Dear Colleague,

By now, messages about responses to the decline in foundation assets are starting to blend together: phrases like "now more than ever," "tough choices," and "finding opportunity in the downturn" have been uttered so many times that it's hard not to tune out. (Yes, I, too, am guilty of using some of these phrases.)

So I'll keep my main message here short and sweet. Like the one-word utterance, "plastics," used to describe the future to Dustin Hoffman's character in The Graduate, I'll be equally concise. My word is "data."

That's the future. That's what we, at the Center for Effective Philanthropy, are all about. Better data. Better decisions. Better philanthropy. Every day, CEP continues to work — in collaboration with foundations and colleague organizations — to develop data that informs foundation leaders. And we continue to innovate.

We are developing a new mechanism for community foundations to understand their donors' perspectives in a comparative context: the Donor Perception Report. We are exploring, in partnership with the Bill & Melinda Gates Foundation, the power of rigorously collected and analyzed data on "beneficiary perceptions" to inform a foundation's work. We are expanding our research on foundation strategy and extending it to community foundations, and continuing to study all the elements of foundation effectiveness that are required for maximum impact. We are developing more case studies on foundations that are focusing their work in pursuit of greater impact, like our newest case on the Flinn Foundation.

We are working to provide you data: the data you need to improve your effectiveness and impact. Because, the fact is, the need for better data to inform decision making is only heightened in a time of diminished resources and increased needs. That was certainly the prevailing sentiment among the more than 250 foundation leaders who gathered at CEP's bi-annual conference in Los Angeles March 31–April 1. Throughout the two days, we heard examples of foundations using data to create greater impact: from the Stuart Foundation's leadership in work to help foster youth develop lifelong connections with caring adults to the performance scorecards of the Robert Wood Johnson and James Irvine foundations. Look for our report on the conference in the coming weeks.

In the meantime, you can read more about CEP's efforts to provide data that helps foundations improve their effectiveness and impact in this newsletter, and I hope you do. Then, please share your feedback by emailing me.

Yours sincerely,

Phil Buchanan

A new case study from CEP, Becoming Strategic: The Evolution of the Flinn Foundation (pdf) , describes the Flinn Foundation's efforts to narrow its focus and assess its performance. In 2002 Flinn began implementing a strategy that focused on boosting its state's bioscience economy and that relied on building collaborative partnerships.

The case describes the steps Flinn took to implement the new strategy and the challenges it faced along the way. Flinn President and CEO John W. Murphy underscores the value of having clear goals, well-implemented strategies, and relevant performance indicators. "It's all about overall effectiveness," he says. "If foundations want to leverage their grant dollars to the greatest degree possible, taking a strategic approach can create lasting impact."

Download or order Becoming Strategic: The Evolution of the Flinn Foundation.

"Ask the Tough Questions": An Interview with CEP Board Chair Stephen Heintz

In January 2009 Stephen Heintz became CEP's board chair, succeeding Phil Giudice. As president of the Rockefeller Brothers Fund, Heintz travels the world helping the Fund tackle the global issues it pursues in its mission to help "build a more just, sustainable, and peaceful world." In a recent conversation with CEP Senior Research Writer Judith Ross, Heintz shared his thoughts on CEP and reflected on the task ahead for funders as they navigate today's challenging financial environment.

JR: Congratulations on becoming our board chair! What are some of the main tasks that you see on the horizon for CEP?

SH: This is still a young organization, and it has developed a remarkable track record in a short period of time. But we want to take CEP to that next level, and really expand the range of services and products it can offer the foundation community. We'd like to expand the client base and increase the number of foundations that are using a range of CEP's products, and in that way advance the whole field of philanthropy. So it's both about institutional growth and stewardship and about deepening our impact on the world of philanthropy so as to enhance its impact on the great social and environmental problems of our time.

JR: What are some of the biggest challenges facing CEP?

SH: The immediate challenge is to manage through this period of economic constraint in a way that allows CEP to continue to grow. That's the short-term challenge. Over the next three to five years, the big challenge is to add to CEP's range of tools and research in ways that help foundations answer the deeper question of how much impact they are making in accomplishing their mission and programmatic goals.

JR: What do you see as CEP's biggest opportunities at this point in time?

SH: Because of the financial crisis, all foundations are trying to manage carefully and get maximum impact for the constrained resources they now have. CEP can help foundation leaders understand how well they are doing with the resources they have. That information will help them make the kind of strategic choices that we are being called on to make. Since most of us are coping with shrinking resources, where do we put our resources now? Where do we cut back, and where are the areas where we can have the highest impact? And what are the things we can do, in terms of the way we do our work, to add value that goes beyond the value of the grants themselves? CEP is well-positioned to help foundations manage through this difficult period.

JR: CEP is currently developing measures to more accurately assess its own impact. Why is that so important?

SH: CEP aspires to be, and must be, a high-performing organization. We need to model the kind of high-performance management that we are encouraging foundations to undertake. And that means being ready to collect and analyze data and change behavior according to what we learn. It is very important for CEP to manage itself using the same framework that it advocates for others.

JR: Let's talk about the foundation you lead. What are some of the biggest challenges facing the Rockefeller Brothers Fund?

SH: We have a very ambitious agenda. In some ways, it is an agenda that is far bigger than our scale should permit us to consider taking on. But we have consciously chosen that agenda because we deeply believe that, given the traditions of Rockefeller family philanthropy, we must use our unique position in the philanthropic community to advance big goals. So that means that we are involved domestically as well as globally. And it means that we're engaged in the most challenging issues of our time like climate change, the relationship between the United States and the global Muslim community, and the need to strengthen the quality of our own democracy at home in order to create a more just, equitable, and inclusive system of global governance. These are enormous issues. And our challenge is to make sure that we are measuring our impact, adjusting our strategies, and using the resources at our disposal to advance these goals. And it is especially challenging because of the nature of these problems and the constraints on financial resources that we are currently experiencing.

JR: What are some things that Rockefeller Brothers Fund is doing to overcome those constraints?

SH: We've made the strategic decision to be counter-cyclical in regard to our budgeting. At the end of last year I proposed that we not cut the budget, despite the fact that our endowment had declined at that point by close to 30 percent. And after asking all the right, tough questions that a board should ask at a moment like that, our Board unanimously agreed that we wouldn't cut the budget for 2010. We are not increasing the budget, but we are not cutting it either. That means that we are going to exceed the five percent payout requirement and will probably be paying out this year something on the order of seven or seven-and-a-half percent. For a foundation that has perpetuity as its long-term goal that is a tough decision to make. And the question is, how many years can you actually pay out more than you can return and yet still maintain that longer-term goal of perpetuity? That's something that we're working through. But I'm very proud that the Board supported our approach on this and in fact is enthusiastic that we continue on with our big agenda.

JR: What advice do you have for other foundations as they try to navigate through our collective economic predicament?

SH: The key thing is to ask all the tough questions. Take a hard look at every one of your program and functional areas to ask whether each of those areas is performing at peak. And if not, then you need to ask, what should we stop doing, and what should we do differently so that we are performing at peak? During a time of fiscal constraint, those are the top-priority questions. We all should be struggling to be centers of excellence in everything we do. And if we're not, we must either decide to exit certain fields in a responsible way so that we can focus on the ones where we really can be high performing, or make radical changes to become high performing.

And as funders are gathering and analyzing data, they also need to be in conversation with their grantee community and other relevant stakeholders. In our case, for example, a lot of the Fund's work is designed to influence public policy, so as we are going through this process, we need to listen to the people in the public sector and make sure we're as responsive as possible to their needs and challenges in the areas where we think we can make impact. Listening to the stakeholders, engaging them in the process, being open and transparent about what you're doing and what decisions you're making, giving people breathing space so that you don't make radical decisions that pull the rug out from under NGOs and grantees in an abrupt manner are all very, very important. CEP's tools and expertise can help funders with that kind of analysis.

JR: How else can CEP be helpful to funders while they are dealing with this difficult economic environment?

SH: CEP can customize the survey instruments even more to get at the specific things that an individual funder needs to understand as they are making tough decisions. We're good at this already, but we may want to do more as we work with funders on their survey questions so that they result in targeted information that will contribute to good decision making.       

JR: Any final thoughts?   

SH: This is a time, both in our country and around the world, of increasing need. When the economy is this weak, there is huge need for philanthropic resources. There also is enormous opportunity to make progress on some of these bigger goals, because of changing political context and the way that events have brought the world more closely together. As we are learning, all of our economies are intertwined, which means that all of our societies are intertwined, and we can't make progress on these issues unless we work on them together. It is a huge opportunity, and it's not a time for philanthropy to shrink away from trying to meet these needs.

Listening to Beneficiaries
"What's your truth?" was the question CEP and The Bill & Melinda Gates Foundation posed to students at 20 Gates-funded high schools early this year. Dubbed YouthTruth, the program asked students to provide unvarnished feedback about their school experiences by filling out a survey developed by CEP. The Gates Foundation initiated the project in order to learn more about its impact on the Foundation's ultimate beneficiaries — in this case high school students.

The effort included kick-off school assemblies rallying students to help improve their schools through the power of their own voices. The assemblies used handheld voting technology and were facilitated by staff from AmericaSpeaks, which partnered with CEP on this effort. A video produced by MTV, featuring hip-hop icon Sway, helped students understand the process and why it mattered.

In the weeks following the assemblies, 5,300 students from high schools in Washington, D.C., North Carolina, Georgia, and Washington completed a 27-question online survey that included questions like:

• Have you ever seriously considered dropping out of high school? Why?
• Do you agree you will have increased options as a result of attending this high school?
• How many of your teachers try to be fair, care if you are really learning, or make an effort to understand what life is like for their students outside of the school?

In April, CEP delivered student feedback data to leaders of the schools and the Gates Foundation via its new assessment tool, the Beneficiary Perception Report (BPR). Survey results were also reported back in aggregate form to students.

"This was a way for us to think about high school students as, in a sense, consumers of the products we're investing in and really listen to their voices and their
experiences," Fay Twersky, director of evaluation at Gates recently told The Chronicle of Philanthropy. "What was working well for them, what wasn't working so well, what could be improved in the high school experience?"

While both Gates and CEP are pondering next steps, Valerie Threlfall, who leads CEP's West Coast office, believes the project provides a solid basis for further efforts to gather feedback from funders' beneficiaries. "It really lays the groundwork for the foundation community to consider a great test case on how you can collect this kind of feedback, and that it's viable to do this," she says.  "It starts a dialogue about the approach."

CEP Launches Its Donor Perception Report

CEP is looking for community foundations to pilot its Donor Perception Report. Participants will not only receive insight into their own donors' perceptions relative to other community foundations' donors, but will contribute to the development of important research that seeks to improve all community foundations' understanding of the donor experience. While many community foundations have undertaken donor surveys in the past, the comparative data provided by this process will substantially increase the usefulness of this feedback.

The Donor Perception Report was designed with guidance from a group of community foundation leaders, and will assist community foundations in most effectively engaging their current donors and advised fund holders. This tool is based on a customizable donor survey covering topics such as donor motivations, preferences and engagement, communications and satisfaction, and future giving potential.

CEP is conducting this confidential survey in June 2009, and participating foundations will receive analysis and a report in October. To learn more, email Kevin Bolduc, vice president – assessment tools, or call him at 617-492-0800, ext. 202.

CEP Collaborates with TCC to Refine a Foundation's Strategic Plan

The Wachovia Regional Foundation (WRF) recognizes the value of periodically revisiting its strategy and the need for data as part of that process. So when it came time in 2007 to refresh its five-year-old strategy, WRF brought in TCC Group for consulting advice and CEP to provide diagnostic information.

TCC had helped WRF develop its strategic plan in 2002, and though the strategy had been working well, WRF was eager to determine where it could further develop and strengthen its programs to achieve even greater impact in the coming years. "Although we had seen some preliminary evidence of success through the implementation of our strategy, we wanted to be sure that we were on track to meet our projected outputs and outcomes and in the short- and long-run," says Denise McGregor Armbrister, WRF's executive director.

Since its inception in 1998, WRF has awarded over $52.2 million in grants to community-based organizations in a 62-county region in Eastern Pennsylvania, New Jersey, and Delaware. The Foundation's strategy is to concentrate its resources on the creation and implementation of resident-driven neighborhood plans. These programs run the gamut from helping families purchase homes, to developing new businesses, to creating green spaces that beautify neighborhoods.

The staff and board at WRF knew that candid feedback from the Foundation's key internal and external stakeholders would be an essential component in the process to refine their strategic approach. "We are both a learning and a philanthropic organization," says Ambrister. "Unbiased feedback from our partners provided us with a clear perception of the Foundation's performance and highlighted key areas in which we could improve our operations and the outcomes of our grantmaking." For that reason, WRF asked CEP to survey its grantees, while TCC interviewed WRF's board and staff, and external stakeholders such as community leaders. TCC also did benchmarking research and reviewed WRF's processes and systems.

TCC's interviews and research determined that WRF was seen as a leader and "best practice" foundation by its stakeholders and in comparison to its peers. And as an example of its best practice approach, the Foundation was constantly striving to improve its programs and increase its impact in the community, as evidenced by its efforts to reach out to stakeholders and to critically assess its programs and processes.

The Grantee Perception Report^® (GPR) administered by CEP found that WRF is viewed very positively by its grantees — often above the 75th percentile among all foundations on key dimensions of effectiveness such as impact on grantees' fields, clarity and consistency of communications, and provision of assistance beyond the grant. And while grantees found the application process more time consuming than typical, they rate the Foundation's application and reporting processes as more helpful than those of many other funders in strengthening their organizations or programs. "Stakeholder feedback and input is such a critical component of strategic planning; CEP's ability to provide the perspective of the grantees on key issues and on a comparative basis to other funders added a strong element to the planning process, " says Tom Knowlton, TCC Group vice president.

The combined efforts of TCC and CEP resulted in a comprehensive assessment that led to specific recommendations on the Foundation's mission, programs, governance, leadership, and grantmaking processes and systems. For example, in addition to putting more focus on its role as a convener/collaborator on behalf of its grantees and community development funders, WRF was also advised to develop grant policies/processes that would be more efficient for grantees, thus freeing them up to focus on making impact in the community.

"It's always gratifying to work with a partner like TCC and a funder like WRF who really understand the value of timely, data-based reflection on what is working well and what can still be better," says Kevin Bolduc, CEP's vice president – assessment tools. "We were happy to help channel grantees' voices into this effort to refine strategy that we know will continue to guide WRF in the coming years."

Foundations Get Grantee Feedback on their Responses to Current Economic Environment

CEP has added new questions to its grantee survey to probe grantee perceptions of how foundations are responding to the downturn in foundation assets. Responses will be presented in a comparative context as a part of future Grantee Perception Reports^® (GPRs).

These new questions have been added at the end of the grantee survey instrument CEP has developed and refined over the past seven years. Also added to the GPR are new questions that probe foundation and grantee alignment on desired results to be achieved through a grant — as well as the data collected to assess results.

"These new questions respond to a changing context and are intended to strengthen the GPR and make it even more useful to foundations during a challenging time," says Vice President – Assessment Tools Kevin Bolduc. "Foundations are facing difficult decisions about how to allocate resources, and they need to understand the perspective of those on the ground if they are to make the right choices."

The deadline to participate in the next round of GPRs is July 3.

To find out more, contact a CEP Manager:
Romero Hayman — 617-492-0800 ext. 211,
Sindhu Knotz — 415-391-3070, ext. 129, or
Travis Manzione — 617-492-0800, ext. 218.

Lisa Jackson Moves On

Lisa R. Jackson, PhD has left CEP after almost three years helping build the organization as associate director and, most recently, as vice president – research. "Lisa Jackson has contributed enormously to CEP's success," says CEP President Phil Buchanan. "She has delivered assessment tools to clients, shaped and led research efforts, and helped the organization adapt to rapid growth during the time she worked with us."

Director of Research Ellie Buteau, PhD, will lead CEP's research team in the months ahead.

Buteau and her colleagues on CEP's research team are completing the next phase of CEP's research on foundation strategy, launching a new study on how community foundations approach strategy, and further analyzing CEP's massive data set of grantee perceptions to highlight foundation best practices. In addition, CEP will continue to expand its development of case studies: over the past 18 months, CEP has released case studies on the David and Lucile Packard Foundation, The Wallace Foundation, and Flinn Foundation.

"I am grateful to Lisa for her contributions to CEP and know that she'll be a highly visible leader in the world of philanthropy in the decades to come," says Buchanan.

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 data and create insight so philanthropic funders can better define, assess, and improve their effectiveness and impact.

If you have questions about this newsletter or would like general information about CEP and its activities, please contact Kacie Sherman at 617-492-0800 ext. 230.

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.