Compared with direct giving, foundations are strongly favored through tax preferences whose value increases in rising stock markets. As a nation, the authors argue, we make a substantial investment in foundation philanthropy that goes well beyond the individual gifts of private donors. Rarely does a foundation's strategy serve as it does in business as a definition of its distinctiveness and a discipline that dictates every aspect of the organization's operation. A foundation should measure its success by the performance of the organizations that it funds. However, because grant-making foundations can create value only through others, they must accept responsibility for the success or failure of their grantees.
Strategy depends on choosing a unique positioning.
A foundation must limit the number of social challenges it addresses. This requires an honest assessment of the foundation's opportunities, strengths and weaknesses. Strategy rests on unique activities. Every positioning requires trade-offs. To achieve excellence at what it does, a foundation must forgo opportunities in other approaches and in other fields.