A little over four years ago we started to ask people what some of the root causes were to better organizational effectiveness in the foundation and nonprofit sectors within the United States. We talked with personnel at large and small nonprofits, and program staff from small family foundations to large private ones . We also consulted the literature on organizational effectiveness in the nonprofit world. Over time we captured what we heard into a poster size (3 feet x 2 feet) root cause “map” with over 65 boxes containing discrete assertions about the challenges foundations and nonprofits face in attaining organizational effectiveness. The diagram also contains scores of arrows that conceptually connect the assertions.

Early versions of the map were shown to our initial interview respondents from the foundation and nonprofit world (and to just about anyone who would look at it!). Over time we confirmed, disconfirmed, and refuted many issues, ever refining the map. It’s not perfect, but it does reveal an honesty and candor that underscores the passion of the people working in the third sector.

Because the concepts are ever evolving, our aim is to make transparent what we've learned and start a conversation on

• where the most viable opportunities for improvement are, and
• what we should address as a field.

In a series of posts we’ll report on what we’ve learned and ask for your reaction. Part One is about foundations. In Part Two we'll look at nonprofit organizations. We'll also publish the map in an upcoming post so anyone can have a copy of it and see the ecology of effectiveness, as we've captured it, for the sector.

Part One: Foundation Effectiveness

We began this thought experiment with the following assertion:

“We, as a social change community, not as effective as we could be.”

We then asked stakeholders in the field why that’s the case, particularly in foundations.

Four major clusters of root causes evolved from the above assertion. One cluster of reasons focused on the way in which the input from consultants, on which many foundations rely, doesn’t always translate into better overall effectiveness. Another cluster focused on how proposal vetting is not as effective as it could be. A third looked at how program evaluation is not leveraged in the best ways possible. And the fourth cluster, which I’ll discuss more in depth below, notes that foundations are not as strategic as they could be.

Why Aren’t Foundations As Strategic As They Could Be?

Three major areas developed in our analysis as to why foundations are not as strategic as they could be.

The first is no surprise. It's hard to stick to a strategy.

• With the passage of time, leadership and staff attain new knowledge that influences how they view the future.
• The stakes for not sticking to a strategy are not readily evident in the day to day work of foundation staff.
• It's hard to make strategy visible and operational in every step of an organization's day.
• It's hard to deliberately re-focus a strategy.
• Board members may have personal interests that can influence grantmaking.
• The needs of a community change over time.

Another second reason why foundations are not as strategic as they could be is that program portfolios can become populated with projects that may not be mission-related. This can occur when foundations have vague, unattainable or unrealistic goals. There are several reasons why foundations would hold such goals:

• It can be more appealing for a foundation to make small contributions to a big problem rather than completely solving a delimited one
• Foundations and grantees are not necessarily centered on a culture of measurement. After all, with measurement comes responsibility; what one doesn't see one doesn't need to fix.
• Foundations want to leave their options open.
• A foundation's strategy may be illusive and confusing. The contributors to this include
  • An inherent ambivalence about power and control over grantees. Foundations can be reluctant to tell grantees what to do because
    
    • they wish to be detached and objective and not involved in funded projects
    • they don't have staff or resources to support funded projects
    • they have respect for the independence of grantees
  • A lack of a market that drives foundations to be more effective and outcome oriented.
  • A tendency to prefer being detached and objective and not involved in funded projects

A third area that contributes to foundations' difficulty in sticking to strategy is a lack of emphasis on results that lead to a change or impact. A reason offered for this is that the quality of grantee operations may be based on foundation's perception of a grantee's organizational efficiency rather than a grantee's social results.

Next Time: Evaluation, Proposal Vetting, and Consultants and Their Relationship to Foundation Effectiveness