with Malcolm Macleod

Malcolm is the author of The Practice of Philanthropy: A guide for foundation boards and staff.

His thesis is that grantmaking foundations can get better by learning the underlying principles of philanthropy and applying them to their work.

His mission is to help foundation leaders to practice
philanthropy more effectively.

Why did you write this book?

To help people who find themselves on the board or staff of a grantmaking foundation. Most of us are
not trained for this work and have little experience in it. This was my situation and I had to grope my
way along by trial and error. I thought at the time that I could really use a reference book that would
teach me the basics of what I had to know.

Can you teach philanthropy?

Yes! In a grantmaking foundation, philanthropy consists of investing money, making grants, and governing the foundation. There are fundamental principles that underpin each of these activities. These principles are easily learned and understood and can be adapted to foundations of any size. This book sets out the principles and the theory behind them and gives concrete steps and examples for their

Why did you title this book, The Practice of Philanthropy?

Because philanthropy, and the essential elements of foundation leadership, are a practice. If you learn the underlying principles and apply yourself to the work, you will get better with experience.

Why do you need to follow “underlying principles” for grantmaking?

Good grantmakers know the difference between simply distributing money and making grants that will have lasting impact. Two of history’s greatest grantmakers and business successes, John Rockefeller and Andrew Carnegie, each said that their money was harder to give away than it was to make. What they meant is that money is harder to give away effectively. Grants that simply distribute money usually do more harm than good, and often create dependance upon more grants. Grants that are made with the benefit of a thoughtful strategy, knowledge, and analysis can be a catalyst for change that has lasting
and positive impact.

What is a 'perpetual' foundation?

A foundation with a mission to exist indefinitely. Some foundations, such as community foundations, support their service to their respective communities with the earnings of endowed funds plus annual fundraising. Others, such as privately endowed foundations, do not raise money and must sustain their grantmaking and operations with investment returns on their endowments. This underlines the importance of successful long-term investing. In contrast to perpetual foundations, some foundations are created for a limited time and have a plan to “spend out” their endowments.

Isn't investing best left to the experts?

Investing provides the fuel for grantmaking and is too important to delegate. Further, it is foundation leaders, not the experts they hire, who are in the best position to lead the investment process. Investment returns are driven by investment policy – how a foundation allocates its assets across various asset classes – and not by clever stock picking. Foundation leaders, not experts, are best positioned to set investment policy and see that the foundation follows it, regardless of market fluctuations. Foundation leaders must also control investment fees and ensure that the foundation gets value for them. Seemingly small annual differences in investment performance or fees, say one half of one percent, compound over time and can make the difference between a foundation sustaining or losing its purchasing power. The skills required to lead the foundation investment process are different from the skills of professional investors. Brilliance is not required but leadership is essential.

In The Practice of Philanthropy, you say that knowledge is a vital foundation asset. What do you mean?

Knowledge always precedes great grantmaking. Whether they operate around a kitchen table or through a staff, foundations need to get outside to meet the organizations in their fields of interest and the people they serve. Who is doing what and why? How is it working? What do they need?

What is the biggest challenge for most foundations?

Succession! Most foundations must recruit and engage board members who will continue the foundation’s mission and effectiveness across succeeding generations.

Do you think practicing philanthropy is for elites?

Not at all. Serious foundation leaders care about the work they are doing and not about being elites. This is true regardless of how much money they have. For many foundations, and all community foundations, board members and staff come from all walks of life and economic backgrounds. The common denominator is the human urge to make things better, to help other people.

Do you think that your background as a lawyer was helpful for leading a foundation?

Not entirely. My legal training and my experience in analyzing issues and communicating was helpful. However, legal practice tends to be reactive. Running a foundation is proactive and entrepreneurial, especially grantmaking. It took me a while to catch on.