 All
around us, we see evidence of dramatic change in organized philanthropy
— of foundations, new and old, focusing with new intensity on
questions of effectiveness and impact.
Those of us who have the privilege to work at CEP
see it every day as we execute our research agenda and deliver
assessment tools to foundations. We see boards questioning whether
goals and strategies are defined clearly enough, whether performance
against those goals and strategies is as strong as it needs
to be, and whether the right performance measures are in place.
We see foundation CEOs and vice presidents for programs confronting
issues of program performance head-on. We see more foundations
willing to admit publicly what didn't work and thoughtfully
using data to inform decisions about what might work better.
But we also see sobering evidence
of how far there is to go.
Our research on foundation decision-making
— the topic of a forthcoming report presented for the first
time on March 8 at our Chicago conference — paints a stark picture.
Although CEOs and program officers overwhelmingly believe good
strategies are essential for impact, a surprising number don't
use strategies to guide their decision making. Our research
on types of grant support, described in our December 2006 report
In
Search of Impact, is also sobering. It suggests that, while
debate rages on among foundation executives about whether to
provide operating or program support, the vast majority of grants
made by large foundations are simply too small and short term
for it to matter much to grantees in which form they come.
These are tough issues, and confronting
them requires strong leadership. This edition of Effective Matters
includes reports on two sessions from our March conference in
Chicago that illustrate this point. In both cases, CEP assessment
tools revealed tough challenges and foundation leaders met them
directly. At the Ontario Trillium Foundation, the issues were
in the boardroom; at The Philadelphia Foundation, the challenges
went to the very heart of grantmaking strategy.
The stories are inspiring — and demonstrate
what is possible when good data meets strong leadership.
Let
me know what you think.
Phil
The following article is from the forthcoming
publication about CEP's March 8-9 conference, Assessment to
Action: Creating Change. The full report will be available this
summer.
 In
an environment where they are more frequently in the public
eye, foundation boards are dedicating themselves to effective
governance. According to CEP research, foundation CEOs and trustees
perceive boards' role in strategy development and assessment
as crucial, with both groups indicating a desire for boards
to engage these topics more. And yet, said CEP Associate Director
Lisa Jackson, Ph.D., "They might want it. They might desire
it. But it's not happening at the rate you might expect, given
that desire."
One place where a board is working
to increase its involvement in strategy and assessment is the
Ontario Trillium Foundation, an agency of the provincial government
of Ontario, Canada, that invests government money into large
and small community-based initiatives. With a mission to build
healthy and vibrant communities in Ontario by strengthening
the capacity of the voluntary sector, the Foundation covers
a region that encompasses everything from modern urban centers
like Toronto to small, remote Arctic communities. The Foundation's
25-person board is appointed by the provincial government and
is representative of the communities served.
In 2005, the political appointment
process resulted in a largely new board. Wanting to use its
time more effectively and strategically, Ontario Trillium's
Board initiated a review of its governance practices that included
commissioning CEP's Comparative Board Report (CBR). Findings
from the report highlighted two areas deserving more attention:
board engagement in strategy and board group dynamics. According
to Ontario Trillium Board Chair Helen Burstyn, it was initially
difficult for trustees to look beyond the ratings in these areas
— particularly at a time when the group was just beginning to
gel. "Board members felt it couldn't be us but rather the review
process that was flawed."
Overcoming some initial disappointment,
however, the Board took action. The first step was to delegate
most of the foundation's 1,500 annual grant approvals to foundation
staff and local grant-review committees — freeing Board members
from reading up to 3,000 pages of grant reports. Now, the Board
simply ratifies grants that have already been approved, and
their involvement is limited to an analysis of trends across
grants and overall issues of accountability. This provides a
broader strategic view. "To be more strategic we could do better
than discussing the merits and demerits of 1,500 individual
grants. The Board should steer the boat, not row it," said Burstyn.
Additionally, the Board eliminated three committees
and sharpened the focus of those remaining. They also developed
a written framework — or job description — to clarify
individual and joint responsibilities of board members.
To further address the issue of strategy, the
Foundation engaged consultants from McKinsey and Co. (on a pro-bono
basis) who facilitated Board discussions about the Foundation's
medium and long-term strategic direction. As with many governmental
organizations, previous planning had been limited to the short
term only. These discussions helped the Board — and in turn
the staff — take a more long-term view of the Foundation's work.
To address Board dynamics, the second issue
raised by the CBR, the Board began to vary the setting and context
of meetings in an effort to enhance opportunities for influence
and dissent among Board members. Often gathering in locations
outside of the Toronto office, the Board frequently invites
outside speakers to help spur new thinking or invites grantees
and other stakeholders to be present.
According to Robin Cardozo, Ontario Trillium's
CEO, it can be challenging to meet people who are not always
satisfied by their experience with the Foundation. "Sometimes
they'll say 'We wish you would change this policy,' or 'I wasn't
happy with the laborious application process.' Board members
get exposed to a range of opinions from our stakeholders," he
said.
These changes have not come without a bit of discomfort.
According to Burstyn and Cardozo, however, the issue is not a good
or bad review, but how the Foundation governs itself. They believe
uncovering a few warts to learn some important lessons was worth
it. Burstyn advised other boards that are considering such reviews
to "go for it with eyes open, go for it with an open mind,
and go for it with a plan that fully commits to acting on what you
find out."
It is with this mind-set that the Ontario Trillium
Foundation Board continues to assess and improve its governance
practices. The Board evaluates itself and the outcomes of each
meeting. It also places high priority on orienting and engaging
new members. The Board continues to hold strategic reviews,
and, as Cardozo and Burstyn agree, each successful change is
a step toward the next achievement.
 Sometimes
a bad review can become a powerful opportunity for positive change.
Such was the case for The Philadelphia Foundation, a community foundation
with an asset base in excess of $325 million that serves southeastern
Pennsylvania.
The Foundation undertook its first
Grantee Perception Report® (GPR) in the spring of
2005. The results revealed an organization that was — according
to grantees at least — far from the top of its game. In fact,
when compared with other foundations whose grantees CEP has surveyed,
including a set of comparable community foundations, The Philadelphia
Foundation fell below its colleagues on most dimensions.
One year later, Nancy Burd became
the Foundation's new vice president for grantmaking services.
Since her arrival, Burd, working along with the Foundation's
president, R. Andrew Swinney, has been a powerful driver of strategic
change.
In a preconference session for users
of CEP assessment tools, CEP's Executive Director Phil Buchanan
sat down with Burd to discuss the changes launched in response
to the Foundation's GPR results. The following is an edited
transcript from their conversation.
PB: Tell us when you
first saw the Grantee Perception Report.®
NB: It was part of the interview
process. They gave the GPR results to finalists for the job and
asked them to comment — what would they do? It was an opportunity
but also a risk. Among its grantees, the Foundation didn't
have a great reputation. It was going through a difficult time.
The fact that they wanted input was great — it made me think
it might be a place that was ready for change.
PB: What did the GPR say?
NB: The Foundation was rated low
on accessibility, interaction, and on partnering with the sector.
Partnership with grantees, for
example, barely existed and because the staff was small and
operated on a twice-per-year competitive process performing
desk review on more than 1,300 applications — they had no time
to go out and talk to anyone. The Foundation communicated primarily
in writing and on its Web site. The application process was
onerous, and most grants were very small. I experienced the
process firsthand as a grantee of Philadelphia Foundation [when
she was Executive Director of the Philadelphia Nonprofit Finance
Fund (NFF)], and I often said that the $10,000 I received from
the Foundation, though important, took much longer and was more
difficult to get than the many hundreds of thousands of dollars
I raised from other local foundations.
PB: How did you start improving
your relationships with grantees?
NB: We made some very immediate
and relatively easy changes that were "customer facing."
For example, we reached out to the community by going to the
regions we serve and hosting public meetings, inviting every
nonprofit organization, many of which we had never funded. Every
week for 10 weeks we met with more than 100 nonprofits to talk
about our new strategy and process changes, which included instituting
a rolling application process, no deadlines; online short letter
of intent applications with a 2-week decision turnaround, and
a partnership relationship with program officers.
PB: What was the change process
like? How did you get from A to B in implementing this change?
NB: We spent a good part of 2006
exploring the needs of nonprofits in our region, where the gaps
in funding lay, and what we could do that would have the greatest
impact on them and benefit the sector as a whole. The need for
capacity-building funding and general operating support rose
to the top. This felt right to me given my decade-plus experience
at NFF lending to nonprofits. This type of grantmaking was immediately
well received by our constituents.
We now direct our grantmaking to
capacity building, leadership development, and civic engagement,
focusing on issues that are the most pressing facing our nonprofit
community and the region. The change will establish the foundation
as a dedicated funding source for initiatives such as strategic
planning, organizational restructuring, and financial assessment,
which nonprofits often cannot afford. It is exactly this type of
funding that will help [nonprofits in the region] not only do their
work better but do it on a larger scale.
Given our change in direction
(from programmatic funding), it was critical to support this
work with staff who had deep capacity-building experience, those
who had worked in the field and were able to provide solid consulting
advice. We also spent a lot of time helping our Board of Managers
understand the need to make these types of grants, given the
challenges of managing that so many nonprofits face today. The
idea of funding capacity building was met initially with some
apprehension; the board was worried that small organizations
might be left behind. But when we made our case that small organizations
have a distinct role in service delivery and they needed infrastructure
support, we were able to make our case using the business argument,
and they began to see the logic. They are still apprehensive
but are now more knowledgeable.
We will measure our progress and
success through evaluation that not only assesses how effective
our grants are but also how we measure up to our goals of being
customer friendly, efficient, quick, clear, transparent, and accessible.
While we may not be able to fund everyone, no organization will
leave empty-handed. They will get advice, a referral, a peer, or
just a sympathetic ear.
PB: So you and Andrew
launched this change campaign. What kind of information did
you marshal? Did you present data?
We did. Plus, we ran focus groups
with our grantees. These were not just about perception but
also about substance: about grantmaking and strategy. If we
only changed our attitude, that would have been fine, but shortsighted.
We wanted to do good grantmaking and be of value to our constituency.
We asked board members to listen to the nonprofits with us and
to understand what the sector was saying.
On November 1, after six months of
planning, we rolled out the strategy to 500 grantees and explained
how we would work with them in the future. Interestingly, we garnered
the most applause for instituting a rolling application, a quick
turnaround, and for a general operating grant approach that had
no strings attached. General operating support would be totally
unrestricted for organizations that were successful in the application
process. The crowd even "hooted" when we declared that general operating
grants were meant to be used as "cash" for anything mission related,
including capital investments and endowment. The Board saw the grantees'
response and realized that this was the right place to be.
PB: How do you know this
strategy will create impact?
NB: Obviously, time will tell.
We are measuring our short-term outcomes as we go using a "dashboard"
document that measures key indicators for us. There are two
ways to get money from our foundation: for operational support
or for increasing organizational effectiveness through capacity
building. We take a more comprehensive look at those applying
for operating support by evaluating four key indicators: Leadership,
Adaptability, Management, and Operations. We weight the first
two greater than the latter two because of the research support
given, and we look carefully at their financial position. Our
goal is to build a highly effective and performing sector, and
we will award grants to organizations that are examples of this.
Should we determine they don't fit, we will direct them to our
Organizational Effectiveness Fund so they can be well on the
way to high performance.
The nonprofits applying for capacity-building
money will develop a workplan with our staff and focus on areas
of their business that need work. The impact of these dollars
will be measured both short term and long term by our evaluators.
We will also be looking for
improvement in our position relative to other foundations on our
next GPR. We want to do better, and we want to be valued. We now
have in-house capacity to do that. The pieces are in place and our
process is sound — though it may need tweaking. Our position
should change dramatically if this works.
"Luck of the Draw," an article appearing in
the current issue of the Stanford Social Innovation Review,
explores the differences among program officers in their approach
to their relationships with grantees — differences that often
exist at the same foundation.
The article's authors, CEP's Kevin Bolduc, Phil
Buchanan, and Ellie Buteau, write that "although program officers
can make or break grantees' experience, many foundation leaders
don't do enough to monitor and improve their program officers' performance
— in part because foundations lack feedback about their program
officers."
To download the article or to share comments on
this research, click
here.
 After
five years, Associate Director Judy Huang will be leaving CEP
in July to pursue an MBA at the Kellogg School of Management.
"She literally
helped establish this place," said CEP Executive Director Phil
Buchanan. Huang started working at CEP in 2002 as a research
analyst when CEP had four employees, and in recent years has
overseen all aspects of CEP's surveying of grantees and the
creation and presentation of Grantee Perception Reports®(GPRs).
Working closely with CEP staffers
Buchanan and Kevin Bolduc, she helped design and launch the
GPR. With them, Huang co-authored a book chapter about the development
of the GPR, "Turning
the Table on Assessment," in the Funder's Guide to Organizational
Assessment.
Huang has also led major CEP
research initiatives, authoring CEP’s second-most-downloaded
report, Foundation
Communications: The Grantee Perspective and co-authoring
In
Search of Impact: Practices and Perceptions in Foundations'
Provision of Program and Operating Grants to Nonprofits.
She is also co-author of Listening
to Grantees: What Nonprofits Value in Their Foundation Funders.
"Judy's
contribution to the success and impact of CEP has been enormous,"
said Bolduc. "I will miss working with her tremendously, but all
of us wish her well. Kellogg is very lucky to have her."
"I've been lucky to work with
such terrific colleagues over the past five years and am grateful
to the hundreds of foundation staff and board members who have
allowed me to step inside their work. I look forward to staying
in touch and hearing about CEP’s continued impact on the sector,"
said Huang.
"I
have little doubt that Judy will end up back in the philanthropic
sector at some point," Buchanan said. "And, when that happens,
she will be in a leadership position at an organization making
a great positive impact in the world."
 CEP's
staff has more than doubled in three years and will soon number
18 in order for the organization to execute a broader research
agenda and meet demand for assessment tools.
Casia Freitas joined CEP in April as senior
research analyst, following a fellowship at the William and
Flora Hewlett Foundation, where she focused on issues of foundation
effectiveness. Freitas has also worked as a senior intern and
program assistant at the Institute for International Education
(IIE), Office for Latin America in Mexico City. While at IIE,
she authored the 4th edition of Bilingual and International
Schools in Mexico and Central America.
Freitas holds an M.A. in International Educational
Administration and Policy Analysis from the Stanford University
School of Education. She graduated magna cum laude and as a
member of Phi Beta Kappa from Lewis and Clark College with a
B.A. in International Affairs and Hispanic Studies.
 Also
joining CEP in April was Melissa Haskin, who serves as executive
staff assistant, providing support to CEP's associate directors.
Haskin began her career with Youth With A Mission, an international
nonprofit organization dedicated to humanitarian outreach, where
she traveled overseas extensively and served as manager of graphics/photography
in their communications department. She was also an assistant
to the founder of Life Less Ordinary, where she served in multifaceted
administrative and creative roles. Haskin received her A.B.S.
in Business Management with a minor in Visual Communications
at McIntosh College and is pursuing a B.A.S. in International
Business at Southern New Hampshire University.
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
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