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Summary:

In this post I propose an organization that consults with US private foundations to encourage more effective grantmaking. The general consensus of EA’s I’ve spoked to working in this area is that existing private foundations are simply too intractable to be worthy of investment. However, I propose the usage of US private foundation tax filings to identify more-tractable private foundations based on several criteria. The hope is that this data approach allows this idea to cross the line from too-intractable to tractable-enough-for-investment.

 

Motivation:

Since 2011, GiveWell has directed $1 billion in effective gifts. Private foundations in the US hold over $1.1T and give ~$70B+ a year in grants, likely to largely ineffective charities. If even a small portion of these private foundations are tractable, the amount of grants redirected toward effective charities could be quite large. Impact will be measurable as engagement outcomes.

 

Tractability:

Tractability is the key challenge of this idea. From speaking with a few people in related orgs, the consensus seems to be that existing foundations are entrenched in their processes and mission and are extremely unlikely to be persuaded to change. For example, Charity Entrepreneurship mostly works with new private foundations for this reason.

I propose that the usage of private foundation tax returns (990-PF) may point toward tractability of even existing private foundations. A common response has been that foundation age is a critical factor, so starting with new foundations makes sense. Additional factors may be significant predictors of tractability (already give to international grantees, already give to highly effective charities, give to a diverse set of cause areas or cause areas associated with EA, information about their employees [low employees/assets may imply a smaller, more persuadable management structure]). It is possible that foundation age is the only significant predictor, and if so, solicitations could be mostly targeted toward brand new foundations, and these other factors could be used to create more personalized solicitations, potentially leading to greater tractability.

 

What would the org actually do?

  1. Develop a process of using US private foundation tax filings to identify tractable private foundations to solicit
  2. Make a targeted solicitation for engagements with tractable private foundations
  3. If successful, establish engagements similar to those done by Effective Giving and Longview Philanthropy
    1. Engagements with new foundations could also be based on the work that Charity Entrepreneurship has done in working with new foundations. 

 

Challenges:

  • The primary downside risk of this approach (other than wasting money on something not tractable) is that foundations may not wish to be solicited, and will sour on EA as a result. 
    • A major emphasis should be placed on ensuring the solicitations are respectful. A light touch is likely necessary!
    • If the foundations do sour on EA, it is likely any attempt in the future to persuade them would fail anyway.
  • The data process and solicitations (unless personalized) are relatively low-cost. A robust team for actual consulting would be fairly expensive.
  • I am an academic researcher and would need to bring in co-founders/partners who have experience in conducting engagements of this nature

 

Four potential outcomes I envision:

  1. The data approach is unsuccessful in identifying tractable foundations and ultimately no progress is made.
  2. The data approach is somewhat successful in identifying tractable foundations, and the optimal path forward is operating as an outreach/warm lead generating organization which funnels into an existing EA consultancy.
  3. The data approach is somewhat successful and no existing organization is interested in taking warm leads, we will have to establish an engagements team. This is basically the outcome I have written this post around.
  4. The data approach is quite successful and a major emphasis is put on both engagements and persuading foundations. An engagements team is created, a solicitations team is created, the tractability of foundations becomes better understood and the data approach is improved, the approach/solicitation is refined, and the organization becomes an important liaison to private foundations in the US. Considerable funding will be needed for this outcome.

 

About me: 

My name is Kyle Smith, and I am an Assistant Professor of Accounting at Mississippi State University. My research agenda is focused on nonprofit organizations. I am very interested in private foundations and have several studies using archival and qualitative methodologies I am actively pursuing. This post is a more refined summary of a prior post I made.

 

My questions for all of you:

  1. Do you see merit in this idea?
  2. Does an EA Infrastructure Fund grant seem to make sense as a next step?
  3. If anyone (individual or organization) has interest in this idea and potentially working together, I would love to talk more! Please send me a PM.

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Sorted by Click to highlight new comments since: Today at 2:37 PM

This is a good idea! I think Longview and Effective Giving are already doing this to some extent, so it could be worth reaching out to them.

I am definitely working on that. Early returns suggest that this type of approach is outside their strategic plan. I think option (2) is ideal, but I'm not sure they will be up for that.

Kyle -- good idea. 

Somewhat related to private foundations, but also distinct in terms of organizations: I think EA should consider more organized and systematic outreach to the people who work in 'family offices', which are the small organizations that very rich families use to run their properties, investments, and donations. Sometimes family offices have their own private foundations, and sometimes private foundations are associated with family offices, but they're distinct things.

There's a Family Office Association that runs events, offers resources, coaching, etc. They might be worth learning about.

My impression is that outreach to the staff at small family offices might be more tractable than outreach to large foundations -- but that often, they have quite a bit of influence over charitable giving, and a lot of money under their stewardship.

(Epistemic status: I know very little about this field, beyond what I learned from watching the TV series 'Billions', and knowing a few families who have family offices.)

Great observation Geoffrey. One of the data points most important is to determine if the PF is a family foundation. I don't have much knowledge of family offices that don't include a PF, but that seems like a very smart group to target!

  1. Yes? I agree with Shakeel that chatting to orgs already doing adjacent work seems good. But also, I'd encourage you to try setting up some sort of prototype website and reaching out to a small handful of foundations to see what the interest is like. You could either ask them for feedback on the website/plans, or just try to find an initial foundation or two to start work with.

I'd avoid prominent EA branding, jargon etc to minimise downside risk to the community.

  1. Yes? If you have a bit of runway/flexibility, then it might be worth doing some of the above steps first so you have some indication of whether it will work. (Although it can take weeks/months from application to having funding offered/rejected.)

  2. I probably wouldn't work full time on it myself, but would be happy to chat a bit more about it if that seems helpful.

The name "Effective Foundations" suggests that the organizations it would be courting and trying to influence are not effective. Might want to consider a different name for an organization with the goal you set forth.

Fair point, the name is really just a placeholder.