Thursday, March 27, 2008

The Future of Foundations

The Open Social Foundation is a new :

"non-profit entity jointly proposed by Yahoo!, MySpace, and Google. The goal of the OpenSocial Foundation is to ensure the sustainable and open development of the OpenSocial initiative and related intellectual property."

You can read the proposal for the foundation here and read liveblogging coverage of the announcement here.

The Open Social Foundation joins the Mozilla Foundation, a nonprofit which makes and protects and markets the Firefox Browser, among other open source software tools (Thunderbird, SeaMonkey, Camino, etc). The Foundation runs a commercial company which some estimate to be worth $1.5 billion+. When will it take the company public? According to and others - never. According to analyst Henry Blodget, this year or next. If you'd like to get in on the prediction market around this issue you can do so here.

Another example is the Wikimedia Foundation, which runs Wikipedia, one of the ten most visited websites in the world, day after day, month after month. The Foundation is an organization that has been in the news a great deal, with questions being raised about its close links to venture capitalists, its need to develop a sustainable business model, and the practices of its founder. Since Wikipedia lives because of the active involvement of its millions of contributing writers (anyone can participate) it faces a level of community accountability and connection that other nonprofits can only dream of.

So what for philanthropy?
  1. Intellectual property is the key asset of these organizations. This embodies the trend I've been writing about since 2000 - knowledge is the base of the new philanthropy and will be at the core of emerging philanthropic capital markets - how they work, how they set value, how people use them, etc.
  2. Each of these organizations is a blend of tech money and products, commercial interests, and nonprofit structures. They embody the hybrid structural organizations and priorities that we will see become ever more common. And which I've been writing about for years.
WikiMedia Foundation. Mozilla Foundation. Open Social Foundation. Chances are you won't run into their CEOs at a grantmakers conference - even though they are the future of foundations.


David Geilhufe said...

If these are the future of foundations, does that mean that philanthropy will be focused on supporting the needs of the white upper middle class (to make a vast generalization)?

I look at these foundations as bright ideas out of the minds of innovators. Looking for a legal structure, the nonprofit structure was just the closest to the hybrid B-corp style structure that would have fit them better.

HOWEVER, the vast majority of the poster children for this new idea are not focused on the needs of the under served. Be careful what we promote as models, or we will be reinforcing yet again the two class society-- innovative philanthropic capital markets for the rich, the same old thing for the poor.

Lucy Bernholz said...

This is a critically important point - thanks for making it. Just because I throw light on a trend doesn't mean I think its a good thing. In line with your comment, the next question we need to ask is whether or not (and when) philanthropic founders take the needs of the poor into account at any point in their structural decision making? I'm not sure the history of foundation creation to-date would answer this question in the affirmative.

IMHO, the relationship between structural choice and social outcome is usually pretty slim and most often far down the list of things philanthropists consider when setting up foundations - legal, financial and family/personal fulfillment coming near the top of the list.

Why do I say this? In my experience, people who find themselves with a pile of money who know that their, "number one goal with this pile of money is to feed the hungry, change food policy, or end poverty (or something like that)" rarely leap over the next logical question and decide that establishing a perpetual grantmaking foundation is the most effective thing they can do.