other people. I hope that the ideas that emerge from the Lab don’t lead to more insularity and do lead to more transparency. I believe that if we are going to be about serious work, at some level we’ve got to be all in. But foundations can be really guarded. Yet the space we’re in right now requires that “all in” mentality. It’s a pet peeve many folks have about the philanthropic sector, and I think it’s a worthy pet peeve.

Foundations can also move along in a way that does not adopt a posture of humility or learning. Given the position they occupy in our ecosystem, it’s hard to check them on that. But when a foundation emerges with a problem they want to work on, they should go as wide and as broad as possible, gathering insights from everywhere.

Another common fallacy is the way foundations think about time – how much time will it actually take to do what we hope to accomplish. That’s a conversation that often needs to be consciously introduced. You’ll often see actors leave the ecosystem because a project didn’t take the time or resources they expect. But that can be fair and legitimate, given that foundations have limited resources.

ABN: Well I think the way you assess that is by making sure you ask what a reasonable amount of time is in the first place. Many people don’t even bother to do that.

SG: Right.

Finally, if people start talking about size of endowment assets as equivalent to authority, knowledge, and impact, someone’s got to check that. We all know about the power of ideas. We all know there is power to other tools and roles. But the sector has been defined in a very “ranking” kind of way – they get ranked on assets, they get ranked on size of staff. How does your foundation really want to be known? It may have something to do with those resources or rankings. But you should be open to being something else.

ABN: So you’re not at a foundation now – you’re with the Department of Housing and Urban Development. How do you feel the work you’re doing now relate to all of this?

SG: I’ve been in the social change space in lots of different roles and got to see many points of view. But being here at HUD, I have got to see so many spaces from the public sector perspective. We spoke earlier of where the country is right now and what people expect from government. I come to that proposition in a very cross-sector way. I believe there can be unique roles and responsibilities that people in each sector bring. For example, national foundations can be somewhat limited by geography.

But when you work with the feds, it really is about everybody. So now I’ve started to think back to my work with foundations and think, “What if they thought about Situation X or Group Y?” I’ll give you an example: tribal populations. The federal government makes investments on reservations and with tribes. That’s an area that’s almost completely devoid of the philanthropic sector. It’s been really interesting to think across this country in that way, realizing where we have robust ecosystems of actors and investments, and where we have nobody.