Let me say up front that I am a big admirer of CEP. The field needs an independent voice devoted to the comparative assessment of philanthropic practice, and CEP has helped many foundations, including RWJF, improve over the last eight years. So I was pleased when Phil Buchanan asked if I would write several posts for CEP’s blog, especially knowing that CEP welcomes critical perspectives as well as bouquets.
Each of these posts provides a welcome opportunity to share some preliminary thoughts and provoke discussion on four questions that have been on my mind recently:
- Why haven’t foundations made more progress in becoming strategic? (two parts)
- Can failure be the key to foundation effectiveness?
- What are the limits of quantitative performance measurement?
- Can foundations be learning organizations?
Why has there been so little progress in foundation strategy? It’s been a decade since the Porter/Kramer HBR article on strategy, and it seems reasonable that with the extensive attention to strategy since then we would see more signs of improvement.
So I anticipated some good news from CEP’s latest paper, Essentials of Foundation Strategy. Unfortunately, when it comes to strategy, the results left me thinking that philanthropy’s glass is half-empty.
As the report states, “Even with what is possibly a more strategic than typical set of respondents, our findings paint a sobering picture of the challenges of foundation strategy.” Among the findings from the responding foundations:
- Only half of the CEO’s report a shared understanding among the Board, CEO, and the staff of the foundation’s goals
- A majority don’t have a logic model
- Just one-fourth use performance indicators to assess all their strategies.
These results raise questions about why foundations have such difficulty with strategy, especially in the context of significant attention to adopting strategy over the past decade. In probing for possible explanations I’ll explore two topics that the report introduces: the problem of goals (in this post) and the concept of “unique positioning” (in the next post).
Having clear goals is essential for strategy, and for assessing performance. It is hard to know how you’re doing if what you’re trying to do is ambiguous. And of course, ambiguous goals inevitably make measuring performance a frustrating activity.
It is easy to overlook how difficult it is to specify clear goals that are useful for decision making and performance assessment, especially for foundations. Foundations often take on quite ambitious goals that don’t guide decisions.
Susan Colby and colleagues acknowledged this in a 2004 article in Stanford Social Innovation Review (SSIR). “Zeroing in on Impact,” introduced the concept of “intended impact” to fill the gap between an audacious mission and actual decision making. “Intended impact is a statement about what the organization is trying to achieve and will hold itself accountable for within some manageable period of time.”
The article notes that developing strategic clarity is a process, not a formula. Perhaps more importantly, it recognizes that doing this work is hard, it causes disagreements, and it always means that those who don’t agree with the decisions will be unhappy. For foundations, this can mean trustees, staff, and grantees.
Goals are almost always contentious as they are developed, and, once established, they are contested continuously. A range of interests among participants in goal-setting often leads to adoption of overly broad goals that accommodate as many of those interests as possible. These goals are often stretched by constant requests for expansion through both external stakeholders and internal staff and trustees with related, but off-target agendas.
Maintaining discipline in the face of these eroding pressures is hard work. But it is necessary because goals have two important functions. The first is to set out a positive direction to help guide decisions. The second function, which Porter and Kramer noted in their seminal article, is to clearly say what the foundation will not be doing. This is often a source of conflict, as any funder who has decided to leave a field well knows.
And note that very few efforts to become strategic start from scratch – most are undertaken in the context of a web of relationships with powerful stakeholders that make change daunting. Vague or ambiguous goals impede becoming strategic, but we can see the reasons for them and why it is hard for foundations to move away from such goals once they are in place.
Bob Hughes is an independent consultant on strategy and organizational learning in health and philanthropy.
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.