Philanthropic innovations: A historical analysis of Foundations' adoption, implementation, and diffusion of program‐related investment (PRI) strategies

Philanthropic foundations are credited with being sources of social innovation. Yet, most scholarship focuses on foundations funding innovations rather than adopting innovative philanthropic practices. Program‐related investments (PRIs) serve as lenses to understand how philanthropic innovations are adopted, implemented, and diffused. Scholars describe PRIs as innovations broadening grantmaking practices, but foundations today do not widely use PRIs despite their increased use in the 1980s and 2000s. I propose a theoretical model integrating foundation behavior literature with social transition theory, linking the diffusion of philanthropic innovations to specific configurations of micro‐, meso‐, and macro‐factors. Drawing on archival research, the study analyzes the Ford Foundation's PRI Office and the Cooperative Assistance Fund between 1968 and 1988. It shows that individual foundations acted upon the favorable environment for PRIs created by a broader agreement that social responsibility was to be shared across sectors. Long‐lasting norms about not mixing investments and philanthropy slowed the broad diffusion of PRIs in the foundation sector, which as an organizational field lagged the innovativeness of individual foundations. By focusing on how foundations adopt and implement innovative philanthropic strategies, the study moves beyond the practice of measuring philanthropic impact through grantees' performance rather than through philanthropic strategies.