Posts Tagged ‘developing strategy’

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Putting Grantees In the Center of Your Map

Tuesday, January 24th, 2012

This is the second post written by Paul Beaudet of Wilburforce Foundation on the complex relationship between funders and grantees. Last week in Doing Less with Less, he raised the issue of unrealistic expectations by some funders that nonprofit organizations would maintain their prior level of activity despite the impact of the economic downturn and the subsequent recession. He discussed alternatives to this practice and what he calls a shift from transaction-based grantmaking to interaction-based grantmaking. This week, Paul expands on that proactive approach for funders, focusing on the effect of using strategy to shape funders’ work with grantees. That requires a greater investment of time and attention on the part of funders, but in the example of Wilburforce, suggests greater effectiveness and progress toward achieving mission-driven goals.

 

The Center for Effective Philanthropy (CEP) defines foundation strategy as “a framework for decision-making that is 1) focused on the external context in which the foundation works, and 2) includes a hypothesized causal connection between use of foundation resources and goal achievement.”

Loosely restated, this says 1) foundation strategy should focus on the change that you are trying to make in the world, and 2) any logical person should be able to see the connection between how you spend your time and money and that change.

Most foundations are able to articulate one or more goals– ending homelessness, building a more just and sustainable world, eradicating disease – to name a few examples. Many also acknowledge that these goals are ultimately achieved individually and/or collectively by the grantees in which we invest. But very few foundations explicitly include grantee-specific outcomes in strategic plans, outcome maps, logic models and theories of change.

In our early years, Wilburforce didn’t do that either. We do now, and it has transformed that way we approach our grantmaking.

Wilburforce Foundation was founded in 1991, addressing a variety of environmental causes. In 1998, we created a strategic framework to prioritize the protection of specific, critical habitats in Western North America. Our plan focused on audacious long-term goals, such as protecting the last remaining pristine places, and assuring strong and lasting public support for wilderness preservation. We assumed that if we picked the right grantees and they reported the right types of short-term successes, we could make a leap of faith and assume we were having a longer-term impact. This approach was dissatisfying to our staff and board. We knew we could do better.

So, in 2004, we decided to refresh our strategy and develop deeper understandings of the ecological, social and political contexts of the places we were striving to protect. We realized that the vast majority of our grantees were receiving consistent annual support from us. We were increasingly relying on these grantees to provide on-the-ground wisdom that informed our work. And we were stepping up our investments in capacity building to improve the efficiency and effectiveness of these partners.

We began scanning for the latest thinking on foundation effectiveness, and encountered a monograph that led to a “Eureka!” moment. The Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership’s report Agile Philanthropy: Understanding Foundation Effectiveness, included a logic model that showed a causal relationship between a foundation’s investments and its desired social change linked to grantee relations, grantee capacity and grantee outcomes:

The Wilburforce outcome map and logic model was built on this framework, and describes the causal links in our strategic plan by more clearly highlighting the importance of grantees in achieving our goals:

By organizing our work in this way, we are better able to describe the logic of our approach to long-term social change:

  • Grantee relations: Since grantees are partners, we must communicate clearly, consistently and frequently to better understand each other’s goals and strategies, develop trust, and address opportunities and/or threats that inevitably arise. We often learn more about issues, strategies and tactics from our grantees than they do from us. We hired additional staff to ensure that our foundation had sufficient capacity to nurture grantee relationships, and we developed processes to shift from transaction-based to interaction-based grantmaking. We also consistently use CEP’s Grantee Perception Reports to provide feedback about how well we’re doing.
  • Grantee Capacity: Using what we learn from our grantees, we feel better equipped to make smart investments in their programmatic and operational capacity. We invest heavily in capacity building service providers that offer customized consulting, coaching and training in leadership development, fundraising, financial management, human resource management, strategic planning, and engagement technology. We also underwrite and share conservation and social science.
  • Grantee Results & Sustained Social Change: If grantees are receiving the support they need to sustain their operations and programs, these organizations will likely be better able to engage in effective work that creates change. Wilburforce also has a better sense of the return on our investments since we can make a logical connection between what we do and what our grantees achieve.

In practice, Wilburforce starts with the change that we desire, which, stated simply, is to create a network of protected habitats that sustains wildlife populations. We select priority regions based on conservation science, and work to identify the local advocates who have, or can develop, the capacity to respond to opportunities and threats to these ecoregions.

One of the earliest places that we fully embraced the Agile Philanthropy model was in the Great Basin. Nevada and Oregon sit at the heart of this remarkable landscape, which contains some of the wildest, most remote lands in the continental U.S.

When we began funding in the Great Basin, there were a few underfunded organizations with passionate leaders working in a region with enormous opportunities and not much history of public lands conservation. As we refined our strategy and shifted to more “interactional” (and less transactional) grantmaking, foundation staff attended science and strategy meetings, grantee events, and field trips to increase our knowledge of our grantees, their work, and the landscapes they are protecting.

As we forged stronger working relationships with our grantees, we learned about their need for:

  • Greater inter-organizational collaboration;
  • Scientific identification of on-the-ground priorities;
  • Leadership development;
  • General support funds;
  • Membership development and fundraising skills;
  • Board capacity;
  • Technological capacity.

We brought in a team of talented capacity builders at Training Resources for the Environmental Community (TREC), whose associates have deep experience in conservation advocacy and are trusted by our grantees. TREC developed a Regional Conservation Initiative of coaching and training opportunities that targeted services to four organizations with tremendous potential to advance a conservation agenda.

We also brought together a blue-ribbon panel of science experts from academia, federal agencies, and grantee organizations to develop a useful tool for our grantees to prioritize landscapes. And we provided significant, multi-year general support funding, affording the organizations greater stability and staff retention, and the ability to sustain long-term relationships with important constituencies and decision-makers.

Since Wilburforce began funding in the Great Basin, our grantees have helped protect millions of acres of federally designated wilderness. Wildlife refuges have been expanded, new National Conservation Areas have been established, and hundreds of millions of dollars have been allocated for private lands acquisition and habitat improvements on our public lands. And they’re not done yet. Our grantees are ready to use the relationships they’ve built to ensure that renewable energy development on public lands protects wildlife habitat while decreasing our dependence on fossil fuels.

Wilburforce can only succeed if our grantees succeed. And our grantees can succeed only if they are given the funding, tools and resources they need to do their work. By placing grantees at the heart of our outcome maps, we can focus on strengthening relationships and building capacity to empower grantees to achieve the outcomes that ultimately contribute to our shared goals.

 

Paul Beaudet is Associate Director of Wilburforce Foundation and a member of CEP’s Advisory Board.

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Doing Less With Less

Wednesday, January 18th, 2012

Those of us who work for foundations want our grantees to invest in core activities that more efficiently and effectively contribute to desired outcomes. Yet funders may make it harder for grantees to do so, often by focusing exclusively on specific grant-funded activities — as opposed to outcomes — and by underinvesting in core organizational needs.

The National Bureau of Economic Research pegged the official end of the 2008/2009 recession in June of 2009. That may be true, but many foundation leaders recognized then that battered stock market valuations were only the start of what would likely be a multi-year drop in grant making, since payouts were tied to a rolling average of diminished investment portfolios.

That year, I heard far too many colleagues casually suggest that we needed to help our grantees “do more with less.” That remark has been echoed at conferences and convenings ever since. At a foundation event this fall, I challenged a colleague who expressed surprise that grantees still seemed to be doing too little to embrace the fundamental wisdom captured by this phrase. I think I understood the intent behind his lament. But the message he and others may be unintentionally conveying to grantees is unfortunate: that we believe that nonprofits have substantial resources that are being inefficiently deployed, and those of us who work for foundations would do a better job of managing the stress of decreasing revenues and increasing demand for services.

At Wilburforce Foundation, we work with grantees over the long term to protect wildlife habitats in Western North America. Investing in and disseminating science, working with local communities to build support, and convincing policymakers to endorse durable conservation solutions takes time, often years.

Many of our grantees are highly dependent on foundation grants, and we have seen firsthand the consequences of their attempts to do more with less. We’ve been tracking financial data for all of our grantees, including annual revenue and expenses, cash holdings, and net assets. Since the recession began in 2008, more than one third of the groups we support have experienced decreases in net assets of 10 percent or more, and many more have cash-flow cushions that can be measured in weeks, not months.

One of our grantees nearly collapsed in the aftermath of the recession. Many of its programs were funded by restricted grants, and foundations invariably wanted their grant-funded activities to be part of the “more” this group should sustain with “less.” This grantee was shoveling increasingly scarce general support dollars to these programs. The organization only recovered after it jettisoned underfunded projects and sacrificed the foundation grants that had ultimately harmed the organization.

Another grantee relied heavily on one foundation for significant support of its largest program, subject to an arbitrary cap of 15 percent of overhead expenses. The true cost of its organization overhead was closer to 25 percent, and its net assets plunged as the group tapped unrestricted funds to pay for its core needs.

In fact, I see far too many organizations trying to do “more” by sacrificing living wages for its staff, shifting the cost of benefits to employees, cutting professional development budgets, and working with obsolete technology.

An article in the Stanford Social Innovation Review in 2009 described what they called the nonprofit starvation cycle, and attributed much of that problem to funders:

“The first step in the cycle is funders’ unrealistic expectations about how much it costs to run a nonprofit. At the second step, nonprofits feel pressure to conform to funders’ unrealistic expectations. At the third step, nonprofits respond to this pressure in two ways: they spend too little on overhead, and they underreport their expenditures on tax forms and in fundraising materials. This underspending and underreporting in turn perpetuates funders’ unrealistic expectations. Over time, funders expect grantees to do more and more with less and less—a cycle that slowly starves nonprofits.”

So, let’s dispense with tired clichés. Jan Masaoka, director and editor-in-chief of Blue Avocado and former executive director of CompassPoint Nonprofit Services, has better advice for nonprofit leaders: do less with less.

“Of course there is more need, more demand, and we probably have less money. And we love the gritty heartfelt nature of the cry, “We need to do more with less!” Pause. But it’s not only unsustainable, it probably means you will be able to do even less in the future. If a program’s funding has been cut by 30%, you may need to do 30% less.”

The trick, of course, is figuring out which programs are most effective, and make those as sustainable as possible. As funders, we can help our grantees do this in several ways by:

  1. More clearly communicating with grantees about our own strategies as funders, and the outcomes we hope to achieve. These conversations have the potential to surface more creative, efficient and effective alternatives to the projects or activities that we may have historically funded.
  2. Forging stronger relationships with grantees, so that they feel comfortable approaching us when trouble arises and before the organization’s financial situation becomes dire.
  3. Understanding and supporting the real costs associated with running an effective and sustainable organization, including livable wages and quality benefits to recruit and retain quality staff, maintaining adequate facilities with current technology, and building sound financial and fundraising infrastructure.

Paul Beaudet is Associate Director of Wilburforce Foundation and a member of CEP’s Advisory Board.

 

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Data Point: What Information are Foundations Using to Assess Their Programmatic Work?

Friday, December 9th, 2011

For our recent State of Foundation Performance Assessment report, we gathered data from 173 CEOs of U.S. foundations with annual grantmaking of at least $5 million on what types of information they use to assess the effectiveness of their foundations’ work – operations, finance, and programmatic. Compared to a similar survey we completed almost a decade ago, it appears that foundation CEOs today are drawing on an increasingly broad array of performance indicators.

In this survey, we listed a range of types of information CEOs may be using to assess the effectiveness of their foundations’ work, and CEOs could select as many as applicable.

On average, CEOs report using seven types of information to understand their foundations’ programmatic effectiveness. Almost all foundations are using anecdotal feedback, written reports from grantees, site visits, and evaluations – either of individual grants, clusters of grants, or program areas.

A minority, however, seek information from their ultimate beneficiaries – the people whose lives foundations are ultimately trying to affect – either through surveys, focus groups, or convenings. When we compare responses of CEOs whose foundations do and do not seek the voices of their ultimate beneficiaries, two important differences emerge: CEOs who report that their foundation does collect beneficiary feedback rate themselves as having 1) a better understanding of the progress their foundation is making against its strategies, and 2) a more accurate understanding of the impact the foundation is having on the communities and fields in which it works.

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To read about current foundation CEOs’ attitudes toward assessment and what foundations are doing to understand their performance, see the report, The State of Foundation Performance Assessment: A Survey of Foundation CEOs written by Ellie Buteau, Ph.D. and Phil Buchanan and published by the Center for Effective Philanthropy.

Ellie Buteau is Vice President – Research at the Center for Effective Philanthropy.

 

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Data Point: Getting Input When Developing Strategies

Friday, November 4th, 2011

Being “strategic” in philanthropy is sometimes equated with being isolated, arrogant, or top-down, with foundation leaders asserting detailed theories of change to rigidly guide grantmaking. But CEP’s research suggests that the opposite is the case. Those who are strategic are more likely to seek feedback from external constituents when developing strategies.

This data point comes from our December 2009 study titled Essentials of Foundation Strategy. The findings from this report are based on data collected from surveys of CEOs and program staff at private foundations with $100 million or more in assets. These leaders were then classified as either “more strategic” or “less strategic” based upon the extent to which they embody two defining elements: 1) an external orientation to their decision making, and 2) logical connections between the way they use their resources and the achievement of their goals.

Completed surveys were received from 102 CEOs and 89 program staff members, representing 155 different foundations. Respondents were asked to rate on a scale of 1 (Not at all) to 7 (To a very great extent) the extent to which they obtain input from four different external constituent groups when developing their foundation’s strategy.

The results show that more strategic leaders seek input from grantees, stakeholders, beneficiaries, and consultants when developing their strategies to a greater extent than their less strategic counterparts. Contrary to the perception that to be strategic in foundation work is to be inflexible, unresponsive, or top-down, the more strategic CEOs and program staff were in fact more likely to look outside their foundations’ walls and seek input from stakeholders.

Even for those leaders who are more strategic, though, the average rating for the extent to which they seek input on strategy development from the ultimate beneficiaries of their work falls on the lower end of the scale.

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What separates more strategic foundation leaders from less strategic ones? To read CEP research that explores the state of strategy at private foundations and identifies behaviors and practices common to more strategic leaders, see the report Essentials of Foundation Strategy written by Ellie Buteau, Ph.D., Phil Buchanan, and Andrea Brock.

Ellie Buteau is Vice President – Research at the Center for Effective Philanthropy

 

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New Report on Strategy at Community Foundations Sparks Debate

Thursday, September 22nd, 2011

The topic of strategy has long been central to research undertaken by the Center for Effective Philanthropy, because we are convinced that strategy is essential if foundations are to maximize their impact on people, communities and issues.

For this reason, we have spent considerable energy exploring how to define strategy in philanthropy and how to determine the degree to which foundations do – or don’t – use strategy in their day-to-day work. Our most recent research report (released last week) looks at strategy at community foundations and concludes that, just as is the case at private foundations, there is a gulf between rhetoric and reality. CEOs say strategy is crucial, but few are really using strategy – at least as we define the term.

The majority of the feedback we have received from community foundation leaders in response to this report has been positive so far. Our findings resonate with them and their experience. But we have also received a few challenging comments from community foundation CEOs. I want to lay out the three critiques we have heard, and our response to each.

Critique 1: The fatal flaw is…the application of the definition of strategy developed for private foundations as the lens through which you evaluated strategic behavior at community foundations.

The definition of strategy used in our research was the following:

A framework for decision-making that is 1) focused on the external context in which the foundation works, and 2) includes a hypothesized causal connection between use of foundation resources and goal achievement.

Before designing this research, we sought feedback from a variety of community foundation leaders about whether or not we should be approaching this research with this definition. Overwhelmingly, community foundation leaders supported the use of this definition in our research.

Then, while analyzing the data collected through our interviews, we considered whether or not the definition of strategy should be changed or expanded. After several months of data analysis and conversation, our conclusion was that nothing in CEOs responses indicated a different definition was applicable to community foundations.

Community foundations generally met the first condition of our definition: external orientation. It was the second condition – includes a hypothesized causal connection between use of foundation resources and goal achievement – where community foundations did not come through.

Might there have been a better definition for strategy in community foundations than the one we used in our research? Perhaps. But it’s hard for me to imagine any definition of strategy that doesn’t include the very basic requirement of logical connections between use of resources and goal achievement. As a result, our finding that few community foundations are strategic would still hold.

Critique 2: Being strategic is not black or white; there’s a huge spectrum along which all of us lie.

We at CEP agree with this statement. In the methodology for this report, we explained that in order for a CEO to be categorized as strategic, half of the decision-making processes CEOs shared with us with regard to how they work to achieve the foundation’s goals had to meet the definition of strategy. This criterion allowed us to be very inclusive about who was categorized as strategic.

In addition, we did identify a group of CEOs as partly strategic, as noted in the report. The bar for being categorized in this way was even lower – requiring only one decision-making process to fit our definition of strategy.

We also tried to capture some of the nuance and spectrum by categorizing CEOs separately with regard to their donor and programmatic work. That means, for example, a CEO could be categorized as strategic in donor work but not in programmatic work.

We did receive a suggestion during the process of collecting external feedback for this report, prior to its release, that we should frame our findings more gently by refraining from using the term “not strategic.” But rather than make our decision about how to word these findings on the basis of what people wanted to hear, we made our decision according to what the data were indicating.

Critique 3: But wait – I can name many community foundations I think are strategic.

One of the main reasons that CEP conducts research is to steer conversations away from anecdotes and towards more systematic data.

Based on our data and analysis for this research, we did identify, among our respondents, some strategic community foundation CEOs – and we highlighted the work of three of them in the report: California Community Foundation; Orange County Community Foundation; and Community Foundation of the Eastern Shore. What we found, however, is that strategic foundations are more the exception than the rule.

Some community foundation leaders clearly disagree with our findings and how we arrived at them. Others, however, told us they did not find our results surprising at all. They said the fact that the majority of those we interviewed were not classified as strategic hardly seemed like news.

In all of CEP’s research, we recognize the critical role foundations play in our society. Our research is conducted to advance knowledge and contribute to conversations about important and challenging issues that foundations face. As with all of our reports, we invite you to share your comments.

 Ellie Buteau, Ph.D., is vice president – research at CEP.

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