The Power of Small

Proponents of small foundations say smaller donors often have closer relationships with the nonprofit organizations they fund, which allows them to see firsthand how donations are being used. (Suzanne) Skees, for example, says she visits her foundation's partners in California and beyond, getting to know everyone at the organization from the executive director on down, and familiarizing herself with the programs the organizations run.

Small foundations also tend to have close connections to the people and charities in their local communities, the proponents say. Those connections make them good partners for bigger philanthropic organizations, says Ms. Portnoy. Small donors can offer insight into a community's specific needs, the inner workings of local charities and anything else an out-of-town foundation might have difficulty uncovering on its own, she says.