“Open-Source Strategy” (Part 4): Foundation Strategy Development and the Perils of Isolation

If adopting a stance of openness with stakeholders in strategy development processes makes sense for nonprofits, as I have argued, then it makes even more sense for foundations. No one is susceptible to isolation in quite the way foundations are: foundations, after all, are surrounded by those who are predisposed to tell them what they think they want to hear. Plus, they’re often a step — or two — removed from the conditions on the ground that they seek to change. And, unlike operating nonprofits, private foundations don’t have to compete for resources and so are more protected from some of the downsides of openness that I blogged about here.

In our research on foundation strategy, we find that the exemplars of strategy are significantly more likely than their less strategic counterparts to solicit the perspectives of grantees and other stakeholders — including intended beneficiaries — on how they might do their work. That makes sense.  It seems almost impossible to imagine that a foundation could develop good strategy without taking assertive steps to reach out and hear from both experts and people closer to the front lines about what approach is most likely to help them achieve their intended impact.

Yet, my observation is that many foundations develop what they call their “strategies” (which often aren’t really strategies, at least according to CEP’s definition) in isolation, or with only the help of consultants who may or may not possess actual expertise in the area in which the foundation is working. Maybe that’s why some of what gets labeled foundation strategy seems so ill-conceived.

As former Ford Foundation President Susan Berresford points out in a recent Chronicle of Philanthropy op-ed, the costs of bad strategic planning are high. “Is it possible,” she writes, “that the quality of what passes for ‘strategic planning’ in too many places is just plain subpar? As in all fields …. there is a lot of mediocre practice. … So a lot of time and energy are poured into planning exercises and materials that yield little actionable analysis.”

I think Berresford is right on in her critique of much of what gets called “strategic philanthropy.” My view is that a big part of the problem lies in the lack of emphasis on getting good information and real (and critical) feedback.  The real strategists take an iterative approach — in which strategies are constantly re-assessed based on data and experience.

Some foundations, like the David and Lucile Packard Foundation, are committed to doing what they can to counter the tendency to be isolated. That Foundation gets regular, confidential feedback from grantees through CEP’s Grantee Perception Report (GPR) process, and takes that feedback seriously, as this CEP case study describes. As part of Packard’s “grantee experience standards,” described in the case study and formulated in response to grantee feedback, the Foundation makes this pledge to its grantees: “When you speak to a program officer, you will receive clear communication about the subprogram strategy and where the work of your organization fits into that strategy.” (Sounds simple, but ask nonprofits that get foundation funding how often this kind of communication happens.)

Packard has also sought to experiment with new technologies as a way to open up its strategy development processes and tap into the best ideas: in Packard’s case, the mechanism was a wiki. An analysis of the experience of using a wiki to develop strategy on the foundation’s web site notes that, “the wiki did not emerge as a panacea. Other methods commonly used by the Foundation remain important, such as drawing on the expertise and contacts of Foundation staff and consultants, and conducting workshops and conferences to enable more in-depth exploration of strategy points.”

I think Packard is wise to recognize that technology is no panacea — and should be commended for sharing its lessons learned. New technologies can facilitate more engagement, but they can’t substitute entirely for the kind of discussions that happen when the right people talk together. (Disclosure: In addition to using CEP’s assessment tools, Packard provides grant support to CEP.)

This, of course, means thoughtful strategy development is going to be time-intensive. In my first post in this series, I blogged about Joanne Creighton, former president of Mount Holyoke College (a mentor to me and my former boss), and her approach to planning. I still remember the push-back she got from some on the Mount Holyoke Board when she said the planning process would take 18 months. “That’s too long!” But she insisted that it would take that long to substantively engage the Mount Holyoke community, get the best thinking and ideas, and emerge with a compelling plan and a community mobilized to implement it.

Of course, at a college, it’s easier to define who to consult with. For foundations, that’s tougher. Much has been written about “crowd-sourcing,” and I think one of the real challenges is to determine how widely to cast the net.

  • What is the relevant crowd, in other words, from which to get ideas about strategy or reactions to ideas?
  • What are the best mechanisms to get that feedback?
  • How do you integrate an approach that takes advantage of data and research on what works with one that taps into perspectives that might help make sense of that research — and how to apply it?
  • How do you balance “expert” perspectives with the perspectives of others — such as intended beneficiaries (and, by the way, aren’t they real experts, too?)?

Regardless of how these questions get answered, it seems clear that foundations can’t develop good strategy with closed processes. The only exception that I can imagine, and it’s an important one, is when a foundation is pushing to achieve goals that put it in direct tension with a well-funded opposition that might use knowledge of the foundation’s strategy to better counter it. I can think of a number of examples of goals — from those related to environmental issues to civil rights — where this could be the case. Even then, however, some openness in the strategy development process will be necessary to engage the right people and get the right information.

I don’t claim to have the answer to how to balance all the tensions that arise in devising and executing strategic planning processes: between data collection (and analysis) and cost; between consulting widely and time; between expert advice and practical wisdom from those on the ground. And I don’t know how to determine the threshold when you have enough data and enough feedback and have been through enough iterations of a plan to know it’s time to start implementing. (Even then, the best planners know strategic planning, and learning, never really stops.)

But I am clear on this: too much of what passes for strategy in foundations isn’t of a high enough quality. Our research suggests much of it isn’t even really strategy. I think that has a lot to do with a failure to engage the right data and the right people, in the right ways, during the strategic planning process.

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