Effective Philanthropy

Reporting Through Conversation: Building Trust and Relationships

This interview with John Esterle, co-director of The Whitman Institute (TWI), conducted by Jessica Bearman and Elizabeth Myrick, originally appeared in the PEAK Insight Journal.

The interview focuses on TWI’s reporting practices, which are informed by and aligned with their philosophy of trust-based grantmaking, the idea that philanthropy can be more effective when funders approach their grantee relationships from a place of trust, rather than suspicion. You can read more about this idea and its nine pillars on TWI’s website here.

How does The Whitman Institute (TWI) think about grant reporting?

Esterle: All of our funding is unrestricted (much of it multiyear) and we do not require formal written reports. Our approach to reporting is that it is primarily about learning and happens organically through conversations with those we support. These can range from one or two meetings/calls per year to more frequent contacts depending on our relationship with them and what is happening with their work. We do not require that grantees have a relationship with us but rather it’s an invitation, depending on what makes sense for them and is supportive. If grantees have written reports for other funders they are willing to share with us, we are happy to read them. And, even though we don’t require them, some of our grantees like submitting a written report to us annually to share their thoughts and learnings from the year.

This approach aligns with our trust-based approach to philanthropy. Nonprofits are drowning in paperwork and we don’t want to add to that burden for them.  Our approach is relational and dialogic and so that makes sense to us as the primary way we learn about our grantees work.

Talk a bit about how these conversations happen and how you use what you learn.

Esterle: Our grantee conversations happen either in person or on the phone with our co-executive directors — myself and/or Pia Infante. We prefer in person when possible, either at our respective offices or over coffee or lunch. Sometimes we initiate the conversations and sometimes they do. It varies from grantee to grantee.

For us, these conversations inform both our understanding about the work of our grantee partners (both their successes and their challenges) and our sense of how we can be of help to them.

Especially with our multiyear partners, our conversations give us ideas about how we can best be of support beyond the check — and they give us a better sense of how to talk about their work with our board and other funders. The benefits are that it invites a more authentic learning and dialogue process with our partners and frees up their time to concentrate on their mission. What we hear from our grantee partners is that they deeply appreciate this approach.

I don’t think many foundations really get how much frustration and anger there is on the part of nonprofits about how much time they have to spend preparing individual reports to funders. What’s particularly disheartening for many is the sense that nothing is really done with the reports other than a box being checked off.

Have you always done it this way, or has TWI’s approach evolved over time?

Esterle: A trust-based approach and a commitment to unrestricted funding was there from the start so we always felt that there was no need for a special report just for us. We were proactive and didn’t require formal proposals. When we started making grants in 2005 our grants ranged from $5,000-$25,000. To date our largest grants have been $75,000 with most in the $25,000-$50,000 range. I recognize that funders making much larger grants might have more of a need for documentation depending on the nature of the funding.

Anyway, reporting was always through conversation. We structured our inquiry around two to three core questions, so we asked things like, “What have you learned and how are you incorporating what you’ve learned into your work going forward?” The focus was on learning, rather than accountability. I’d say we still address those questions but it’s not a formal process.

In the beginning, we also invited folks to send in additional brief, informal written reflections on what they had personally learned leading their organization in the past year. It wasn’t required and some did and some didn’t take up the invitation. Over time, given the richness of the conversations we were having, we didn’t see the need to ask for that. To this day, some of our multiyear grantees like sending us a written report or they will share a report they have written for another funder (including budgets) that gives us a current snapshot of their work.

We used to ask for annual financial information from our multiyear grantees. But now, in alignment with our trust-based principles, we do the homework and generally look at 990s to understand an organization’s financial health.

If something comes up in conversation about the budget and current funding, we may ask a grantee to send us a copy of their budget and a list of current funders. This helps us to discuss different financial and program scenarios, including opening doors if possible. Usually, financial information is included in the reports grantees share with us.

To reiterate, we don’t take a “one-size-fits-all” approach to reporting. It varies according to the particular relationship we have with an individual grantee, including how long we have been supporting them, how often we are in communication (it can vary from year to year), and whether we are making a one-time grant or not. The through line is that the focus is on learning and being a supportive partner. Unless our grantees tell us otherwise, we assume our funds are used to pay staff and keep the lights on.

Has there been a time when an organization has been struggling or mismanaging funds and you’ve felt the need for something more formal? What did you do in that case?

Esterle: Yes, of course. Some organizations struggle financially — that happens — but in our experience it has been because of lack of funding support not financial mismanagement. In past instances, we knew from our conversations when an organization was struggling because they would tell us. Sometimes an organization had to downsize, restructure, or end. Sometimes what we learned informed a decision not to renew a grant. Sometimes it renewed our resolve to keep supporting them through tough times. In a few instances over the years, grantees have asked us if we could move up a scheduled grant payment by a few months to help with cash flow and we oblige. We had one instance where we did ask for more formal reporting from a fiscal sponsor, our concern not being with the grantee but with the fiscal sponsor. Other than that we have not seen the need for something more formal.

Do you have a story of when this particular approach opened a door or provided an insight or relationship that you would not have been able to achieve with a different (more formal) reporting process?

Esterle: Sure. For example, when we first started supporting one grantee they were a promising program, but struggled financially. Because we trusted each other, they could share both their big vision and their struggles. So we had a deeper sense of our own alignment with their long-term vision and a better understanding of their funding challenges. Consequently, we were able to provide not just extra financial support for a time, but also open a door to another funder. Our conversations also enabled us to provide moral support in the sense of, “No, you’re not crazy to have this vision.” Both were important and I feel we were able to embody one of our other principles — to partner in a spirit of service at a crucial time in their organizational development. They are in a much better place now and it’s exciting to see.

I think the key insight for us is that when we build trusting relationships that prioritize learning and dialogue we have a more authentic understanding of what’s happening with our grantees.

Consequently, we are able to be more responsive, supportive, and effective partners in the work.

What advice do you have for another funder seeking to adopt this approach?

Esterle: I would say to be open to your role changing. From our experience, a relational, conversational approach to reporting frees you up to more truly listen and to be more of a partner in the work in all kinds of ways (e.g. advocating, connecting, convening). I think streamlined paperwork helps not just the grantee, but the foundation itself to become a healthier learning organization with better outcomes.

My only other advice is this: if you don’t have the capacity or inclination to have conversations become the gateway for reporting, really ask yourself if you need your grantees to write special reports just for you. Instead, ask your grantee to submit a report they’ve written for someone else that best captures their successes, challenges, and questions going forward.

If you are not already doing so, I would also say to consider providing unrestricted funding, which dovetails nicely with the idea of a common report multiple foundations can learn from.

Jessica Bearman works with foundations and other mission-based organizations, focusing on organization development, facilitation, and R&D to help them become more intentional, effective, and responsive to the communities that they serve. She is also known as Dr. Streamline and blogs regularly on funder practices and values. You can find her on Twitter at @jbearwoman.

Elizabeth Myrick is an independent consultant with nearly 20 years of experience in the nonprofit and philanthropic sector. Her work focuses on leadership and organizational strategy.

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A Foundation Website for Sore Eyes

A version of this blog post from CEP Associate Manager, Research, Matthew Leiwant originally appeared on the CEP blog in March 2016. It is re-posted here as part of our Rewind series.

Sifting through every nook and cranny of 73 foundation websites is not fun.

On its face, that statement does not seem revelatory, but I really would not have thought about it much until the CEP research team started collecting data for our research report on foundation transparency. For part of the analysis in this report, we decided to look into what information foundations were sharing on their websites. We looked for everything from staff names to grant application deadlines to conflict of interest policies. You can check out some of our quantitative findings from this effort in Sharing What Matters: Foundation Transparency.

Websites are the public face of any organization and foundations are no different. In fact, 81 percent of grantees at an average foundation use the foundation’s website as a resource. If you are in charge of writing grant proposals at an organization that receives foundation funding, a foundation’s website can be an important resource for a whole host of information, such as funding guidelines, programmatic goals and mission statements to help frame funding proposals, and much more. If this is your role, you might have to take a deep dive into foundation websites to find this kind of information once a month. Maybe even once a week.

If you are in this group, I now know some of your pain.

While some foundations do a great job of making their websites accessible to grantees (grantees who use foundation websites rate their helpfulness a 5.59 on a 1 to 7 scale, according to our dataset of grantee perceptions), others seem like they simply are not willing to put the necessary resources toward making their websites friendly to those seeking information. In Sharing What Matters, we found that many foundations are not posting some potentially valuable information for grantees and the sector as a whole, including reflections on strategies that have been tried and not worked in the past and information about unsuccessful projects. This is unfortunate.

But while our report discusses what foundations are and are not sharing on their websites, it does not delve into how effective web design can make the information that is there as helpful and accessible as possible. We often found that even when foundations’ sites shared all of the information we were looking for, it often took an eternity to find. What we found on this topic did not make the report because we could not quantify it, but I wanted to share some of my observations here because I believe it can be important for funders to think about as they look at their own foundation’s sites.

Don’t Party Like It’s 1994

With how ubiquitous websites are today, it’s hard to believe that the first AOL disks only started appearing in the mail in 1992. We’ve come a long way since then. When General Electric became the first Fortune 500 Company to launch a website in 1994, the home page looked something like this:

Note the crazy color scheme, the amazing amount of grey space, the ambiguously worded clickable headers (and the quintessentially 90’s hairstyles). If you go to GE.com today, it looks more like this:

What a difference 20 years can make. I think we can all agree that the days of prehistoric websites should be behind us.

So imagine my surprise when I came across several foundation websites that looked eerily similar to GE’s 1994 website. Crazy formatting abounded, as did unhelpful headers. It’s a bad look for a foundation to have such an eyesore as a website, but the issues run deeper than simply visual appeal or aesthetics. Old websites are not intuitive to users because we’re used to interacting with more up-to-date layouts. Additionally, dated websites tend to hide information by accident because of the coding limitations of the day. I remember going to one foundation website where I could not click into the tab for one of the program areas. On another, I searched and searched and could not find the foundation’s mission statement. But when I accidently clicked on the foundation’s logo, up popped a page with — you guessed it — the elusive mission statement.

These types of websites are bad for users and are a bad public face for any foundation. Given how many people use any given foundation’s website, I urge foundations with an antiquated website to spend the money to get the site updated. It will be worth it and your grantees will thank you.

We Are Going Back to the Future

Speaking of updated sites, there’s been a wave of recently redesigned foundation websites that are so new age they look fit to be perused while riding in your self-driving flying car. I am not going to lie, these websites are chic. They are a positive and modern public face for the foundation, often including high resolution photographs and highlights from grantees’ work. These things are important, but it seems that this most recent round of website renovations might, in some cases, fall victim to prioritizing style over substance.

When going through most of these new websites, I often found that it was difficult to find important pages such as FAQs, grant assessments, and funding guidelines for specific programs. In many cases, the in-site search function did not work particularly well and I found myself stuck clicking through page after page trying to figure out where a piece of information might live. In fact, we found that 34 percent of foundation websites either had confusing page navigation or poor search functionality. Everyone wants to have an aesthetically pleasing external face for their foundation, but the content should match the flashy exterior. It’s important to remember that visually appealing web design is not necessarily good web design. Too many of the new foundation sites forget about navigability, and that can be frustrating for a grantee or any other website visitor.

Give The People What They Want!

What foundations with effective websites do, which is so important, is balance the importance of form and function. They’re not hard to look at, and while they do not include every piece of information they could, what they choose to share is easily accessible and well organized. So as you are thinking about what new information to put up on your foundation’s website after reading Sharing What Matters, make sure to remember that it is not only important to consider what you share, but also how easy it is to find.

Matthew Leiwant is associate manager on the research team at CEP. Contact him at mattl@cep.org.

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How Foundation Transparency Sets the Stage for Diversity, Equity, Inclusion, and Justice

This post originally appeared on the Glasspockets “Transparency Talk” blog.

Philanthropy invests billions of dollars into charitable causes each year. According to Foundation Center, foundations gave an estimated $59.28 billion in 2016. That’s a tremendous amount of capital. For better or worse, the field of philanthropy is a leader in determining what’s important and how social change happens. Whoever holds the purse also holds the power. And with power comes responsibility for foundations to set the gold standard, especially for diversity, equity, inclusion, and justice (DEIJ). 

In my role as executive director of Green 2.0, I spend a lot of time helping foundations better understand how improved foundation transparency around DEIJ can position philanthropy to lead by example instead of just playing catch up, or worse, just going through the motions. Though we focus on the environmental field, what we have learned in the process can serve as a helpful example for all of philanthropy because every sector has been influenced by the power and privilege that exist in our society.

So what have we learned?  The environmental movement, in particular, has failed to adequately represent people of color. In 2014, Green 2.0 commissioned “The State of Diversity in Environmental Organizations” report authored by Dr. Dorceta Taylor, which found that while people of color are 36 percent of the U.S. population, they only comprise 12 percent of foundation staff in the world of environmental funding. And ample studies have shown that communities of color are disproportionately affected by environmental hazards. Green 2.0 envisions a different, more diverse movement that wins environmental battles for those most impacted. To catalyze transformational change, Green 2.0 works to increase the racial and ethnic diversity in the mainstream environmental movement. We call for data transparency, accountability, and increased resources to ensure NGOs and foundations are diverse.

As the sustained drumbeat to improve workplaces and increase opportunities for talented people of color, Green 2.0 engages with environmental NGOs and foundations by calling on them to share their demographic data year after year. This is not just transparency for transparency’s sake. We find there are direct benefits to this kind of transparency that spurs change for the better as outlined below. But there is still lots of room for improvement.

Since 2014, only 12 of the top 40 environmental foundations have answered the call. Given the benefits of transparency to the DEIJ movement, it is important that both GuideStar and Glasspockets encourage disclosures pertaining to diversity data in their respective profiles. In the case of Glasspockets, the transparency self-assessment covers disclosures about both diversity values statements and demographic data, and what we have learned here is it remains a challenge for the field as a whole with fewer than half of participating foundations reporting any kind of values statement, and fewer than 10 percent disclosing any demographic data at all.  And out of a universe of more than 86,000 foundations, only 500 foundations have willingly submitted their demographic data to GuideStar via their profile page demonstrating that this is a challenge for all foundations.

Commitment means:

  • Being transparent about the demographics of foundation staff and boards. Greater transparency can spur a review of recruitment and hiring process to reduce implicit biases but also allow foundations to identify the full range of organizations they should be supporting.
  • Encouraging grantees to submit their diversity data and communicate how they are working on diversity, equity, inclusion, and justice both internally and externally. As funders, foundations are uniquely suited to holding grantees accountable for advancing a more diverse environmental movement.
  • Recognizing your role as leaders in the field that influence the whole. When foundations make a move and engage deeply on issues, others follow suit. Foundations have an opportunity and responsibility to show the field the value of diversity through its action and set the standard on recruiting, attracting, and retaining talented people of color.

In order to see transformational change, foundations need to make a real commitment to diversity, equity, inclusion, and justice, internally.  That’s more than providing lip service to the value of diversity. It is rather embedding equity and justice in the practices, policies and procedures of the organization and for foundations also into their grantmaking. Ask your foundation simple questions that may result in complex but informative answers as a start:

  • Are you tracking the data of your staff and board?
  • Do you have an organizational vision and/or mission around diversity, equity, inclusion, and justice?
  • Is there authentic leadership on DEIJ issues and are they holding the organization and themselves accountable for change?
  • Are your internal policies for attracting, recruiting, hiring, promoting and retaining staff transparent, equitable and consistently implemented?
  • Are you assessing your organizational culture and making constant adjustments to achieve your vision?
  • Are you tracking the demographic makeup of your grantees? Are you sharing those statistics with program officers? Are you using this to inform future grantmaking?

Several foundations have made or are starting to ask these questions, but many are not public about them.  From sharing the demographic data of their grantees to intentional recruiting and hiring staff of color, these foundations are changing their focus and what they fund. One foundation has been collecting the demographic data of their staff and grantees for several years; and sharing that data with grantees and program officers. This data gives program officers insight into where the dollars are going, how to shift their portfolio over time, and for their grantees they can now compare themselves to other organizations in the field. As a foundation, they have engaged in more DEIJ conversations internally and externally from how they support racial equity through funding to how they support the internal DEIJ work of grantees. This has spurred important conversation and reflection about funding, commitment, and action that this foundation is digging into and learning from every year. More need to start this conversation and be public about the answers that they are coming to.

Green 2.0 will continue to advance enduring change in the environmental movement broadly but we call on foundations to dedicate the time and resources needed to change the face of philanthropy to one that is more diverse, equitable, inclusive, and just.

Whitney Tome is the executive director of Green 2.0, a campaign dedicated to increasing the racial diversity of mainstream environmental NGOs, foundations and federal government agencies through data transparency, accountability, and increased resources. Follow her on Twitter at @wjtome.

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The Transformative Power of General Operating Support

At CEP, we are always eager to learn how the recommendations we provide through our assessments and advisory services affect not just the funders we partner with, but also — and most importantly — the work of their grantees toward improving lives and tackling complex social and environmental problems.

We previously worked with the Citi Foundation to provide guidance on the grantmaking patterns that our research has found to be most helpful to grantee organizations: large, multiyear grants of general operating support. The flexible nature of this support allows organizations to strengthen important aspects of their work that they see fit to best serving their mission. Large, multiyear, no-strings-attached funding can also provide nonprofits the financial security that allows their leaders and staff to focus on their mission — and not devote too much of their time to raising money to keep the lights on or agonizing over project budgets to fit narrow programmatic grant parameters.

In 2015, the Citi Foundation launched its Community Progress Makers Fund, which has provided 40 community organizations with two-year, $500,000 general operating support grants, as well as access to many forms of technical assistance. Elevate Energy, a Chicago-based organization focused on smarter energy use, was part of this first cohort of grantees.

Below, we’ve shared some excerpts (with our bolding for emphasis) from a recent blog post in which Elevate Energy CEO Anne Evens describes the impact that unrestricted, multiyear funding has had on her organization. This is just one example, but stories like this can serve as powerful illustrations of the ways in which this type of grant support can allow organizations the freedom and ability to change in ways that are both transformative for their own work, and influential for their fields.

The importance of general operating support in achieving an organization’s mission:

For the first time since our founding in 2000, Elevate Energy — a Chicago-based community development agency that helps people do more with less energy — participated in a funding opportunity that enabled us to think transformationally about how we achieve our mission. By providing multi-year, unrestricted grant support, the Citi Foundation’s Community Progress Makers Fund helped our organization develop the evidence and business case to dramatically increase clean energy investments in low-income communities. But it’s more than that. The Fund is an innovative approach to grantmaking that pushes organizations to transform the world by first transforming themselves. Elevate Energy seized this unique opportunity to grow from an organization that focuses on program implementation to an organization that uses its on-the-ground, practical experience to help influence and inform energy policy in partnership with other leaders. In other words, the Community Progress Makers Fund helped us move from being a “doer” to being an “influencer.” We know that many of our nonprofit peers could likewise benefit from this kind of funding model and urge other foundations to consider similar approaches.

The value of assistance beyond the grant:

Beyond the enormous value of providing a significant amount of general operating support, the Citi Foundation also provided a critical opportunity and clear platform for Community Progress Makers to learn from one another. Through the Fund, we were connected with cross-market experts and resources that provided technical assistance in the areas of communications, marketing, performance measurement and capacity-building.

Funding that helps organizations make large-scale changes — and on their terms:

Becoming a Community Progress Maker ultimately drove this transformation. The provision of general operating support has enabled Elevate Energy to transform itself into a key influencer in our industry and to more effectively drive clean energy investments in the low-income communities we serve both in our hometown of Chicago and eight other cities nationwide.

Read the original post in its entirety here, and learn more about the Community Progress Makers Fund here.

Mena Boyadzhiev is manager, assessment and advisory services, at CEP. You can reach her at menab@cep.org.

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Too Many Foundation Boards Are Failing at Diversity

The BoardSource report I blogged about last week includes shocking data about a lack of racial diversity in the foundation boardroom. Forty percent of foundation boards for which BoardSource gathered data reported they are all white. Excluding family foundations, 35 percent of the boards have no members who are people of color.

Even allowing for the fact that some foundations work in geographies that are overwhelmingly white, I found these statistics surprising (call me naïve). And even allowing for the fact that BoardSource’s data is, by its admission, not representative, it’s still a whole lot of really white foundation boards.

Overall, of the board members at the 111 foundations that responded to the survey, only 15 percent were people of color.

Foundation boards must do better. It’s just that simple. In an increasingly racially diverse country at a time of resurgent, open racism — and in light of this country’s history of racial oppression — it’s inexcusable not to have greater diversity in the boardroom. 

Diverse groups make better decisions, as Scott Page describes in his new book, The Diversity Bonus. People who bring a range of backgrounds — including race but also extending to many other elements including disability, socio-economic history, and life experience — are better positioned to help a foundation choose goals and chart the strategies to achieve them.

So it’s about effectiveness. If you doubt that, see, for example, this short summary of a number of research studies linking diversity to performance.

In fact, I thought this was more or less settled. So what are these all- or virtually all-white foundation boards waiting for? Foundations big and small — from the Ford Foundation to the Hyams Foundation in Boston — have shown what a really diverse board can look like. It’s not so hard.

How to start? Step one is to ensure there are term limits for current board members — and that they are enforced.  Boards can’t get more diverse without new members, and yet a 2015 benchmarking study CEP conducted of governance practices showed that, while the overwhelming majority of foundation boards have terms for their members, nearly half impose no limit on the number of terms a board member may serve. While there may be legitimate cases involving a donor or a donor’s direct descendants in which terms or term limits may not make sense to apply, these cases should be much more the exception than the rule and don’t in themselves explain the lack of racial diversity overall.

(A side note about CEP’s 2015 governance benchmarking efforts: we attempted, but were unable, to collect data on the racial diversity of foundation boards due to the high number of non-responses to those questions. We assumed this must have felt like a touchy subject to boards, and given the BoardSource data I could see why. So I’m especially glad BoardSource was able to collect this data.)

It may be difficult for boards to impose limits on themselves in light of the various perks of foundation board membership — including the meaningfulness of the work, prestige, and, in many cases, compensation and access to discretionary grantmaking budgets to support organizations of personal interest. But it’s the right thing to do. The hardest part can be opening up the conversation.

But it needs to happen.

Ensuring regular turnover of current board members and then prioritizing diversity in the recruitment of new ones is the only path forward for foundation boards if they are to make the kind of dramatic progress on diversity that is so desperately needed.

Phil Buchanan is president of CEP. Follow him on Twitter at @philxbuchanan.

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Essential Responsibilities of Foundation Governance

Governance matters across sectors, of course. But within the nonprofit sector, foundation governance is especially crucial. 

After all, foundations have a significant impact on nonprofits, fields, and communities. But, unlike for an operating nonprofit, there aren’t a lot of naturally occurring feedback loops for private foundations if the CEO or executive director — and/or his or her staff — have significant weaknesses (AKA “areas for growth”) or, worse, are just mailing it in.

That’s why the board is so crucial.

Given this, it was especially disappointing to see that nearly a third of CEO respondents in a just-released BoardSource study on foundation governance reported that they hadn’t had a performance review in the past 12 months. Eighteen percent of the 111 respondents said they’d never been evaluated! (It’s noteworthy that the story was very different for the 28 community foundation respondents, of which 91 percent experienced a review in the past year, and 100 percent reported they’d been reviewed in the past two years.)

Admittedly, BoardSource makes no claim of representativeness or generalizability in its clearly-presented and important report. CEP benchmarked governance practices at larger foundations in 2015 and found a slightly lower proportion — about a quarter — who hadn’t had a review in the last year.

But whether it’s a third or a quarter, it’s still troubling. Every board should annually and in some formal way assess its CEO against mutually agreed-upon goals. There’s no excuse for not doing so. Foundation CEOs whose boards haven’t initiated a conversation about the process should take the initiative to do so themselves — proposing a process that includes a range of relevant qualitative and quantitative data and allows for direct and unfiltered feedback from staff and other key constituents to the board.

I’ve experienced the power and utility of well-constructed performance reviews. My own review process at CEP — which I am sure is not perfect but has been incredibly useful to me — includes the following elements:

  • A self-assessment that reflects on my performance against personal goals (articulated and discussed with the board early in each year), drawing on available data such as (these are just a few examples): frequency and visibility of speaking engagements and writing; anonymous 360-degree feedback about me that any staff member in the organization can complete (and nearly half of our 42 staff members typically do), which goes straight to a board committee at the same time it goes to me; and results of our regular staff survey.
  • An assessment of organizational performance that includes results relative to agreed-upon targets on a series of performance indicators (spanning the gamut from conference attendee satisfaction to blog readership to the economic contribution of CEP’s assessment and advisory services); a detailed report on progress against our workplan for the year; analysis of data about our influence on practice, which most years includes third-party assessments based on independent surveys; and an assessment of our financial performance, including earned and contributed revenue and cost levels relative to budget and past years.
  • Board member feedback and, every so often (most recently last year), a series of board-conducted interviews with key stakeholders — major funders, clients, and other infrastructure organizations — to explore their perceptions of my performance and to ensure the board is really hearing about how I am doing.

Some might argue CEP is not a foundation, so our performance is therefore somewhat easier to assess. But the difficulty of assessment in a foundation context only makes it more crucial, not less.

I have seen foundation boards whose CEOs go through a similar process to the one I described for myself. Those who do inevitably feel, as I do, that much is learned in the process. I am better at my job than I was a decade ago (though I have much still to work on), and I’d credit well-constructed board-led performance reviews with contributing to a lot of what I have learned.

This kind of process takes time and commitment from board members, but it is a crucial way for a board to fulfill its essential responsibility of ensuring that the CEO is performing well — and remains the right person for the job.

Admittedly, two-thirds of respondents to the BoardSource study have had a recent review, so you might argue that I am making too much about the third that have not. But I’d argue that the percentage of boards that review their CEOs annually should be the same as the percentage whose financials are audited, or who complete their 990-PF: 100. The functions are of at least equal importance.

Moreover, I know from my experience working closely with foundations that, even among those that routinely assess their CEOs, there is a range of approaches — some much more diligent and thoughtful, with opportunities for board members to hear unfiltered feedback from a range of constituents, than others.

Boards need to assess their own performance, too, although not necessarily every year. Yet foundation boards represented in the BoardSource study are less inclined to do this, with just 38 percent saying they had conducted a self-assessment in the past three years. CEP’s 2015 benchmarking study found 48 percent in the same timeframe. Again, either way, that leaves too many who aren’t.

Board self-assessments are crucial ways to ensure each member of the board can candidly and confidentially have her voice heard about how it’s going. (CEP’s board has over the years used a variety of processes to do this and now implements BoardSource’s self-assessment every two to three years. In addition, we do a short self-administered survey of board members after each and every meeting.)

There’s positive data in the BoardSource report, too, and it’s well worth reviewing all the rich data. But the data points about CEO evaluation and board self-assessment jumped out at me as both concerning — and frankly not that hard to fix so long as the will is there.

Note: In my next post, I’ll discuss the BoardSource data on racial diversity — or the lack thereof — in the boardroom.

Phil Buchanan is president of CEP. Follow him on Twitter at @philxbuchanan

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“OpenNotes” for Funders: A Radical Idea for More Transparency and Better Relationships

Transparency — being open, honest, and clear — is a key driver of strong relationships between funders and grantees. It’s valued by foundation and grantee CEOs alike, and grantees think foundations are doing a decent job of being transparent (though more so in sharing about their processes than their learning).

Still, are there more radical ways to improve openness in ways that would benefit both funders and grantees?  As I’ve thought about this question, I’ve been drawn to a transparency movement called OpenNotes, which is changing the relationship between doctors and patients.

(To be clear up front, I admit the doctor-patient/funder-grantee analogy is imperfect. Yes, both involve relationship dynamics with significant levels of information and power asymmetry, punctuated by intermittent high-stakes visits and conversations. But, unlike a patient, an individual grantee doesn’t depend on a foundation for its mortal life. Still, I think the analogy can be instructive. Even the savviest patients I know — like my physician husband — talk about not wanting to bother or anger their doctors.)

In the OpenNotes movement, doctors have taken the radical step of directly sharing their medical notes, lab results, and plans — the entire medical record — with patients. They’ve created systems to make those notes easy to access and discuss. It’s a rapidly growing movement, and now more than 20 million patients have access to their doctors’ perspectives about their health, treatments, and plans.

So how does this relate to foundations? I’d argue that virtually every foundation I’m aware of has similar “notes” in the form of the grant write-ups and recommendations created by program officers for boards and/or senior leadership.

Why not open up those notes to the grantees they’re about? 

If we want to improve funder-grantee relationships — not to mention capacity building and shared learning — what better to share than these summaries about why a grant should be funded and what the risks are in doing so? Even when grant recommendations contain worries about a particular risk — organizational capacity challenges or major external risks, for example — a direct, if difficult, conversation between a grantee and her program officer, prompted by an open note, could yield new ideas, clarifications, or opportunities for assistance.

I’ve seen quite a few examples of funder write-up formats, and most contain explanations about a funder’s perspective on the fit between their program’s strategy and the grantee’s work, assessments of why the organization has the capacity to succeed (and sometimes where that capacity can be strengthened), risks the project faces, and observations about potential impact. This is exactly the kind of substance that program officers and grantees should be discussing as much as possible!

I can imagine reasons why some of you might think this is some combination of silly, impossible, or harmful. Maybe a foundation OpenNotes-style movement would create extra work because grantees would reach out to correct the record or debate a program officers’ assessment of their work. Maybe it would require a different writing style or more editing — or make funders feel pressured to be less honest in their write-ups. Maybe it would create hard feelings.

Well, a lot of that is exactly what doctors once thought, too. I had the chance to sit down with Dr. Tom Delbanco, John F. Keane & Family Professor of Medicine at Harvard Medical School, who was one of the founders of the OpenNotes movement. He told me about how the first doctors to pilot this crazy idea were viewed as “mavericks.” (He also described how the early and long-term funding from foundations, including Commonwealth Fund, Robert Wood Johnson Foundation, and Gordon and Betty Moore Foundation, made the movement possible when health systems were skeptical.)

Doctors initially felt that notes would not be easy to share. Of course they contain the good news of their judgments about what’s going well (e.g., “The patient has had a remarkable response to treatment and is thriving”). But they also contain the unvarnished assessment of what’s not going well (e.g., “Treatment has failed and the patient continues to have unrealistic expectations about the likelihood of cure”).

Doctors worried that patients couldn’t handle the more sensitive information, Dr. Delbanco said. The notes felt like expert doctor-to-doctor talk. And doctors worried they’d be inundated with patient requests and extra work. For a few, “closed” notes reinforced a comfortable hierarchical relationship between doctors and patients.

However, research on doctors’ experiences with OpenNotes has been almost universally positive. Writing OpenNotes hasn’t added time to doctors’ work, nor have doctors been besieged by emails from patients. Some participating doctors do feel they need to change their writing (e.g., less jargon, better documentation). But, overall, doctors seem to think opening their notes provides benefits. In studies of OpenNotes pilots, virtually all doctors chose to continue with OpenNotes even after the pilots ended.

Ultimately, though, this isn’t about the effect on doctors (or funders, in my analogy), right? What we care most about is the effect on patients (or grantees).

This is a question that Dr. Delbanco and others in the OpenNotes movement have been studying since the very beginning. It turns out that OpenNotes seem to strengthen both the quality of care and the patient-doctor relationship — and the specifics of those improvements pretty closely match some of the most important components of the grantee-funder relationship.

As a starting point, research suggests that 99 percent of patients feel the same or better about their doctors after having access to their notes. Research by Dr. Delbanco suggests OpenNotes are associated with patients having a greater sense of control, greater adherence to treatment plans, and greater understanding of their medical situation. The results of a qualitative study of patients’ experiences highlights the ways patients say OpenNotes creates better mutual understanding, a greater sense of trust and partnership with their doctors, greater confidence and comfort in their relationships, and better and clearer communication. Another study describes how patients feel that OpenNotes ensure “that we are on the same page,” “helps me come to my appointments better prepared,” and “provides another opportunity for two-way communication.”

Some of these benefits translate fairly directly to the grantee-funder relationship.  I can picture the grantee who, in reading her grant recommendation note, gains a deeper understanding about a funder’s analysis of the context in which she works, greater clarity about how her organization’s work contributes to the outcomes a funder is seeking, and a stronger sense of alignment, approachability, and trust.

When I’m working with funders on responding to results of a Grantee Perception Report (GPR), it’s often efforts to improve relationships that feel particularly challenging — especially in an environment where program staff don’t feel they have enough time for more interaction with grantees. So why not try opening up notes and improving the quality of the conversations you do have? If the experience of patients and doctors is any indication, I bet that simple act of transparency — sharing both the enthusiasm and worries that grant recommendations contain — would help. I’d love to hear your experience if any of you try.

Kevin Bolduc is vice president, assessment and advisory services, at CEP. Follow him on Twitter at @kmbolduc.

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The Predicament of Strategic Philanthropy

This article was originally published on India Development Review. You can read the original here.

Strategic philanthropy was born a generation ago to challenge the prevailing orthodoxies of philanthropy over the past century. Moving beyond traditional notions of giving back and charity, strategic philanthropy believes the way to create change is to decide on a goal that matters and then figure out what it will take to achieve it.

And strategic philanthropy’s norms are still gathering force — still promising to inspire and improve the good that philanthropy can do. However, what is also clear is that strategic philanthropy is in danger of becoming its own orthodoxy — a set of conventions that deserve to be questioned and are now being questioned by a next generation of innovators around the globe.

Many roads to a larger good

Let us first understand the journey of philanthropy itself, before we discuss the dilemma faced by strategic philanthropy. Some of us are no doubt just starting out; others are already quite experienced, and have much learning to share; some have built a great fortune and feel a responsibility to give back; and some are already part of a family tradition of giving.

Despite these differences, we also share many important things, not least the great privilege we enjoy in a world sorely in need of change and transformation. We are also united in our understanding of some of the great truths about philanthropy. While it can be a source of great joy, doing it well — let alone excellently — is quite hard. 

Philanthropy is about making choices, and there are many right answers. It’s easy to be overwhelmed. And it’s easy to feel that no matter what you do, no matter how thoughtful you are, your efforts are small compared to the size of the problems in the world, for philanthropy can be a confounding mixture of power and powerlessness.

Nevertheless, in philanthropy’s long history, leaders regularly come along and ask: Can’t we do better? That’s what has been happening in recent years, as our generation asks the following kinds of questions: Can’t philanthropy be about making measurable progress toward clear definitions of success? Can more rigor and discipline be brought to decision-making, basing strategies on evidence, not just wishful thinking? Can philanthropy, in other words, be more like business and insist on a social return on investment?

These questions have famously unleashed a great deal of energy and innovation — and no small amount of hype. I have had a front row seat at this “strategic philanthropy” drama, working with many of this generation’s best leaders in major foundations, and in the newer domains that go by names like venture philanthropy, social entrepreneurship, and impact investing.

While the pace of experimentation and the scale of the changes taking place has been impressive, it’s fair to ask: How is it going? Is it working?

On one level, it will be a long time before we fully know the results. There is some good news already: improving maternal and child health trend lines in many parts of the world, for instance. In other domains, such as climate change, the problems are getting worse much faster than our attempts to solve them.

I don’t think we have to wait, however, to ask how it’s going when it comes to the practice of philanthropy itself.

The limitations of strategic philanthropy

While the increase in rigor is commendable, the mindset of strategic philanthropy has significant limitations. The disciplines and cultures of business and management are much better at creating wealth than at creating the large transformative changes that philanthropy seeks to catalyze. 

Let us look at two aspects of strategy that I believe are getting in the way of greater success: decision making and strategy making.

Decision making: Who decides, and based on what knowledge?

At the heart of strategic philanthropy is an assumption that making a strategy is a rational process, controlled inside an organization or by a donor, to craft a unique philanthropic contribution.

This approach directly challenges older, more relational styles of giving, when funders “respond” to those who ask, and attempt to fund great strategies rather than assuming they should figure them out on their own.

Let’s look at the difference between fashioning a strategic solution and funding strategies.

Fashioning a strategy: In 2010, Facebook founder Mark Zuckerberg announced that he was donating $100 million to the Newark New Jersey public schools, working in partnership with the Republican N. J. Governor and the Democratic Newark Mayor. The plan was audacious: turn around a school district where nearly half of the public-school students dropped out of high school, and turn it into a symbol of excellence for the nation.

This gift seemed to epitomize strategic philanthropy: bold, big, with a clear ‘theory of change’ involving making a bet on expanding the charter schools that operated outside the usual education bureaucracy.

Over five years, however, the reformers ran into obstacle after obstacle. Though a few things changed, and continue to, the experiment’s results were deeply disappointing.

We know a lot more about what happened in Newark because a reporter named Dale Russakoff was there, day after day. Her book, The Prize, tells a story of reformers who knew what the answer was, and therefore saw no need to really listen to anyone else — to the teachers on the front lines, or to the Newark citizens who had been run over time and again by outsiders intent on “helping” them. The reformers, in other words, had their own strategy. The story is quite instructive about the limits of changes pushed from the top down.

Funding a strategy: Let’s contrast the Facebook initiative to MacArthur Foundation’s new competition called “100 and Change,” whereby the foundation announced it would make a $100 million grant every three years.

Instead of doing a lot of research on where to make that grant, the foundation invited ideas from anyone, anywhere, in any domain. You just had to propose a big solution for a meaningful problem — feasible to do, an idea that has already been verified, a solution that will be durable.

MacArthur, in short, seeks to fund someone else’s strategy. The quality of the proposals the foundation received was stunning, said MacArthur president Julia Stasch.

Admittedly, this comparison between Newark and MacArthur is not a fair one. We don’t know the results of the winner MacArthur recently chose — a new evidence-based effort to educate young children displaced by conflict and persecution in the Middle East. And not all strategies driven by funders play out as the one in Newark did.

These two stories illustrate a troubling pattern I have observed over the past 20 years. At its worst, strategic philanthropy can be a toxic mix of arrogance and ignorance, lacking critical understanding of the context, treating grantees not as partners but as mere instruments of a funder trying to meet a goal. In this kind of environment, it is never safe enough to give real input or feedback to those in power. 

This is a problem, because the brutal truth about philanthropy is that those with the power to make decisions are often those who have the least direct knowledge about the problems or opportunities being addressed.

The good news is that many people are working to shift this imbalance of power, from using data directly from beneficiaries, to employing design thinking techniques, to dreaming up big new approaches such as MacArthur’s.

Still, strategic philanthropy clearly must question some of today’s entrenched rituals of decision making — questioning who decides, based on what knowledge and what relationships — if we are to accelerate progress in the next generation.

Making strategy is not the same as making change

Despite what I’ve just argued until now, philanthropy is actually much better at deciding what to do than at confronting the inevitably messy reality of human beings trying to make the changes the strategy calls for. Making change is an art and it requires working with others. Simply put, philanthropists often have a difficult time taking the risk of letting go of control.

It’s easy to understand why. There is so much pressure on philanthropists today. Everyone wants a “clear return on investment,” after all. The press is often watching. No one wants to waste money or look foolish.

Unfortunately, in response to these pressures, philanthropists too often tighten the reins to try to control the uncertainties, rather than empowering a capable leader to exercise judgment in navigating the uncertainties as they arise.

As one nonprofit leader I know recently said, “We are trying to do something that has never been done before. We need to get out and fail and learn. And yet our funders say: ‘Show me great numbers the first time.’”

What this nonprofit leader needs instead is the longer-term, flexible, general support that will allow him to learn his way to success. Philanthropy’s unique role is to provide the social risk capital that more traditional givers and governments and businesses will not.

But today’s strategic philanthropy practices, when implemented too rigidly, can have a profound unintended consequence — actually reducing risk-taking and creativity. A funder who insists on short-term accountability above all, asking for a series of detailed one-year plans and metrics, will get a different result than someone who gets behind a five-year goal or a 20-year vision, and partners closely to achieve it.

In other words, to make change, trust and relationships are as important as the strategy itself.  I am not kidding when I say that some of the best leaders on the planet spend 50, 60, 70 percent of their time just begging for essential operating funding. Businesses usually don’t torture people this way. Philanthropy too often does.

These dysfunctions must be addressed over the next generation, or we will remain stuck with today’s fragmented, individualized funding system that lacks the capacity and patience to inspire the changes that are needed in the world.

Philanthropy beyond business-like transactions

So that’s a brief look at two aspects of strategy I believe are holding us back. I am not suggesting that we should reject strategic philanthropy. Passion alone is rarely enough to create impact. I am just saying that the past 20 years’ attempts to improve have over-corrected.

What we need now is an integration, a new whole, that incorporates wisdom and practice from many approaches, choosing what is best for the situation at hand. We must accept the need to let go of control in the face of all we do not know and cannot know. And we must get better at building the necessary, trusting relationships that will bring out the best in people and enable us to co-create a better future.

This is no small task. Strategic philanthropy, in the wrong hands, can suck the soul out of giving, choosing instead to make investments in technical fixes that can never catalyze true, lasting transformation. Great philanthropy transcends business-like transactions and instead requires wisdom, imagination, and courage. That is its challenge, and its promise. 

This article was adapted from a speech given to an audience of global philanthropy leaders hosted by UBS.

Katherine Fulton has been advising individual and institutional funders for more than three decades, and has published and spoken extensively about philanthropy. She was a leader at Monitor Group and Deloitte Consulting, where she spent a decade building Monitor Institute into a leading social-sector consulting firm.

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Charting the Learning Journey of New Donors

By Heather McLeod Grant and Kate Wilkinson

In The Giving Journey: Guiding New Donors to Actualized Philanthropy, our new report at Open Impact, we look into the mindsets and motivations of new ultra-high-net-worth donors. Specifically, we wanted to know: why do Silicon Valley’s “new donors” give? What barriers get in their way? And how can philanthropy experts, foundations, and nonprofits help address these obstacles so that donors can give more — and more effectively?

To answer these questions, we conducted interviews and small-group conversations with more than 50 ultra-wealthy individuals (those with self-created net worth over $10 million) based in the Bay Area. The interviewees were anonymous in order to encourage candid conversations about their giving.

In our discussions, we asked a range of questions designed to get at both the why and the how of these donors’ philanthropy. When prompted to tell us about their motives for giving, many donors told us more about their lives, their values, their careers, and the experiences that shaped what they care about most. The more conversations we had, the more the “journey” metaphor became an apt way of demonstrating how these donors think about their philanthropy.

Talking about philanthropy opened a door for people to reflect broadly on money, meaning, and their deeper purpose in life — answers to the why questions. As donors considered these questions and acted on them over time, their giving became more “actualized,” meaning intentional, strategic, and psychologically rewarding for the donors themselves. Our key finding is that the path to this actualized philanthropy is quite similar for all donors, regardless of their income, interests, or varied experiences. It can be represented in five stages:

  1. Formative Experiences: We found that donors’ philanthropy is very much informed by who they are as individuals and what they care about most deeply. This, in turn, is shaped by their family, faith, and early formative experiences such as learning about poverty, volunteering in school, or enjoying solving problems.
  2. The Wealth Event and Pause: After coming into significant wealth, most of these individuals don’t start giving right away, even though they might set aside assets in a donor-advised fund (DAF) or pledge to give away their fortune. Rather, they typically pause before beginning to actively give. Many are still busy with their careers, families, and the responsibilities of managing new wealth. They are also overwhelmed by the learning curve that philanthropy can present and don’t always know where to turn to learn how to be effective.
  3. Getting Unstuck: When new donors do finally begin giving, most start within their comfort zone and donate to what is already familiar: their children’s school, their religious house of worship, or their alma mater. Additionally, most donors start small. No matter their total net worth, almost everyone we interviewed began by making relatively small gifts of about $5,000 to $10,000. It’s helpful to understand that this is a developmental stage — donors make small bets in order to learn, reflect, and grow.
  4. Ramping Up: As these donors ramp up and begin to reflect more on their motives and intentions, they move from reactive check writing to more proactive and strategic giving — and often donate in larger amounts. Most donors said that figuring out the why behind their giving was crucial, as that became the catalyst that helped shape their approach. Finding a philanthropy mentor (an expert or friend with more giving experience), getting involved with nonprofits, or joining a giving circle can all be helpful catalysts in answering and acting on those why questions.
  5. Actualized Philanthropy: By the time a donor has moved through this journey — which can span a decade or more — they’ve answered the why question, which makes them more actualized, self-aware, and strategic in their giving. One important milestone is making a big gift (typically of $100,000 or more), which often signals a high potential donor’s commitment to bigger bets and their specific interests. Getting here is the ultimate virtuous cycle, because when donors are more actualized, they feel more fulfillment and give more strategically. This matters, since nonprofits get the highest and best social and financial capital from philanthropists like these.

Our findings about this five-stage path give rise to a number of important questions.

Why is the inner journey of philanthropy so important for new donors?

The outer journey of philanthropy is straightforward and has been explored in research and literature — it’s what has been called “strategic philanthropy.” It involves very practical questions like: How much of my wealth should I give away? Which vehicle should I use: should I start a foundation or use a donor-advised fund, or set up an LLC? What issues should be in my portfolio? What are the best nonprofits to fund within a particular issue area? While straightforward, initially these questions can seem overwhelming, and donors might delay their giving because it’s so complicated and requires so many decisions.

We argue that if these donors first understand their why — their deeper motivations for giving and how philanthropy can play a part in their own emotional/ spiritual/ leadership development — then the how questions become stepping stones rather than obstacles. When donors understand how philanthropy contributes to developing meaning, they are more likely to give it their time, energy, and focus.  Ultimately donors need to address both the why and the how of their giving.

What impact can this type of thinking have for donors in giving locally?

We see local giving as an important piece of a donor’s philanthropic portfolio, alongside giving to other issues and regions. Actualized philanthropy is about engaging with your inner purpose in order to become more empathetic, generous, and outer-directed. Often, engaging with peers, meeting those who benefit from funding, and developing relationships with nonprofit leaders can “turbocharge” that internal journey.  Because local organizations have a geographic advantage in that regard, we believe partnerships with them present an opportunity for new donors to learn from others, build connections, and address local needs.

What can foundation leaders, board members, and donors who have already started a foundation take away from these findings?

We believe that foundation leaders, board members, and established donors have an important role to play in continuing to promote effective philanthropy and a spirit of generosity. In many ways, these individuals have deep knowledge of both the how and the why of giving, and should be sharing their journeys and insights with individuals just starting out. In all our interviews, emerging donors spoke about the influence wielded by mentors and advisors who were further along in their philanthropy. More established philanthropists and philanthropoids can step into a role as coaches and be critical guides to new donors as they start their giving journey.

Heather McLeod Grant is the co-founder of Open Impact and a social entrepreneur, author, and consultant with 25 years of experience in social change. Follow her on Twitter at @hmcgrant.

Kate Wilkinson focuses on strategy and local philanthropy at Open Impact.

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Closing the Feedback Loop

By Amy Latham and Karen McNeil-Miller

In my work with foundations through CEP’s Grantee Perception Report (GPR), I have the opportunity to see some inspiring examples of how funders use grantee feedback to learn and improve. For funders who receive this feedback, much of the focus on sharing findings back to grantees can be soon after receiving results. But it’s also helpful to check in further down the road about what you are learning — and what actions you are taking as a result of that learning.

This post from Amy Latham and Karen McNeil-Miller at The Colorado Health Foundation is a great example of just that. After receiving their GPR results in 2016, the Foundation responded to feedback from their grantees in a number of different ways, many of which aligned with changes that were already underway or being developed.

Some of these approaches included:

  • Changing the program officer role to allow Foundation staff to spend more time on the ground in local communities.
  • Engaging staff in a learning series focused on helping them continue to improve how they engage as leaders and with each other.
  • Revisiting the Foundation’s transition process to ensure full clarity about each transition of a grant or portfolio that occurs.
  • Launching a new website and communication resources.

Change isn’t easy, and it requires a focus measured in years, not months.  But when funders share that hard work with grantees and other partners, it’s something we can all learn from.  – Austin Long, director, assessment and advisory services, CEP.

This post, titled “Checking Ourselves on How Grantees Experience the Foundation,” originally appeared on The Colorado Health Foundation blog in December 2017.

Last year, the Foundation received a number of recommendations from the Center for Effective Philanthropy (CEP) that were designed to help us achieve greater impact with our grantmaking. CEP’s recommendations were part of a Grantee Perception Report that is an important data point as we work to increase our impact through grantmaking.

Many of the recommendations were aligned with changes that were underway, or being developed, by our leadership team. For example, the recommendations directed us as a staff and team to engage differently with the grantees we fund. They also called for us to build a much greater understanding of the fields and communities that grantees serve, work and live in. Finally, CEP recommended more robust communications – from clearer points of contact to more regular communication and proactive discussions about evaluative data from a grantee’s work.

As we near the end of 2017, we wanted to share updates on how we’re addressing the CEP recommendations:

CEP recommendation: Seek opportunities for grantee engagement that drive and demonstrate a deeper understanding of their fields and incorporate grantees’ ideas and concerns into future grantmaking strategies and approaches.
Here’s how we’re doing today: In 2016, we went on a listening tour across the state. That tour, along with other data sources we draw from, prompted us to step back and reflect on how and what we do in grantmaking. It re-inspired how we think about “listening” to learn from Coloradans, including grantees. In January 2017, we shared how we have changed the program officer role. Now, program officers are spending more time on the ground than ever before, focused in specific geographic regions of the state. We hope that by listening and being present in communities, everyone in Colorado (especially grantees) find a voice in our work and spirit as an organization.

CEP recommendation: Consider where the Foundation can build a stronger understanding of grantees’ local communities and contexts, particularly for those working in rural areas.
Here’s how we’re doing today: Our mantra today is that community engagement is both a process and an outcome. We see engaging residents as vital for communities to thrive. Bringing in new voices and supporting local champions taps into the inherent power in communities and helps create equitable, sustainable and healthy communities. In October, our portfolio directors wrote an update about how we are striving to understand communities more deeply in every area of the state.

CEP recommendation: Ensure staff have opportunities to engage with grantees to create a stronger shared understanding of grantees’ goals, strategies and the challenges their organizations face.
Here’s how we’re doing today: The Foundation has a new philosophy overall about how we show up and work in communities. The new philosophy has impacted grantmaking deeply: We have fundamentally shifted how our program officers work and operate across the state. In a blog post we published back in February, we shared our thought process behind our philosophy: “This is a fundamental shift in who we are, how we show up, who we talk to and who we pay attention to. The shift happens far beyond philanthropy. This is not just a grantmaking strategy. It’s about us changing our DNA, changing our fingerprints.”

CEP recommendation: Facilitate regular staff conversations about barriers that hinder and how to facilitate stronger relationships with grantees, and how these challenges might be addressed.
Here’s how we’re doing today: Throughout 2017, our program officers have engaged in a learning series focused on helping us continue to improve how we engage both as leaders and how we work together. This has enabled staff to spend more time considering how we can improve our knowledge base and how we can use what we learn to achieve more impact. Our staff have also been engaging in a variety of trainings and education focused on the political, economic and cultural aspects in different parts of the state, as well as building content knowledge in our new focus areas.

CEP recommendation: Review and refine our process for increased continuity and robust knowledge transfer during moments of staff transition.
Here’s how we’re doing today: We revisited our transition process earlier this year to ensure full clarity about each transition of a grant or portfolio that occurs. Staff are also spending more dedicated time and energy on transitions between themselves and in learning about new bodies of work or issues they’ve been asked to take on.

CEP recommendation: Strive to communicate clearly with understandable and timely messages to grantees about organizational changes.
Here’s how we’re doing today: Timing was in our favor this year, as our Communications Team was already committed to reworking several of our main communications tools. We launched a new website that has enabled much clearer communications for those that are trying to learn about us online. It includes a blog that has helped us to share information more readily and directly from those of us who manage certain types of work. We also launched an interactive map that is designed to help you connect with a program officer by area of the state. Most importantly, the new program officer role outlines how we can communicate more clearly and regularly. Being available to grantees in their own communities is integral to this.

CEP recommendation: Discuss reports/evaluations with grantees.
Here’s how we’re doing today: We are committed to timely review of reports and communicating with grantees about the reports they submit. We also want to share our broader outcomes across grantmaking as much as possible. Fortunately, this has become much easier since we launched a new website with a dedicated area for organizational insights. Check out an example of how we are sharing insights from a recent funding opportunity we wrapped up earlier this year.

CEP recommendation: Consider how to mitigate pressure to modify programs or projects in order to receive funding through current opportunities.
Here’s how we’re doing today: We are trying to develop funding opportunities that are more responsive to community needs. For example, based on what we heard from Colorado communities, we opened two new funding opportunities for our June 2017 deadline that focused on behavioral health and immigrant and refugee communities.

While we know there is more to do, we remain committed to sharing our progress in our areas of opportunity and improvement. We look forward to this continued progress and to any thoughts you may have along the way.

Amy Latham is vice president, philanthropy, at The Colorado Health Foundation. Karen McNeil-Miller is president and CEO at The Colorado Health Foundation. Follow the Foundation on Twitter at @COHealthFdn.

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We Need More Checkbook Philanthropy

Twenty years ago, before I worked in philanthropy, if you had asked me to explain the fundamental purpose of a foundation, I would have given a simple answer: to give money to nonprofits.

That was naive. After joining the Eugene and Agnes E. Meyer Foundation in 2003, I quickly came to understand that the foundation had a mission beyond giving away money — and a vision for impact that encompassed more than simply supporting good organizations. I also learned that strategy entailed more than just figuring out which issue areas and organizations to fund.

During my nearly 14 years at Meyer, we went through two strategic-planning processes — emerging from each with a somewhat narrowed focus, more concrete ideas about our goals, and an increased commitment to measuring our impact.

That evolution was part of a broader shift by many foundations over the past few decades toward an approach often referred to as “strategic philanthropy.” In a 2009 report, the Center for Effective Philanthropy defined “strategy” as an approach to giving focused on the external context (rather than the foundation itself or its grantees) and the logical connections between use of foundation resources and achievement of goals, with a commitment to measuring progress.

This field-wide shift, though not without detractors, has been positive in many ways. Institutions entrusted with significant philanthropic capital have an obligation to be thoughtful and intentional about how that capital is being deployed. And any effective organization should want to know whether it is making progress toward its goals.

But as our field has embraced strategic philanthropy, “checkbook philanthropy” — the term frequently invoked to describe giving that is the opposite of strategic — has gotten a bad name. Just look at the websites of leading philanthropic advisors, who describe checkbook philanthropy as “ad hoc with little further communication or follow up,” or even “giving without thinking.”

“Checkbook philanthropist” has become a pejorative, and that’s a shame. Simply writing checks to effective organizations doing important work can be an honorable approach to philanthropy and doesn’t have to be mindless, haphazard, or ineffectual.  Checkbook philanthropy isn’t necessarily the opposite of strategic philanthropy. Indeed, strategic funders can pursue their goals while fully funding grantees’ operating costs. But, in my experience, far too few actually do this. More checkbook philanthropy could go a long way toward solving some of the chronic problems with how nonprofit organizations are capitalized.

There’s considerable evidence that the current system of capitalization isn’t creating the kind of strong, resilient, and effective organizations that strategic philanthropy aims to support. More than a third of the 5,400 respondents to the Nonprofit Finance Fund’s most recent State of the Nonprofit Sector Survey, for example, reported that their organizations had less than three months of cash on hand, and cited achieving long-term financial sustainability as their most pressing challenge.

A more recent national analysis of more than 200,000 IRS forms 990 found that about half of nonprofits had less than a month of operating reserves. Nearly eight percent had liabilities that exceeded their assets, making them technically insolvent. Thirteen percent of health and human services organizations were insolvent.

Both reports pointed to government funding and contracting policies as part of the problem. Many contracts don’t pay the full cost of services, regulations and contracting procedures can be onerous, and payments often come late.

Those things are generally true, but philanthropy is far from blameless. Philanthropy is also often reluctant to pay the full cost of programs, and many foundations are skeptical of general operating support and ambivalent about overhead.

Strategic philanthropy has been instrumental in calling attention to this problem and has also offered new frameworks and systems that help organizations measure their outcomes and impact, which is critical to ensuring financial sustainability and programmatic success.

But for all the good it’s done, strategic philanthropy can also be part of the problem. As more foundations develop their own strategies — complete with goal statements, theories of change, and outcome measures — nonprofits are under increasing pressure to align their work with the strategies of their funders. Ideally, funders would give general operating support to organizations that are already aligned with their goals. But in the less-than-ideal world many of us inhabit, things are messier. Here’s an example of how it plays out:

Imagine yourself as the executive director of an organization providing after-school and summer programs to middle school students in a large city. Your organization serves 600 students each year across eight sites, with an annual operating budget of $1.2 million. You have no endowment and unrestricted net assets of $200,000 — less than two months of operating expenses.

Two of your largest foundation funders, each providing about $50,000 per year, have just completed strategic-planning processes. Both funders admire your organization’s work and would like to continue support. But one foundation is shifting to a systems-change approach, and so suggests that you could continue to get funding if you expanded your parent engagement program and mobilized parents and students as advocates for school reform.

The second foundation now wants to fund programs “at scale,” and would like to see you expand to the eight other middle schools in the city. They don’t have the resources to fully fund that expansion, but would be willing to provide seed funding to help you get started. This foundation is also concerned that you aren’t able to track college completion rates for students, which is now the key metric they’re focused on tracking.

And so it goes. Oh, and I should have mentioned that your largest funder is a quasi-governmental agency that requires detailed monthly reporting on program participation, and contract payments often don’t arrive until 90 days after reports are submitted. You also have 18 other institutional funders and can’t seem to keep a director of development on staff for more than a year.

This scenario is fictional, but not so far-fetched — organizations like this one comprise a large proportion of the nonprofit sector. To capitalize its operations in a sustainable way, this hypothetical organization — like so many others — needs some funders who believe in the work and are willing to just write checks.

One could argue that the primary concern of foundations should be impact on people and communities, rather than the financial health and stability of grantees. But when organizations are financially unstable, the people and communities being served experience the adverse effects, such as disruptions to or lowered quality of services. And chronically underfunded organizations are less likely to be reliable partners in delivering on the impact strategic philanthropy aims to achieve.

While the shift of many foundations toward strategic philanthropy has been a positive trend for the field, there’s no one-size-fits-all, silver bullet approach for maximizing impact. Like for-profit enterprises, healthy and sustainable nonprofit organizations need a variety of investors — some who support innovation and push the envelope on strategy, and some who are willing to “buy shares” in the good work already being done.

Yes, foundations serve a broader purpose than simply giving money to nonprofits and should be clear about strategy and intended impact. But in a sector in which organizations are chronically starved for capital to support their core operations, there’s also a need for funders who just write checks. 

Rick Moyers is an independent consultant to philanthropy and chair of the board of directors of BoardSource. Follow him on Twitter at @Rick_Moyers.

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The New Tax Bill: Hearing from Donors Now

In a meeting a few weeks ago, my CEP colleagues and I were grappling with understanding what potential impact the new U.S. tax code might have on philanthropy. In 2016, charitable giving reached an all-time high of $390.05 billion. But what will the future look like?

Perhaps larger donors, in response to the extensive news coverage or nudges from their professional advisors, have accelerated their giving, leading to a surge in 2017 charitable donations. Perhaps they might give less in 2018 because the increased standard deduction means they’ll no longer itemize and won’t benefit from the charitable giving deduction. Or, on the contrary, despite these tax implications, donors might give more in 2018 because they’ll have greater financial resources. Or perhaps they will “bunch” their giving, pooling charitable donations and giving in larger chunks only once in a while in order to reap the tax benefits.

Taking a step back, these uncertainties point to a bigger question: how much do donors actually care about the tax benefits of their charitable giving? Given CEP’s work surveying donors for more than 60 community foundations over the years through the Donor Perception Report (DPR), we do have some data on this already.

When asked for the two most important reasons why donors first established a fund or made a donation to or through their community foundation, 26 percent of donors responded “for financial or tax benefits.” That said, the two largest proportions of donors responded that they did so to “create a charitable legacy or to continue a family tradition” (36 percent), or to “give back to the community” (34 percent). This data is based on approximately 10,000 donors responding to this question over a total period of seven years.

That said, it remains hard for anyone to know how the new tax bill will influence donors’ giving plans, and different news outlets, pundits, and research provide contradictory predictions. I certainly don’t dare to guess how the new tax code will influence people’s giving behavior. And we heard from community foundations that they were asking themselves similar questions, too.

With the new U.S. tax bill hot off the presses, we thought this was a moment we could be of service. Now seems like an opportune time to ask donors directly how they think the new bill will impact their future giving. That’s why we worked with some of our community foundation partners to develop optional new questions for the DPR about donors’ giving plans in the wake of the new tax bill. All community foundations participating in our current February survey round have opted to add these questions to their donor surveys, and we’re looking forward to working with those funders to think about the implications of what they learn.

We cannot yet predict what donors will say, let alone how they’ll behave. But the question is an urgent one. We believe deeply in the value of community foundations and their work with donors to create positive impact on their communities, and we’re eager to help them hear rapidly and systematically from donors about these important changes in the context of their work.

Charlotte Brugman is manager, assessment and advisory services, at CEP. You can reach her at charlotteb@cep.org.

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Donor Stories: Grantmaking that is “With” and not “For”

We’re starting a new periodic blog series today called “Donor Stories,” in which we highlight origin stories of foundations and funders that reflect upon themes and lessons we are seeing in current philanthropic debates. The idea for this series came about after I attended a meeting where a woman shared that decades ago, her family’s foundation had not only adopted the practice of hiring end beneficiaries onto its staff, but had also invited them to serve in advisory and leadership capacities. In light of conversations in the philanthropic sector around participatory grantmaking and truly listening to beneficiaries, I found the story of end beneficiaries serving on a foundation board especially intriguing, and I wanted to hear more. So I invited the Sister Fund to share about the context, values, and lessons learned from that time.

My hope is that with this series, we can continue to refresh our understanding of where our sector has been as we face the challenges before us now. As always, we welcome submissions along this theme or other topics of interest to philanthropic leaders, addressed to my colleague Ethan McCoy at ethanm@cep.org. – Grace Nicolette, vice president of programming and external relations.

What if the beneficiaries of the hardworking organizations that foundations serve were represented among foundation leadership? For a decade, the Sister Fund adopted this model into its staffing and governance practices, and the unique expertise of grantees and the communities we seek to help continue to meaningfully influence our grantmaking.

In 1982, when I decided to become more strategic with my philanthropy, the first thing I did was gather the annual reports of foundations from around the country so I could study how others were carrying out their giving. As I read through the reports, I noticed that the boards of these foundations were primarily white males. Many of these men were credentialed and considered experts in their respective fields. All of the nonprofits and people their work served, on the other hand, were framed as “needy” organizations and populations.

I realized this was the standard model of philanthropy at that time. While greatly appreciating the caring work of those board members, I wondered whether beneficiaries would want to have a voice at the decision-making table — and whether inviting their participation would enrich the entire grantmaking process.

As my research continued, I noticed that the annual report of one funder, in particular, was different than the others: the San Francisco Women’s Foundation (now the Women’s Foundation of California). As I reviewed the foundation’s report, I learned that not only were women on their board of directors, but these women were also of diverse social, cultural, and economic backgrounds. The foundation’s board represented the population it served. I knew immediately that I wanted my foundation to be like that.

With this model in mind, in 1988 I started the Sister Fund, which is committed to funding the work of organizations benefitting marginalized women of color. I invited grantee partners and frontline community members of the organizations we funded to serve in an advisory capacity on a newly formed group called our Activist Board. This board complemented our formal Board of Directors, which has the legal authority to allocate funding. The Activist Board members worked closely with our staff to develop our grants portfolio and make grantmaking decisions. They offered the expertise and wisdom of people in the communities we serve, which was invaluable to determining the most strategic ways to address the various issues that we care about.

Participatory grantmaking, however, goes beyond the mechanics of inviting grantee partners to advisory roles. It involves the deeper, intentional work of building relationships with grantee partners and the people they serve. For example, we invite beneficiaries of our grants into staff leadership roles. Like the other women’s funds, the Sister Fund practices a kind of philanthropy that is “with” and not “for” ― an approach that dignifies the grantees and places their expertise at the center of everything we do. I carried this approach into my work cofounding the New York Women’s Foundation with Gloria Milliken and a diverse group of 40 women in 1987. On our first board, we had Rockefellers working alongside women on public assistance, forming a “cross-class alliance.”

For me, faith also played an important role in formulating this approach, as I mirrored this inclusionary model after the life and example of Jesus Christ. Jesus did not see the poor as less worthy than others, but rather as the precious ones among us, and spent much of his time walking among, visiting, and sharing meals with the diseased and poor. This example taught me that we have much to learn from people living on the margins, and we made sure to incorporate that guiding principle into our philanthropic approach.

Relational Philanthropy

We have defined our funding approach as “relational philanthropy.” A few characteristics of this vision include:

  • Staff and board leadership that is inclusive across many dimensions, including gender, race, and class;
  • Collaborative relationships with grantee partners — learning with and from them and those they serve about best practices for programming, fundraising, and operations; and
  • Professional development and introductions to other funders.

This vision is about lifting up the voices of the marginalized by investing in their leadership. While this is a worthy model to pursue, it is not without its challenges. Our greatest challenge was a growing funding expectation from grantee partners. As our relationships with our grantees grew, in some cases their expectation became that we would increase our funding to them.

With that, we learned a few things that may be helpful to other funders:

  • Set clear expectations from the beginning, including open, ongoing conversations and transparency about your funding intentions.
  • If you wish to invite grantees or people you seek to help onto a formal or informal advisory board, set clear term limits, roles, and responsibilities. From the outset, consider setting shorter-term limits as you experiment with the model.
  • Secure the help of an external philanthropic adviser or consultant who can guide the process. Do your research (read those annual reports!), seek out other models that inspire you, and begin working with the right grantees ― organizations that you know well, and those with a solid reputation in the field.

In recent years, the Sister Fund has transitioned into a “hybrid” foundation ― now more a family foundation, while keeping its identity as a women’s fund at its core. With the increased involvement of the next generation, we have shifted our internal structure to engage our family more in the grantmaking process. Although we are not currently practicing participatory grantmaking, my daughters and sons continue to rely heavily on the insight and expertise of our grantee partners and the communities we seek to help to fulfill the foundation’s mission. 

The family, as well as staff and board leadership, continue to stay attuned to industry trends, best practices, and effective models for giving. Recently, for example, we’ve been learning from the Center for Effective Philanthropy’s research on funder-grantee relationships, which provides insights on how to improve and strengthen transparency, understanding, and knowledge exchange.

Many of the practices highlighted in CEP’s reports have been common among women’s funds for decades. Historically, women’s funds have fostered a culture of learning and collaboration from the on-the-ground experts ― the grantees. They’ve also made intentional choices in their staff and board composition, focusing on diversity and inclusion. In this way, women’s philanthropy represents a more horizontal, rather than vertical, style of decision-making that has elevated the knowledge, voices, and expertise of grantees and those they serve.

Leaders of these funds have even shied away from the term “grantee” or “beneficiary,” electing instead to use more inclusive language like “grantee-partner.” Subtle changes like this underscore that we as funders are also beneficiaries of these relationships — and that grantmaking is a co-creation of a visionary way forward, not a transactional exchange between the “haves” and the “have-nots.”

Helen LaKelly Hunt is founder and president of the Sister Fund, a private foundation in Dallas, TX dedicated to fostering a world where we each grow to relate with greater justice, kindness, and humility in our relationships with one another.

Kimberly Miller and Laura Risimini contributed to the writing of this post.

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Talking Politics

It’s said that you shouldn’t talk politics in polite company. Does anyone still say that in 2018? I know I haven’t followed that rule in my personal life over the last year. It seems every conversation eventually wends its way back to politics. But the candid grantee feedback we’ve seen over the last year suggests that might not be the case between foundations and grantees. There continues, even now, to be an unmet demand for more talking politics, as both funders and grantees reassess what it takes to be effective in today’s ever-shifting political climate.

Bear with me for a tiny bit of important background. In our efforts to help funders effectively respond to changes in the context of their work, CEP regularly adds timely questions to our core assessments like the Grantee Perception Report (GPR). In 2017, we worked with foundations to design a set of questions to help them rapidly and systematically understand the specific ways in which their grantees were responding to the major shift in the U.S. political environment.

Twenty-four funders opted to include those new questions in their surveys, so the information I’m about to share is not representative of all funders and grantees. Those 24 represent just over half of the U.S.-based funders using the GPR in February, May, and September of 2017. The foundations that chose to include the questions vary — very large and quite small, urban and rural, coastal and mid country, private foundations, conversion foundations, and public charities. All were interested in this feedback and willing to act on it.

Reasons the other 2017 GPR users weren’t interested varied quite a bit. For some it was “too soon.” Some didn’t want to suggest they “were political.” And some had already acted on getting feedback in other ways. So we know that the funders using these questions — and probably their grantees — aren’t a random sample. But what we did hear was striking, and we wanted to share it.

We ultimately received responses to these questions from just over 4,000 grantees. And if one thing was clear, it’s that those grantees felt the change in the political environment affected them: A whopping 85 percent of grantees on average said that the changing political environment had affected them — positively or negatively (and the substantial majority felt the effect was negative).

So, not surprisingly, most grantees said they were changing in response. On average across these 24 foundations, about 35 percent of grantees said they were changing their goals, 41 percent were changing their approaches to achieving impact, 28 percent were changing the types of services provided to beneficiaries, and nearly half were changing their fundraising approach. Overall, 69 percent were making a change in at least one of these areas.

This is similar to what we heard from foundation CEOs when we surveyed them in February and March of 2017 about their own organizations’ responses to the changed political environment. Almost half of foundation CEOs report making — or planning to make — a variety of changes in their goals, strategies, and grantmaking budgets.

Given that funders and grantees were both responding to a changing context, what was interesting to me was whether or not they were talking to each other — and in particular whether or not program officers and nonprofit staff were communicating about those changes. Maintaining alignment, or even just learning from experiments, is really hard when both partners are shifting their work.

So what did grantees say? About a third on average indicated that their program officer had been in communication with them about how the changing political environment related to their work. That’s encouraging, but grantees want more. About half of grantees said they had not had that kind of communication but wished they had. (Related, slightly higher proportions said they would like to but hadn’t yet heard from their funder about how their funder was or wasn’t modifying its own work in response to the changing context.)

Maybe this is old news. It’s been a year since the inauguration. Trump’s first State of the Union was Tuesday.

But I think it’s still relevant. We fielded surveys three times in 2017: in February, May, and September. Even when grantees were responding in September and October — nearly a full year after the election — many of them continued to say that that they’d like to have a conversation with their program officer about how the shifting political landscape is affecting their work.

Substantial majorities indicated they were changing the emphasis they placed on collaboration, policy/advocacy work, creating local engagement, and hearing from beneficiaries. Nearly half were increasing their emphasis on direct service (and it would be interesting to know how that will be affected by the recent tax bill).

The state of our nonprofit union is changing. 

These changes represent an important opportunity for partnership, learning, and re-alignment on both sides of the funding table. And GPR survey results suggest these conversations should be ongoing, whether you’ve started them already or not. There’s too much at stake to delay. So it’s on all of us — funders and grantees alike — to get beyond talk of the immediate applications, reports, and grants; get outside our comfort zones; and talk politics. 

Kevin Bolduc is vice president, assessment and advisory services, at CEP. Follow him on Twitter at @kmbolduc.

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Cracking the Code of Technology Capacity Building

Technology is changing how we operate in the world. But the social sector is rapidly being left behind as many organizations struggle to understand and use technology to its fullest potential. How can philanthropy increase technology know-how, adoption, and use in the social sector? 

At the Taproot Foundation, we work to harness human capital, through pro bono service, to help social change organizations overcome challenges in core functions like marketing, financial management, and organizational strategy. In our work, we’ve learned a lot about the fundamentals of successful capacity building. We’ve also learned that strengthening organizations’ technology muscles is a different type of capacity building.

Here are three reasons why technology capacity building is unique — and what it means for philanthropy:

1.) Technology is not a core function.

Technology supports all that an organization does. It helps to increase staff productivity by automating processes. It helps deliver services more effectively by providing real-time connectivity to constituents. It helps an organization make informed decisions, creating more cost-effective programming.

Technology is used, wherever applicable, to solve a problem or capitalize on an opportunity for an organization. It isn’t a functional area itself, but rather underscores all of an organization’s work, from strategy to operations.

2.) We’re asking the wrong questions.

If technology supports all areas of an organization, then we can’t talk about technology as a standalone need. Many funders may ask grantees, “What is your technology challenge?” In response, we hear mostly about technology applications that don’t work: websites that are clunky, CRMs that don’t capture the right information, donation pages that don’t interface with internal systems, etc.

But what if we changed our question? What if we asked, “What does programmatic scale mean to you and what holds you back from achieving these results?” Or, “Where do you struggle to adequately communicate with and reach those you serve?” In answers to questions like these, we may work together to uncover where the most promising opportunities lie for technology to strengthen — or completely transform — the way an organization works or delivers its services.

3.) We’re undervaluing technology assessments.

If the effects technology can have on an organization range from strategy to operations, it’s no wonder that many nonprofits feel confused or overwhelmed by what technology means for them. When discussing technology, we’ve heard many nonprofits say, “We don’t know what we don’t know” — and they feel paralyzed about where to start.

Outside support can allow nonprofits to take a step back and understand fundamentals at their organization that might affect their technology success. Fundamentals are things like a culture of training and learning, technology champions in leadership roles, employees whose job description includes technology maintenance and support, or onboarding and off-boarding processes for personnel. Pro bono service is one way an organization can develop the ability to better prioritize technology projects; identify organizational risks, assumptions, and constraints; and analyze current systems or processes that may affect their technology solution. Creating a strong infrastructure is a nonprofit’s first step towards technology transformation.

What this means for philanthropy:

Reimagining how philanthropy builds technology capacity opens up a range of new opportunities for funding and impact. Here’s how funders can put these principles into action:

  • Reframe grantee applications to focus on grantee aspirations: Consider asking open-ended questions such as, “What is stopping you today? What do you need to grow? What would you do with unlimited resources?” By uncovering these larger organizational opportunities, funders and nonprofits can invest in technology where it matters most.
  • Encourage the use of outside technology practitioners: Technology changes fast. Staying current on trends, new threats, and new developments is hard for everyone, let alone nonprofits with limited technical staff and other pressing priorities. Pro bono service can bridge the technology gap between what a nonprofit knows about technology and where it needs to be.
  • Couple technology funding with grants for other organizational areas: Since technology underscores all aspects of an organization, consider adding funding designated for technology strategy, staff training, or maintenance into existing grants. For example, an organization receiving program effectiveness funding would benefit from simultaneous support to determine how to collect and analyze their data. Or an organization receiving funding for a program expansion could benefit from support to train staff on best practices and protocol for working remotely.
  • Provide funding for baseline technology assessments: Funding technology assessments helps a nonprofit identify a solution that truly meets its needs, saving them resources and expenses down the line. This larger analysis builds critical capacity by helping the organization plan for the long run while managing day-to-day needs.

For many resource-strapped organizations in the social sector, technology can be a daunting and overwhelming challenge. By reframing the technology discussion, funders can empower nonprofits to understand exactly where technology can advance their work and vision. Helping nonprofits create an infrastructure that supports technology success — through pro bono service, funding technology assessments, or technology-specific grants — is an often overlooked, but critically needed, opportunity for philanthropy.  Technology capacity building is unique, but reframing our approach makes it achievable.

Ava Kuhlen is director of external relations at Taproot Foundation, which connects nonprofits and social change organizations with passionate, skilled volunteers who share their expertise through pro bono service. Follow Taproot on Twitter at @Taprootfound.

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Understanding Beneficiaries to Build True Partnerships

This post is adapted from the CEP report, Staying Connected: How Five Foundations Understand Those They Seek to Help.

The five foundations highlighted in Staying Connected all view grantees as being a crucial resource to help them develop and maintain an understanding of the needs of their ultimate beneficiaries. After all, grantees are the ones working on a daily basis to address the needs of those whom foundations are ultimately seeking to serve.

We know that most nonprofits gather feedback from those they are serving. CEP has found that collecting beneficiary feedback is a widespread practice at nonprofits. With this in mind, we asked grantees of the foundations profiled in the report what their organizations do to develop and maintain an understanding of beneficiary need:

“When we’re working with a group of patients or a community, we use focus groups, surveys, or one-on-one communications. One example is when we were trying to figure out where to build a hospice inpatient facility, better known as a Hospice House. We were able to use focus groups to determine that physicians, patients, and the community felt this special facility needed to be on the hospital campus, close in proximity to healthcare facilities, and easily accessible. This valuable input helped make the decision to build the Hospice House on the hospital campus.”

– Jill Bramblett, Executive Director, McLeod Health Foundation

“We have five team members whose roles focus on community engagement. Every day they are out in the field, serving on local boards or councils, building relationships, and listening to our partners’ needs and concerns. Because of this, we have a strong understanding of the most pressing issues and what people care most about.”

Erin Hart, Interim President & CEO and Chief Operating Officer, Expect More Arizona

“Our board of directors elected two clients of our organization to sit on its strategic planning committee. We also had two members of the broader community in that group — one from a community association in West Baltimore and the other from a hospital collaborator.

– Kevin Lindamood, President & CEO, Health Care for the Homeless


Since nonprofits are doing this work, some foundations believe it is enough to rely on grantees’ knowledge of their beneficiaries, rather than developing an understanding on their own.

But most of the nonprofit leaders we interviewed for this report disagree.

“Seeing everything from one lens doesn’t work. You need that different perspective. So it’s helpful, not only for the foundation, but for the nonprofit, too, when foundations have an understanding. Then, when we have conversations, they have some different knowledge they can share with us.”

– Victor Leandry, Executive Director, El Centro

“It’s crucially important for foundations to have their own understanding of the needs of beneficiaries. Everybody has to keep each other honest and have their own sources of information. I don’t know how you would decide what to fund if you didn’t have some vision of the communities that you wanted to support and some direct knowledge of them.” 

– Donald Kerwin, Executive Director, Center for Migration Studies

“I think it’s really important for foundations to understand their beneficiaries. It allows them to thoughtfully use experiences with other people and organizations to provide constructive feedback about what the nonprofits could do differently or better. That sort of communication — of not just learning independently, but rather looping back to the grantees with input — is really critical.”

– Sarah Hemminger, CEO and Cofounder, Thread: The New Social Fabric


From the grantee perspective, foundations must independently understand the end beneficiaries of the work they are funding in order to build a true partnership with their grantees. This sentiment not only came through in our interviews, but is also backed by data. In CEP’s recent research, Relationships Matter: Program Officers, Grantees, and the Keys to Success, we found that grantees’ perception of how well a foundation understands their intended beneficiaries’ needs is highly related to the strength of a funder–grantee relationship.

Download Staying Connected: How Five Foundations Understand Those They Seek to Help here.

Matthew Leiwant is associate manager, research, at CEP.

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Hearing from Staff about DEI

“Why do you think that our staff who are women are rating our foundation’s culture less positively than men — even though there are more women than men at the foundation and in leadership,” asked the HR director who was working with me on her foundation’s employee survey.

I think back to that question frequently because I had a decent, but not deep, answer based on the information CEP had collected. I wish I’d had more to offer.

In our work with the 50 foundations that have commissioned a Staff Perception Report (SPR) from CEP, we always seek to understand whether groups of staff, at any foundation, are having different experiences. Often we don’t find any differences, and that’s good news. But sometimes we do, and it sparks a conversation about the experiences of people of color, of women (or men), or of another group’s experiences.

Ultimately, that conversation about data is the beginning of a more important conversation about inclusion — ensuring that all staff feel welcome in, and able to contribute to, a foundation’s work.

The 2017 iteration of Is Grantmaking Getting Smarter?, published by Grantmakers for Effective Organizations, highlighted that more than 80 percent of respondents to its triennial foundation survey indicated that diversity, equity, and inclusion (DEI) was an important consideration for their work. However, about half or less reported having recently put in place specific internal DEI-related practices/policies, and fewer still benchmarked the success of their DEI efforts against relevant data.

In recent years, CEP has also been considering where we could contribute to funders’ DEI efforts. In thinking about how our assessment and advisory services team could help individual funders and build data for the field, we honed in pretty quickly on the Staff Perception Report. That survey had only a couple questions about respect for people of different races, genders, and backgrounds (though we had worked with many individual funders to add customized questions about DEI to the surveys they had commissioned). We recognized that we were missing an opportunity with the SPR to build a broader dataset in which funders could reflect on and contextualize their DEI efforts.

So we got to work designing a more in-depth series of DEI-related questions. With gratitude to W.K. Kellogg Foundation and Arelis Diaz, our program officer there who encouraged us to make these questions a standard part of our survey, we piloted them in our own annual staff survey here at CEP. We then revised the questions to incorporate related input that CEP’s advisory board provided for an effort by our Research team (also supported by Kellogg), which is studying what information funders are currently collecting and using regarding the diversity of their grantees and beneficiaries.

The new survey items, which include both open and closed response questions, are now part of the survey for all funders that work with CEP to get feedback from their staffs. The questions explore the ways in which staff feel the funders they’re working for:

  • Demonstrate a commitment to diversity, equity, and inclusion internally and in their programs;
  • Are committed to and have practices that reflect a commitment to racial, gender, and other types of diversity; and
  • Have leadership that exemplifies those values.

We designed these new questions to complement existing ones about engagement and empowerment, goal alignment and communication, internal culture, and programs. We believe they will provide helpful early input for funders starting to think about DEI as well as more nuanced ongoing tracking for funders measuring the progress of their DEI efforts over time.

In his new book, The Diversity Bonus: How Great Teams Pay Off in the Knowledge Economy, Scott E. Page lays out an extensive set of empirical evidence for the existence of what he calls a “diversity bonus” — the benefits in tangible outcomes that accrue to diverse teams working on non-routine, cognitive tasks. That sounds a lot like philanthropic decision making (which is perhaps in part why the book was supported by the Andrew W. Mellon Foundation and prefaced by its president, Earl Lewis).

Page writes:

Success requires unity and difference. Successful diverse teams must be united in their goals. At the same time, team members must appreciate, encourage, and engage their difference. They cannot check their identities at the doors. They must bring their whole selves — their identities, their experiences, their education and training — to achieve these diversity bonuses.

Diversity and inclusion are linked to success. With these new questions, I’m excited to take another step to help foundations build the diverse, inclusive, and equitable organizations that will enhance their effectiveness.

Kevin Bolduc is vice president, assessment and advisory services, at CEP. Follow him on Twitter at @kmbolduc.

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Q&A: Insights from Program Officers

Last fall, CEP released Relationships Matter: Program Officers, Grantees, and the Keys to Success, a report that takes an in-depth and data-driven look at what it takes for funders to build and maintain strong relationships with grantees. Our analysis of grantee perception data finds that the program officer to whom a grantee is assigned plays a crucial role in the strength of these relationships, and to that end, the report features insights gleaned from interviews with 11 program officers whose grantees provided high ratings about their funder experience through CEP’s Grantee Perception Report (GPR).

In November, CEP hosted a webinar that featured discussion among a panel of three of those exemplary program officers highlighted in the report. The webinar conversation was an engaging one, so much so that we ran out of time and were unable to get to a number of important questions attendees posed to the panel.

So we sent out those questions to several of the program officers featured in the report. Here are the answers we heard from Sarah Lovan (Program Officer, Arts, The McKnight Foundation), Nick Randell (Program Officer, The Peter and Elizabeth C. Tower Foundation), and Jackie Hausman (Program Officer, Health, Kenneth Rainin Foundation).

Q: How do you approach the difficult conversation with a grantee or applicant to inform them that you are not able to fund a program?

Sarah Lovan: With clarity and honesty. These are some of the most important conversations we have in this work. I try very hard to communicate clearly and honestly when foundation dollars are not a fit for an organization. Being clear about the reasoning behind the decision, and being honest about the probability of a grant in the future, have proven to be two critical pieces of information to share.

I also provide at least one or two other funding ideas. Sometimes people working in philanthropy have the most up-to-date knowledge regarding funding trends and priorities of other funders. This is helpful insight to pass on to grantees and grant-seekers alike. (Caveat: I typically check with the other funder before I make an email introduction out of respect. Also, I never, ever speak on behalf of another funder.)

And last but not least, always thank them for their time and effort. It’s amazing how many times I hear from folks that other funders don’t say those simple, yet powerful, words of respect.

Q: What are effective ways to transition relationships between grantees and newly hired program officers?

Nick Randell: This will probably vary depending on the complexity of the grant in question. For fairly simple grants, we would notify a grantee in writing ahead of time and then complete the transition to the new program officer in the course of a site visit or, in some cases, a remote conference call. For more complex grants, and deeper relationships, we would probably consider a transition period of six months or so where the original program officer and the new hire essentially co-monitor the grant.

Q: How do your grantees engage with other staff members at the foundation? When and how are staff besides program officers supporting the funder-grantee relationship? What are the pitfalls and benefits of those approaches?

Jackie Hausman: An important part of my role as a program officer is to be the central point of contact and primary resource for grantees. Rather than grantees needing to contact staff in various departments (e.g. grants management, accounting), I serve as the primary contact, and facilitate all grantee communications related to financial, administrative, and operational issues. Our grantees are generally universities, and due to their complex institutional structure, it is a lot easier if they have a single point of contact for their various departments.

Q: What advice do you have for a founder or board member at a foundation with a very small staff to build relationships with grantees?

Lovan: Do what you can. I don’t believe there is a way to do this work that fits in every situation. I do believe that if you listen to what grantees want, and assess what your staff is willing/able to give (both time and money), you’ll be able to find a middle ground. In some cases utilizing an intermediary organization can be useful. That way you have one relationship to maintain, but benefit from the knowledge that the intermediary is building deeper relationships with the grantees than you are. And, in some cases, I actually don’t think a grantee wants to have to develop a ton of deep relationships with funders. I think that even a brief, yet respectful, interaction can be effective and impactful.

Q: What have you seen grantees do that helps make the funder-grantee relationship successful?

Randell: As a program officer, I really appreciate brief, unsolicited program updates. Even emails that are just a few sentences long can help program officers feel more connected to the grants in their portfolio. And they need not be frequent. Consider filling that six-month stretch between a site visit and an interim report with one or two quick correspondences. This works for program officers, too. There’s no reason not to check in with grantees on things not directly related to a program officer’s grant monitoring function. Pass on an article of interest, invite them to submit a guest blog post.

Q: In instances that require being responsive and changing strategy with grantees, how do you balance those actions with the need to be accountable to your board and maintaining pre-set agendas?

Lovan: Great question. I’d love to know the answer! My approach is based on effectiveness, trust, impact, and the tolerance of the board/staff for flexibility and risk. The tolerance for risk is a great conversation to have with your board. If at the core of the work your board and staff are aligned on general principles, I think you have a great opportunity to see how adaptive you can get with the rest.


Ethan McCoy is senior writer – development and communications at CEP.

The post Q&A: Insights from Program Officers appeared first on The Center for Effective Philanthropy.

Unlocking the Potential of Beneficiary Feedback

How can we better listen to, learn from, and act on feedback from those we seek to help? 

The topic of listening to beneficiaries has received increasing attention in recent years. CEP research conducted in 2014 showed that most grantees of major foundations were collecting and using feedback from their beneficiaries to improve their programs and services. However, leaders of these nonprofits said that foundations lacked a deep understanding of their intended beneficiaries’ needs — and that they believe this lack of understanding is reflected in foundations’ funding priorities and strategies.

CEP’s most recent report, Staying Connected: How Five Foundations Understand Those They Seek to Help, explores the practices of foundations that are highly rated by their grantees on their understanding of beneficiary needs. The report finds that these funders develop that knowledge by:

  • Listening to and learning from grantees as the experts doing the work on the ground;
  • Recognizing the importance of going out into the fields and communities their work supports; and
  • Hiring staff from the fields in which they fund.

Through these practices, these five foundations exemplify a culture of learning.

This theme — and the importance of learning through listening, in particular — echoes findings of CEP research conducted in 2016, in which foundation CEOs reported that the single most promising practice for the future of foundation philanthropy is “seeking to learn from the experiences of those they are ultimately trying to help.” A full 69 percent of CEOs point to learning from beneficiary experiences as a practice that holds a lot of promise.

It is clear that there is an interest in listening better. But it is not always clear where — or how — to start.

YouthTruth: Listening to and Learning from Students

YouthTruth — an initiative of CEP’s that harnesses student feedback to generate insights and accelerate improvements — is one example of how funders can learn from the perspectives of those they seek to help. YouthTruth was created based on the simple but powerful premise that when you get timely feedback from those you’re trying to help, and listen to that feedback, you get better — whether you are a teacher, a principal, a superintendent, a nonprofit leader, or a funder. To date, YouthTruth has been used to survey more than 675,000 students in more than 200 districts across 38 states to inform school improvement efforts.

YouthTruth has recently seen some exciting momentum with education funders, demonstrating the various ways in which funders can use feedback to better understand the student experience and perspective about what’s working — and what isn’t — in schools.

In Texas…

Since 2016, a collaborative of districts and funders in Texas, Raising Blended Learners, has incorporated YouthTruth data alongside other academic and nonacademic indicators to measure the initiative’s progress. Raising Blended Learners is a demonstration initiative showcasing strategies for using blended learning, which combines online learning with traditional instruction, to improve student achievement. Through a 10-month competitive process, Raise Your Hand Texas and several state funders selected five districts to receive grant funding and technical assistance to implement new school models across 20 school sites.

These funders are using YouthTruth data in two primary ways. First, the data is helping inform the evaluation of the initiative. Similarly to how sites are using student perception data as a leading indicator of academic success, funders are also looking to the data as an early indicator. Along with other data sources to measure progress, YouthTruth data will be incorporated into the initiative’s comprehensive three-year evaluation.

Second, the funders are using YouthTruth data to affirm strategy. As districts innovate with new school models, disruptions and complications are likely to crop up. While there may be some initial dips in academic data as schools make the adjustment to a new learning model, student perception data helps round out the picture and helps schools and funders alike stay the course as the work gets established.

In the San Francisco Bay Area…

This summer, a group of funders in the Bay Area came together to explore the extent to which funders can constructively learn from the student experiences, insights, and perspectives captured by YouthTruth’s surveys. Recognizing that funders say they want to learn from the experiences of those they are seeking to help, as demonstrated in CEP’s 2016 research on the future of foundation philanthropy, this initiative is a concrete opportunity to do so.

To this end, a group of Bay Area funders are supporting networks of local schools and districts to participate in YouthTruth at no cost — thus removing any financial barrier to interested schools and districts. The funding partners seek to learn together, through this two-year initiative, how student feedback can inform the work of not only schools and districts, but also the funders who support them.

There are now six participating funders in the group, including the William and Flora Hewlett Foundation, Monterey Peninsula Foundation, Marin Community Foundation, Richmond Community Foundation, Community Foundation Sonoma County, and Career Technical Education Foundation Sonoma County. Each foundation has invited partner schools to join the initiative, and to date, 46 schools across four districts have accepted the invitation, 24 have started surveying, and more than 6,000 students have shared their feedback through the YouthTruth survey.

The initiative includes opportunities to come together as a learning community several times a year — sometimes in a peer group of funders, and other times with funders and school leaders together. This affords time and space to explore the data that is being gathered, the questions that are arising, and the opportunities the group collectively sees to use the beneficiary perception data to enhance effectiveness.

Finally, continuing the theme of learning, the group is committed to sharing the collective lessons learned about what funders can gain from more systematically listening to students, as well as the challenges inherent therein.

In The End…

As explored in Staying Connected, there are a number of ways that foundations can build their knowledge of beneficiary needs and incorporate that understanding into their work.

The foundations profiled in that report build their knowledge by listening to and learning from grantees as experts; recognizing the importance of going out into the fields and communities their work supports; and hiring staff from the fields in which they fund. YouthTruth and other efforts like it, including the Fund for Shared Insight’s Listen for Good initiative, offer another window into beneficiary needs and experiences, in the form of asking beneficiaries directly.

We believe student perception data can help foundations better understand the impact of their programs on the lives of students in several ways.  Funders can use student feedback data to change or affirm strategy, revise tactics, adjust funding levels or priorities, convene conversations, compare different approaches, and broker relationships.

We recognize that there will be challenges in this work, but we are excited to explore some of the concrete ways that funders can use beneficiary feedback to inform their work. We invite you to ask yourself: can you imagine how beneficiary feedback could be used at your foundation?

Jen Wilka is executive director of YouthTruth. Follow YouthTruth on Twitter at @Youth_Truth.

The post Unlocking the Potential of Beneficiary Feedback appeared first on The Center for Effective Philanthropy.

Here’s How to End the Culture of Sexual Harassment

This op-ed by Harry and Jeanette Weinberg Foundation President and CEO Rachel Garbow Monroe first appeared in The Baltimore Sun.

Words have power. Too often today, they are being used to tear us down and apart, making us feel helpless and defenseless. Alternatively, words can build us up, strengthen us, and give us the ability to move forward together, constructively. I choose to focus on the latter believing that none of us can afford the continued costs of remaining silent.

As a female CEO, I have a responsibility to speak out, and I am compelled to do so now. The pervasive workplace culture of sexual harassment, intimidation, and the undervaluing of women must be addressed both swiftly and firmly.

It is now time to take deliberate, verifiable, and precise steps to ensure that the ethics of our workplaces cannot be compromised by leaders who put their personal ambitions above their companies’ welfare or those who are indifferent to bad behavior or simply unwilling or unable to prevent it.

For the sake of every stakeholder involved, it is time for the values of mutual respect and kindness to find their way into the workplace.

What can we do?

First, we need to make it absolutely clear that behaviors that have been “accepted” for too many years are intolerable.

Government, corporate, and philanthropic communities need to develop mandatory codes of conduct and organizational values, both internally and externally. Employers should exercise leadership by updating existing harassment policies and creating a neutral platform for filing complaints without retribution. Organizations must also train managers and staff on acceptable workplace behavior as well as how to effectively respond to sexual harassment claims.

In addition, organizations that insist upon a safe and respectful workplace should be recognized and elevated for demonstrating best practices. We regularly recognize enterprises for their positive contributions to the environment, being family-friendly, and supporting employee health. It should not be difficult to recognize organizations that are firmly committed to keeping their employees safe and unthreatened in the performance of their professional duties.

Technology can be brought to bear to give victims an avenue for redress. An online tool named AllVoices is about to launch and should make it easier for both men and women to report instances of sexual harassment. This app will allow employees to bypass human resource departments and directly report misconduct to CEOs and company boards. (The purpose is not to bypass the process of investigating complaints of harassment but to prevent executives from denying knowledge if the allegations prove true.)

Second, companies also need to do more to promote women’s leadership roles in the workplace. In 2017, the number of women CEOs in Fortune 500 companies registered an all-time high at 32 (6.4 percent), up from 21 last year. Although the trajectory is positive, there is a long way to go.

Women should be on every CEO search committee and candidate interview list. Corporate leaders should decline to appear on speaking panels unless women are represented. Organizations should provide mentorship and sponsorship opportunities for women, creating a clearer pathway for them to become leaders. And, of course, compensation should be fair and equitable with our male peers.

Third, we need accountability. The key to reaching these goals is articulating rules that need to be followed — with clear consequences for noncompliance. CEOs need to say to their boards and to their staffs that no matter what has happened in the past, certain behaviors that constitute harassment — whether overt and explicit or in more subtle sexual innuendos and whispers — will no longer be tolerated. Period.

We also need men’s voices and actions heard and felt in this — because they matter. Men in leadership positions who are willing to stand up and support a safe and fair workplace for all need to use the power of their positions to help advance this agenda. While there has been some leadership, for the most part we are forced to ask: “Where are their voices? What are their actions? Why don’t we hear more of them?” If they are silent, they should speak. If they are speaking only to their employees, they need to speak up so we can all hear them. The collective power of these unified voices will affect the transformation in sentiment and action that we all desperately need.

In the law and society, silence usually connotes assent. We need to speak — and speak loudly. This is not a women’s issue. It is a foundational issue for how all of us live and work together. It is the basis for how we demonstrate respect and human decency in all our interactions. Let us use this moment to speak loudly and take action to strengthen and advance a mandate for the way in which each of us wants to live and how we choose to create the world in which we want to raise our children, regardless of their gender.

Rachel Garbow Monroe is the president and CEO of the Harry and Jeanette Weinberg Foundation.

The post Here’s How to End the Culture of Sexual Harassment appeared first on The Center for Effective Philanthropy.