Foundations typically approach most grants as a team sport, debating their merits and deciding, collectively, whether they’re likely to achieve the foundation’s goals. However, in addition to granting as a group, some foundations give their board and/or family members a portion of funds to donate as individuals. This practice, called discretionary grantmaking, is legally permitted as long as the grants are consistent with the foundation’s charitable purpose, and there aren’t restrictions in the charter documents to prohibit it.
If your foundation is considering providing discretionary funding, there are pluses and minuses. When you weigh the advantages and disadvantages, you’ll understand why some foundations allocate an ample portion of their budgets to discretionary grantmaking, while others choose not to provide this funding.
Whether to allow discretionary grantmaking is an important decision. Before proceeding, you’ll want to carefully consider the advantages as well as the potential drawbacks.