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April 15, 2005 Dear Colleague, I want to update you on the progress of the Center for Effective Philanthropy (CEP) and invite your support and engagement as we enter a new phase of development and growth. In the fewer than four years since we received initial funding, we have seen foundations increasingly interested in obtaining, and acting on, comparative data on their performance. I told a group of 230 foundation leaders at our seminar in San Francisco last month that I believe that we are, together, creating a new “language of assessment” that is specific to foundations.(Click here for the text of these remarks.) We at CEP believe that the benefits of this new language are many, including improved foundation performance and, ultimately, a positive impact on the lives and issues foundations seek to address. But we also believe this approach is essential in today’s environment because, absent a creative and data-based approach to assessment, administrative cost ratios will become the sole defining, universal measure by which foundations are judged – with no regard to whether those expenses generate value that more than justifies their cost. In addition, serious attention to assessment and improvement sends a powerful message that foundations are setting a higher standard for themselves than any external critic might seek to impose. The ultimate goal of foundations’ work is creating positive social impact. Although it is difficult to precisely assess and attribute impact to foundation activities – as we discussed at length in our report, Indicators of Effectiveness: Understanding and Improving Foundation Performance – CEP continues to develop new comparative data in areas that should, logically, contribute to the achievement of impact. To that end, CEP has worked to undertake new research initiatives and develop new assessment tools that broaden the data available to foundation leaders to inform their decision-making. For example: • 77 foundations have now commissioned comparative Grantee Perception Reports® from CEP. Foundations are taking seriously the results and acting to improve, in recognition of the fact that, for many foundations, grantees are the primary agents of change through which their goals are enacted. Understanding the grantee perspective on a range of dimensions is crucial because, as the McKnight Foundation put it in a statement discussing its GPR results on its Web site, “respectful, productive relationships with our grantees are the medium through which we achieve … our social change objectives.” We are continuing our analysis of our grantee perception data, building on the findings we published in Listening to Grantees: What Nonprofits Value in their Foundation Funders, which we released last year. We are preparing a report on our additional analyses as well as case studies focusing on promising practices. • We launched the Foundation Governance Project and have piloted a new board assessment tool, the Comparative Board Report, with 53 participating foundations. A report on Phase I, Foundation Governance: The CEO Viewpoint, discussed the CEO perspective on board effectiveness. The report on Phase II, which will be based on a survey of 600 trustees, qualitative interviews, and an in-depth examination of the structure and practices of the 53 participating foundation boards, will be out later this year. • Working in partnership with the research and evaluation team at the Robert Wood Johnson Foundation, we have developed a staff survey instrument and are piloting a Staff Perception Report with six large foundations. This report will give foundation leadership an honest and comparative appraisal of the staff perspective on elements of foundation effectiveness, including alignment in pursuit of key goals, as well as perceptions related to job satisfaction. • We continue to develop operational benchmarking data that allows foundations to understand, for example, how the ratio of program officers to applications or grants awarded compares to other foundations. This data provides crucial comparative context to decision-makers as they consider appropriate staffing levels and shape their expectations of staff. • We are planning a new research initiative in the area of foundation and program strategy development, looking at how strategies are developed, implemented, and assessed. This pilot study will seek to document definitions and approaches to strategy and, to the extent possible, identify the key elements of effective strategies. We hope to begin this work later this year and continue to fund raise for this initiative. • Our programming and case studies will continue to highlight exemplars in areas such as strategy development and implementation, foundation-wide assessment, relationships with grantees, and governance. Our San Francisco seminar featured some inspiring examples. We will be sending you a report on this event within the next few months. We have been pleased by the level of interest and participation in our work and are deeply grateful for the support we have received. We have grown considerably, to a staff of 11 (up from six just 18 months ago), unrestricted revenues of $1.6 million in 2004, and a budget of more than $1.8 million in 2005 to support our new initiatives. (For CEP’s audited financial statements, our IRS-990 filing, a list of our funders, or to make a contribution to CEP, click here.) .Although earned revenue now comprises more than 40 percent of CEP’s total funding, our budget for 2005 and projected growth beyond 2005 assumes significant increases in fundraising. Grant funding and individual contributions support our research and data collection which, in turn, fuel the creation of field-wide publications and new, broadly available assessment tools. I hope you have found our research publications – which are available free for download on our web site – useful in your work. CEP’s success is entirely dependent on the support and participation of foundations. Our mission is to provide you the management and governance tools to define, assess, and improve foundation performance. We need your engagement and participation. Please email or call to offer your reactions to our work and your suggestions for improvement. I have also attached a response form that you can fax us to express your interest in specific CEP initiatives. (Click here to access the form.) We look forward to working with you in the future, supporting you in your efforts to improve your foundation’s performance. Thank you for your continued support and engagement. Yours sincerely,
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