Foundations fund too many program failures Feasibility studies route money better

NON-PROFITS INC.

September 07, 1992|By LESTER A. PICKER

"Teach us, good Lord, to serve thee as thou deservest: To give and not to count the cost."

From his words, it's obvious that St. Ignatius of Loyola was a spiritual leader with much wisdom. Fortunately, in 1548 he did not have to contend with investment strategies, IRS regulations and a seemingly unlimited number of requests arriving daily for the modest funds available.

I'm talking here about private foundations, a once-unique charitable instrument of American life, now copied worldwide.

Through this creative exercise in charity, federal, state and local governments forgo tax revenues to encourage people to make social investments that benefit us all. When it's working well, it's a win-win all around.

The problem is that social needs today far outstrip available private foundation financial resources, creating stresses at the seams of many giving programs.

The AIDS health problem alone, not even on the horizon 15 years ago, is so costly to address, it could easily absorb every penny available from foundations that support health care initiatives. The same holds true for intractable problems like homelessness, drug abuse or environmental issues.

Private foundations receive their fair share of criticism every day. Some critics charge they are too conservative, others that they move too slowly. Still others fault the political agenda of some. The list is long.

To be fair, I have found the majority of foundation founders, staff and board members to be conscientious people who sometimes take risks, applying innovative solutions to difficult social problems. That is good. It can also be bad.

In their frustration, many foundations fund significant, high-cost programs, aimed at attacking some of these social problems, which have proved so resistant to positive change. In more cases than we care to acknowledge, these programs are either not as effective as their initial promise or are downright failures.

I'm the first to say that if a private foundation wants to be innovative, then most projects it funds should end up as "failures," from which we can learn much.

That is the only way to encourage risk-taking in non-traditional, creative approaches to social ills. But, with such intense social needs out on the streets today, private foundations are seeking more efficient ways to apply their limited funds.

One way foundations can improve the effectiveness of their funding is to fund more carefully structured feasibility studies prior to launching major funding initiatives in specific areas or before funding any large-scale projects.

Oddly enough, private foundations and corporate giving programs seem to have a cultural reluctance to fund feasibility studies, claiming that they would rather see the funds go directly into projects. This is a classic example of penny-wise and pound- foolish. Well-constructed feasibility studies have the potential of yielding a rich body of information that, if ignored, can sabotage the best intended social intervention project.

Steven Somers, a program officer at the Robert Wood Johnson Foundation, wrote in the Chronicle of Philanthropy: "A small-scale feasibility study is always a good idea." He pointed out that a large grant can sometimes be counterproductive.

My experience echoes his. I have seen non-profits get into financial trouble, and their funding sources catch some flak, from sudden expansion of projects that are then left with large overhead structures to support when project funds dry up.

A feasibility study reaches out to the community, identifying related needs, additional resources and the support base for the eventual project. A well-designed feasibility study can help identify obstacles to success or identify ways to enhance the success of the project by involving a wider network of quality players. A feasibility study could also provide data that might indicate that the funding agency would be well advised to drop any consideration of support.

The idea of a cultural reluctance to fund feasibility studies intrigues me. But cultural practices can and do change. Funding sources that have operated without conducting careful feasibility studies would be well advised to change that practice.

Les Picker, a consultant in the field of philanthropy, works with charitable organizations and for-profit companies.

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