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Harvard Business Review | November 1999

Foundations do good—but how can they do better? With the potential and ability to be more than middlemen, foundations can instead be leaders in social progress. FSG founders Michael Porter and Mark Kramer offered their perspective on how foundations can create greater value for society.

Top Takeaways

  1. Foundations create value in four ways: selecting the best grantees, signaling to other funders, improving the performance of grant recipients, and advancing the state of knowledge and practice.
  2. Foundations are uniquely positioned to tackle social issues in the long-term and develop expertise in their fields.
  3. The starting point for strategy is to limit the number of social challenges addressed—where will you make your impact and how?
Until foundations accept their accountability to society and meet their obligation to create value, they exist in a world where they cannot fail. Unfortunately, they also cannot truly succeed.