Opportunities to pursue “nontraditional” activities are increasingly a fact of life for institutionally related foundations regardless of their size or the institution they support. Foundations are sometimes asked to consider unusual investments or entrepreneurial activities because their essential characteristics make them ideal collaborators.
This list was originally published by AGB in an article by Gerald B. Fischer.
Foundations considering new entrepreneurial activities should examine several questions and criteria before pursuing such opportunities. Each foundation has its own strategic priorities, values, and culture, and what works for one may not fit another. While the differing historical, tax, and legal environments facing foundations could lead their executives and directors to different decisions, the following may serve all as useful guideposts:
- Mission Fit. Foundation leaders must constantly ask,“Would the inviting idea fit with what the foundation was created to do?”
- Sound Financial Planning. Due to the limited resources of most foundations, the appropriate board committee should ensure that staff thoroughly studies the financial realities of any nontraditional opportunity.
- Capacity of Staff and Other Resources. Carefully consider whether it makes sense to take on a new activity without gauging the staff's expertise or competence or without adding additional staff.
- Diversion of Management Talent. To what extent would the new activity divert the attention of the senior staff and/or board away from the core functions of the foundation?
- Perceptions of Key Constituencies. Some valuable constituents may perceive that a certain nontraditional activity is inconsistent with the normal goals, culture, or values of the foundation. It is important to maintain the foundation's “trust compact” with these stakeholders.