Time for a Recalibration: Why Grantmaking Foundations Are Stuck, and What Needs to Change

Value Stream Consulting
Apr 14
4 min read

Updated: Jul 6

Over the past few months, I’ve shared several posts exploring the deeper process and technology challenges facing grantmaking foundations.

This article brings those threads together.

Because what we’re seeing isn’t just a tech problem. It’s a strategic misalignment—one that’s leaving many foundations stuck in cycles of reactivity, siloed operations, and underutilized potential. It’s time for a recalibration.

Let’s review seven challenges that this sector is facing:

1) Foundations Are Being Asked to Deliver More Than Just Dollars

The days when a foundation could simply write checks and remain above scrutiny are over.

Today, stakeholders—including grantees, communities, peer funders, and especially policymakers—are demanding more. Much more.

In the U.S., a growing number of lawmakers are openly questioning whether foundations are doing enough to justify their tax-advantaged status. Proposals have emerged that would:

Mandate changes to mission and program focus to align with public policy priorities
Alter the favorable tax treatment of philanthropic endowments, potentially reducing the capital available for long-term giving
Increase minimum distribution requirements, forcing foundations to grant more annually and reducing flexibility to act strategically

These proposals reflect an incorrect, but nevertheless growing perception that foundations function as elite institutions—disbursing tax-deferred funds to tax-exempt contractors, but doing too little to create visible, systemic impact.

To remain relevant and resilient, foundations must move beyond transactional grantmaking and become engines of synergy and catalytic philanthropy. That means:

Demonstrating measurable outcomes, learning, and influence
Amplifying community voices, not just funding them
Showing how relationships, data, and resources align to accelerate systemic change

And yet, the technology that powers most foundations today was built for an earlier era—optimized for compliance and cash flow, not for storytelling, strategy, or synergy.

2) Siloed Teams and Fragmented Tools Are Slowing Everyone Down

Most foundations are made up of multiple moving parts—program teams, finance, operations, communications, executive leadership—all tasked with pursuing a common mission.

But too often, those parts don’t move in sync. Each team operates in its own silo, using its own tools, tracking its own metrics. The result is:

Inefficient workflows
Communication gaps
Misaligned timelines and goals

When the grantmaking team uses one system, the finance team another, and the CRM lives in a spreadsheet, it leads to constant manual reconciliation, delays in decision-making, and organizational fatigue.

This fragmentation isn't just annoying—it’s costly. And it’s avoidable.

3) Foundations Are Still Thinking “Systems,” Not “Solutions”

Many foundations approach technology as a procurement exercise: Find a system, implement it, and move on.

But in reality, the most successful foundations don’t look for systems—they look for solutions. There’s a big difference.

Systems are static and transactional
Solutions are adaptive and strategic
Systems are implemented once
Solutions evolve with you

4) Grant Management Is Not the Same as Foundation Management

This mindset shift is critical.

Most software for philanthropy still centers on the concept of a Grant Management System (GMS). But focusing solely on grants narrows the lens—and limits impact.

Foundations do more than move money. They convene. They advocate. They invest in knowledge, relationships, and systems change. What they need is a Foundation Management Solution—one that supports:

Internal collaboration
Strategic evaluation
External engagement
Adaptive operations

Grantmaking is only one chapter in the larger story. The right technology should support the whole book.

5) Relying on Hardcoded Platforms Means Falling Behind

Legacy systems—or even newer platforms that are overly rigid—create bottlenecks. Every change becomes a mini project. Innovation is slowed. Adaptability is lost.

Modern foundations need the flexibility of low-code/no-code platforms that enable teams to:

Make changes quickly
Build new workflows without coding
Iterate in real-time based on feedback

No-code/Low-code solutions can replace or supplement existing systems. This flexibility isn’t a nice-to-have—it’s essential for staying aligned with dynamic strategies and evolving contexts.

6) Slow Implementations Kill Momentum

Some platforms take 6–18 months to roll out. Others take nearly as long just to make simple modifications.

That’s too slow.

Foundations need solutions with a fast time-to-value—platforms that deliver early wins and empower users to make ongoing improvements without needing to wait for the next budget cycle or IT intervention.

The pace of change in the world demands tools that can keep up.

7) AI Is Intriguing—but Still Unclear

Foundations are curious about AI—but cautious. And rightly so. There's a tension between automation and mission alignment.

The key is understanding where AI can augment human insight without undermining values.

Early use cases include:

Summarizing reports and applications
Spotting trends across portfolios
Supporting predictive insights for grant strategy

But even here, foundations need clarity—not just on the tools themselves, but on how to use them ethically and effectively, with people still at the center of decision-making.

As a Consequence of These Challenges, Many Foundations are Experiencing a Costly Cycle of Technical Debt

All of these challenges—political pressure, siloed teams, outdated thinking, inflexible platforms, slow implementations, and ambiguous AI strategy—compound into one reality:

Most foundations are stuck in a state of ongoing technical debt.

Instead of spending time, focus, and budget on innovation or learning, they spend it maintaining systems that barely meet expectations.

That’s not sustainable.

It’s not mission-aligned.

And it’s not the future of philanthropy.

Next: What to Do About It

In my next few articles, I’ll share a framework for how grantmaking foundations can recalibrate—by shifting their mindset, rethinking their platforms, and reclaiming their capacity to innovate with agility, strategy, and impact.