With the current trend of vast financial resources being set aside in long-term, donor-directed and tax-incentivized private foundations, it is imperative to scrutinize what informs foundations and nonprofits to make particular philanthropic investments. One way to examine such behavior is through the lens of neoinstitutionalism. In this paper, I focus on the neoinstitutionalist concept of isomorphism on two main levels. One, among nonprofits reliant on foundational funding and the isomorphic effect dependency has on nonprofit form and function, and two, among foundations and how they might come to fund a narrow range of sectors in a narrow range of ways (with questionable efficacy). I argue that by examining the field of foundations and non-profits through the lens of neoinstitutionalism—with its focus on legitimation, social reproduction, and change—we can see how philanthropic action and interests can become narrowed and provide for a narrow set of goods. This likely occurs through intra- and inter-organizational field forces that influence the form, function and actions of firms. These relations are between nonprofits and foundations, among nonprofits, and among foundations. Furthermore, I take an interest in the problem of emergence that neoinstitutionalism provides. How do novel organizations or organization actions emerge? A lack of novelty, coupled with isomorphic forces may produce a narrow set of philanthropic interests, out of step with societal needs.
This account, though speculative and broad, should highlight important areas deserving of research. Furthermore it can serve as a contextual lens for neoinstitutionalism and demonstrate, if neoinstitutionalism’s theories hold true, the practical implications for the foundation and nonprofit fields. For the sake of simplicity, I am using the terms foundation and nonprofit to mean different things. Though foundations are a type of nonprofit institution, here they are being discussed here as philanthropic organizations providing funds to other nonprofits to carry out particular services. Nonprofits then, as referred to in this paper, are those organizations directly involved in carrying out services. Particularly in mind here are social service organizations. These relationships—nonprofit dependency on funding and the influence of institutions within nonprofit and foundation fields are the focus here.
The first set of relationships is that of nonprofits to their foundational funders. From Meyer and Rowan’s chapter on formal structure as myth and ceremony, we learn that organizations are driven to incorporate practices and procedures defined by prevailing rationalized concepts or organizational work in institutionalized society…[to] increase their legitimacy and survival prospects independent of the immediate efficacy of the acquired practices and procedures” (Meyer and Rowan). Gaining legitimacy then is a focal project of the organization with technical accomplishment a secondary goal. In the case of nonprofits, this may be due in part to nonprofits’ orientations toward a field of foundational funders. We can see this relationship in the way that Zuckerman describes the candidate-audience interface. Here, the nonprofits are candidates, vying for acceptance among the audience (foundations) who hold the financial keys to their survival and legitimacy. To secure this financial support, the project of the nonprofit is to conform to the legitimate or accepted roles as expected by the foundations. In short, they must look and act as foundations expect them to look and act.
Orientation toward a field of foundations can have isomorphic effects on nonprofit organizations. Isomorphism, as used by Powell and DiMaggio (1983), describes a “constraining process that forces one unit in a population to resemble other units that face the same set of environmental conditions” (66). It explains why there is so much similarity in organizational forms and practices. Isomorphism is largely a product of field structuration, a process reliant on increased interactions, dependencies, information and awareness among organizations in a field. Once organizations are in the same field, powerful forces, such as seeking legitimacy, make them more similar. Among nonprofits, I suspect this process falls largely into what Powell and DiMaggio call coercive isomorphism. Nonprofits, reliant on foundational funders, are subject to the imposition of foundations expectations. Powell and DiMaggio hypothesize that the greater dependence one organization has on another, the more it will become similar to that organization in structure, climate and behavioral focus. This may take place through the creation of corresponding structures and positions (perhaps at a ceremonial level), or it may occur through the adjustment and alignment of interests. For example, a nonprofit interested in providing food to the poor, might encounter a foundation interested in funding nonprofits that provide food to the poor in Africa. Given it’s reliance on funding for legitimacy and survival, the nonprofit may make the adjustment of interests to conform to the founder’s expectations—regardless of whether this is the “right” or most efficacious adjustment. Depending on the extent of that foundation’s reach, other nonprofits may be inclined to conform in the same way.
DiMaggio offers a descriptive account analogous to the hypothetical example I described above showing how philanthropy can have significant effects on organizational practices. In his account, the Carnegie Corporation is the foundational philanthropist, and the independent art museums are the nonprofits. DiMaggio describes the central role of the Carnegie Corporation in structurating the organizational field of museums, noting among other effects the emergence of a center-periphery structure. By making grants to some museums over others, the Carnegie Corporation legitimated and called attention to particular museum forms and functions in a way that “enhanced their position in the field as a whole” (277). Borrowing from Meyer and Rowan, we can see these grant making activities as legitimating “external assessment criteria” (51). By extension, we can see how foundations funding particular forms of nonprofit organization and activity over others may lead existing and new nonprofit organizations to adopt the successful and legitimate models in their field. Such mimicry would indicate a high level of field structuration based on evidence of the increased awareness among organizations of legitimacy in their field.
Mimicry within an organizational field suggests a second major set of relationships among nonprofits: nonprofits in relation to other nonprofits. If particular organizational forms of nonprofit are legitimated within the field, we expect a degree of memetic type of isomorphism (as described by Powell and DiMaggio). Memetic isomorphism occurs when there is uncertainty in how to achieve particular ends and to avoid this uncertainty, and thus increase chances for legitimacy and survival, new organizations model themselves after organizations they perceive to be legitimate and successful. Again, this analysis benefits from DiMaggio’s chapter about American art museums. In his account, there were competing forms of museum one of which won particular favor of the Carnegie Corporation, demonstrating that diffusion is not necessarily a matter of smooth accord—there may be discord at some points—but over time this discord may ease and a predominant organizational form may take place. In the field of nonprofits, this isomorphism may disappear through mimicry, serving as evidence that legitimacy and survival takes precedence over technical definitions of meeting organizational goals (such as efficacy or efficiency). We are left to wonder, if memetic isomorphism is pervasive, how particular nonprofits may win funding where others do not. According to Zuckerman, organizations in markets face a difficult balance between legitimacy (requiring conformity) and differentiation (requiring uniqueness). The threat of being too unique is that claims to legitimacy will be lost. Conversely, the threat of being too similar to other organizations is that of not winning support and jeopardizing survival. This leaves us with an empirical question: how do nonprofits, dependent on foundations with normative expectations and under the social conditions that create isomorphism, achieve enough differentiation to win support?
The third set of relations considered here is that of foundations to other foundations. Throughout this account, foundations have been presented as the witting or unwitting dictators of social forces amounting to nonprofit isomorphism. But the organizational field of foundations is also subject to isomorphic tendencies. As with nonprofits, there may be a degree of memetic isomorphism. Take for example the Gates Foundation—with assets of nearly $35 billion and an additional $37 billion pledge from Warren Buffett. I would expect, given its claim to legitimacy among society at large, that the Gates Foundation — its organizational structure, goals, philanthropic interests and grant making activities—is influential on other foundations and is thus mimicked. There is also the possibility for normative pressure isomorphism, though not necessarily through the professionalism mechanism that Powell and DiMaggio describe. Instead, normative pressures may be found in the growth of nonprofit and foundation evaluation, journals, media and even public discussion. These pressures may force compliance and homogenization to some degree.
If we can accept that some foundations can be viewed as more influential than others, then the problem of novelty arises. From where do new organizational forms and philanthropic interests emerge? While largely side-stepping this problem (as it is the subject of a bigger debate that I am not prepared to comment on), we might locate the source of initial emergence among elites. After all, many foundations are donor-directed so we can expect their influence to be substantial. Within foundations, the adoption of interests and practices by elites with sway may be most likely to be legitimated. We can see suggestions of this through Colyvas and Powell’s account of Stanford’s OTL where more prominent scientists had an influential role in legitimating the OTL (342). Is this possibly true among philanthropists? They may first legitimate practices within their organization; and some of the most prominent philanthropists may legitimate practices within the field. This seems possible but also demands a greater understanding, if elites are influential, of where their organizational conceptions come from.
Linking these multiple levels of relationships together, it may appear that philanthropists influence other philanthropists and foundations leading to isomorphism among the field of foundations; foundations influence nonprofits through providing the ceremonial and legitimating awards of funding while setting normative expectations requiring conformity to be legitimated; and nonprofits operating under conditions of uncertainty and desires to be legitimate and successful mimic those nonprofits they see as legitimate and successful. I don’t expect this process, however, to be unidirectional. Instead, I suspect there is a feedback loop. New foundations and nonprofits enter fields in which these processes are ongoing. Not having the sway the initial and extant organizations have, I’d hypothesize new organizations seek legitimacy and survival over efficacy. Or, paraphrasing Schelling (from DiMaggio and Powell 1983) organizations respond to an environment that consists of organizations responding to an environment of organizations’ responses (65).
But if this is the case, we can see how the “taken-for-grantedness” (Colyvas and Powell, 311) of foundation and nonprofit organizations can have dire consequences for society. Embedded in an American society in which there is significantly decreased trust in the government (19% faith in government according to Pew), and possibly increasing expectations for the nonprofit sector to provide for public goods, isomorphism among nonprofits and foundations should be considered concerning. Assuming that the provision of a diversity of services in accordance with societal needs is crucial for the successful provision of public goods, we are left to wonder what effects narrow philanthropic and nonprofit organizational forms and interests—something I hypothesize to be the outcome of the isomorphic processes detailed above—will have on society. To this end, we run into a major puzzle presented in the neoinstitutionalist literature. How does change and novelty occur? To this, we have a few clues. One, as Mahoney and Thelen point out, change can be an incremental and gradual process. The problem with this, however, in the case of nonprofits and foundations is that those changes may occur through whims—not assessed needs (whatever those may be)—and may simply be a shift of narrow focus, not a broadening of that focus. Two, also presented by Mahoney and Thelen, change may be most possible when there are problems of rule interpretation and enforcement that open up space for actors to implement existing rules in new ways. We can see this process occur in Dobbin and Kelley’s piece regarding the adaptation of means to deal with sexual harassment within organization. Their account this resulted into a lopsided territorial battle between personnel management and lawyers (resulting in what Dobbin and Kelley refer to as a legitimate solution but not necessarily the best solution). I propose that this theory offers space for solutions to problems of isomorphism in the nonprofit and foundation fields. Perhaps a change in regulation (of which there is currently very little as well as very little accountability) will beget a change—ideally diversification—of practices. Thus, the major question arising from this paper is how does major change occur within the constraints that drive organizational isomorphism? I believe this to be an issue worthy of attention and research—both for the benefit of organizational studies and of society at large.
 As well as other major, well-known foundations such as Open Society, MacArthur and Hewlett.