For the past four years I have been responsible for producing The Irvine Foundation’s Annual Performance Report, our foundation-wide assessment of program impact and operational performance. Through my work on that report I have come to understand that focusing on outcomes in many foundations is encumbered by the core business activity of making grants. The grantmaking process tends to focus the attention of program staff on the next grant award rather than the outcomes of active and past grants, which should be the focus of an assessment of our performance.
This foundation outcomes paradox was on my mind during the recent CEP conference, where one of the breakout sessions, “Driving Toward Impact: What Funders Can Do To Support Nonprofits’ Performance Management,” raised the question of whether foundations are equipped to support and model best practices in performance management. The unanimous response was no, most foundations are not a good model for nonprofits’ performance management.
Why is this? For the answer to why, I return the core business of a foundation – making grants. In an article in Foundation Review, Patti Patrizi and Elizabeth Heid Thompson astutely observed that the process of reviewing proposals, making recommendations, awarding grants, and cutting grant checks can dominate time and attention in foundations. Any readers with experience working in a foundation can attest to the way that making grants drives the day-to-day work at a foundation. Time and energy of program staff are sucked up by “bureaucracy’s gravitational force.”  Two things happen as a result. First, we find ourselves with program staff who are good at the grantmaking that they have been trained to do, rather than focused on grant outcomes. Second, when foundation performance is measured, it is often in terms of the amount of grants made rather than the outcomes of those grants.
What can we do about it? Foundations seeking to manage based on performance and outcomes will need to tackle the outcomes paradox and think about how their current processes support or impede a focus on outcomes. What is the job description for a program officer, and how is their performance measured? Break-out panelist and Impetus Trust Chief Executive Daniela Barone Soares reported that the performance of the foundation’s investment staff (their equivalent to program officers) is based on the outcomes achieved by nonprofits in their investment portfolio. This creates the incentive for deep engagement and collaboration with nonprofits to help them succeed. It also requires a set of skills that is probably different from traditional foundation program staff.
These process changes need to be part of a larger cultural change in the foundation, led by foundation executives and boards. Based on my own experience and the wisdom of others, this is no small task (see Mario Marino’s timely and relevant new book, Leap of Reason: Managing to Outcomes in an Era of Scarcity). Once a foundation’s leadership is aligned about a focus on outcomes, we need to turn attention to the business processes and job descriptions and consider how to shift the management of the foundation from grant making towards grant outcomes.
Kevin Rafter is manager, research and evaluation at The James Irvine Foundation.
