Philanthropic Funding of Human Services: Solving Ambiguity Through the Two-Stage Competitive Process

Abstract

Philanthropic funders play an important role in human services—they support policy research and community services—but little is known about how they structure their funding or select grant recipients. Using personal interviews with Chicago-area foundation officials, this article documents how four types of philanthropic funders approach these decisions. The article shows that the grant process is constrained by how funders obtain their resources and govern themselves. It is also constrained by ongoing relationships between funders and grant recipients, reflecting pervasive task ambiguity and weakly institutionalized norms. The result is a grant award system that resembles a two-stage competitive process.