Déjà Vu (or 1969) All over Again?

Joel Orosz
by Joel Orosz
March 10th, 2010
 

 

That faint grumbling sound you hear about foundations comes from all over, but recently, more and more of it is emanating from Washington, D.C.  Sonal Shah, head of the White House’s Office of Social Innovation and Civic participation, in January took foundations to task for being risk-averse. Senator Charles E. Schumer, (D-NY) last year stated that “The need for philanthropy is greater than ever in this weakened economy, and we should be encouraging foundations to increase their charitable giving.”

Granted, this is a far cry from the rolling thunder of dissatisfaction led by Congressman Wright Patman, Democrat from Texas, during the 1960s, which led to provisions affecting foundations in the watershed Tax Reform Act of 1969.  And, in this age of anti-big government fury, it is easy to dismiss such Administration and Congressional calls as mere posturing by the discredited denizens of Weimar-on-the-Potomac.

Such a dismissal of this winter of Washington’s discontent with foundations would be a mistake, for one very big reason.  Over the past year, the wave of populism epitomized by the Tea Party movement has grown to tsunami proportions, and the criticisms of foundations in Washington may well be the equivalent of the ominous stillness before the wave washes in. And, sorry to say, most foundations are, figuratively, lolling on the beach. 

The Tea Party movement, of course, is a motley collection of malcontents, a certain number of whom are unsavory to the highest degree:  racists, nativists, homophobes, and xenophobes.  These elements lead many decent people to dismiss the Tea Partiers, en masse, as haters and wack jobs.  This is neither accurate, nor wise, for many in the movement are populists who are neither Klansmen nor crazy, but who are mad as hell about the federal government in particular and—this is crucial for foundations—institutions in general. 

When the Tea Partiers helped Scott Brown to victory in the Massachusetts Senate race, thus taking a seat that the Democrats had held long before the current President was born, it provided a rude awakening to politicians of both parties.  Both Democrats who had dismissed them as the lunatic fringe, and Republicans who had thought they could co-opt them, now realized that this movement was demanding that establishment politicians dance to their populist tune.  

Consequently, we have already seen leaders, from President Obama on down, begin to stake out populist positions, from taxing the banks to gutting the budgets of certain federal government departments. These attempts to placate of the torches-and-pitchforks sensibility will only increase as we approach the November elections.

Once the politicians run out of governmental targets to flog, you can bet that they will turn to other institutions.  Large nonprofits, especially those that pay their chief executives well, are already in the crosshairs.  Maybe foundations will escape the wrath of the populist movement.  Perhaps the sheer lack of familiarity that even the best-informed Americans have with foundations, discussed in my last post, will allow foundations to escape unscathed. 

Evidence suggests, however, that foundations will not be so lucky.  In Michigan, for example, the ambitious Attorney General, Mike Cox, took aim at the Ford Foundation a couple of years ago, threatening legal action on the grounds that the Foundation, which was established in Michigan in 1936, was making an insufficient number of grants in its ancestral home. Ford grants to Detroit rose from $350,000 in 2002 to $5,730,000 in 2008, and Mr. Cox, mollified, stepped back from the legal brink. 

Should politicians decide to sacrifice foundations upon the altar of populism, they will find a target-rich environment. Consider the following facts.  Most foundations pay out about 5 percent of their net asset value, an amount that many consider to be parsimonious even in good times.  Most foundations have cut back on payouts due to the market meltdown, which makes good financial sense, but seems, to people who are hurting or angry, to be the unkindest cut of all. 

Foundations turn down far more organizations than they fund, which means that every day, they make more potential enemies than potential friends.  Most foundations do little or nothing to train their employees, which virtually guarantees that applicants, and even grantees, will occasionally be treated unprofessionally.  Most foundations do little or nothing to improve their processes and “customer satisfaction,” which leaves the people with whom they interact often frustrated and angry. 

Naturally, if politicians come after foundations in order to appease the Tea Partiers, foundations will defend themselves as vigorously as they can.  To put it bluntly, however, foundations should not expect to have many friends standing with them on the ramparts.  The field is widely perceived as ungenerous, unapproachable, unreasonable, unprofessional, and unaccountable.

Moreover, it suffers from the Willie Sutton problem:  foundations are where the money is.  If Congress, in its infinite wisdom, decided that revenue enhancement (and populist appeasement) could be achieved by doubling or tripling the excise tax paid by private foundations, does anyone truly think that there will be a groundswell of support for foundations as they resist such proposals?

A growing number of foundations have been taking their business more seriously, by sending their program officers to be trained by The Grantmaking School, and by commissioning Applicant and Grantee Perception Reports from the Center for Effective Philanthropy. 

Encouraging as this movement is, it is as yet a mini-movement, its participants amounting to less than 1 percent of the U.S. foundation population. So let’s hope that the populist anger and political posturing pass the foundation world by this time. 

A decade or two from now, the foundation world will be better-positioned to respond.  For now, however, they would be well-advised to pray that it is not 1969 all over again.

Note:  My friend William A. Schambra with whom I almost never agree, published a viewpoint article in the February 21 Chronicle of Philanthropy that, to my surprise, advances many of the same arguments.  

Joel Orosz, PhD, is the Distinguished Professor of Philanthropic Studies at The Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University.

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Disclaimers and Disclosures: The views expressed in the CEP blog by guest bloggers are entirely their own and do not necessarily reflect the opinions of the Center for Effective Philanthropy.  

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The Foundation: An Abiding American Mystery

Joel Orosz
by Joel Orosz
March 3rd, 2010
 

This posting’s headline, of course, was inspired by the title of Joel Fleishman’s celebrated book, The Foundation:  A Great American Secret.  Fleishman got it half right, at least according to a recent report by Harris Interactive for the Philanthropy Awareness Initiative (PAI), which suggests that foundations are—even among the best-informed Americans—a mystery beyond fathoming.  This is a finding that should worry all of those who believe in the power, or at least the potential, of foundations to improve the lives of people.

The findings of the PAI survey are, if not shocking, at least depressing.  Only two out of ten people surveyed could identify an example of how a foundation has affected their community, and fewer than four in ten could even name a foundation on the first try. 

What goes beyond depressing to the realm of scary is that the respondents are not the fluffy-craniumed participants on Jay Leno’s “Jaywalking” segments, but rather what PAI calls “engaged citizens.”  Engaged citizens are the 12 percent of the adult population who hold leadership positions, either staff or volunteer, with organizations working on community or social issues. 

If foundations are a secret to more than 60 percent of these people, imagine what an abiding mystery they must be to the “disengaged” 88 percent of our adult population!

It gets worse.  While most of these engaged citizens can’t name a foundation or think of a way a foundation has affected their community, they do have high expectations of foundation performance.  More than three out of four say their communities would suffer without the work of foundations, and nearly eight in ten want foundations to focus grants on finding new and better ways of solving problems.  And nine out of ten believe that it is important for foundations to accept responsibility to serve the public.

So, to summarize, even the best-informed of our citizenry know very little about foundations or their work, but nonetheless have high expectations of what foundations should be doing to help their communities. 

If one thinks that foundations are capable of doing much, but one also thinks that they are doing very little, there is a definite disconnect.  The PAI survey does not suggest that such a disconnect has yet inspired the highly engaged respondents to grab their torches and pitchforks, but it does raise the question of whether an unaddressed gap between what is expected and what is delivered might turn “highly engaged” citizens into “highly enraged” citizens.

There are two possible explanations for the cognitive dissonance highly engaged citizens experience when considering foundations.  Either foundation performance 1) has been lousy, or 2) has been effective, but not well communicated, either of which would explain the perceptions of trifling impact.  Fortunately for foundations, the respondents seem to believe the latter:  nearly 90 percent think foundations should be more open with the public about their activities, mistakes, and lessons learned.

If ever there was a wake-up call to foundations to do a better job of sharing their wins, losses, and learnings with their natural allies in the social sector, the PAI survey has rung it up. There is no guarantee, especially in these straitened economic times, that engaged citizens will continue to blame the gap between their perceptions of high foundation potential and low foundation performance upon ineffective communications. 

In fact, it seems likely that, sooner or later, the conclusions will shift from “they’re doing a lot, but don’t tell us about it” to “they don’t tell us much because they aren’t doing much.” 

True, communicating good news is not easy, but in this age of viral marketing, there is no excuse for the good work of foundations to be an abiding mystery among even the best-informed citizens. 

If that omission is not corrected, and soon, foundations may pay a big price the next time they need public support, whether to buttress their funded programs or to defend themselves from misguided regulatory efforts. 

The time to make friends is not after the bar fight has begun.  For foundations, friend-making time is now.    

 Joel Orosz, PhD, is the Distinguished Professor of Philanthropic Studies at The Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University

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Disclaimers and Disclosures: The views expressed in the CEP blog by guest bloggers are entirely their own and do not necessarily reflect the opinions of the Center for Effective Philanthropy.

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Comments3 comments, most recent by Janet Camarena on Mar 10:
This PAI study underscores the need for foundations to strive to have "glass pockets"--a phrase coined by Russell Leffingwell, a Carnegie board chair over fifty years ago. Glasspockets (www.glasspockets.org), a new web site developed by the Foundation...

Introducing Guest Blogger Joel Orosz

Phil Buchanan
by Phil Buchanan
March 2nd, 2010
 

One of the best books about foundations I know is one that gets too little attention. It’s Effective Foundation Management: 14 Challenges of Philanthropic Leadership – And How to Outfox Them by Joel Orosz. It should be required reading for every new foundation CEO and board member, because it lays bare the pitfalls that await them.

Its author, Joel Orosz, is one of the clearest-thinking people I know, and he writes with great wisdom, wit, humor, and insight – drawing on his experience as both a foundation insider (at the WK Kellogg Foundation) and someone studying foundations. Among his most important contributions to effective philanthropy is that he identified a need for better education and training for program officers, founding The Grantmaking School at the Johnson Center for Philanthropy at Grand Valley State University.

Over the past eight years, Joel has been a huge encourager of our work at CEP and provided wise counsel in his role as a member of our Advisory Board. He cares passionately about foundation effectiveness and has done much to advance it.

I, for one, missed his presence on the philanthropic scene greatly – no one is more fun to banter with at a conference – during his recent medical leave of absence. It’s more than great that he is suited up and back in action again.

And we are thrilled that he is bringing his game to our stadium as CEP’s third guest blogger. I know you’ll enjoy reading what he has to say.

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Phil Buchanan is President of CEP

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Funders Should Do More to Help Nonprofits Build Evidence

Ellie Buteau, PhD
by Ellie Buteau, PhD
February 23rd, 2010
 

Announcing the final funding guidelines for the Social Innovation Fund last week, the chairman of the Corporation for National and Community Service Board said, “It’s just crystal clear we can’t continue to be funding social programs the way we’re funding them without more evidence of success.”

As I discussed in my last post, I see the Social Innovation Fund – and its focus on evidence – as a welcome push in the right direction. While there have been funders and nonprofits that have worked hard to assess effectiveness over the past many decades, we remain well short of where we need to be.

Admittedly, assessment in philanthropy is complex. It happens at multiple levels:  1) determining which grantees to fund; and 2) assessing a foundation’s own overall effectiveness. These two levels are interrelated, of course, but each has its own set of challenges.

Cutting to the heart of the first level’s challenges are the requirements in the SIF Notice of Funds Availability’s “Applicant’s Track Record of Using Rigorous Evidence to Select, Invest in, Support, and Monitor the Grantees” section. Funders must describe the process they use to “incorporate evidence into the selection, investment, support, monitoring, replication, and expansion of your grantees” and provide “in detail specific examples of how your organization has used rigorous evidence to drive program improvement and increase the base of evidence of what works.”

Neither of these requirements would be easy for most foundations to fulfill.

Today, too few funders use “rigorous” evidence to select the nonprofits they fund or to drive the development of their own goals and strategies. But, while I applaud the push that SIF NOFA requirements provide, any move in the direction they suggest must be made thoughtfully.

These guidelines should not be taken as an invitation to put the onus on grantees to suddenly produce evidence of their effectiveness independently. As I said in my post last week, many nonprofits are understaffed and underresourced, lacking the people, skills, and/or funds to conduct evaluations or collect data. Funders should proactively offer support – monetary and nonmonetary – to help grantees develop the needed systems and data to more rigorously test their effectiveness. 

Today, too few funders provide the needed support for nonprofits to build better evidence bases about their work.  At CEP, we have analyzed data from over 30,000 surveys of grantees of nearly 250 funders, and the facts speak for themselves:

  •  Just 11 percent of grantees report that their funder helped them with the development of performance measures
  • Only 11 percent say their funders provided them with research or best practices
  • Of the 58 percent of grantees who reported having participated in a reporting or evaluation process, less than half (44 percent) report that after submitting a report or evaluation, their funder or an evaluator discussed it with them

These facts have consequences.  We know from our data, for example, that when discussions of a report or evaluation do not happen, grantees find the reporting/evaluation process to be much less helpful in strengthening their work. 

Funders have an opportunity – and an obligation – to step up and share responsibility for the development of more rigorous nonprofit performance data.  Because if nonprofits are in a better position to answer questions about what works, funders will be able to better decide where to direct their resources, and subsequently have  more answers to questions about their own effectiveness.

If the Social Innovation Fund can act as an impetus for this kind of evolution, that is a very good thing indeed.

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Ellie Buteau, PhD, is Vice President-Research at CEP

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Experimental Design Can Be a Powerful Evaluation Tool

Ellie Buteau, PhD
by Ellie Buteau, PhD
February 17th, 2010
 

The White House’s Social Innovation Fund, which will support intermediary grantmaking institutions that “identify and invest in promising organizations to help them build their evidence-base and support their growth,” has been a topic of much discussion and debate. Among the concerns has been the Fund’s focus on evidence of nonprofit program effectiveness and, in particular, its focus on evidence of effectiveness being based primarily on experimental design approaches.

In an op-ed in the Chronicle of Philanthropy, Katya Fels Smyth, founder and principal of the Full Frame Initiative, argues that “No one benefits” from the Fund’s proposed approach. “Not the best ideas for helping the nation’s most vulnerable, not the taxpayers, not philanthropy, and, most important, not the communities that most need help achieving a decent quality of life.”

Her critique is rooted in an inaccurate conception of what it means to take an experimental design approach. She asserts that experimental design must “require a very narrow definition of who is being studied, and people who face multiple intertwined challenges—who are the most in need—are excluded. So, for example, if a new approach to helping homeless mothers is under scrutiny, experimental-design evaluation would exclude battered women, those with chronic health problems, or those involved in the criminal-justice system unless everyone had the same problems.”

But that is simply not the case.

An experimental design approach need not be totally removed from the complexities of the real world or prevent innovative approaches from receiving serious consideration. Many factors can be taken into account through the design and statistical analysis processes.

For example, in one of its randomized trials, Nurse-Family Partnerships, which is now a grantee of The Edna McConnell Clark Foundation, had an objective “To investigate whether the presence of domestic violence limits the effects of nurse home visitation interventions in reducing substantiated reports of child abuse and neglect.” Participants did not fit a “very narrow definition” but instead differed in a number of important ways, including the number of domestic violence incidents in the family, race of the mothers in the study, mother’s marital status, and the employment status of fathers. These differences were taken into account when the data for this study were analyzed.

My experience with foundations and nonprofits tells me that we certainly are at no risk today of over-emphasizing rigor in how assessment is approached. Nor is it the case that a greater emphasis on rigor – and on really understanding what works and what doesn’t – need crowd out other valuable approaches to getting feedback.

The promotion of experimental designs often has a polarizing effect: this has been true in the field of education with the What Works Clearinghouse, psychology’s approach to the study of social issues, and in the nonprofit community and field of evaluation as well. Proponents sometimes act as if it is the cure for all evaluative ailments; opponents sometimes act as if it is the root of all evil.

But being in support of the use of experimental designs is not necessarily in tension with supporting nonexperimental designs, case studies, and the use of qualitative data (the importance of which Bob Hughes, from the Robert Wood Johnson Foundation, wrote about in a recent CEP blog post). Any design should be selected because it is the best way to answer a particular question, and the question to be answered should be directly related to the stage of the organization or program being tested. Not all questions in the field are best answered through an experimental design approach. But some are. I see experimental design as an important tool for the field to use to understand the effectiveness of its work.

Experimental designs allow us to rule out alternative hypotheses in a way that no other designs do. When testing the effectiveness of a social program being offered to those most in need, doesn’t it behoove us to get as close to an understanding of causation as possible?

We should seek to be as confident as possible that a program has positive benefits and isn’t yielding no – or even negative – effects. Philanthropy should be looking for the models that have potential to really make a difference on our toughest social problems. The field has a moral obligation to demonstrate, to the best of its ability, that a program works before funneling significant resources to expand it.

Admittedly, these are weighty statements. Many nonprofits are understaffed and underresourced, lacking the people, skills, or funds to conduct evaluations or collect data. A small nonprofit might have an excellent innovative idea that deserves to be tried on a larger scale and tested more rigorously. This is where funders come in. They have a crucial responsibility in this.

I will take a closer look at that responsibility in my next post.

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Ellie Buteau, PhD, is Vice President – Research at CEP

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Comments7 comments, most recent by Ellie Buteau on Feb 23:
I could not agree more with Teri Behrens when she advises: “use the most rigorous method available that is suitable to the question being asked.” Isaac Castillo, you say you believe that experimental design has “a time and a place, but that is...
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