Strategic Planning for Foundations: Get Clear, Get Real, and Get Better (Post #3)

In the November 2009 issue of the Harvard Business Review, an article entitled “Galvanizing Philanthropy” by Susan Wolf Ditkoff and Susan J. Colby asks all foundation leaders to get clear, get real, and get better at philanthropic investment. This is the LAST of three posts on the article.

Third:  How can we improve our results over time? (Getting better)

Improving results and getting better takes the development of a culture of continual improvement and strong leadership. To improve outcomes, foundations must get constant feedback from the field and measure their results, something that we often demand of our grantees but do precious little of ourselves.

Once again, the authors suggest two traps to avoid: First, failing to solicit outside perspectives. Genuine feedback mechanisms create a learning loop that foundations need to up their game. Second, underestimating the power of nonfinancial assets. Some examples of nonfinancial assets that funders can bring to the table are long-term commitments and help with strategic planning.

In summary: Devise an ambitions and realistic strategy for social change, put it front and center, and demand a stronger performance from ourselves.

Strategic Planning for Foundations: Get Clear, Get Real, and Get Better (Post #2)

In the November 2009 issue of the Harvard Business Review, an article entitled “Galvanizing Philanthropy” by Susan Wolf Ditkoff and Susan J. Colby asks all foundation leaders to get clear, get real, and get better at philanthropic investment. This is the SECOND of three posts on the article.

Second: What will it take to make change happen? (Getting real)

Conventional philanthropy, or the process of funding individual grantees to support great initiatives, may be just what a foundation should be doing. Or, grant making funds could be dedicated to helping a multi-pronged solution to a complex problem that the entire community is working to fix. Or, investment in innovative ideas may the answer for the foundation. Whatever the decision on how to give away philanthropic dollars, the authors of “Galvanizing Philanthropy” suggest collecting candid feedback from the community to help evaluate the chosen direction. Moving the needle on a complex social problem is not easy and requires a reality check from time to time.

Most foundations are not realistic about what it takes to make real change happen. The authors suggest two traps to avoid here: First, don’t be too optimistic about what limited resources can do, and second, don’t hire people and create processes that don’t fit your chosen strategy.

Strategic Planning for Foundations: Get Clear, Get Real, and Get Better (Post #1)

In the November 2009 issue of the Harvard Business Review, an article entitled “Galvanizing Philanthropy” by Susan Wolf Ditkoff and Susan J. Colby asks all foundation leaders to get clear, get real, and get better at philanthropic investment. This is the FIRST of three posts on the article.

What is the lasting effect of any philanthropic investment? Often it’s hard to tell. This is a stunning and discouraging fact, especially after years of experience with social investment and countless billions of philanthropic dollars spent nationally.  The authors of "Galvanizing Philanthropy" in this month's Harvard Business Review suggest an approach that could strengthen the foundation world’s impact.  They recommend an iterative process that gauges the impact of philanthropic investments.  It starts by asking three questions that help the organization get clear, get real, and get better.

First: How do we define success? (Getting clear)

Use your strategic planning process to define a few “strategic anchors,” namely, what are the people, problems, places, and philosophies that we care about as a foundation. Once the organization is clear on its strategic anchors, the programs, initiatives, and identity of the grantees naturally follow.

The article encourages taking a look at both hard evidence and data (what we know), and then applying the organization’s values to that data (what we care about).  Even at the foundation level, philanthropy is values-driven.

Some useful questions to ask in this process are provided in the article: “How do we believe change happens? What role to we want to play in tackling this issue? Do we prefer market-based approaches, policy-based approaches, or neither?  Do we favor a vibrant field of volunteer led organizations or a few larger, professionally managed ones?”

Needs data first.  Applied organizational values second.  And only then are decisions on grant making clearer. 

What's Wrong With Charitable Giving - And How to Fix It (Post #3)

In the November 9th issue of the Wall Street Journal, Pablo Eisenberg, a senior fellow in the Center for Public and Nonprofit Leadership at Georgetown Public Policy Institute in Washington, D.C., wrote an article entitled “What's Wrong With Charitable Giving—and How to Fix It.” This is the LAST post about that article.

Eisenberg’s final three recommended changes for donors and foundations in order to fix what’s wrong with charitable giving are:

7. Simplify Application and Reporting Procedures

Foundations need to use common grant applications and simplify both the grant application process and follow up financial reporting process.

8. Improve Public Accountability

Who holds the nonprofit sector accountable? Not government so much any more. Not independent investigative journalism which is disappearing. One idea: Eisenberg recommends converting failing or at-risk newspapers into nonprofits that could, among other things, perform this function.

9. Fund the Watchdogs

A dearth of funding for advocacy and watchdog organizations exists, and foundations are reluctant to subject themselves to criticism. Needless to say, this is probably the biggest challenge facing the sector.

In summary, Eisenberg is calling for a complete overhaul in the way foundations think about and do philanthropy. More funding, flexible capital, grassroots outreach, true understanding of critical community needs, public accountability. Less bureaucracy.

Sounds about right.

What's Wrong With Charitable Giving - And How To Fix It (Post #2)

In the November 9th issue of the Wall Street Journal, Pablo Eisenberg, a senior fellow in the Center for Public and Nonprofit Leadership at Georgetown Public Policy Institute in Washington, D.C., wrote an article entitled “What's Wrong With Charitable Giving—and How to Fix It.” This is the SECOND in a series of posts about that article.

Eisenberg’s next three suggestions for fixing charitable giving are as follows:

4. Adopt Rolling Grant Making

In other words, don’t make the nonprofits bend to fit the annual or biannual grants cycle of foundations. Rather, delegate ongoing grant making authority to a Board Level grants committee so nonprofits may apply for and receive necessary funding at any time during their fiscal year.

5. Allocate More Funds to the Truly Needy

Nationally, only 3% to 5% of foundation funding goes directly to nonprofits serving those in the greatest need. Rather, the overwhelming bulk of foundation funding goes to higher education and larger health and arts organizations. Eisenberg recommends a rebalancing of this.

6. Reach Out to Local Groups And Underserved Regions

Foundations should do more to stay in touch with local nonprofits who have their finger on the pulse of critical local needs. More local action, interpersonal contact, and understanding is in order.

What's Wrong With Charitable Giving - And How To Fix It (Post #1)

In the November 9th issue of the Wall Street Journal, Pablo Eisenberg, a senior fellow in the Center for Public and Nonprofit Leadership at Georgetown Public Policy Institute in Washington, D.C., wrote an article entitled “What's Wrong With Charitable Giving—And How To Fix It.” This is the FIRST in a series of posts about that article.

The foundation world is being asked to take a hard look at its grant making policies and practices. Are we giving nonprofits enough, and are we funding the most critical needs of the region? In this recent WSJ article, Eisenberg answers both questions with a resounding NO. Caught in the squeeze between reduced funding and increased demand for services, nonprofits are being forced to cut essential health and social services.

Eisenberg therefore lists 9 changes donors and foundations could do to fix this problem.  Here are the first three.

1. Increase the Distribution Percentage

Even when foundation endowments were increasingover the last 20 years, the minimum required payout rate for foundation net assets stayed at 5%. Eisenberg advocates an increase in the payout rate to 6%. He estimates that one additional percentage point would add approximately $10 billion to total annual nonprofit grant making.

2. Increase General Operating Support

Like Rick Cohen, Eisenberg advocates flexible capital for nonprofits, recommending that at least 50% of our grants be unrestricted. Give nonprofits the “lifeblood” they needs to hire and maintain staff so they can build internal capacity and improve community impact.

3. Increase Multiyear Funding

As any nonprofit executive will tell you, planning is virtually impossible without multiyear commitments from funders. Fund the best nonprofits out there, and let them achieve long term success that only multiyear funding can promote.

Philanthropy for the Future (Post #4)

This week I’ll be discussing an article that was published on “Dialogues on Civic Philanthropy”, http://www.civicphilanthropy.net/. Rick Cohen, the former Executive Director of the National Committee for Responsive Philanthropy, posted an opinion piece on that website entitled What Can and Should Philanthropy Do in the Future?  This is the LAST post in the series.

Foundations Should Provide Flexible Capital to Nonprofits

Rick Cohen frames this issue very clearly. He believes that foundations must increase grants for core operating support of nonprofits, and I couldn’t agree more. General operating grants provide the kind of funding that is critical for the effective functioning and survival of nonprofits. Period. It isn’t glamorous, cutting edge, or sexy. It’s just necessary, in the truest sense of that word.

The safety net nonprofits literally hold up the sky for our neediest neighbors. We can’t forsake them for the latest and greatest “social entrepreneurship” endeavor that comes along.  Community foundations are well positioned to support the existing, long standing, well managed safety net nonprofits.  Indeed, there probably isn't a better way to deploy the majority of available unrestricted grant dollars in 2010.

His message is clear:  Foundations need to refocus on critical community needs.  Fund the safety net nonprofits and provide them with general operating support whenever possible.