Chapter Thirteen

Influencing Policy

Perhaps the most profound way for a foundation to leverage additional impact is through active participation in public and organizational policy activities. Public policy can be defined as the legal and regulatory actions taken by the executive, legislative, and judicial branches of the government at the federal, state, and local levels. Organizational policy can be defined as formal rules and regulations that govern behavior and practice within publicly chartered organizations. Creating and applying public or organizational policy is the province of elected and appointed governmental officials or leaders of publicly chartered institutions, but influencing the formation of such policy is the right—and responsibility—of every citizen, and certainly of every organization with a mission to serve the common good. Public policy impinges directly on every issue or program area in which foundations have interest.

Laws and regulations can be of immense assistance in magnifying impact and in bringing projects to scale, or they can derail projects altogether. For example, if a foundation funds a pilot project that demonstrates that service-learning is an effective K–12 educational strategy, it can be quickly brought to scale if state boards of education can be persuaded to add service-learning to their approved curricula or if the federal Department of Education can be convinced to provide funding for wide-scale start-up of such programs. Conversely, should a promising social services pilot project funded by a foundation be passed over for support by a governmental agency in favor of another approach, it can effectively pull the plug on bringing the foundation's approach to scale.

Foundations can also take a very active role in the development of sound public policy by funding models that policymakers can observe as a prototype before making policy decisions. For example, a foundation may fund a cluster of school-based health clinics, evaluate their effectiveness, then disseminate the lessons learned to policymakers, who will then have the benefit of real-world models before making decisions about policy. Foundations can thus fund “policy prototypes” in a deliberate effort to shape the formation of policy that will promote the common good.

There is another, more threatening, aspect to public policy with which all foundations must be concerned. Foundations, and the nonprofit sector of which they are a part, exist and operate within a legal and regulatory framework that has evolved for hundreds of years; the antecedents of this framework are lodged in the Common Law of Great Britain. This body of law, regulation, and custom is highly dynamic and continues constantly to evolve. New laws and regulations may smile or frown on foundations and on the nonprofit organizations to which foundations make grants. Legislation to lower the excise tax paid by private foundations, for example, has allowed these entities to increase their grantmaking accordingly. Other legislation has dramatically increased the formation of new foundations by allowing gifts of highly appreciated publicly traded stock that are used to establish foundations to be fully tax-deductible. On the downside, during the 1990s alone, bills were introduced into Congress to eliminate the charitable deduction, to cap the amount of gifts a donor could deduct, and to abolish the advocacy rights of any nonprofit that accepts funding from the federal government. These bills were all defeated, thanks in large part to the efforts of foundations and nonprofits mobilized by INDEPENDENT SECTOR and the Council on Foundations. Public policy has an effect on much more than individual projects: it can dramatically enhance—or disastrously limit—the power and effectiveness of foundations and nonprofit organizations as social institutions. Policy considerations, therefore, should be a key factor in planning any initiative or grantmaking program.