Legitimacy of Philanthropic Foundations: United States and European Perspectives

Chapter 11 Foundation Legitimacy at the Community Level in the United Kingdom

Chapter 11 Foundation Legitimacy at the Community Level in the United Kingdom Diana Leat Community foundations claim to be the fastest-growing form of philanthropy (Walkenhorst 2001), yet in most countries they are also the newest. This raises a number of questions concerning the diffusion of philanthropic innovations, including how novel foundation forms carve out distinctive roles and build legitimacy and trust in their roles, capacity, and viability. The story of community foundation development in the United Kingdom also highlights issues about legitimacy and accountability in an era of third-party government (Salamon 2002). For the purposes of this discussion, a community foundation is defined as “an independent philanthropy organization working in a specific geographic area which, over time, builds up a collection of endowed funds from many donors, provides services to those donors, and makes grants and undertakes community leadership and partnership activities to address a wide variety of needs in its service area” (Feurt 1999, 10). Compared with the United States, community foundations in other countries are fewer and less established, although similar structures have existed for some time. During the 1990s the number of community foundations worldwide began to grow and are now found in thirty-seven countries, with an estimated global total of near 1,100 (Sacks 2000; Feurt and Sacks 2001; WINGS-CF 2003). In the United Kingdom in 2003 there were said to be sixty-five at various stages of development. Here I discuss the development of community foundations in the United Kingdom, focusing in particular on the factors that contributed to the development of their roles and the generation of both legitimacy and trust in their capacities as institutions new to the U.K. context. Foundations in the United Kingdom Although the nonprofit sector in general is relatively well-developed in the United Kingdom, the foundation sector is not. Estimates for 2003 and 2004 put the number of foundations giving grants of around £2 billion at about 3,500. Assets and income are very unevenly distributed, with a very small number of relatively wealthy foundations and a very large number of very small ones (see http://www.acf.org/uk). Whereas in the United States the legitimacy of foundations has been periodically challenged (Troyer 2000; Brilliant 2000), it has not been in the United Kingdom, at least, not for several hundred years. Only two have been the subject of popular critical media attention in recent years—the National Lottery Charities Board, now The Big Lottery Fund, and the Diana, Princess of Wales Memorial Fund. In both cases, the challenge related not so much to foundations in general but to the fact that these were organizations spending the “people’s” money. (There was no link to the notion that other foundations also spend public money in the form of tax expenditures.) In general, foundations bask in the halo of sedimented, but limited, legal legitimacy enjoyed by all charities and confirmed in Charity Commission endorsement. Foundations, like charities, are broadly accepted as legitimate because they “do good.” Having rarely been challenged, then, foundations do not provide any detailed articulation of their legitimacy and roles. They have traditionally seen their role as complementing rather than substituting for the responsibilities of government, and have not typically used words such as redistribution, preservation, or pluralism in their selfde finitions. Nor, with a few notable exceptions, have they presented themselves as agents of policy and practice change. They have traditionally seen themselves primarily as risk-takers and innovators, giving short-term gifts that others (primarily government) would then pick up and sustain. These roles went hand in hand with traditional practices that stressed being responsive rather than proactive, making smaller short-term grants, giving grants for specific projects rather than Foundation Legitimacy at the Community Level 253 for core funds, and often for capital rather than revenue purposes (Leat 1992). Although U.K. foundations have now changed in many respects, this was the dominant prevailing philosophy and practice when community foundations were first promoted. Context Understanding the social and political context into which community foundations were introduced is important, not least because legitimacy is socially constructed and situated. The U.K. context of the late 1980s and later presented a number of both opportunities and challenges in establishing the legitimacy of community foundations as new and unknown institutions. These challenges and opportunities were in several respects both similar to and different from...