The uniqueness of philanthropy is built on its independence—its relative freedom from systematic market and public accountability constraints. This oft-noted feature of the philanthropic sector undergirds the sector's rich diversity of approaches and is the source of much of its influence. But the societal and institutional benefits of this relative autonomy for individual foundations—in diversity of approaches, independence of thinking and innovation—are balanced, when it comes to judging effectiveness, by relatively weak relationships between foundations and the environments in which they operate. Feedback loops are attenuated, and the capacity for constructively critical commentary is undermined along two dimensions: the assessment of a foundation's performance and a foundation's assessment of the environments in which it operates. This leads to two important challenges: Developing and sustaining a framework for assessing the performance of foundations. Designing ongoing mechanisms for scanning environments and using that knowledge strategically.