Small Foundations Honing Strategies for Greater Impact, Study Finds

Individual donors and small foundations with few or no staff increasingly are adopting strategies and tactics aimed at boosting the impact of their grantmaking, a report from Exponent Philanthropy finds.

Based on a survey of the association's nearly two thousand members, the report, 2017 Foundation Operations and Management Report (74 pages, PDF), found that 81 percent of respondents review their grantmaking strategies regularly, up from 74 percent in 2014; 61 percent have board members who attend sector conferences, up from 55 percent in 2014; 48 percent bring in speakers or resources to help inform their grantmaking, up from 40 percent; and 43 percent gather feedback from their grantees, up from 38 percent. The report also found that 79 percent of survey respondents said they ask their board members to conduct site visits, 77 percent make general operating support grants, 70 percent make multiyear grants, and 63 percent said they collaborate with other funders.

According to the report, 11 percent of survey respondents currently engage in impact investing and, on average, allocate 32 percent of their portfolios to such investments. The most common impact investing strategies cited by respondents were socially responsible investments screened for environmental, social, and governance (63 percent) factors; mission investments (47 percent); direct investments (33 percent); and investments that are actively managed for financial and social return beyond screening (27 percent). Among foundations that are not engaged in impact investing, 34 percent said they anticipated considering such strategies in the future.

Funded by U.S. Trust, the survey also found that small foundations and individual donors have been formalizing their governance structures and process over the past decade, with 80 percent of respondents saying they have a formal conflict of interest policy in place, up from 30 percent in 2005, and 78 percent saying they have an investment policy statement, up from 52 percent.

"Foundations with lean operations do so much more than just write checks to their grantees," said Exponent Philanthropy CEO Henry L. Berman. "Our members are making a conscientious effort to have an 'outsized impact', allowing each dollar granted to result in more than just the monetary value of their giving."

"New Report Details Shifts in Foundation Operations & Grantmaking." Exponent Philanthropy Press Release 02/01/2017.