Decision-making among philanthropic foundations in the U.S.: Factors that influence international giving

Abstract

Philanthropic foundations utilize private money for public purposes. U.S. based foundations play an increasingly important role in shaping global agendas and efforts, providing $22.03 billion towards international causes in 2016. As their resources are vital but limited, grant-making foundations are always making decisions aimed at improving the effectiveness and reach of their grant dollars. Understanding the decision-making processes adopted by foundations help identify decision-making patterns, examine donor preferences, and learn about the various factors that affect foundations decisions. This study sought to address the gap in literature on international grant-making decisions by foundations. The research questions of the study were: 1) What factors influence foundations' decision-making processes, their determination of funding priorities or goals, and the philanthropic strategies they employ in their grant making to international civil society organizations? 2) What characteristics of targeted beneficiaries or recipient organizations do foundations consider in making funding decisions? This study used a multiple case study approach to examine international grantmaking in five independent foundations that have offices in mid-Atlantic U.S. Primary data on were collected through in-depth interviews with a key staff member at each foundation. In addition to the interviews, publicly available information about the foundations including web content, reports and publications were used to supplement the data collected. In each of the five case studies, the participants discussed how the grant making practices at their foundations have evolved over time, highlighting that although the core mission of their foundations may remain unchanged, foundations adapt priorities, goals, strategies and decision-making. Factors in the external environment of the foundation that influence decision-making processes include international policies and priorities, U.S. policies, tax regulations, and priorities, local country policies and priorities, grantmaking behavior of peers, and market forces. At the foundation level, leadership and staff, donor motivations, and foundation structure affect decision-making. Foundations also seek to increase impact and fund programs that are a philanthropic fit. Foundations support needy and vulnerable beneficiaries, build institutional capacities, and seek knowledge development. Foundations support grantees based on familiarity and reputation, past experience, and organization size. The implications for theory, research and practice are discussed.