Strategy is something that people in philanthropy seem to talk about a lot. What they do, though, may be another matter. In recent months, I’ve had a number of conversations with philanthropic leaders who admit that they’re still somewhat perplexed when it comes to creating and implementing a solid strategy for their investments.
- A senior consultant was asked by two large national foundations to create a strategy for them, but when he presented that strategy, the funders said they were “only interested in how many people we reached”—outputs, in other words. When the consultant tried to emphasize the importance of linking those to a larger strategic framework, they responded, “We only care about results.”
- The deputy director of a large regional foundation, charged with helping each of her program staff members create a grantmaking strategy, expressed frustration about their tendency to “drill down immediately to tactics,” rather than grappling with clarifying the goals and rationale for those efforts first. She wondered how to help them understand that “without the why, they won’t be able to assess whether the tactics they decided to use were effective.”
- A foundation official speaking at a conference said his foundation’s strategy was to “end homelessness in their community.” An audience member, also a foundation executive, responded by observing that this seemed to be a goal, rather than a strategy, and that the two seemed to increasingly be “conflated in ways that lead to confusion about what philanthropic institutions are doing, how and why.”
These anecdotes are hardly evidence of a trend, but they’re a few of many examples I’ve seen indicating that the concept of strategy remains murky, despite all the publications and tools available to help people who work in philanthropy dispel that cloud.
But why? It’s hard to say for sure. Perhaps it’s because creating a strategy and then rolling it out in ways that will achieve impact are all different parts of one complex concept—and none by themselves are easy to do, let alone in combination. Another reason may be that the array of sometimes expensive and confoundingly complex strategic planning products available can leave even the smartest foundation officials scratching their heads in confusion. Others point to the influx of a new set of players in philanthropy, including young people or those whose backgrounds make them more interested in doing than in navel-gazing, which is sometimes how strategy is characterized.
Perhaps the most commonly cited reason for funders to eschew more intentional and rigorous strategy development is that there’s little incentive for them do to so, given that philanthropic institutions tend to operate with few formal accountability structures, especially those that are externally imposed. As the public, however, becomes less enamored with institutions, particularly those that are seen as reluctant to adopt the open source ethos that’s becoming a cultural norm, there will be more, not less, demand for accountability and transparency from even the most closed-door organizations. And unlike some foundations that define transparency as publishing an annual report or articles describing what they’re supporting, the public, especially grantseekers, have long known that real transparency is when funders are clear about what they’re doing, the decision making criteria they’re using to make investment decisions, and how they’re going to assess themselves in those efforts. In short, people want to know: What’s your strategy and why?
Fortunately, strategy isn’t really that complicated. While it does require the ability to think logically and articulate a rationale as to why a particular path is chosen over another, it isn’t rocket science. Nor should it take forever and serve as a proxy for actually doing something. How many times have you heard ‘We’re revising our strategy’ from foundations that you thought did that already last year… and the year before that… and before that…?
What strategy can do, however, is make a better rocket—and one that lands where it should. And who doesn’t want that?
To help make things a bit less mystical, and thus, more likely to be applied in daily practice, we might take a page from the book of some wise people who were developing effective funding strategies long before the advent of the strategy gurus. One of those people was Andrew (a pseudonym), with whom I had the good fortune to work. Andrew came to philanthropy after organizing thousands of women in one of the country’s poorest communities to secure child care subsidies they needed to stay employed—a result that led to significant changes in national welfare policy. In addition to serving as the president of a foundation, Andrew also was the senior vice president at a family foundation with a national focus.
It’s worthwhile to note that Andrew didn’t have an Ivy League degree, hadn’t worked at a multinational consulting firm, and had probably never even read a book about philanthropic strategy. He was, in fact, deeply skeptical of foundations and their capacity to make a difference, but was, at the same time, roundly viewed by his peers as a brilliant strategist because of his ability to home in on difficult problems with laser-like focus and get results. He was also able to project out longer-term visions and predict which would have traction, but only as a function of rigorous evaluation and assessment—processes he built into every program he oversaw.
Lucky for those us who worked with Andrew, he was an excellent teacher from whose wisdom we benefitted. While none of us would call ourselves strategy experts, we’ve all been able to apply what we learned from him to our work with different kinds of foundations—traditional/private, family, corporate, community, and technology. Serving in a variety of capacities at these organizations, we’ve developed and implemented strategies that have had legs and longer-term impact (we know, because we learned the importance of building in metrics and benchmarks to evaluate that way before they’d become philanthropic buzzwords).
We’ve also learned a lot about what separates a good strategy from one that’s not so good—mostly because we’ve experienced our share of failures—and what strategy is and isn’t. Most importantly, we learned a process through which we can create effective strategies—one that’s served us and the institutions for which we’ve worked well.
The basic tenets of that process are fairly straightforward and some have been discussed many times before, but they bear repeating. So, in true open source fashion—something that Andrew also practiced before it landed in the zeitgeist—they are shared below.
Developing an effective strategy starts with an open mind and a willingness to step back and explore all options. When developing strategy, it’s important to assume a position of explorer, rather than expert. Andrew, in fact, tended to hire people who had a broad range of experience as generalists able to see the big picture and flesh that out with important details, as well as the ability to identify the gaps, assets, opportunities, and challenges associated with issues or problems.
They were also skilled at exploring and answering questions such as:
- What are the most important issues in a particular domain?
- What are the debates occurring among various practitioners and theorists about those issues?
- What kinds of efforts are being tested in communities?
- Which are promising?
- What field-building is needed to support those efforts?
- What does the data and research say about the issue/projects/trends?
People working for Andrew were asked to provide answers to those questions, but in a way that was as unbiased and objective as possible—and, preferably, based on information that had some evidence behind it.
This approach was in contrast to what occurs in some philanthropic institutions, which usually involves one of two scenarios. The first involves hiring experts on specific subjects or issues as program staff and then charging them with developing programs based on that expertise. The second is commissioning outside consultants to conduct environmental scans but then using only the part of those reports that “fit” with the funder’s predilection for a particular strategy as the rationale for pursuing that strategy. Missed in both of these approaches is an awareness that deep knowledge of a particular subject can sometimes be accompanied by deep biases about what’s “best”—a stance that mitigates the likelihood of identifying alternative, new and/or more effective options for effective strategies. Even experts, after all, don’t know everything and, in fact, can be saddled with more misguided preconceptions than the novice.
Other philanthropic institutions simply don’t give program officers the space and freedom to conduct serious and thoughtful analyses of the issues or domains in which they’re working. A colleague who recently interviewed for a job at a foundation, for example, was asked by senior officials what she would fund if she assumed oversight over a particular program. When she replied that she couldn’t answer that question thoughtfully because she hadn’t had the chance to look more deeply at what the field needed, what the best approaches were, and/or what was really working, the interviewers were astounded, having assumed that she’d have her strategy set in stone before she even started. Fortunately, that didn’t deter her from getting the job, and, to the foundation’s credit, they allowed her the room to dig deeper, which led to the development of two new programs that were later nationally recognized as being instrumental to moving a policy agenda. Those results, in turn, spurred the institution to incorporate this process across all program areas—one that’s still used currently.
Create a template for strategy development that’s supported by research, analysis, and evidence. Inherent in Andrew’s strategy development process was a template that included the following elements: a comprehensive overview of the issue/field/area being examined (rather than just the parts that interest the program officer or its executive staff); a compelling and evidence-based rationale for why the foundation should be engaged in this issue/field/area (and not just because the program officer or executive staff think it should); a discussion of the foundation’s historical interests, experience, and/or mission and how it relates to the issue/area/field (and if there is no relation, why there should be now); a set of goals the funder could consider pursuing, as well as objectives for each of those goals; and the strategies that would be best to implement in meeting those goals and objectives. An essential piece of each of these components was describing, in detail, the why behind them. Why should we do this and not that? And on what basis are we making those decisions? What are the pros and cons of each and why?
Goals are related to strategy, but they’re not the strategy. ‘What would success look like’ isn’t a throwaway question, and it’s been reiterated in numerous strategy how-to guides, but it’s surprising how many funders still overlook the importance of this question as a critical starting point for creating effective strategies. As one foundation vice president remarked, “I tried to get my younger staff members to think about the goals of their programs before coming up with strategies, but they stared at me like I was from Mars,” saying that “talking about the goals was too academic and airy-fairy.”
The distinction between goals and strategy isn’t just a semantic issue; they’re different concepts. Goals are what we are striving toward; strategies are the way we get to them. Goals should be the starting point, but, often, there’s a tendency to rush to the toolkit. Skilled strategists argue that it’s almost impossible to develop effective strategies by starting with tactics, activities, or even strategies themselves. Instead, the best strategies start with the end goal at the top of the pyramid, with the rest flowing down from that, including objectives, strategies to meet those goals, and then activities or tactics.
Tactics/activities have to be linked to strategies. It’s natural for people to want to jump right into the activities but doing so without attaching them to the why will most likely lead to disappointment and, ultimately, failure—and a lot of wasted time and money. That tendency isn’t limited to grantseekers; funders are equally as susceptible to fixating on the do without linking it to a strategy or goal. But some funders have the opposite problem; they focus only on the issue itself, providing eloquent, academic arguments and analysis about poverty, education, or other “problems” and why they need to be addressed but then never say what, exactly, they think should be done about them. It’s rare to see an artful and logical strategy linking both tactics and rationale, but when done well, this weaving offers a clearer picture of not only what funders are supporting, but why, how, and to what end—the essence of good strategy.
Benchmarking and measurement aren’t just for grantees; funders should be using them in evaluating their own program planning and implementation efforts. While there has been a lot of attention toward helping grantees build in metrics and benchmarks so they can be more readily evaluated, there has been less attention paid toward the need for funders to do likewise when developing and implementing their own program strategies. (Some of us, in fact, believe that considerable tension between grantees and funders could be reduced if funders were held to the same accountability standards to which they hold grantseekers.)
An important part of the template, therefore, is outlining, clearly, and preferably in quantitative terms whenever possible, how program staff is going to measure or assess each of the strategies and/or activities that will be part of the program. Each element, for example, should be accompanied by indicators that answer the questions:
- What will progress look like to us—the foundation—not just the grantees—in terms of our ability to do what we said we were going to do and how will we know?
- What will we use to determine whether we’ve met our program objectives?
- How can we “operationalize” the objectives with indicators?
- What’s the timeline we anticipate to meet those objectives?
- Which can be done sooner and which require a longer time period?
Strategy isn’t a box; it’s a membrane. People tend to bristle at the notion of indicators or metrics because they can feel limiting or as if they’re “boxing us in” and, indeed, in some ways, they are because they’re a prompt for “concretizing the vision” in ways that invite more accountability for what’s supported and what isn’t. But programs don’t operate in a vacuum; times change as does the context within which programs are operating. A strategy focused on long-term change around a particular issue, for example, may need to be more flexible and/or tweaked if an opportunity suddenly emerges that may not fit the original template but is one that would clearly enhance the likelihood of added impact.
Thus, while it’s important for funders to have a solid strategy behind their efforts, it’s equally important for them to review that strategy on a regular, consistent basis to see what’s working and what’s not—a process that is helped by having good progress indicators in place. In Andrew’s model, we were asked to develop this template with a three-to-five-year timespan but with the understanding that we would, every six months or so, re-examine it to assess the progress wewere making in the context of the indicators we’d stipulated. This process allowed us to see where there was a need for tweaking or, in some cases, making more profound changes to the original strategy.
Strategy includes an assessment of what other investors are doing. Like many of us, funders can easily become wrapped up in their own sense of importance and/or buried in their own cultures to the extent that they forget to look around and see what others are doing. As part of Andrew’s process, we not only shared our strategy papers/templates with other staff members but also with peers at other foundations to get their feedback and insights as to what they thought we should be doing, either in ways that would leverage or complement their efforts or address gaps they were unable to resolve. While this kind of collaboration is gradually increasing in philanthropy, it’s still relatively rare for funders to proactively engage their colleagues in open conversations about their strategies, despite the potential for enhanced learning—something that needs to change, particularly at a time of decreased resources.
Theories of change are nice, but they’re not enough. When used appropriately, theories of change can be very helpful in developing effective strategies, but they aren’t a proxy for strategy—a trap that some funders fall into when describing what they’re doing. Theories of change, generally, don’t usually include the how or why behind a problem or issue, nor do they explicitly detail tactics or strategies. Rather, they offer a set of assumptions about how an investor views a particular issue or problem and how it should be addressed—a rubric from which the rest of a strategy can emanate.
Good strategies find the nexus between feasible investment options and institutional focus. Conducting a comprehensive exploration process to pinpoint areas of possible investment is only one part of good strategy. The other part is matching these findings with the institution’s overall focus, history, or legacy—a step that’s sometimes ignored. A foundation that’s been historically focused on higher education, for example, isn’t necessarily going to eagerly embrace a community-organizing or ham-fisted advocacy strategy. A funder who’s supported nonprofit technological innovation isn’t going to view a strategy focused on capital endowments as a particularly compelling way to leverage their experiences or investments. A good planning process, therefore, will highlight the intersection between a funder’s interests and experience in ways that will help leverage the latter more strategically.
The process to develop strategy should inform, not shame. Just as it’s hard for grantees to tell funders about failures, it’s hard for funders to admit them, largely because few institutions invite that kind of candor, nor is there much incentive for it. Developing effective program strategies can and should be opportunities for strengthening communication and collaboration not only within philanthropic institutions but across them. When program officers are encouraged to present their strategies to their colleagues in a atmosphere that’s intellectually challenging, yet supportive, it can lay the foundation for more openness about their progress as the strategy unfolds, including what didn’t work and what did and why—information that’s critical to deciding whether the strategy should change.
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These are just a few of the pearls of wisdom gleaned from Andrew and others like him who’ve since helped to prod funders into being more strategic about their efforts. There are certainly many more. What’s important to remember, though, is that none of these require a Ph.D. to understand or integrate into practice; they’re merely a set of guideposts that can help lead to the creation of better programs, and ultimately, results.
Those kinds of guideposts are going to become even more important as funders operate in an environment in which the demand for more accountability is growing across a wide spectrum of institutions and domains, as well as in a world in which the problems facing philanthropy are more complex than ever before. That context suggests funders will need to be even more intentional about clarifying what philanthropic investments they’re making and why and with what anticipated results. Integrating a more thoughtful process for developing strategies with a higher potential for success can be the first step toward meeting that challenge. Thankfully, that isn’t rocket science.
Cynthia M. Gibson, Ph.D., is an independent consultant for a wide range of national nonprofits and foundations who serves as a strategist, thought leader, and writer.
