Thursday, May 07, 2009

Institutional isomorphism

(Photo: 416Style, Creative Commons, Flickr)

It is always nice when ideas from this blog get picked up elsewhere. My last two posts, on breaking new boxes and considering alternatives, came from my reflections as I begin research on the possibility that technology has led to fundamental changes in philanthropic behavior. They are my attempts to ask "why do we do the things we do?" The post, "Consider the alternatives" got picked up and picked apart, and that's a nice thing. It is sometimes a bit surprising to me which posts get picked up and discussed. But what was not surprising to me was that perpetuity, one of about 50 ideas floated in the piece, is the one that seemed to get the most traction in terms of discussion. It got twittered, and blogged, and re-blogged and all of that is good. Perpetuity and payout - folks love to talk about those two pieces of the puzzle.

But perpetuity is only part of the picture. Really, why do foundations do any of the things they do? Why do foundations in 2009 - all 70-odd-thousand of them - look so much alike structurally? Yes, I know the old trope, "You've seen one foundation and you've seen one foundation." That may be true at some level, but it is also true that if you've seen one foundation you've probably seen 1/3 - 1/4 of the prevalent models. The differences will all be in the trimmings, not in the underlying structures, norms, practices, or expectations.

Even more puzzling, why do those structures all look so much like the original model, 1913 Rockefeller Foundation? Why do they have endowments, grant departments, finance functionaries, proprietary software, offices, and various levels of management? Why do board-run foundations, or those with no staff members, operate so much like their 55,000 peers - with deadlines or quarterly meetings or 5% payout limits? And foundations with staff, why are the departmental lines so similar and the job titles and descriptions so interchangeable (regardless of foundation interests, size, or location)?

Given how much everyone - inside foundations and outside - complains about how slow they are, or how unwieldy their processes, or how unwelcoming their applications, or duplicative their due diligence, or blah blah blah - why do they do these things? It doesn't seem possible that these practices survive because they work well, please the customers, or even please the board and staff who choose them and re-create them. Institutional isomorphism is one of those graduate school concepts that is not only fun to say, but true to life - organizations mimic like organizations, even when it doesn't necessarily serve their purposes.

Now, I don't intend to take the easy road here. It is not enough for me to just criticize, I want to point to real change and use the examples I can find to spark iterative, and perhaps, eventually, rapid and widespread change (one can hope). So please don't read this post or the previous two as just jabs to the gut of foundations. I'm posting my real-time reflections from my daily work and from a research project I'm working on looking for real transformations in how philanthropy functions now compared to in the past, and where it might go in the future.

I spend a lot of time writing about the changes all around foundations - in the philanthropic marketplace, the social sector, the financial systems, global information sharing, etc. etc. And I do have examples of philanthropic foundations that are different (and new practices that matter) which I will include in the article. But as I do the research it is the isolated nature of these "change cases" that stares back at me. Sure, I can find examples, but why are they still just examples?

Why hasn't something done to foundations what Craigslist did for job hunters, GE did to individual power plants, eBay did for garage sales, the Internet and bad management are doing to newspapers, iTunes did to the music business, water treatment systems did for public health, Obama did to political fundraising, telephones did to the telegraph, cool new laptops did to secretarial pools, television did to the drive-in, the PDF did for document sharing, or Alice Waters did for sustainable agriculture? That is, why hasn't something either inside or outside organized philanthropy fundamentally altered recognizably and admittedly bad institutional practices and replaced them with something better?

It has been almost 100 years since the modern foundation was born. We've seen every one of the changes listed above in that century, plus literally countless others (space exploration, the end of Apartheid, satellite TV, charter schools, the creation of the EU, streaming video, etc. etc.) Quite a few things have changed in that time. What is amazing to me, truly amazing, is how little foundations have changed.


Andrew Taylor said...

Probing and essential questions about structure and purpose. Thanks for nudging the conversation.

I'd suggest that not just isomorphism but evolution played an essential role in the foundation structures we have today. There was actually some significant utility in the board structure, the asset structure, and even the giving and decision structure (matching grants and such) in the environment where these critters evolved.

But, as you suggest, that environment has changed. But the biomass and the tightly-linked defensive structures live on.

I'd also say that the alternatives are already bubbling away, although we may not recognize them or categorize them as philanthropy or organized giving. But again, a large portion of the wealth in the system (the food to help these little ideas grow) is locked up by the dominant life forms.

Sadly, radical and transformative innovation rarely comes from within an industry. So our best bet might be to loosen the legacy rules and policies that formed the current foundation model, and release some of that energy back into the system.

Lucy Bernholz said...

Andrew - OH BOY do I agree with this. Thanks for reminding us of the usefulness of certain structures at certain times, I should have emphasized this more. And, as author of a book on the subject subtitled :The Deliberate Evolution - I also agree with the evolutionary comment. As a fan of Peter Schwartz's work I also think you are right about where most innovation happens....So take us further here - what "alternatives that are bubbling away" most intrigue/impress you....?

Thanks so much for writing in...


Andrew Taylor said...

Hey Lucy,

I'm not sure I can see all or even most of the alternatives currently bubbling. But, I'm particularly interested in approaches to social support that reconsider both how capital and resources are aggregated and how they are allocated. The foundation model accumulated wealth under a tax shelter, then created policies and procedures to spin off earnings from that wealth and give them directly to institutions.

There's innovation on BOTH sides of that equation now. On the aggregation side, we're seeing collaborative giving circles where groups of people of limited means direct their giving toward a common cause through a communal process. We're seeing distributed giving and support structures such as and

On the allocation side, there are increasing opportunities beyond direct grants or capital gifts to host organizations. Among them, providing low- or no-cost access to assets (rather than transferring them) through micro-loans or Low-Profit Limited Liability Companies or hosted back-office and shared services models like

Some of these will be successful, some will not (such is the nature of innovation). But all recognize that accumulating wealth and allocating wealth is only one way to approach the challenge.

Su said...


Andrew wrote: "There's innovation on BOTH sides of that equation now. On the aggregation side, we're seeing collaborative giving circles where groups of people of limited means direct their giving toward a common cause through a communal process."

Yes indeed. Things ARE happening! Look at where a user led feedback system and "Web of Trust" is evolving around online giving. It is quite interesting.

Greetings from Berlin,