Sure, grantmakers want to focus their giving, so they can gauge what they've accomplished. But foundations need to keep in mind the repercussions of the well-intentioned cultivating of some grantees over others.

Focus in grantmaking is a good thing. Consider these examples:

George Grune, chairman of the DeWitt Wallace-Reader's Digest Fund, calls "focus" the fund's hallmark in its 1994 annual report. "As we've grown larger over the years we've also gotten better at making more focused grants," he explains. "Today, we're aiming single arrows at a much more clearly defined and somewhat smaller target. That makes our interventions more meaningful and more effective."

After ten years of giving to a broad range of health care programs, the Archstone Foundation (formerly the FHP Foundation) in Long Beach, California, decided to focus on issues concerning aging and the care of the elderly. The board confirmed with Foundation Center data that not many funders were giving in this area, and as a health conversion foundation that had already given grants in the area of aging, it felt it could have an impact. Archstone Program Officer Mary Ellen Courtright says that a result of focusing has been that the foundation has received better proposals. "When you're covering the waterfront, it's hard for people to know what's a fit," she says.

Let's Be Reasonable

But can focus be carried too far? Certainly.

"There are extremes," says Tami Bradley, director of communications for the Kansas Health Foundation, a health conversion foundation started in 1985. The foundation's giving has always been quite focused-first on biomedical research and public health needs in Kansas and more recently only on public health, health promotion and disease prevention in the state.

The foundation gives primarily to organizations responding to Requests for Proposals (RFPs) or that have been specifically invited to submit proposals. But since the spring of 1994, the foundation has administered a program-called Recognition Grants-intended to draw in nonprofits that are excluded by the foundation's otherwise focused approach. About $500,000 of the foundation's $15 million yearly grants budget goes to this program. There's only one criterion for Recognition Grants, and that is the suggested program must support the foundation's mission to improve the quality of health in Kansas. "It was a staff-generated idea to respond to the perception that the foundation doesn't listen to nonprofits, though that's not the reality," says Bradley. "We wanted to stay open to good ideas that are out there that we might not come across otherwise."

The nonprofits FN&C spoke with identified several ways foundations focus that cause them to be concerned. They are:

When funders declare they won't accept unsolicited proposals. The Hitachi Foundation in Washington, D.C., is unapologetic about how it stopped considering unsolicited proposals in 1994. Laurie Regelbrugge, vice president for the foundation, says under the previous system, where the foundation received 3,000 proposals a year and funded 30, a lot of staff time on the part of the foundation and the grantseeker was wasted. Under the current system, people who send in a proposal uninvited receive a letter back describing the recent RFPs put out by Hitachi. This way, Regelbrugge says, "We feel as though the grantseeking community is better able to decide whether something of theirs will fit or not."

Foundations operating their own programs or increasingly shaping programs. Several large foundations, including Annie E. Casey and Pew Charitable Trusts, fund and run at least one program like an operating foundation would. The Rockefeller Foundation has created and then launched programs as separate entities. And the perception in the field is that foundations are moving toward shaping initiatives much more than they did in the past.

Geri Mannion, the program officer for special projects for Carnegie Corporation of New York, says she finds the idea of foundations running their own programs "worrisome" because it allows funders to close themselves off from a variety of opinions on a particular issue.

Richard Bell, national executive director of Young Audiences, an arts education organization based in New York City, believes that when foundations start their own programs they actually diminish the amount of impact they're likely to have. He describes how foundation funding often starts a chain reaction-it gives organizations credibility, which attracts additional funding, and so on. There's also a multiplying of ideas that is "almost impossible to achieve to the same degree if one is internally administering the program," he says.

Concentrating on special projects and avoiding paying for operating support. Several observers are eager to go on the record about the downsides of this strategy. (For more insight on why funders do or don't give operating support, see "To Pay or Not to Pay the Light Bill"). In a recent Chronicle of Philanthropy editorial (January 9, 1996), Peter Goldberg, CEO of Family Service America in Milwaukee and former head of corporate grantmaking for Prudential Insurance Company of America, pleaded for private foundations to help "slow down the runaway train" of funders' moving away from providing charities with general operating support by insisting on awarding money for specific projects. Goldberg suggests that private foundations, jealous of the visibility that corporations have received for their targeted grants, have made a similar programmatic shift in their giving. He states: "The pursuit of such strategies by grantmakers is particularly regrettable because it is happening precisely at a time when this nation, crippled by government cutbacks, must rely on charities to come up with innovative solutions to social problems."

Peter Karoff, president of The Philanthropic Initiative, a Boston-based organization that advises donors, encourages funders to focus their giving. But at the same time, he encourages them to consider the general needs of nonprofits. "We recommend that donors think a lot about how to make the delivery system of the program they're supporting the best it can be. That gets into capacity building, which gets you into operating support."

Lauren Katzowitz, a New York City-based consultant who manages seven private and family foundations, says she too advocates focused grantmaking. But she has a couple of recommendations that go with it: Funders must get out of the office and talk with the people they hope to serve, not just the leaders of the institutions they support. "If your work is resettling immigrants, go to the schools, go to the restaurants. Talk to the people," she says. Once a year or more funders should take the leadership of each of the organizations they support out to lunch, not to discuss a specific grant but to discuss the organization as a whole. Such a discussion would help funders to learn more about the overall financial situation of organizations they support, she says. Would this lead to funders offering more operating support? "That would be interesting to track," she comments.

If the Program Fits

Foundation focus can be like manna for grantseekers that happen to fit within a newly narrowed mission.

The Washington, D.C.-based National Trust for Historic Preservation has benefited from funders increasingly focusing their giving, says Director of Foundation and Corporate Philanthropy Linda Cohen. She says that in her 25 years in development work, she's noticed that small and mid-sized foundations have become more focused (the large foundations have always been pretty focused, she notes). While not very many foundations give to historic preservation as a category, many have focused on economic development and community revitalization, which is also what the trust does.

Reaching Out to Misfits

But what about the organizations whose missions don't easily fit foundations' guidelines? There's one way that a foundation can keep focused and still allow for a little serendipity, too. It involves routinely budgeting a certain amount of discretionary money to make available for groups that come along with a worthy idea that just doesn't fit the guidelines. Some small foundations do this by allocating a certain amount per trustee or per family, if it is a family foundation with many branches.

Carnegie Corporation of New York maintains a fund it calls Special Projects. Each year, Carnegie reserves some money-last year, it was $6.5 million of its $59 grants budget-for projects that fall outside of its guidelines. However, "it's not as flexible as you'd think," says Geri Mannion, noting that the foundation often uses the fund to start new or limited initiatives. For example, the Carnegie Commission on Science, Technology, and Government, which operated over a five-year period, was supported with special project funding. Recently, about 75 percent of the special project money has gone for "strengthening American democracy."

While grantees understand why foundations want to focus, some of them are concerned about the collective impact of so many foundations focusing, particularly if it means funders increasingly want more control over the impact of their dollars.

"It seems to me there's a trend, a moving away from trusting the organization [grantee] to determine and implement its mission," says grantee Heather A. Hitchens, director of development for Meet the Composer, an arts group in New York City. "As a result the organization gets more wrapped up in playing the grantseeking game than it does in producing, presenting, performing and creating great art. I guess the funding community really must determine whether its role is to create programs or support programs."

Sidebars - The Finer Points of Focus

"So Whats" and Shortfalls in Rhode Island

In 1994, after nearly 80 years of not being very focused in its grantmaking, the Rhode Island Foundation announced it would start giving to programs within just three categories. Admittedly, they are broad categories: children and families, education, and economic/community development. These areas were selected after the community foundation consulted with 200 Rhode Islanders from a variety of backgrounds.

Part of the impetus for the change came from Ron Gallo, who became president of the community foundation in 1993, hired from the Jessie Ball duPont Fund in Jacksonville, Florida. According to Gallo, the board had already been grappling with how to answer the "so what?" question when he arrived at the foundation. "They had been giving away hundreds of small grants--$5,000 to $8,000. It was hard to discern what it had done for people in the state," he says.

Now, the foundation gives more large grants (in the $150,000-$250,000 range) than it did in the past. While the foundation still gives a considerable amount of money for operating support, much of that money now goes to intermediaries, such as the United Way of Southeastern New England.

How It's Playing in Providence

Such change does not come without fallout. The community foundation has given up its historical role of providing operating support for small, struggling organizations, particularly in the area of human services, says Deborah DeBare, who has worked for nonprofits in Providence, Rhode Island, for ten years. (The Rhode Island foundation confirmed this was true.) "When they stopped providing that kind of support, it presented some difficulties for small nonprofit organizations," she says.

DeBare is the executive director of the Rhode Island Coalition Against Domestic Violence, which received a community foundation grant for $40,000 for salaries in 1991 and 1992. Luckily, her organization has fared all right without additional funding from the community foundation, she says, because it started to receive federal money due to the passage of the Violence against Women Act along with the 1994 crime bill.

The Rhode Island Coalition for the Homeless, which received several grants for operating support in the early 1990s from the community foundation (including $20,000 in 1991) is not faring as well today. Since the community foundation's guidelines have changed, the coalition applied for a $30,000 grant for operating support and was turned down. The coalition's executive director, Tanja Kubas-Meyer, says she just received a $5,000 technical assistance grant from the community foundation for a study of the needs of the homeless in the state. "I have money to pay a consultant, but no money to pay my own salary," she said with a touch of frustration in her voice.

When asked about operating support, Gallo explains: "We're not so much interested in the agency per se, but in what it can do as a partner with other agencies to address community problems. We do give structural support to organizations. We no longer entertain proposals where that's the lead argument. We are turning down organizations that say simply they have a shortfall."

Gallo points to positive results of the focusing, noting that nonprofit leaders are talking together more and working together outside of their relationship with the Rhode Island Foundation. As far as whether the foundation is better able to answer the "so what?" question, Gallo says that it has just recently hired its first director of assessment and evaluation, who will focus on that task.

Reader's Digest Funds, Condensed

When the philanthropies of DeWitt and Lila Wallace were reorganized in 1986 and 1987 into the DeWitt Wallace-Reader's Digest Fund and Lila Wallace-Reader's Digest Fund, the managers of those foundations deliberately chose a clear focus for each. The goal was to have more of an impact in delineated areas, something they felt that the broad giving by the Wallaces had not done. And giving careful consideration to the sentiment that foundations too often hop from one interest to another, the managers decided that the Reader's Digest funds would stick with their new giving areas for many years.

The DeWitt Wallace fund has focused on improving services to young people, particularly from the point of view of classroom education. The Lila Wallace fund carved out from its many interests in the arts a target of supporting audience development. How Lila Wallace defines audience development and how it goes about finding nonprofits that will carry out this mission provides a bit of insight into foundation focus.

An arts organization might say that everything it does is "audience development." That's not how Lila Wallace sees it. "With respect to the wisdom of audience development, we remain clear that arts institutions exist for the benefit of the public," says M. Christine DeVita, president of both of the Reader's Digest funds. "And arts organizations can exist only if they are supported by the people."

While the foundation cares about the quality of the art of groups it funds, the foundation doesn't "support the creation of new work just to create new work," says DeVita. It works with arts groups to form plans for them to reach out to people they're not serving. A plan may include commissioning new work, if that will likely serve the larger goal, or trying different kinds of marketing, or forming relationships with community groups.

Within the audience development focus the foundation continues to hone and refine. When dance touring didn't really help develop audiences, it stopped funding dance touring. When it became apparent that more than marketing is needed, the foundation experimented with more comprehensive approaches.

Seeking the "Sweet Spot"

Nowadays it is much more likely that Lila Wallace will find a grantee first than the grantee will find Lila Wallace. The way the foundation identified nonprofits for a recent dance initiative is typical of how it selects grantees. Through research it identified 63 organizations, which it put through a screening process. This whittled the pool down to 26 organizations that were then invited to submit proposals.

"Because our grantmaking tends to be focused, and we have eligibility criteria," DeVita says, "unsolicited proposals have a slim chance of landing right smack down in the sweet spot of a program."

DeVita feels that the foundation stays in touch with what arts organizations need. The foundation does gives money for overhead costs to the programs that make it through the process. Program staff read all of the unsolicited proposals that come in. The staff receive lots of information from various arts agencies and service organizations and frequently get out to conferences and meetings, where they ask grantees what's happening in the field.

The Lila Wallace fund doesn't make a lot of claims about producing meaningful post-focus results, nor does it waver from its initial choice. "Long-term support for cultural institutions must come from and has always come from individuals," says DeVita. "In our conversations with the people in the field, that's what they say. Arts organizations must pay attention to their audience in the same way that businesses pay attention to their customers."