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Assessing Foundation Performance

Thursday, April 15th, 2010

At last year’s CEP conference in Los Angeles, I presented on the Irvine Foundation’s approach to assessing foundation performance, joined by David Colby from the Robert Wood Johnson Foundation. I think it’s fair to say that David and I were presenting approaches used by our respective foundations that remain works in progress – Irvine’s even more so than RWJF’s given its focus on this area for many more years.

In view of the interest in this topic at the conference, and my own desire to share what we are doing at Irvine in an effort to improve upon it, I appreciate the opportunity offered by CEP to write a series of blog posts on the subject of assessing foundation performance.

 I plan to do this in four parts, addressing the following topics:

  1. Why we developed an approach to foundation performance at Irvine
  2. What we have found particularly challenging about assessing foundation performance
  3. How our board has engaged with us on this subject
  4. Why assessing foundation performance is both important and necessary

In reflecting upon Irvine’s experiences, I hope to stimulate readers’ contributions to deepening our collective understanding of this important subject and to improving our efforts to measure and understand our performance as foundations.

The focus of these blog posts is Irvine’s Annual Performance Report, which informs Irvine’s board about impact in our three program areas and our overall institutional effectiveness. I include links throughout this post and hope readers might take time to scan those related documents. 

We developed our current performance assessment framework after a strategic planning process in 2002-2003 that led to our current focus on three grantmaking programs (Arts, California Democracy, and Youth). As we embarked on this new focus, we wanted a plan to assess the foundation’s performance, both within the grantmaking programs, and across the foundation as a whole. 

A group of board and staff members worked together for several months and, as part of that, explored best practices in foundation-wide assessment. Two examples that stood out at that time were assessments done by the RWJF and the Rockefeller Brothers Fund. 

From those models and our discussions about what the board wanted to learn about the foundation’s performance, we created a framework that balances an assessment of grantmaking impact with ways to track overall institutional effectiveness, which are the two broad areas that organize Irvine’s approach. 

We also felt it was critical to look at our performance through different prisms, so within these two broad areas, we examine specific grantmaking statistics and progress, evaluation results, broader institutional effectiveness beyond the grantmaking programs, and a range of other categories. This framework is the basis for our Annual Performance Report. 

The primary audience to date for these Annual Performance Reports has been our board of directors. This focus has enabled us to be clear about the report’s purpose, ensuring that we are providing the information that is most relevant for that audience. 

Once we created the first report for the board in 2007, we then published it on our website, as a manifestation of our commitment to transparency and as another model for others to draw upon as they explore their own approaches. Throughout, I have also been interested in the critiques and questions that our approach has generated so that we might improve upon it going forward. 

This description of our process for creating Irvine’s Annual Performance Report sounds very straightforward. The reality, of course, is a bit messier, and my next blog post will focus on some of the challenges we’ve experienced and how we have refined our approach based on what we’ve learned. 

I’ll conclude with a final, personal observation: We have invested a great deal of time on this subject because I am persuaded that my obligations as CEO include developing an approach to rigorous foundation performance assessment. Given the autonomy that private foundations enjoy, and the occupational risks of complacency and insularity, creating a framework for foundation assessment and then reporting to our board in some regular interval has kept us focused on how we apply our finite resources for greatest impact. That goal has motivated us to date and it remains why we are keenly interested in improving upon and refining our approach to foundation performance assessment. 

There are undoubtedly other perspectives, however, including those that might disagree with this premise and/or our approach. I hope you’ll take a few minutes to share your thoughts, and I would especially value any comments or questions that will push us as we continue to grapple with this important work. 

Jim Canales is President of the James Irvine Foundation 

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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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Has Anything Really Changed in Philanthropy?

Monday, April 12th, 2010

Sean Stannard-Stockton, CEO of Tactical Philanthropy Advisors, and founder of the terrific blog Tactical Philanthropy, invited me to join a team of bloggers sharing thoughts on the GEO conference this week in Pittsburgh.  What follows are some musings on what’s changed since the first GEO conference I attended in 2002.  To link to this and the other guest blogs on the Tactical Philanthropy site, go to http://tacticalphilanthropy.com/2010/04/has-anything-really-changed-in-philanthropy.

The first Grantmakers for Effective Organizations (GEO) conference I attended was in Washington, D.C., in 2002.  It was tough to get in: GEO wouldn’t let me register because I was the executive director of a tiny (four staff) organization that no one had ever heard of  – the Center for Effective Philanthropy (CEP). I said, “Come on, we share a middle name.  We’re practically related!”  But they weren’t having it.

So, with a little help from Vince Stehle, then program officer at the Surdna Foundation (one of CEP’s initial funders), I registered as if I worked for Surdna and showed up.  Vince hosted a breakfast roundtable to discuss CEP’s first report, on overall foundation performance assessment, and I was thrilled when we had to pull two tables together because 17 people showed up.

Fast-forward to the eve of the GEO conference in 2010 and allow me to switch – as my 9-year old daughter often does when she writes – to the second person and say this: you are expecting me now to discuss “how much has changed” when it comes to funder effectiveness and assessment since that conference almost a decade ago.  And, I will, but it’s not quite so simple.

Fact is, I think we tend, in philanthropy (and maybe in life), to overlook historical examples and proclaim that something is “new” when it is really only new to us.

The media, and even those within philanthropy, often speak as if the focus on impact, outcomes, measurable results – whatever we call it – is brand new when, of course, it is not.  As Ed Skloot, now of Duke University, has noted, “Our earliest American philanthropic ancestors—John D. Rockefeller, Margaret Olivia Sage . . . , Andrew Carnegie — bequeathed a kind of courage and determination to us, a confidence we can take on large-scale problems with deeply rooted causes.”  Bill Schambra, of the Hudson Institute, also argues – although for him, unlike Skloot, it is a lament –  that the “mania to measure” goes back to the “first days” of the Rockefeller Foundation.

So, let’s not pretend that, just because our friends at McKinsey have launched a Web site focused on impact assessment, the concept was invented yesterday.  But, at the same time, it’s clear there has been dramatic change over the last decade in philanthropy.  New donors have brought new ideas, new and creative approaches, and new energy to the table. Numerous organizations that were either fledgling or non-existent a decade ago are now providing crucial data on nonprofits to funders:  Guidestar, Charity Navigator, Philanthropedia, Great Nonprofits.  And the list goes on.  And then there are the organizations focused on funder effectiveness:  GEO, GrantCraft, CEP.

But are funders operating more effectively?  Are they achieving more impact?  We at CEP see real signs of hope  – funders making clear their goals, strategies, and performance indicators; funders getting – and acting on – feedback from crucial stakeholders, from grantees to intended beneficiaries; boards really holding CEOs accountable for performance.

I can point to some inspiring examples of present-day foundation effectiveness and impact, from the Stuart Foundation’s Child Welfare Program to the Wilburforce Foundation’s work protecting wildlife habitat to the Gill Foundation’s work on gay rights to the groundbreaking and much-discussed work of the Edna McConnell Clark Foundation.  And we at CEP have some new data we’ve been analyzing that will suggest some movement in the right direction. But, quite frankly, the movement is less dramatic than many of us would hope.

The reality is that there are still far too many staffed foundations doing significant (in dollars) grantmaking that aren’t even clear on what, exactly, they’re trying to do, much less how they’ll do it or how they’ll know if they’ve been successful.  So, my question is, how much really has changed since that conference in 2002?

In my less optimistic moments, I wonder: is it possible that there has always been a subset of foundations that really care about effectiveness and impact and that their proportion of the overall number of foundations hasn’t changed much since the early days of Carnegie, Rockefeller, and Sage – even as the resources available to help them have grown and improved?  (A related question: how common is it that the very same foundation goes through periods of being highly effective – with clear goals, coherent strategies, and good performance indicators – and then other periods of being unfocused and adrift? I have seen many examples of this, suggesting that it’s not about “new” philanthropy or “old” philanthropy but rather “effective” philanthropy.)

My fundamental question is, how much change, really, has there been? Today, we can’t really answer that question as definitively as I would hope.  I’d be curious to know what others think.

(Disclosure: The foundations I mention above are among the more than 200 we have either provided assessment tools to or received funding from – and the former CEO of Edna McConnell Clark sits on our Board of Directors.)

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Can Foundations Be Learning Organizations?

Tuesday, January 19th, 2010

Nobody dislikes learning, at least in the abstract.  It ranks right up there with apple pie, baseball, and foundation partnerships – almost everyone is in favor of it.  But in reality learning is difficult (come to think of it, so are foundation partnerships).  Organizations, like people, tend to avoid learning when possible.  It is usually easier to go with the way things are than it is to change them.  Think of your recent New Year’s Resolution.  Or the challenges of refining a foundation’s program agenda.

It is somewhat ironic that foundations, given their role as social change generators, face more challenges in changing than other organizations.  They are insulated from market pressures on the one hand and tight public accountability on the other.  In both the way they operate and the program agendas they adopt, foundations, compared to other types of organizations, enjoy greater autonomy.

That independence is the source of both great potential and significant risk.  The risk, in the felicitous phrase of Susan Wolf Ditkoff and Susan Colby in their recent Harvard Business Review article, “Galvanizing Philanthropy,” is not enough “truth tellers.”

Being a learning organization is one possible way to mitigate this risk. A learning organization is committed to improving through structured attention to its performance relative to its environments and its goals.  The key to being a learning organization for foundations is being oriented to the external environment, not to internal structures and processes.

In this respect, foundations are similar to other nonprofits, where “greatness has more to do with how nonprofits work outside the boundaries of their organization than with how they manage their own internal operations” (Heather McLeod Grant and Leslie R. Crutchfield, “Creating High Impact Nonprofits,” Stanford Social Innovation Review, Fall 2007).

An external orientation focuses foundation attention on basic questions like:

  • What are the environments in which we operate?
  • How do we analyze our environment?
  • How do we look at risk?
  • How do we think about our role relative to other actors in the environment?
  • Where do our program ideas come from?
  • How do we expect program activities to be sustained in future environments?

Wrestling with these questions is a critical (and constant) activity to determine what a foundation can and cannot do effectively, and to navigate the task of establishing and nurturing relationships with others.

Although it is important to ultimate effectiveness, being a learning organization is not easy for foundations.  One reason is that, quite simply, they don’t have to.  Because of their relative freedom and unencumbered resources, the external pressures on foundations are significantly weaker than those on businesses or public agencies (foundation “customers” are almost always polite, at least in earshot of foundation staff, regardless of a foundation’s actions).  This means the impetus for change, for embracing learning in a meaningful way, must come from foundation leadership.

In addition, a learning organization entails being receptive to (even encouraging) differing perspectives.  The impetus for  a climate for give and take of ideas must originate inside the foundation and be genuinely acted upon in interactions with external actors; otherwise critical voices outside foundations will not speak up.

So to return to the question we started with – can foundations be learning organizations? – the answer is yes.  But it does not come naturally or easily.

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.

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