Philanthropy is about beginnings – new ideas, new projects, new awards, and new initiatives. Foundation program staff are attracted to philanthropic jobs because of the opportunity to start projects that will make a difference in people’s lives. To the extent the public thinks about foundations, it is as grantmakers.
But for every new grant, program, or initiative, sooner or later there is an exit. Too often, these exits are neglected.
A session at the upcoming Center for Effective Philanthropy (CEP) conference Better Philanthropy: From Data to Impact (May 10-11, 2011) will tackle the vital topic of exit strategies. I’m excited that CEP is taking on this often overlooked topic in philanthropy.
The neglect occurs despite the fact that foundations know that sound exit strategies are necessary to achieve sustained impact. We know that the absence of thoughtful exit strategies harms grantees, foundations, and the legacy of good work done together.
In my experience as a grantmaker and a consultant, I’ve seen foundations exit a grantmaking program for a variety of reasons. Among them:
- A foundation board changes priorities
- New foundation leadership adds new goals and drops others
- An economic downturn leads to fewer dollars to award
- An initiative achieves its goals or financial sustainability
- Grantee performance is unsatisfactory
- New funders enter an area and existing funders pull back
- A foundation “spends down” or closes
In other words, there are many explanations for foundation exits, most of which have little to do with the performance of the grantee. But the diversity of reasons for exits does not explain why exits are often problematic or awkward.
One source of awkwardness is that too often the funding size and duration (and thus the timing of the exit) is more often determined by funder constraints that do not fit the problem or need the project intends to address. This can result in grantees accepting support that is insufficient to meet the aims of the project. Another potential source is that expectations between funders and grantees are rarely discussed. When the relationship approaches the end, divergent expectations that haven’t been voiced can lead to problems.
The Wednesday, May 11th CEP panel on exit strategies will examine this rarely discussed topic. It will be moderated by Debra Jacobs of the Patterson Foundation and kicked off by remarks from Kevin Walker from the Northwest Area Foundation, Mayur Patel from the John S. and James L. Knight Foundation, and Ann Monroe from the Community Health Foundation of Western & Central New York. The panel will include ample time for discussion among panelists and attendees to share their ideas.
As I anticipate participating in this session, some of the questions that I hope panelists and attendees will discuss are:
- Does it matter why foundations exit a grantmaking area? That is, do the reasons for the exit influence the approach to an exit strategy?
- When does it make sense to begin a discussion of exit strategies in a foundation?
- When does it make sense to begin talking about exit strategies with grantees?
- Have foundations found effective exit strategies in working with their board, their program staff, and their grantees?
- What hasn’t worked in exit strategies?
- How can foundations best anticipate various exits and prepare for them in a responsible manner?
I’m looking forward to a lively and interactive discussion at the CEP panel.
Robert Hughes is a consultant and Learning Lens Manager for The Patterson Foundation.