For Immediate Release

THE CENTER FOR EFFECTIVE PHILANTHROPY RELEASES REPORT ON THE STATE OF FOUNDATION PERFORMANCE ASSESSMENT AND AREAS FOR IMPROVEMENT

Boston, MA: The Center for Effective Philanthropy has released Indicators of Effectiveness: Understanding and Improving Foundation Performance. The report provides findings of its study on the state of foundation performance assessment and the potential for foundations to use new data and measures to improve performance.

"CEP's aim is to work with leaders in the foundation field to move forward in developing better performance measures - measures that can help foundations use their resources for the greatest possible impact on critical issues facing communities and the country," said Executive Director Phil Buchanan. "We are pleased that we were able to develop, through this Pilot Study, both a framework for performance assessment and relative performance data that can inform key measures within that framework."

To collect the data presented and interpreted in the report, CEP surveyed CEOs representing the country's largest foundations, interviewed foundation trustees, surveyed nonprofit grantees, and analyzed publicly available data from tax forms, annual reports, and other sources.

CEP sought to understand current thinking and practices among leaders of large, private U.S. foundations to determine the state of foundation performance assessment today. From this, CEP was also able to put forth a set of common indicators these leaders believe are important in judging foundations' performance and impact.

Through an in-depth look at 23 large foundations and several case examples, CEP considered how helpful these indicators were for judging overall foundation performance and how useful comparative data across these indicators are for foundations. The study of this group of foundations included a survey of nonprofit grantees about their perceptions of the quality of the funder/grantee relationship and the foundations' impact on their focus issues.

Finally, the study identifies gaps in available data and additional research needed to improve the ability of foundations to measure their performance and judge their level of social impact.

Key findings of the study include the following:

• Foundation CEOs face mounting pressure to measure and improve performance. This is driven by their belief that measuring performance is necessary to increasing social impact. It also is driven by their expectation of heightened regulatory scrutiny and a tighter economic climate that requires them to create social impact at the lowest cost. They are increasingly looking to their boards of directors to be involved in assessing foundation impact, though boards are slow to actively engage this role.
• Current performance assessment within foundations primarily relies on formal grant and program evaluations and administrative measures related to operating costs and investment performance. While these measures are important, foundation CEOS and trustees agree they are not sufficient in judging overall foundation impact.
• It is difficult to measure whether a foundation is achieving the greatest possible social impact with available resources. However, the study found that there is a common set of indicators CEOs believe are central to assessing foundation performance and impact. This framework of indicators includes those that are currently being used by many foundations and those for which foundation leaders wish they had more data.
• Relative measures of a foundation's performance, compared to past performance and other foundations, help foundation leaders assess their organizations' results. With the report's findings, foundations can compare their performance with others along common indicators that are considered by the field to be important measures of performance and impact.
• Analysis of data from IRS 990s tax filings and compilation of grantee surveys yield new insight into practices within the foundation field and provide bench-marking data along key indicators of performance assessment.
• For example, new data provide an average among large, private foundations for the length of time between the submission of a grant request and a funding commitment from foundations. Similarly, this data yields grantee perceptions on key elements of the relationship with foundations, such as the extent to which foundations are helpful in leveraging funding from other sources.

CEP was founded by foundation expert Mark Kramer and Harvard Business School Professor Michael Porter.