Foundations indicate they do not allow discretionary grants because these grants:
- Can send confusing messages to grantees and potential grantees when they fall outside the foundation’s mission and program focus;
- Weaken the family dimension in family foundations by placing too much emphasis on personal decision making;
- Increase the likelihood of self-dealing or conflict of interest, because they do not require the full board’s review and approval;
- Increase the number of grants and take up significant time and effort to administer;
- Dilute the foundation’s impact and ability to be effective in reaching long-term goals;
- Discourage personal giving; and
- Tend to take up more of a foundation’s distribution over time, especially if the number of trustees increases.
However, if the portion of the endowment allocated to discretionary funding remains small, many of these issues can be avoided.