By Charles H. Hamilton
Senior Fellow, Philanthropy New York
Thus began an article in 2000 by Robert Mayer, then Chair of the Nathan Cummings Foundation. At any time—and especially during an economic downturn—the question we should ask is “what is the best use of foundation resources?” The whole independent sector would be better served if foundations invested resources more wisely in their own capacity to do a more effective job.
Spending time and money on capacity building and technical assistance for grantees should be an important part of what foundations do. In fact, many nonprofits are handling the economic downturn precisely because they and their funders previously invested in infrastructure. Too bad there wasn’t more of that over the last 10 years.
It is strange to me, though, that with endowments greatly eroded and grantmaking budgets down, foundations around the country seem compelled to offer more and more technical assistance and non-monetary help, as a big response to the recession. A cynic might hypothesize that foundation staff, having less money to give away, are simply finding other ways to spend their time and interfere with grantees. Many nonprofits may even feel that foundation capacity and effectiveness tend to be flabby already, but focusing on internal effectiveness and efficiency could be the most valuable capacity building foundations can do. Clara Miller, President of the Nonprofit Finance Fund, put it nicely: “And while most of the sector’s management improvement and capacity-building work focuses on fixing the management practices of nonprofits themselves, much greater untapped leverage resides in improvement of funding practices…” (emphasis added).
The first step is to identify what foundations should do to become more effective. As Tony Proscio pointed out in In Other Words: A Plea for Plain Speaking in Foundations (which should be required reading): “Often the writer who uses ‘capacity’ genuinely doesn’t know what an organization’s problem really is.” That insight is especially true when we are talking about our own practice. Thus, the first two steps could be:
- Survey grantees about one’s own performance, and then take the feedback seriously.
- Review some of the fine literature about foundation effectiveness. I am thinking, for instance, about the findings in Drowning in Paperwork, Distracted from Purpose, a report from Project Streamline; and many of the publications of Grantmakers for Effective Organizations.
Great advances in foundation practice can be made. Each of the following suggestions would reduce foundation costs over time and reduce the burden of time and money for grantees and prospective grantees. Each one needs further development, but perhaps this short list will get people thinking:
- Simplify application forms and report forms: thus making them less expensive to prepare, and more appropriate to grant size.
- Communicate more clearly about mission, programs, and guidelines: thus eliminating unnecessary requests.
- Respond much more quickly and candidly to inquiries and requests: thus eliminating uncertainty and encouraging a better use of nonprofit staff time.
- Provide serious professional development for staff (especially financial expertise): thus improving due diligence and oversight.
- Encourage all program staff to join a board (not of a grantee): thus also improving staff understanding of what nonprofits are really like.
- Invest in technology: thus reducing duplication.
- Clarify impact measures and benchmarking used: thus communicating clear outcome expectations and reporting requirements.
- Review foundation staffing requirements and expenses: thus having the appropriate, streamlined capacity (the “right people on the bus”) and having more funds to grant.
- Work much more closely with other foundations—sharing, for instance, a) common applications, b) common reports and outcome measures, and c) coordination of TA offerings: thus largely eliminating vast amounts of silly duplication and sending more unified messages to the nonprofit community.
Common sense, the experience of grantees, and studies by the Urban Institute and Grantmakers for Effective Organizations find that so much can be done. These and other changes would improve foundation efficiency, reduce the cost to nonprofits of working with foundations, and thereby increase the effectiveness of both.
This is not a plea to cut back on capacity building and technical assistance for grantees, but simply a reminder that we tend to ignore what can be done to make our own operations better, more impactful, etc. The recession makes it even more important that foundations look at themselves and make internal changes. That would be a great gift to our grantees.
In recent months, many nonprofits have written revealing and helpful letters to supporters about what they have done in response to the recession by reducing costs and improving efficiencies. Some foundations have written about what they are doing for their grantees. What about writing to grantees about what a foundation has done to increase its efficiency, reduce its costs, and improve its funding practices? While nonprofits may care primarily about getting a grant and not a whit about the internal workings of foundation funders, we should care about, and be open about, what we are doing “at home.”
Chuck,
We at the Center for Effective Philanthropy (CEP) couldn’t agree more with your post. Thanks for so cogently pointing out the need to incorporate the needs and perspectives of foundation stakeholders into any conversation about foundation effectiveness.
In past years, nearly 200 funders among the largest 500 in the country have surveyed their grant recipients just using CEP’s survey protocol. Others surely have used other mechanisms. That in itself is something to be proud of. But more importantly, a 3rd party assessment of funders’ actions in response to their results from CEP’s survey shows that nearly 100% of them make changes in their operations in response (http://www.effectivephilanthropy.org/assessment/assessment_gpr.html). And many improve in subsequent surveys. It’s not just navel gazing, grantee feedback drives change in effectiveness when it’s taken seriously.
Beyond a single foundation, though, the comparative data developed through these surveys fuels field-wide research fueled by the more than 40 funders who are committed to these issues. I’m so glad you mentioned the excellent report put out by Project Streamline. No time is better than now to ensure that grantees and funders are collecting the right amount of truly useful information. (CEP provided data and analysis from our grantee survey database for the Project Streamline report.) We still see too many examples of grantees forced to spend time applying year after year for small project grants for the same project. This cannot be the best use of society’s resources—grantees and funders both tell us that this can improve.
Similarly, it’s only by asking grantees how funder-provided technical assistance is experienced that we can provide it most effectively. In our recent research, “More than Money,” we pretty clearly painted the picture from the grantee side—most non-monetary assistance isn’t provided very well by funders. It’s only when funders provide intensive assistance across multiple areas that grantees say it really matters. (http://www.effectivephilanthropy.org/research/research_fgrelationships.html)
As everyone seems to be saying right now: “a crisis is a terrible thing to waste.” Let’s hope that funders take your advice seriously, Chuck, and really seize this opportunity to ensure that their work is making as much difference as it really can.
Kevin Bolduc
Vice President
The Center for Effective Philanthropy
http://www.effectivephilanthropy.org
The NY/NJ Area Common Application Form needs an update. Foundations might consider modeling after the college common application: have a generic application form with a supplement specific to the individual foundation.
I enjoyed your presentation at Fund Raising Day in NY.
Meg Sheridan
Consultant/grantwriter
Board Member, Grace Outreach
….Chuck got me thinking about some things foundations can do differently and better.
First, I agree with the call for simplification of foundation application and report forms. As a Board Chair, I was told several years ago by the executive director of a foundation, “when the time comes to report on your progress in achieving the goals outlined in your proposal, send us a copy of the report that you are sending X foundation (another one of our supporters). Don’t even go through the motions of changing the foundation name on the report; just send us a photocopy of their report with a handwritten note to us.” That was the first time that has ever happened—and the last as well.
Second, I encourage foundations to work together to create pools of money for common projects. Doing so can produce a kind of multiplier effect for foundations and their grantees. We at the Volunteer Consulting Group are in the third year of a successful TA assistance collaboration among three nonprofit providers funded by three foundations—who take the same proposal and report!
Third, I believe the most successful foundation executives have served on boards of other nonprofits. They also have served as staff members of a nonprofit organization as well. Both of these viewpoints contribute to the ability of a program officer to understand grantees better and to provide support and assistance—offered in a way that is grounded in a common experience.
Fourth, in my over two decades of approaching foundations as a board member or a staff member, I have NEVER heard a foundation or an individual program officer ask a version of Mayor Koch’s famous feedback question to the press: How am I doing? I know from experience that it is a question that foundation staffs ask themselves all the time. If they did ask grantees for input on their foundation’s performance in formal and informal ways—they will certainly learn something useful and might be pleasantly surprised.
Finally, I want to urge careful thought when thinking about investment in technology. When I was a hospital administrator, my colleagues and I all bemoaned the fact that every insurance company used a different form to file a claim—even when claims were filed on line! To this day, this lack of standardization costs the healthcare system millions of wasted dollars. While I endorse the call that foundations should invest in technology, it would be a lost opportunity and a costly one if the myriad current hard copy systems were simply just transferred to an on-line setting without a total reconception of the information needed in a proposal and report—and how this information can be obtained most efficiently. Certainly, in common funding areas such as workforce development, technical assistance, youth development, etc., we can standardize the information needed across foundations.
Certainly, we can try.
David LaGreca
Executive Director, Volunteer Consulting Group
Board Chair, JOBSFIRSTNYC