Foundation is by degrees (5)
I believe the answer is:
basis
'foundation' is the definition.
(I know that foundation can be written as basis)
'is by degrees' is the wordplay.
'by' means one lot of letters go next to another.
'degrees' becomes 'bas' (BA is an example).
'is' after 'bas' is 'BASIS'.
(Other definitions for basis that I've seen before include "Foundation or support, or a main principle" , "Underlying support for a theory" , "Ground, foundation" , "Form of support" , "First principle" .)