Tuesday, March 11, 2008

Fleishman on the Market Failure Impact of Private Foundations

Sunday's New York Times Magazine had an interesting discussion of the long term impact of private foundations.  The piece discussed whether the spending habits of private foundations ought to be judged by more short term standards producing immediately measurable effects.  Professor Joel Fleischman, who teaches and writes about non-profit organizations, and is active in the Independent Sector is quoted thusly:

In recent years, one guiding idea behind strategic grants, whether from old-money institutions like the Rockefeller Foundation or new-money outfits like the Bill and Melinda Gates Foundation Foundation, is that they fill gaps in the modern economy opened up by the neglect or failures of the marketplace. “They’re the only unrestricted pool of funds to finance innovation in the social sector and to facilitate major social change,” says Joel Fleishman, a professor at Duke who recently wrote a book on the role of private foundations in American life. Fleishman explains that foundations can take risks that private companies might shun and can also finance programs that governments might be unable (or unwilling) to support. Foundations can thus experiment with cures for poverty or disease that are largely unproven, with the hope that evidence of success will entice private enterprises, politicians or other foundations to follow suit.

Of course, the type of "investments" Fleishman talks about bring about results only in the long term.  While sitting on huge mountains of money looking for long term accomplishments, people are dying for basic necessities in sub-Saharan Africa, the story points out.  Others point out that requiring that Foundations show immediate "metrics" may not be the way to go either.



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