A product of the first great era of capital accumulation in America, the private foundation evolved over the course of the 20th century into a respected feature of American life. Bearing the names of men who amassed vast wealth during the late 19th and early 20th centuries, philanthropic foundations such as Carnegie, Rockefeller, and Ford were established to ameliorate social needs and inequalities created by the rapid industrialization of Western economies, bring private money into play for public benefit, and counterbalance "the forces of markets and state, helping to prevent either from dominating and atomizing society."

But while American society changed — at an ever-accelerating rate — during the second half of the 20th century, organized philanthropy stuck to familiar forms and approaches, avoided innovation, and, according to Helmut Anheier and Diana Leat, the authors of Creative Philanthropy: Towards a New Philanthropy for the Twenty-First Century, failed to realize its full potential.

Today, as a result, critics on both the left and right have begun to question the role and value of foundations in a world "in which the meaning and processes of democracy have been transformed." What's more, the key question for many of these critics, Anheier and Leat suggest, is not whether foundations do good, but whether they do the best they possibly could in the current environment. For Anheier, the director of the Center for Civil Society at UCLA's School of Public Affairs, and Leat, a visiting professor at the CASS Business School, London, the answer is a qualified "no."

According to Anheier and Leat, the reason lies in philanthropy's past, which was dominated by three historical approaches: charity, in which foundations, consistent with the "social and political context of the 19th century and the Gilded Age," provided services "to those unable to care for themselves"; scientific philanthropy, the task of which, in keeping with the times (the early to mid-20th century, when the "notion of social engineering" was riding high), was "to root out the causes of poverty" instead of feeding the hungry; and, more recently, new scientific philanthropy, which, "in response to criticism of the ineffectiveness of existing philanthropy," has applied business models and approaches to foundation practices, "with the assumption that if only foundations were run like businesses, all would be well."

Unfortunately, say the authors, none of these approaches is particularly well suited to the realities of the 21st century. While acknowledging that the charity approach, still the dominant model in most countries, is responsible for much good, they suggest that it has limited impact, operates on "the now largely false expectation" that someone else (i.e., government) will assume the job of "widening and sustaining impact," and suffers from a lack of sustainability, in that it addresses symptoms rather than causes.

In contrast, the scientific approach, which rests on assumptions that may be true in science but are questionable when applied to social issues, "faces a widening gap between potential and reality, with the planning ethos and mechanistic practice of grantmaking often an obstacle to renewal and innovative ways of using philanthropic resources." And the new scientific approach, which tends "to focus on foundation processes rather than roles — let alone purposes," suffers from its underlying "business and managerial ethos" and does not address the question of "the unique value of foundations in a democracy."

For Anheier and Leat, that value proposition is self-evident: Foundations' independent resources mean "they can develop relationships with the powerful and powerless, rich and poor, and are free to mix disciplines and professions," which, in turn, means they "are uniquely situated to become major agents and sources of creativity and innovation, enhancing diffusion processes towards desired outcomes or objectives [emphasis added]."

Having established their thesis, the authors spend most of the book looking closely at creativity and innovation in a philanthropic context. Chapter 3 attempts to define creativity and lists seven characteristics of a creative milieu, while chapters 4 and 5 offer a series of vignettes and case studies of foundations — including the Wallace Foundation, the Rosenberg Foundation, the Pew Charitable Trusts, and the Annie E. Casey Foundation — that have adopted a creative approach to the problems they are working to address. Chapter 6 considers how and why foundations adopt a creative approach, while chapters 7 and 8 look at the implications for foundation management and practice. And the book closes with a brief look at, in the authors' words, the way forward.

The way forward, for Anheier and Leat, is both obvious and daunting. The urgent problems of modern society — the decline of civic engagement, the erosion of democracy, a crisis in values — cry out for new philanthropic approaches and the reinvention of private foundations. The creative foundation of the 21st century, they argue, will take a less rationalist view of contemporary problems than conventional foundations do. It will assume "that lack of money is not the only resource missing in the resolution of social issues" and will be both "strategic and opportunistic." It will employ a variety of resources (financial and other) and tools (authority, ideas, and incentives) in varying degrees and at different levels. And it will be a "post-managerialist organization" that is about passion and reason at the same time.

It's a compelling vision, and one that foundations would do well to consider. As the world's population continues to grow and humanity's capacity for invention — and mischievousness — increases, we will need our best and brightest to be fully engaged in meeting the challenges, and leveraging the opportunities, that the 21st century presents. There is work to be done and, as Anheier and Leat remind us, no better time to get started than now.