New CEP Report Suggests that Debate on Provision of Support Is Too Narrow: Operating Support Is Not the "Silver Bullet"

Operating support is important to nonprofit grantees, but only when grants are larger and longer term than what is typically provided today by even the country's largest foundations, according to a report from the Center for Effective Philanthropy (CEP) released today. The report In Search Of Impact: Practices and Perceptions in Foundations' Provision of Program and Operating Grants to Nonprofits brings new data to the debate about current foundation practices, attitudes underlying those practices, and the impact on grantees of foundation choices. The report was mentioned in a Wall Street Journal article, "Why Big Donors Cut Tiny Checks" (12/8/06).

"Our data and analysis suggest that the debate about type of support has overlooked the importance of other grant attributes, such as grant size and duration," said CEP Associate Director Judy Huang, who co-authored the report with CEP Executive Director Phil Buchanan and Senior Research Officer Ellie Buteau, Ph.D. "Operating support matters, but it isn't the silver bullet it is sometimes made out to be," said Huang.

The report explores how foundation CEOs think about the choice of what type of support to provide to nonprofits and reveals what types of grants nonprofits believe are "ideal" and result in the most impact.

Among the report's key findings:

• Most grants made by the 163 larger foundations analyzed in the report are program-restricted, small, and short term.
  
• Foundation CEOs surveyed see operating support as more likely to make a positive impact on grantee organizations, but most place other priorities – such as an ability to assess outcomes or respond to board pressure to provide program support – higher in their decision-making.
  
• To grantees, type of support is important – and operating support is preferred – but only when grants are larger and longer term than what is typically provided today.

The research, which was funded in part by the Aspen Institute, reveals how foundation CEOs think about what type of support to provide to nonprofits. It also describes the arguments made by those who prefer to provide grantees with program support and those who prefer to provide operating support.

"The findings raise many fundamental questions," said Buchanan. "Foundation approaches to the question of type of support relate centrally to the definition of their own roles and goals. We hope that by revealing both current practice and the attitudes of foundation leaders and grantees about the question of type of support, we can help spark a broader debate about these matters that includes a fuller discussion of both what foundations are seeking to achieve and what grantees really value."

To download or order the report, click here.

Stephen Heintz on Listening to Grantees
By Stephen Heintz, President, Rockefeller Brothers Fund

Oliver Wendell Holmes once wrote, "It is the province of knowledge to speak, and it is the privilege of wisdom to listen."

At the Rockefeller Brothers Fund (RBF), we have had the honor of listening to, learning from, and communicating with our grantees more closely over the past two years. This process has helped us reaffirm our mission – helping to build a more just, sustainable, and peaceful world – and has allowed us to expand and enhance our interactions with grantees and grantseekers. It has inspired us to reconfigure how we work as we seek to go beyond the traditional grantee-grantor relationship of grant checks and compliance reports.

Our journey to greater accountability and deeper interaction with the grantee community began in fall 2004 when we engaged CEP to conduct confidential, third-party surveys of current grantees as well as recently declined applicants. CEP's Grantee Perception Report (GPR) allowed us to hear in-depth from the grantee community on a range of issues that are very important to us – overall grantee satisfaction, the quality of our communications and interactions with grantees, the value of assistance beyond the grant check, and how "user-friendly" we are.

All of our results were placed in a comparative context, allowing us to understand how grantees rated the RBF on these dimensions relative to how other foundations were rated by their grantees. The feedback has been enormously valuable and has led us to take a number of steps to improve our interactions with both grantees and grantseekers.

Just as important as the results were the new kinds of conversations they enabled. Over the past year, we have shared the perception survey results with our grantees through our Web site and by convening several small groups of grantees for in-depth follow-up discussions. Led by RBF program officers Jessica Bailey, Nancy Muirhead, and Michael Conroy, we conducted three GPR presentations — two to grantees in South Africa and one to Democratic Practice-Global Governance grantees.

These presentations gave us the opportunity for a genuine dialogue with grantees and provided us with candid feedback that greatly advanced our understanding of the survey data. Perhaps more important, these gatherings opened space for a broader conversation about the grantees' work and the very real challenges they face. They were, in content and tone, qualitatively different from the routine conversations we have traditionally had with our partners.

While we were pleased that grantees ranked their overall satisfaction with the RBF highly, the data also clearly pointed to some areas that required further attention. As one grantee wrote: "It would be helpful to have a window on what further interaction is available from the foundation…some 'how are you doing' communication [could help] develop a two-way relationship."

As we strive to improve the RBF's overall performance, the GPR – and the conversations it enabled – have proven to be enormously valuable.

Stephen Heintz serves on the Board of Directors at CEP.

Five Years of CEP, Five Elements of Effectiveness

More than 50 key early supporters gathered this fall to celebrate CEP's five-year anniversary in New York, where Executive Director Phil Buchanan called on them to embrace "five elements of foundation effectiveness."

At the September 14 event Buchanan argued that "foundation effectiveness takes many forms" and that there are "no easy answers, no simple calculations, no frameworks ready for quick importation from other sectors." But, he suggested, foundation effectiveness requires five elements: 1) specific goals, 2) a strategy for achieving those goals, 3) measurable indicators of effectiveness, 4) leaders who assess staff performance and "make the indicators real," and 5) boards who "hold CEOs accountable for results."

"These are not easy things to do," Buchanan said. "They entail personal courage [and] require personal risk." He added that they are necessary, however, if foundations are to "catalyze the kind of important changes – in our society and in our world – that perhaps only you can."

Other speakers praised CEP's achievements in its first five years, highlighted challenges for the future, and thanked those who helped bring CEP into existence. "We know we are making a real difference," said Board Chair Phil Giudice. "One of our core initial premises was that listening carefully to the field was a key, crucial, and critical element of our effectiveness. In those early months, many people stepped up to provide perspectives, introductions, and even funding. Without you, we wouldn't have made it. Thank you."

Giudice and Buchanan thanked CEP's funders and, in particular, the three foundations that provided initial grant funding in 2001: The Atlantic Philanthropies, Surdna Foundation, and The David and Lucile Packard Foundation. They also expressed their gratitude to The William and Flora Hewlett Foundation, CEP's largest current grant funder, and to the many foundation leaders, as Buchanan put it, "who have cared enough about really understanding and improving foundation performance to take a chance … on an organization with a lot of ambition but, at least initially, not much of a track record."

Other speakers at the event included:

• Lumina Foundation for Education's Board Chair John Mutz and CEO Martha Lamkin, who described their approach to performance assessment
  
• Surdna Foundation's Edward Skloot and the Monitor Institute's Barbara Kibbe, who discussed barriers to improved foundation effectiveness
  
• Duke University's Joel Fleishman, who discussed CEP's achievements and his thoughts on its future

Selected transcripts of talks are available by clicking here. CEP will release a report on the event early in 2007.

CEP Adds New Speakers to 2007 Conference Agenda

Robert Wood Johnson Foundation President and CEO Risa Lavizzo-Mourey and Atlantic Philanthropies President John R. Healy are among the recently confirmed speakers at CEP's 2007 conference, Assessment to Action: Creating Change, which will be held March 8-9, 2007, in Chicago.

Lavizzo-Mourey, a practicing physician who joined the Robert Wood Johnson Foundation in 2001, will discuss the challenge of defining, implementing, and assessing programmatic strategies. Healy, who has held leadership positions at The Atlantic Philanthropies for 11 years, will share the story of the Foundation's transformation process as it prepares to spend itself out of existence by 2016.

Other newly confirmed speakers include Peter Frumkin, Professor of Public Affairs and Director, RGK Center for Philanthropy and Community Service at the University of Texas at Austin; Ron Gallo, President and CEO, The Rhode Island Foundation; and Luz Vega-Marquis, President and CEO, Marguerite Casey Foundation.

A special preconference seminar open only to users of CEP assessment tools will take place on Wednesday, March 7. The seminar will provide an opportunity for candid, confidential conversations about interpreting and acting on results and will include small group discussions.

Registration is open, and a special early-bird rate is available through January 2. To register or to learn more about the conference, click here.

Sign Up for the Grantee Perception Report

What do the Bill and Melinda Gates Foundation, Kalamazoo Community Foundation, Levi Strauss Foundation, George Gund Foundation, Missouri Foundation for Health, and The Heinz Endowments have in common? All have participated in CEP's Grantee Perception Report (GPR) process – using the results to assess and improve their effectiveness – as have more than 100 other foundations of various sizes and types with a wide range of strategies and focuses.

There is still time to receive GPR results in summer 2007. CEP has extended its deadline for participation in its next round of GPR surveys to December 15 in response to requests from a number of foundations for more time to consider participation. CEP staff will work with participating foundations in December and January to customize the process and prepare to administer the surveys. The survey will be mailed in February, and CEP will produce confidential GPRs, including a relevant custom cohort of peer foundations, in April and May. CEP staff will present confidential GPR results to foundation staff and boards in person between May and August.

In a survey of those that have participated, 97 percent of foundations reported making changes as a result of the GPR, and participants rated it both more useful than other assessment processes and as an excellent value relative to its cost. The Chronicle of Philanthropy reported in a November 2005 article that GPRs, "have resulted in changes in foundation operations and have fostered a frank dialogue between grant makers and charities, which historically have been wary of speaking out against their supporters for fear of losing money."

For more information on the GPR, please contact Judy Huang at 617-492-0800 ext. 204 or John Davidson at 617-492-0800 ext. 207.

CEP Adds Senior Research Writer

Judith A. Ross will join CEP on January 29, 2007, as Senior Research Writer, taking on writing and editing responsibilities in the production of CEP's major research reports. Ross is an accomplished writer who has worked extensively as a freelancer for Harvard Management Update and Working Knowledge: A Report on Research at Harvard Business School. From 2000 to 2006, she was Senior Writer/Editor and Program Manager at the Balanced Scorecard Collaborative, and from 1993 to 1998 she served as Editorial Assistant at the Harvard Business Review.

"Judith Ross is a terrific addition to CEP," said Executive Director Phil Buchanan. "She is a thoughtful person and an accomplished writer with a gift for communicating clearly the practical implications of complex research and analyses. Equally important, she is passionate about our mission and eager to contribute to the cause of improving the performance of this country's large charitable foundations."

About this Newsletter

Effective Matters is a quarterly newsletter published by the Center for Effective Philanthropy (CEP), a nonprofit organization focused on the development of comparative data to enable higher-performing foundations. CEP's mission is to provide management and governance tools to define, assess, and improve overall foundation performance.

If you have questions about this newsletter or would like general information about CEP and its activities, please contact Alyse d'Amico at 617-492-0800 ext. 206.

Permission to use, copy, and/or distribute this document in whole or in part for noncommercial purposes without fee is hereby granted, provided that this notice and appropriate credit to the Center for Effective Philanthropy is included in all copies.