Make gifts of at least five percent of their assets every
- Not engage in self-dealing. The families or trustees of
foundations can't benefit from foundation grants.
- Do no lobbying, except on voting rights. During the 1970s,
this requirement made foundations very tenuous about getting
involved in public-policy issues, Healey said.
- Pay an excise tax, which started out at four percent and
is now down to one to two percent.
Large foundations tend to be
staff-run. The staff members do the research, interview the
applicants and read the proposals, Healey said. "Are the staff
too powerful?" she asked. "Maybe," she replied. "They view
themselves more as gatekeepers now." She said when she worked as
a foundation staffer, she viewed herself as an intermediary: a
reporter to the board and a resource for the grantees.
"Good ideas," she said. "That's what
it was in my day. It's changed quite a bit."
In small foundations, she noted,
especially family foundations, the board tends to be more
involved in developing grant guidelines and directing the staff.
But in all foundations, Healey
contended, the power ultimately lies with the board, because it
can always fire the staff.
How a foundation decides on its areas
of interest depends on the board, the history of the foundation
and sometimes on the staff. "Sometimes the staff gets the
board involved and sometimes the board has its own ideas and the
staff implements them or refines them," Healey said.
Whether to give program support or
ongoing operating support is a major point of discussion among
foundations. Healey pointed out that in the 1980s,
foundations started to focus more. "It's a problem," she said,
"because foundations want to show outcomes. And nonprofits want
to show outcomes so they can justify to their donors how they're
using their money."
"But what are outcomes?" she asked.
"Are outcomes activities or longer term? This is one of the
great, unanswered questions in the philanthropic community.
Perhaps you can show that the outcome you're looking for is not
an immediate outcome, but it could have profound changes in
educating the public."
For human services organizations,
Healey said, outcomes are often reported as how many sessions
they had and not as how many lives have changed. "A therapy
session for a family is an activity," she said. "An outcome is a
kid who wants to stay in school. That's a profound difference.
We have to stop talking about success as activities and start
talking about success as change."
Foundations used to see themselves as
having little role in public life, affecting or effecting
public-policy changes. "Things have changed in that regard
in the past few decades," Healey said, "but foundations are
still careful about being identified with a public-policy push.
As unelected forces in the public arena that are prohibited from
lobbying, foundations do not want to arouse the interest of
Congress, as has happened a couple of times in the past 30
years. The best way to accomplish that is to keep a low profile
on public-policy issues. The last time Sen. Chuck Grassley's
committee held hearings on foundations, it demanded a lot of
time and response from the national Council on Foundations and
its legal staff. That was 20 years ago, but foundations still
Foundations don't have the expertise
and are not necessarily interested in developing a list of the
most urgent needs in the community. An interviewer recalled
that the Citizens League used to put together a list of the most
urgent matters facing the state and would pick its own projects
from that list. He asked whether foundations, working together,
could develop such a list.
Healey responded that the foundations
don't have the expertise or, perhaps, the interest to do that.
"I don't think the foundations would do a very good job, even if
you could get them interested," she said. In her view, the Civic
Caucus or other organizations like it should be the ones
developing the list.
The largest foundations don't have
living donors. As time has passed, Healey said, these
foundations have become less attached to their original donors
or to those donors' wishes.
Operating foundations use at least 80
percent of their payout to fund their own programs. Healey
said the Wilder Foundation is an operating foundation, because
it pays out money from its corpus to support its own programs.
Today lots of foundations have clear
ideas of what they want to have happen. Healey said grant
writers try to match what each foundation sees as its mission.
"That's part of the fluidity of the process," she said. "It's
all creative on both the grant seeker's side and the grant
Historically, local foundations have
had a fierce sense of independence. Healey said when she was
hired in 1975 to build the new Minnesota Council on Foundations,
she learned that local foundations were fiercely independent.
She said that has changed in recent years and that some
collaborations have taken place among local foundations. "The
danger in collaborating, however," she asserted, "is that when
grant decisions are discussed among foundations, a 'group-think'
can take over that bars some grantees or favors only the
collaborative projects, leaving the rest of the community out in
the cold. On the other hand, the advantages of collaboration are
obvious: more money to solve some identified community problem."
The biggest growth in philanthropy
across the board is in donor-advised funds in community
foundations. That is a low-cost way for families of wealth
to put their money into a foundation, Healey said. A lot of that
money is coming in from the sale of companies. Because of the
tax implications when a company is sold, people are often
advised to put part of the money from the sale into a charitable
foundation. "More and more, they're doing it with community
foundations, not independently," she said. "That's where the
growth is now."
As an indicator of that growth, Healey
noted that when she came to work for the Council on Foundations
in 1975, the Minneapolis Foundation had $15 million in assets
and the St. Paul Foundation had $35 million. Now they each have
around $1 billion in assets.
Foundations no longer look to academic
institutions for ideas. Healey said years ago, Al Heckman,
former executive director of the Hill Family Foundation (later
the Northwest Area Foundation), used to go to the Campus Club at
the University of Minnesota and talk to people about what they
were working on. He'd encourage people to submit proposals to
the foundation. "That doesn't happen anymore," Healey said.
"Foundations no longer look to the academy for ideas."
However, Healey noted that connections
between foundations and academia still exist. Foundations do
make grants to universities, often for research. And sometimes,
larger foundations hire staff from academic institutions to help
develop foundation programs.
Other organizations are always afraid
to criticize foundations, because they might need a grant
sometime. "Nobody is looking at foundations and nobody wants
to criticize them," Healey said. "It's too bad." She indicated
that there had been more open public debate about foundations in
In the 1990s, she worked with an
organization of 40 CEOs of human services organizations who
started the movement to get foundations to look at long-term
outcomes. "There's nothing like that today," she said. "The
Civic Caucus could do that."
The Citizens League had a profound
impact on the Twin Cities area. Healey, a former Citizens
League board member, said the League brought people together to
wrestle with issues. "There's nothing like that anymore that
engages people who are also engaged in other parts of civic
life," she said.
Foundations won't hold their grantees
accountable for coming up with precise and actionable proposals.
An interviewer asked whether foundations could make sure
civic organizations they fund come up with specific, actionable
proposals. Healey responded that it's the grantees'
responsibility to get things done. "If it becomes the
foundation's responsibility, then it's a contract situation,"
Nationally, we're in a civic time
that's dangerous. "We don't need a lot of academic research
in order to be a voice for something changing," Healey said.
"Where are the voices saying, 'We're not a group of thugs; we
forged a country.' Foundations are a peripheral part of that
because they have the resources. Is there a voice that can come
forward and foundations could give attention to?"
Nobody's raising the issue of what is
happening to us as a result of technology. An interviewer
commented that technology has brought societal change in the way
we gather, dialogue and participate. He noted that people don't
join organizations like they used to. Healey responded by saying
she worries what will happen to our civic life. When the
interviewer said, "It's gone," Healey responded, "We have to get
"There's always change going on," she
continued. "We must accept that, but also speak up when change
is harming us as a body politic. Nobody's doing that. I worry