Do Foundations Make a Difference?

Posted by Laura Otten, Ph.D., Director on December 15th, 2016 in Thoughts & Commentary

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The Center for Effective Philanthropy’s report, The Future of Foundation Philanthropy:  The CEO Perspective, has a number of interesting findings from among the 200 responding foundations.    But perhaps the most talked about one is this:  while 66.6% of these CEOs think foundations can make a significant difference, only 13% see foundations actually making that significant difference.

What hypocrisy this finding reveals.  How many of these CEOs would argue to their boards to continue to fund a nonprofit that only achieved 13% of its intended outcomes?  I know enough and read enough to feel confident saying I can’t imagine any CEO being comfortable making that argument to her/his board.

I can’t imagine any foundation CEO listening too far into the argument to a program officer seeking continued support for a nonprofit with, in essence, a 13% return rate.  No matter how much the nonprofit claimed to have learned from this experience, no matter how much it explained the planned changes to the program, it should be difficult to convince anyone to provide ongoing support for an organization that is only succeeding at the 13% level when it knows it could—and should—be working at the 66% level.

The CEOs seem rather clear as to what gets in their way of their grantees being more successful.  None will be surprising to any of their grantees, as there isn’t anything they’ve not faced at one time or another—or constantly: organizational challenges, such as spreading themselves too thin and not all being on the same page; the complexities of the problems being addressed; inability to collaborate with others due to differences of opinions and, yes, egos.

Asked directly if foundations need to change in order to become more successful at addressing societal needs, 57% said yes, “to a large extent.”  Yet, only 14% think foundations are “very likely” to make those changes, though 64% say they are “moderately likely” to change.  Again, I have to ask:  how many funders would continue to have interest in an organization that came to it and said:  “we know we need to change in order to be more successful; we have a fairly good idea of what that change should look like, but we are only moderately likely to make those changes.”  I would hope they wouldn’t be walking out with a check!

The second thing that makes the acknowledgment of the achievement gap so interesting is what it says about our willingness to accept, once again, mediocrity—or, in this case, whatever is less than mediocrity.  (I would hope that we would all agree that 13% is less than mediocre.

When I read the statistics of 66.6% and 13%, 57% and 14%, for the first time, I was immediately reminded of something someone recently said to me about her board of directors:  she thinks the board doesn’t take up its fundraising responsibilities because the individual board members don’t believe the organization is sustainable; so, why bother?

Do the foundation CEOs not think the problems they are charged to redress fixable, so there is no incentive to try to make that difference?  Certainly the challenges of redressing any one of the many needs foundations take on is daunting; but are the goals not achievable?  If that is the belief, then the 13% is understandable:  why bother?

In the last half dozen or so years, funders shifted their semantics, as more and more now refer to their grantees not as grantees but as partners.  Yet, too few actually treat their grantees as partners, preferring still to tell their partners what they want rather than listening to the experts—their partners—and what they think is best.

Of the 200 CEOs contributing to this research, 40% have been in that role for 10 or more years, indicating that they have been out of the field and trenches (if they were ever even in them), for too long.  Only 1/5 came directly to their current position from working in a nonprofit; the others came from another position in the funding world (1/3) or the business world (1/5)—both experiences very removed from the reality of nonprofits.  (We aren’t told about the remaining approximate 27%).

Don’t get me wrong:  as an academic, I get and greatly appreciate book smarts, and know that most foundation staff has varying degrees of book smarts.  But as a practitioner, I get and greatly appreciate what happens when the book smarts meet the reality of the day-to-day of a nonprofit and their clients.  And what that looks like today, isn’t what it looked like five years ago, and probably isn’t what it will look like five years from now.

Only those in the trenches will know it, understand it and have the expertise to construct possible solutions.  Perhaps the CEOs could see their foundations having greater impact if they listened more to the experts and really partnered with them, rather than making themselves and their staff out as the experts.




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