A Conceptual Model of Foundations’ Leadership Capacity in Times of Change: Lessons From Egypt

Political Independence

Political independence refers to a foundation’s freedom from government influence and control. In Western states, philanthropic foundations—private and community foundations alike—enjoy relatively high levels of political independence, and this is theorized to allow them to spearhead change efforts (Fleishman, 2007; Reich, 2016). Although foundations must adhere to basic procedural regulations and reporting requirements, they are generally free to fund whatever issues they choose so long as they advance a charitable public good. This means that foundations can take on priorities that fall outside of the government’s agenda. Whereas government agencies are motivated to cater to the interests of the majority or the median voter, foundations have the prerogative to fight for the concerns of minority and/or marginalized groups: precisely those who tend to be the most outspoken—but least powerful—advocates for change.

However, foundations’ political independence may be greater in theory than in practice. Foundations’ resources are small compared with governments’. Although foundations may have the liberty to propose policy changes and experiment with innovative solutions to social problems, their leaders often view the government as a key partner in bringing those solutions to scale and implementing policy changes (Almog-Bar & Zychlinski, 2012; Thümler, 2011). Meanwhile, even governments that have traditionally left foundations to pursue their own initiatives are increasingly seeking to partner with foundations in policy development and implementation realms (Daly, 2011; Harrow & Jung, 2011; Smith, 2010). In addition, burgeoning foundation sectors in developing states may benefit from higher levels of government monitoring and reporting requirements, as such accountability mechanisms bolster trust among foundation beneficiaries and the general public (Wang, Graddy, & Morgan, 2011).

Financial Independence

Financial independence refers to a foundation’s ability to rely on a steady stream of internal resources to fund its grant making, and by extension its level of accountability to donors. Private foundations have high levels of financial independence. Endowed with financial resources in perpetuity and beholden only to the vision of the founding donor, private foundations have grant making budgets that are both reliable in their size and unconstrained by the need to please a variety of donors. This is theorized to give them the freedom to pursue risky or unpopular change initiatives (Reich, 2016).

Community foundations, by contrast, have low levels of financial independence due to their need to regularly raise funds from elite members of the community. This reliance on contributions from elite donors to survive and grow may discourage community foundations from supporting change initiatives, particularly if the change threatens donors’ interests (Guo & Brown, 2006; Millesen & Martin, 2014). Faced with a choice of leading change and alienating donors or taking a more conservative approach to funding to court the wealthy class, community foundations may find it in their strategic interests to take the latter approach. Young community foundations may be particularly sensitive to this tension between leading change and cultivating donor loyalty as they prioritize endowment building (Graddy & Morgan, 2006; Guo & Brown, 2006).

However, research suggests that private foundations’ propensity to fund social justice and change rarely lives up to its theorized potential (O’Connor, 2010; Suárez, 2012). Rather, grant making tends to reflect the interests of elite donors and to perpetuate neoliberal corporate values, a trend especially notable in so-called venture philanthropy (Saltman, 2010). Moreover, the idea that the only influence on private foundations’ priorities is a vague mission statement provided by a deceased (and thus powerless) founding donor is increasingly inaccurate. Family foundation boards are often comprised of extended family members of the founder (Pharoah & Keidan, 2010), and as more private foundations choose to spend down their assets in a limited period of time, the influence of founding donors is enhanced (Ostrower, 2009).

Civic Independence

Civic independence refers to a foundation’s level of accountability to beneficiary communities. Private foundations tend to score high on this factor, which presumably inhibits their ability to lead change efforts that resonate with, and have legitimacy for, local civil society actors. Whereas some private foundations focus their grant making locally, many work on regional, national, and international scales. These foundations are removed from, and relatively unaccountable to, beneficiary communities (Fleishman, 2007; Reich, 2016). Although program officers may conduct site visits to meet with grantees, such foundations are not closely connected to, or embedded within, the communities of their grant recipients. Moreover, private foundations of all grant making scales tend to be managed by members of an elite establishment who may be out of touch with the challenges faced by the marginalized groups most likely to advocate for change (LaMarche, 2014). As such, they are likely to lack both the knowledge and moral authority necessary to serve as legitimate leaders of change (Kohl-Arenas, 2015).

Community foundations, with their narrow geographic foci, locally recruited boards of directors, and wide donor bases, tend to be deeply embedded in the communities they serve and thus have low levels of civic independence. Familiarity with the local community’s needs and priorities, coupled with the clout to bring together leaders from a variety of sectors, is thought to position community foundations to convene constituents and mobilize resources to advance change (Graddy & Morgan, 2006; Gronbjerg, 2006; Sacks, 2014). Once again, however, the picture is not necessarily clear. Often, community foundation boards are stacked with local elites who can court donors (Millesen & Martin, 2014). Their connections to marginalized, change-oriented groups are often tenuous at best. In addition, community foundations vary in their conceptualizations of localism and community (Jung et al., 2013), with some (e.g., the Silicon Valley Community Foundation) viewing the world as their community. Thus, the low civic independence of community foundations—and their corresponding position as local change agents—assumed in theory may not hold up in practice.

In sum, the literature suggests that foundations’ levels of political, financial, and civic independence will shape their capacity to lead social change efforts, but that neither the direction of each factor’s influence nor private and community foundations’ levels of independence is clear-cut. Thus, the conceptual model should be a useful tool for analyzing, but not predicting, foundations’ capacity to lead change. It is to this analysis that the article now turns.

Political Independence

Prior to the 2011 uprisings, Egypt’s private and community foundations had low levels of political independence due to extensive government regulation of Egypt’s NGO and foundation sectors, manifested primarily through Law 84 of 2002. Leaders of both private and community foundations indicated that intrusive government monitoring affected their work, and that prior to the 2011 uprisings it prevented them from working on political or policy issues. The program director of one community foundation indicated that members of the Ministry of Social Solidarity (MOSS), which was officially responsible for overseeing NGOs and foundations, came to the foundation’s premises regularly to inspect its records and observe its activities. “We must tell MOSS about everything we do,” the program officer said. “It takes a lot of time and stops our work” (Interview, February 6, 2010). The program officer of a private foundation agreed, indicating that the foundation could not go ahead with its work prior to government approval, and that doing so could land the foundation staff in jail. “The point is to help people,” the program officer said. “It’s not useful to fight the government” (Interview, January 28, 2010).

However, while both types of foundations were affected by Mubarak-era control, the foundations had adopted different relationships with the regime. Whereas Egypt’s private foundations aligned with Mubarak and his priorities, the community foundations took a more oppositional stance. These different approaches in turn affected the foundations’ capacities to respond quickly to the 2011 uprisings.

Egypt’s private foundations were created, and remained governed, by business elites who had built corporate empires through a system of crony capitalism in which the government exchanged business contracts and monopoly rights for political loyalty (El-Tarouty, 2015). Private foundation boards consisted of family relatives of the founder, senior executives of the founder’s corporation, and experts in the development fields in which the foundation made grants. Thus, much of the private foundations’ board members were directly or indirectly tied to corporations, which were in turn tied to the Mubarak regime.

As part of their clientelistic relations with Mubarak, private foundation donors used their foundations to support the regime’s neoliberal economic development agenda by targeting their grants to NGOs working on projects that aligned with the government’s priorities (Soliman, 2011). Leaders of private foundations openly admitted their donors’ ties to Mubarak. Speaking in 2010, one foundation program officer said, “[Foundations] are very closely affiliated with [the government] . . . At the National Democratic Party conference the government highlights areas where it needs support from business. This will impact the agendas of foundations” (Interview, February 4, 2010). Another described a “three-ring show” in which the government approved projects, foundations provided funding, and NGOs delivered services (Interview, January 28, 2010).

Egypt’s community foundations were created by development professionals and governed by academics, development professionals, and everyday citizens. Unlike the leaders of Egypt’s private foundations, which maintained close ties to Mubarak, Egypt’s community foundation leaders took an oppositional stance toward the regime. Their foundations, while still complying with Law 84, subtly challenged the Mubarak regime’s policies. For example, by including the word “Waqfeya” in its Arabic name, one foundation signaled its attempt to reclaim private philanthropy from government appropriation and return decisions about resource allocation to local citizens. The other community foundation worked to empower Egypt’s Bedouin community, whom for years the Mubarak regime had marginalized, denied basic rights, and allowed no voice or vote (Gilbert & Al-Jebaali, 2012). In the context of an autocracy, in which a governing regime used its power to silence citizen voices and control social welfare and development priorities, efforts to empower private citizens with the agency to make decisions affecting their communities and to demand their basic rights were decidedly political.

The foundations’ contrasting stances toward the Mubarak regime—with private foundations aligning with the regime and community foundations subtly challenging it—affected their responses to the 2011 uprisings, slowing the private foundations’ responses and bolstering community foundations’ ability to lead political reform efforts.

Although leaders of Egypt’s private foundations admitted their culpability in helping to maintain the political status quo under Mubarak, they indicated that they were eager to realign with civil society after the uprisings and help to bring a more democratic system of governance to Egypt. Fallout from ties to the Mubarak regime slowed this realignment. In late 2011, the SCAF levied a series of corruption charges against allies of the deposed Mubarak regime (Springborg, 2011). Donors to Egypt’s private foundations were targeted, including those of the EFG Hermes Foundation, the Mansour Foundation for Development, and the Sawiris Foundation for Social Development. Indictments were made arbitrarily (Springborg, 2011), leaving the entire business community, including foundation donors, uncertain and apprehensive about the future.

A scholar of Egyptian civil society described foundation donors as, “completely confused about what to do . . . They were all tied to Mubarak and are now vulnerable. They want to do more but they’re not sure if they are welcome” (Interview, July 4, 2011). Private foundation donors confirmed this. They indicated that they wanted to use their foundations to advance change, but at the same time wondered “if [they] were going down with the regime” (Interview, April 10, 2012). One said,

The revolution ended an era we all thought should end. There was a small group controlling the country. There was oppression and a lack of human rights. But the consolation was stability with [Hosni] Mubarak, Gamal [Mubarak], and the military. We knew where the line was. We knew how to adjust. Now no one has a feel of what’s going on . . . The instability factor is high. It is difficult in the face of instability. (Interview, July 18, 2011)

As a result of this uncertainty, Egypt’s private foundations adopted a “wait and see” approach to the aftermath of the 2011 uprisings, indicating that they would stick to the safe realm of economic development until a new president was elected and power realignments had become clear.

The community foundations, while not fearless of leading civil society’s political reform efforts after the uprisings, were better positioned to do so due to their prior experience in contesting government policy and advancing citizens’ interests. They found themselves on the right side of history and could seamlessly move into roles as citizen mobilizers. The leader of one of the foundations told me that the uprisings were “about dignity” and that the foundation’s work was already aimed at nurturing citizen dignity and empowerment (Interview, July 14, 2011). Unencumbered by ties to the deposed regime, the community foundations boards could “act quickly” (Interview, July 14, 2011) to adapt the foundations’ strategies to facilitate local residents’ efforts to build a more democratic Egypt.

They admitted the risk—One leader said that her foundation’s work “was a huge risk” and that she “was scared” (Interview, July 14, 2011), while the other described the foundation’s work as “edgy” (Interview, October 22, 2011). One explained, “Other NGOs said no, and hesitated because of the history of control. Civil society is coming from a culture of strict government control. It is scared. It thinks it is not free” (Interview, July 14, 2011). But the community foundation leaders, who had conceived their foundations as vehicles for change, saw the uprisings as a window of opportunity to marshal a surge in citizens’ desire to participate in reforming Egypt and augment their foundations’ existing efforts to empower people to exercise their voice and claim their rights.

Financial Independence

Neither Egypt’s private foundations nor its community foundations were financially independent. Both types of foundations relied on regular but unpredictable donations to fund their grant making activities, with private foundations receiving funds from founding donors, board members, and the corporate parents, and community foundations receiving donations from local community members, board members, and Western donors. The private foundations’ reliance on donors slowed their responses to the uprisings as a deteriorating national economy strained corporate profits and, by extension, reduced the foundations’ grant making budgets. The community foundations were less hampered by their lack of financial independence, as their donors provided moral support for the foundations’ efforts to lead political reform efforts and the foundations’ structures facilitated an approach in which the foundations served as conveners and facilitators of local advocacy efforts rather than grant makers to other advocacy organizations.

Still in their youth, Egypt’s private foundations were in the early stages of building endowments and thus relied on yearly financial contributions from the founding donor, members of the donor’s family, and board members of the donor’s corporation for their grant making budgets. Some of these foundations were housed within a parent corporation and thus structurally resembled what in the United States are referred to as “corporate foundations.” These foundations did, however, clearly identify themselves as foundations seeking to build endowments and be independent from the parent company. They emphatically distinguished themselves from corporate social responsibility departments that were part and parcel of the corporation. Others were registered as stand-alone private foundations, but they, too, were in the early stages of building endowments. Thus, Egypt’s private foundations all relied heavily on their parent corporations’ profits to fund their annual grant making budgets. Some foundations received a set percentage of corporate profits for their grant making, while others relied on annual donations from the founders and board members, whose fortunes were themselves tied to their corporations’ success.

This link between corporate profits and the foundations’ grant making budgets hindered their capacity to fund new democratic political reform projects after the uprisings. Soon after Mubarak’s ouster, Egypt’s economy declined precipitously, with GDP growth rates falling to −4% in 2011 and rising to only 2% to 3% for all but one quarter between 2012 and 2013 (http://www.tradingeconomics.com/egypt/gdp-growth). This economic downturn threatened business profits and, correspondingly, private foundations’ grant making budgets. “The [foundation board members] own the corporation. The revolution affected their profits,” explained the executive director of one foundation. “I took 25 percent of the administrative costs and gave them to the beneficiaries. I committed to not asking for funds for two years,” this director went on to say (Interview, April 10, 2012). The leader of another foundation added, “Regarding the funding side, when the company [that funds the foundation] was making money it gave much to the foundation, which then made large grants. Now we don’t have money” (Interview, July 18, 2011). These strains on corporate profits confined the private foundations to funding existing projects and precluded them from expanding their grant making to include political reform initiatives.

Like Egypt’s private foundations, the community foundations aimed to build endowments but were in the very early phases of doing so and thus relied heavily on annual contributions from external donors, including local community members, board members, and international grant makers. Both foundations received significant support from the Global Fund for Community Foundations, which provided start-up funding and ongoing support. The founders indicated that their budgets were relatively small, and that in addition to making grants to local NGOs, the foundations also operated their own programs. Also, due to budget limitations, the community foundations employed few paid staff and depended heavily on volunteers.

The community foundations’ ties to external donors, along with their small grant making budgets, actually bolstered their capacity to lead political reform efforts after the 2011 uprisings. Some of their largest grants came from Western donors who conceptualized community foundations as agents of change. This support emboldened the foundations to lead local democracy building initiatives. Describing the foundation’s voter education program, one foundation director said, “If this isn’t what [our Western donor] is trying to achieve, I don’t know what is” (Interview, October 22, 2011). Both foundations indicted that the Global Fund for Community Foundations was a particularly important source of support, not only providing financial backing but also surrounding the Egyptian foundations with a worldwide group of peers who all subscribed to a vision of community foundations as catalysts for change.

The community foundations’ reliance on volunteers to carry out programs also facilitated their responses to the uprisings, as they were well positioned to nimbly build political reform initiatives into their repertoires of self-administered activities. “The community spirit is there,” explained one foundation leader (Interview, July 14, 2011). The foundations marshaled this spirit, drawing residents together to advance political reform at local levels. The foundations were cautious to avoid calling attention to themselves as organizations, even describing their work as “undercover” (Interview, July 14, 2011). One foundation leader explained that her employees who had previously earned salaries were working as volunteers so that foreign grants would not have to flow through the foundation and attract government attention. These strategies helped the foundations to position themselves as facilitators of the collective action of local residents which, at the time, the SCAF had not yet begun to repress.

Civic Independence

Egypt’s private foundations were based either in downtown Cairo or in the parent corporation’s headquarter offices located in greater Cairo. The offices were formal, with corporate-style furniture, up-to-date technology, and tea boys. Program staff were responsible for the day-to-day responsibilities of grant making, including soliciting and evaluating proposals, making grant recommendations to the board, conducting site visits to potential and current grantees, and evaluating the results of grants. Although these staff members took site visits to meet with grantees, their office spaces denoted a level of distance from beneficiary populations.

Moreover, the loyalty that foundation donors cultivated with Mubarak left the foundations both removed from, and distrusted by, activists and grassroots groups within civil society. This gave the private foundations high levels of civic independence and correspondingly low levels of trust and accountability among the people and organizations pushing for change. “Your name is [our foundation’s name] and the beneficiaries are suspicious,” indicated the executive director of one private foundation (Interview, April 10, 2012). Leaders of Egypt’s human rights organizations, which were at the front lines of political reform initiatives, were particularly wary of private foundations’ motives and their legitimacy as change agents. Said the director of one,

At our organization, we hire human rights lawyers. Egyptian foundations won’t fund this. They won’t fund you to promote ideas against the government philosophy. At the end of the day a foundation is a corporation and they don’t want to lose their government relations. (Interview, July 28, 2011)

Foundation leaders indicated that they needed to renegotiate their “relationships with power” and “realign with the grassroots” (Participant observation, May 6, 2011). This process would take time, however, and until it was complete, the foundations were unable to serve as trusted leaders of reform. “If we are going to enlist people from the community to [rebuild Egypt], we need the people’s buy-in,” said the donor to one private foundation. “But if you’re in business,” or connected to a business as this foundation was, “they don’t trust you” (Interview, February 26, 2012). Foundation leaders acknowledged that they needed to “unlearn cultures of unproductive, corrupt practices,” but did not want to “throw out what works” and were still struggling to figure out, “what is to be kept, what is to be set aside, and . . . how to begin where ordinary Arabs stand” (Participant observation, May 6, 2011).

Egypt’s community foundations, by contrast, were deeply embedded in their neighborhoods. Their offices coupled as community gathering places, and in fact during my first visit to one community foundation, I wondered if I had found the correct space. Instead of rows of offices, I walked into a large room filled with long tables covered with paint, brushes, paper, and smocks. The walls were plastered with art. While prior to the 2011 uprisings, art classes hosted at the foundation served as revenue-generating activities, after the uprisings the classes turned into activism as the students depicted scenes of democratic political practices (e.g., voting in elections) that would be used to educate the illiterate members of the local community. That same room full of tables was also a convening site for local activists. Before the uprisings, they met to discuss local priorities and build the foundation’s agenda. After the uprisings, they gathered to launch an advocacy campaign to recognize local community members who had been killed during the protests and to press charges against the government for complicity in the protesters’ deaths.

Egypt’s community foundations rooted themselves locally from their establishment, despite the fact that their founders were to different degrees somewhat removed from their beneficiary populations. The founder of one community foundation was only a part-time resident of the local community, spending the other part of the year in the United Kingdom. The other founder was a longtime community resident but had earned university degrees from elite institutions and also participated in philanthropy fellowships abroad. Although inspired by the global community foundation movement, the founding donors wanted to create “something local” (Interview, January 23, 2010) that would be a “trusted vehicle” (Interview, October 22, 2011) for community philanthropy in the Egyptian communities they served. Toward this end, they invoked the concept of waqf when establishing and describing their foundations. Ultimately, their foundations brought together the U.S.-based community foundation practice of raising funds from a wide variety of community members, with the waqf concept of using endowed funds for community development.

Egypt’s community foundations were structured for community ownership, employing local residents as staff members and volunteers and relying on community input when making decisions about program and funding priorities. The aim was to “facilitate [local citizens] having a voice” (Interview, October 22, 2011) not only in the foundations’ operations but also, by extension, in their communities’ futures. When the 2011 uprisings occurred, the foundations felt a moral obligation to propel the newfound spirit of political engagement that sprang forth among local citizens. The foundations’ political reform programs were designed and administered “through and by local community members” (Interview, October 22, 2011). “It doesn’t work when people in Cairo decide what people want,” the founder of one community foundation said. “We sit and drink tea [with our beneficiaries] and listen to what people want” (Interview, October 22, 2011).