An Evolving Definition of Foundation Effectiveness

There’s lots of talk about effectiveness in philanthropy, but defining it isn’t necessarily easy. 

Our Board of Directors took a stab at it a few years back, and we put out what we called our “working definition of foundation effectiveness.” We got a lot of feedback on it — much of it affirming and some of it constructively critical.

Earlier this year, as part of a planning process, our current Board returned to the definition — revising it somewhat to reflect our learning over the years, to incorporate feedback and ideas from many in the foundation world and the broader nonprofit sector, and to respond to the current context grantmakers find themselves in. If our focus here at CEP is on helping foundations be more effective, we better be darned sure we know what we mean by that.

So we’re pleased today to share our revised proposed definition of foundation effectiveness. We hope it can be a resource to foundation boards and staffs as they consider their own work. We still see it as — and probably will always see it as — a work in process. We continue to welcome feedback so we can improve upon it in the months and years ahead.

At the highest level, our definition probably seems like it includes elements required for success in anything: clear goals; coherent strategies to achieve those goals; disciplined implementation of those strategies; relevant performance indicators to assess performance.

“Duh,” you might say.

But in each case, it’s more complicated in philanthropy than it might be if, say, you’re running a business. And, in each case, we’ve tried to go further in defining what this really means.

Why is effectiveness uniquely challenging for foundations? In part because so much of how we think of effectiveness comes from business literature, which doesn’t quite translate. With respect to goals, for example, business has it comparatively easy — the goal is typically profit. For foundations, how do you choose goals when there are so many pressing social problems?

Strategy is similarly more complicated when there aren’t competitive dynamics. In business, you want your strategy to be yours alone — you definitely don’t want others in your industry to share it, or potentially even to know it. In foundationland, if your strategy is yours alone, you will surely fail. 

This makes implementation especially challenging, as we have seen time and time again. When strategies work, relationships are strong across multiple actors who are working in concert. When strategies fail, it’s often because insufficient attention is paid to the hard work of implementation and to the relationships that need to be attended to. (See, for example, Dale Russakoff’s excellent book The Prize for a real-life example of what that kind of failure looks like.)

It’s the same story when it comes to gauging performance. If you’re running a business, or coaching a soccer team, the indicators are clear. For foundations, it’s much tougher. How do you measure progress when you’re one of many funders working on issues for which it takes years or decades to see progress? How do you balance your own assessment interests with those of the organizations you fund?

These are just a sampling of the challenges of effective philanthropy. We hope our definition can be a resource to you.

And, again, we welcome your feedback.

Phil Buchanan is president of CEP. Find him on Twitter at @philCEP.

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