On the CEP blog this week and next, CEP President Phil Buchanan will discuss, in a series of eight posts, recent critiques of large, staffed foundations and assertions that recently-established, “lean” foundations are paving a promising new path without being saddled by “bureaucracy.” The following is the first post in the series. To make sure you don’t miss a single one, subscribe to the CEP blog and get each post in your inbox as soon as it goes live.
To hear some tell it, big, staffed foundations are on their way out. Like bookstores or taxis, they’ll soon be obsolete, if they’re not already.
David Callahan, founder of Inside Philanthropy, writes that new donors are embracing a “leaner” philanthropy and that “places like Ford” (as if there are a lot of places like Ford) — which he calls “philanthrosoraus rex” — “will start to feel more out of step with the mainstream of philanthropy, a sharp change from a past era when big foundations embodied state-of-the-art grantmaking.” Callahan suggests that there is a growing recognition that “lumbering legacy foundations, with their program support models, are doing things wrong and underperforming as a result.”
He is not alone in his view. Sean Parker, of Napster and Facebook fame, is similarly harsh in his assessment, declaring in the Wall Street Journal in June that “the executive directors of most major private foundations, endowments, and other nonprofit institutions are dedicated, first and foremost, to preserving the resources and reputations of the institutions they run.”
“This is achieved by creating layers of bureaucracy to oversee the resources of the institution and prevent it from taking on too much risk,” Parker argues. As a result, “many large private foundations become slow, conservative, and saddled with layers of permanent bureaucracy, essentially taking on the worst characteristics of government.”
Today, of course, it’s almost de rigueur to declare that any institution or model that has existed for more than five minutes will be “disrupted.” But, like rumors of Mark Twain’s death, the reports of the demise of big foundations may be exaggerated.
Drawing on available evidence, including (but not limited to) research the Center for Effective Philanthropy (CEP) has conducted over the past 14 years, as well as our experience in hundreds of engagements with foundations using our assessment tools, I want to make four points in response to these critiques.
- First, it’s not actually clear that the new foundations being heralded by Callahan for their slim staffs will be so thin five or 10 years from now — or even that they’re particularly slender now!
- Second, the small size and great diversity of nonprofits often requires larger foundations to have enough staff to be able to interact with many different entities and to be knowledgeable enough to make good decisions about who to fund.
- Third, our data and analysis of tens of thousands of surveys of grantees of nearly 300 foundations shows the benefit — to grantees — when foundations have sufficient numbers of staff for the goals and operating strategies they’ve chosen.
- Fourth, it’s not just about numbers — the quality of staff and of staff culture matters, because what happens inside a foundation’s walls ripples outside those walls.
I’ll seek to flesh out these points in a series of eight posts in the coming days on the CEP blog.
In doing so, I am not going to argue that all is well in philanthropy (just as all is not well in any of our sectors, including business and government). For it is surely true that foundations of all types and sizes can sometimes become overstaffed, slow, bureaucratic, and infected with a complacency that is quite out of step with the urgency of the challenges they work to address. Anyone who has spent time in the world of larger foundations knows this can happen, and I’ve seen this first-hand at least a few times — which is, of course, a few times too many.
Neither am I encouraging foundations to rush out and hire more staff. Whether they should or not depends entirely on their goals, strategies, and approaches.
What I am saying is that there’s a price to be paid for not paying attention to staff — both their numbers and their quality. And, I am also arguing that the rush to heap praise on the “new” donors and denounce the “old” institutional foundations is perhaps a little simplistic, at best.
More on that in my next post.
Phil Buchanan is president of CEP. Follow him on Twitter at @philCEP.
See all posts in the series here.