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.
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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.
| Posted in | Assessing Performance, Developing Strategy |
| Tags | Essentials of Foundation Strategy, foundation effectiveness, foundation strategy, goals |
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This post was mentioned on Twitter by adincmiller: Great post by RWJF’s Bob Hughes on why foundations haven’t made more progress in becoming strategic in grantmaking: http://bit.ly/6CcsCA...
Liked Bob’s post. Perhaps one reason why being strategic/ deciding what not to do is so difficult for Foundations is because there isn’t crystal clarity and priority about who stakeholders are, and what are Foundations’ accountabilities to those stakeholders.
[...] by Allison Fine on January 7, 2010 I read the post “Why Haven’t Foundations Made More Progress in Becoming Strategic?” by Bob Hughes on the Center for Effective Philanthropy’s (CEP) blog with interest. Hughes [...]
Thanks for the comments. Let me punctuate my colleague Robin Mockenhaupt’s point about stakeholders: a challenge for some foundations is that the very act of selecting their goals, or changing them over time, de facto changes their stakeholders. At the same time, current stakeholders often work very hard to see that their interests are incorporated in any changes. These dynamics underscore the contested nature of the goal-setting process.
Allison Fine makes an important point about the range of ways foundations can and do work. To me it cycles back to the value of being clear about goals. If a foundation’s goal is to be, using CEP’s terminology from Beyond the Rhetoric, a charitable banker, and to give money to charitable causes mainly for the expressive benefit of giving rather than achieving some social goal, that is fine. The heterogeneity of the sector is a key strength; all foundations shouldn’t be strategic in the same way. But what seems to occur sometimes is a foundation positing ambitious goals, but then acting like a charitable banker. That situation offers opportunities, albeit usually quite challenging ones, for aligning goals and behavior.
I wonder if Mr. Hughes could comment on how this applies to non-foundation corporate giving which is very often conducted with corporate dollars and not through a foundation.
Corporations have learned the hard way due to the world recession that all spending must be strategic. Hence, I wonder if Mr. Hughes has any insight into how non-foundation corporate has become more strategic as a result of the current economic climate.
I wonder if a different set of questions might be more fruitful in identifying what actions support “being strategic” and how to move them forward. For instance:
1. What is strategic, as opposed to effective, deliberate etc?
2. In what ways have foundations demonstrated their “strategicness” (think I just made that up) and to what end?
3. What have we learned to date about being strategic (across fields and sectors) and how can that enhance the efforts underway in philanthropy?
As you can see, I tend to see things from a “what is working” viewpoint. In evaluation, it is often referred to as an appreciative inquiry lens. I believe the questions we ask determine what we find.
Most major donors and foundation staff I know are not interested, as Alison suggests, in doing what “simply makes them feel good.” They are interested in maximizing the positive impact of the resources with which they have been entrusted. It’s only when they have confidence that they’re doing so that they feel good.
The problem isn’t that it’s “unnatural” but rather that it’s challenging – for all kinds of reasons including those discussed by Bob so well in his post and those discussed in our report, Essentials of Foundation Strategy.
But all the examples of philanthropic impact I can think of – from the Rockefeller Foundation’s support of the Green Revolution to RWJF’s efforts to reduce tobacco use to the Stuart Foundation’s work today with foster kids – shared some key elements. Clear goals, coherent strategies, and good, relevant performance indicators. There’s nothing unnatural about this. And it’s not even new in the way many assert. The early great American philanthropists often operated in these ways.
Ellen,
Thanks for the inquiry about non-foundation corporate philanthropy. I have no direct experience with this, so I invite others who do to comment. In general, it appears some companies have responded by being more strategic, others have hunkered down. My hunch is that companies that have become more strategic will put themselves in a better position in the future. The alternative – retrenchment – is less strategic because it implicitly assumes a future environment that will reward an unchanged strategy. In any type of organization, a dynamic strategy – one that is under constant review and modification from diverse perspectives and takes into account environmental changes – is more likely to produce better results. We do know that turbulent times often produce some disruptive and transformative innovations – severe economic downturns can be among the most valuable time to experiment with new directions because assumptions are questioned and unanticipated opportunities emerge.
[...] Hughes in “Why Haven’t Foundations Made More Progress in Becoming Strategic?” states: Having clear goals is essential for strategy, and for assessing performance. It is hard [...]