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“The Foundation” by Joel Fleishman – A Critique

Throughout the history of the United States, charity evolved into philanthropy due to economic trends, population growths and change in leadership.  The growth of the civic sector as a whole was originally led by the Robber Barons, who were catalytic in creating the first foundations in the early 20th Century.  The development of foundations has helped define the importance and power of the third sector in the United States.   Today, the third sector employees represent over one tenth of the labor force and engage a dynamic volunteer community.  However, there are also pitfalls and unintended consequences to the creation of foundations. Fleishman suggests that foundations, along with the organizations they support, “are the great secret of the dynamism of America’s civic sector.”[1]  In his book, “The Foundation,” Fleishman argues the importance of accountability and transparency on behalf of foundations, and discusses strategies for foundations in terms of principle and practice.  Through a historical lens and case-study analyses, Fleishman creates an in-depth view of the facets of American foundations.

Without the guidance and innovation of today’s foundations, the civic sector would be less strategically focused and efficient.  Foundations provide the long-term, consistent funding that is crucial to promote diversity and goals to the third sector.  Fleishman argues that foundations play one of three basic roles: Driver, Partner or Catalyst.  These roles “do not have crisp, clean boundaries”[2] but rather depend on the character and goals of the foundation.   As an example, the Robert Wood Johnson Foundation is considered a Driver for national 911 emergency response, financing organizations to build a network of emergency responders.  Partner foundations share accountability with the organizations their support, building common strategies and goals.  The least common, Catalyst foundations, offer little control and accountability on the part of the grantee.  These types of foundations “sow seeds and move on.”[3]  However, while these three roles only represent a small percentage of foundations, they hold a large share of grantmaking dollars allocated annually.

While foundations created “a powerful ‘third force,’” distinct from government and business, that balance and mediate social pressures through voluntary actions,”[4] they also encountered their share of drawbacks and consequences.  Looking back at the Robber Barons, Carnegie, Ford and Rockefeller to name a few, creating foundations was reserved for the ultra-wealthy.  The “public policy advocacy role has brought controversy,”[5] as critics claim “the progressive image of philanthropy is a false façade”[6] aimed to advance their own interests and socioeconomic class.  Many of these criticisms are born from skepticism because foundations are not accountable to anyone, however, early example of foundation work does illustrate a blurred ethical line.  Fleishman discusses the “sins of foundations,” ranging from arrogance and inaccessibility, to discourtesy and most notably, lack of accountability.  While corporations and non-profit organizations are accountable to a myriad of agencies, commissions and individuals, foundations are not.  They do not possess “external stakeholders with effective influence on them”[7] and there is no “functioning market in the grant-giving sector,”[8] allowing foundations to operate without accountability.  Due to the tax deductibility of gifts, Fleishman stresses that “foundations have an overriding obligation to the public to perform their duties according to the highest standards of effectiveness and stewardship.”[9]  In order to avoid foundation underperformance, Fleishman outlines the thirteen major failures experienced by organizations,[10] as well as strategies and steps to create success and impact[11].  However, it is throughout his concluding discourse that the most important observation is made; “Foundation leaders must find the courage and vision [to] lead their institutions into a new era of transparency, accountability, and effectiveness.”[12]

With many attempts to create tax reform in the third sector, the government has failed in properly cataloguing and enforcing financial structure and accountability for foundations.  While foundations are required to submits annual paperwork to the Internal Revenue Service (IRS), the agency admits that “it lacks personnel required to review such filings,”[13] leading to oversights.  Fleishman urges a call to action whereby “the IRS’ role in the oversight process is significantly transformed,”[14] to ensure substantial review and accountability.  The shortcomings of foundations are not illegal, but the lack of efficiency on behalf of the government makes ethical lines easier to blur. 

The 20th Century defined the American foundation and built the largest civic sector in the world.  Fleishman brilliantly argues the shortcomings of the civic sector and the role of American foundations.  Through deep analytical thought and exploration of crucial cases that illustrate both failures and lessons learned, Fleishman builds a well-rounded argument for civic sector reform and development of stronger governmental policies.  His book is enlightening as he offers educated reactions about the past and open-minded predictions about the future of the third sector. Private wealth, foundations and volunteers make the third sector a fighting influencer in today’s political issues, most recently in the global conversation about the Ebola outbreak.  In sum, I would argue that “The Foundation” is a must-read for all individuals, regardless of their profession and interest, as all Americans, and global citizens, are affected by the work of the third sector in some way.

 

[1] Fleishman, p.59

[2] Fleishman, p.60

[3] Fleishman, p.65

[4] Fleishman, p.72

[5] Fleishman, p.103

[6] Fleishman, p.102

[7] Fleishman, p.220

[8] Fleishman, p.221

[9] Fleishman, p.328

[10] On p.260

[11] On p.234

[12] Fleishman, p.340

[13] Fleishman, p.330

[14] Fleishman, p.331




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