Q&A: Does Organizational Culture and Health Matter in Philanthropy?

This post appears as part of our Q&A series on the blog, in which readers can submit questions to be answered by CEP’s experts. We’d love to hear from you with questions related to relationship-building with grantees, grantmaking patterns, assistance beyond the grant, or any other topics related to foundation effectiveness. To submit a question, please email Ethan McCoy at ethanm@cep.org.

Q: There is research that suggests one cannot truly measure the “culture” or “health” of an organization without surveying the followers of the leaders (i.e., staff). Likewise, venture capitalists never make investment decisions without vetting the quality of the senior leadership team of investees. Given all the research in business and other fields about the importance of organizational culture and organizational performance, why does the grantmaking field not measure (through the voice of staff members in organizations) and take into consideration the health of organizational culture in making investment decisions?

– Nina Esaki, Assistant Professor, Springfield College School of Social Work

At CEP, we agree with the premise that a foundation or nonprofit’s organizational culture and leadership have a great bearing on effectiveness.

For foundations, this is why we offer the Staff Perception Report (SPR), a survey instrument for foundation staff that offers benchmarking and insights into areas such as staff’s understanding of the foundation’s goals, staff satisfaction and empowerment, and the quality and helpfulness of performance reviews, among other topics. When we analyzed data gathered contemporaneously from staff perceptions and grantee perceptions (via our Grantee Perception Report (GPR)) at 29 foundations, we found that there is indeed a relationship between the health of foundation staff climate and culture and grantee experiences (more information on that study can be found here and here).

For example, when staff feel empowered — as measured by a series of specific survey items covering issues from authority to professional development to team culture — grantees are more likely to see the foundation as clear and consistent in its communication, which is vital to grantees’ perceptions of the foundation’s impact. We see the connection on other important dimensions in the survey, too. So, contrary to the stereotype that foundations can be opaque or isolated institutions, our data shows that their cultures are emanating outwards and influencing their grantmaking relationships.

For nonprofits, there are many leadership and organizational health-focused resources available. For instance, the Leap Ambassador’s “Performance Imperative” is a helpful framework and toolkit for nonprofits to align their performance and impact with their values. It shares seven pillars of high performance for nonprofits to cultivate, the first of which, identified as the “preeminent pillar,” is “courageous, adaptive executive and board leadership.”

We also see some foundations take a high-engagement approach to grantees, which involves evaluating and understanding grantee capacity on many dimensions, including leadership. One public example I can share (because the foundation has made its GPR results public), is that of the Einhorn Family Charitable Trust (EFCT) in New York City. You can read more about them here. Another initiative you may find interesting is the formation of Blue Meridian Partners, a funder collaborative focused on investing in high-performing nonprofits specifically serving youth and children.

And in a post on the CEP blog just last week, Rusty Stahl of Fund the People pointed to several examples of evaluations that demonstrated how instances in which funders invested in staff at grantee organizations influenced those organizations’ performance and sustainability. As Stahl writes, “Funders can use their intellectual, reputational, and financial capital to recognize the inextricably symbiotic nature of nonprofit workers and their good works.”

We’d be curious to hear of other funders’ approaches to assessing both their own and their grantees’ respective leadership and organizational cultures. Please share any examples in the comments below.

Answered by Grace Nicolette, vice president, programming & external relations, at CEP.

To submit a question to CEP, please email Ethan McCoy at ethanm@cep.org. We will respond to all questions directly, and we’ll choose one question per month to answer on the blog. For the latter, we can withhold your name upon request.

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