The International Journal
of Not-for-Profit Law

Volume 11, Issue 3, May 2009

By Kevin Bolduc, Ellie Buteau, Greg Laughlin, Ron Ragin, and Judith A. Ross
Center for Effective Philanthropy

Reviewed by Michael Bisesi,
Professor and Director, Center for Nonprofit and Social Enterprise Management, Seattle University.

“When a man knows he is to be hanged,” Samuel Johnson reportedly said, “it concentrates his mind wonderfully.” In the midst of this “Great Recession,” nothing seems to concentrate the minds of philanthropic and nonprofit leaders more than watching the rapid evaporation of endowment funds.

Beyond the Rhetoric: Foundation Strategy, a monograph from the Center for Effective Philanthropy, could not be making a more timely appearance. Ironically, the distinctive exemption from competitive and economic realities described by the researchers who wrote this report is now quite clearly a new collective vulnerability. In a field long noted for asking grant recipients to engage in certain types of accountability (collaboration, planning, and evaluation, among others), it could well be that foundations may emerge much stronger and healthier.

The researchers invited 50 CEOs from the largest 450 private foundations to participate in the study, and 21 accepted. Since a program officer from each foundation also was invited to participate in the study, the final study involved interviewing 42 individuals.

The basic finding is starkly simple and direct:

We learned that even though most of the CEOs and program officers interviewed believe that having and using a strategy increases a foundation’s ability to create impact, many do not use strategy in their own work. We asked respondents to describe the frameworks they use to guide their decisions. While some decision-making frameworks met our basic definition of strategy, a majority did not.

And what is that basic definition of strategy? According to the authors, strategy entails “a framework for decision-making that is (1) focused on the external context in which the foundation works and (2) includes a hypothesized causal connection between use of foundation resources and goal achievement.”

Four categories of philanthropic decision makers were identified by this research: Charitable Bankers, Perpetual Adjusters, Partial Strategists, and Total Strategists.

Charitable Bankers make their decisions strictly on the merits of a particular grant request without any apparent strategic concern. Their primary focus is on process: how grants are reviewed and awarded or declined. This category often applies to foundations that want to maintain maximum flexibility. This style is definitely reactive—responding to proposals rather than thinking about what kind of impact to make. Boards are quite involved in decisions, causing some level of consternation among staff.

Perpetual Adjusters also seem to be more interested in process than strategy, but foundations that “frequently add more programs, communities, grantee types and decision-making frameworks to their work, yet rarely remove anything” also characterize this category. Stakeholder input is key, along with mission and values, but there is also a fair amount of “ongoing, internal disagreements about decision-making.”

Partial Strategists may use a strategy connected to some desired external goal from time to time, although any causal relationship between the foundation grants and public results is quite often coincidental. This approach typically relies on “mission, values, or broad beliefs when describing goals and resource use.” Other rationales for action include board interests, shifting external funding priorities, and CEO leadership.

Total Strategists organize all grantmaking activities with goal achievement uppermost in the minds of key decision-makers. This is the most proactive of the four types. Data and external analysis are quintessential elements of every funding decision. A written strategic plan is nearly universal among these funders. There is considerable interaction with key stakeholders and communities, although this interaction is more likely to focus on assessment rather than changing strategies.

The authors then examined how foundations compared when considering grantmaking (proactive, reactive, or responsive), assessment (primarily at the individual grant level) and boards (degrees of disagreement between board and staff).

Finally, there is the not necessarily surprising finding that the view from the CEO suite and the view from the program officer cubicle are different. Decades of studies in organizational behavior and management have yielded similar results in business, government, and nonprofit organizations. These findings simply remind us that decisions at the top require implementation throughout the organization if real change is to occur.

The monograph includes a sidebar profile on the Doris Duke Charitable Foundation’s “Wise Person Review” that helps foundation leaders get the “honest criticism” it considers a vital part of its strategy development and implementation. The monograph concludes with a case study highlighting the Gill Foundation’s record of strategic philanthropy.

The great strategist Yogi Berra once offered this helpful bit of advice: “When you come to a fork in the road, take it.” Since it is always advisable never to waste a good crisis, foundation leaders could make good use of these turbulent times with some constructive reflection on which strategic road they intend to follow.

Note

* https://www.effectivephilanthropy.org/images/pdfs/CEP_Beyond_the_Rhetoric.pdf