Strategic Investment:Philanthropic Influence in Public Policy

Abstract

Each year private philanthropic foundations allocate millions of dollars through thousands of grants to influence public policy. Due to legal restrictions, direct foundation involvement in public policy is limited. Foundations serve as sponsors for other nonprofit organizations that act as policy agents within policy systems. The long-term effectiveness of nonprofit policy agents is enhanced by development of the organization's operational capacity. Well-managed, and well-funded organizations that can effectively convey information to policy makers can be effective policy agents.

This research explores public policy grant maker funding for the capacity development of policy agents. Three dimensions of capacity development are considered. These dimensions are (1) research and communication capacity, (2) resource acquisition capacity, and (3) management and governance capacity. It is hypothesized that foundations engage in holistic investment in the capacity of policy agents. Holistic investment involves grant maker support for the comprehensive development of all dimensions of policy agent capacity. Consideration is given to the attributes of public policy grant makers that provide funding for capacity development. The grant making records of 407 public policy grant makers for awards made around the year 2000 are considered in this research.

The study concludes that holistic investment in policy agent capacity is not a wide spread practice among public policy grant makers. There is no clear pattern of grant maker support for the comprehensive development of grantee capacity. Public policy grant making is influenced by foundation wealth and the number of staff employed by the foundation. Social acceptance of policy issues also appears to influence funding for capacity development. Foundations that have an interest in funding policy in less controversial policy areas such as art and culture, education, and health are more likely to support capacity development. Public policy grant makers that provide support in more controversial areas such as social action, the rights and needs of disadvantaged groups, civil rights, advocacy, and community improvement are less likely to provide support for capacity development.