In its recently released report, Foundations Respond to Crisis: Lasting Change?, the Center for Effective Philanthropy (CEP) shared new research in which foundations reported working differently now than in early 2020 — and indicated plans to sustain most of these changes. The report reveals numerous areas of change in foundation practice and in leaders’ plans for the future, as well as some disconnects, barriers, and additional opportunities for further change. This is the fifth in a series of blog posts in which members of CEP’s research team share further data and insights that the research revealed, beyond what was included in the report. Find other posts in this series here.
A popular saying goes “Before you judge a person, walk a mile in their shoes.” We would like to offer a modified version of this saying: “Before you help a nonprofit organization, walk a mile in their shoes.”
CEP’s recent report, Foundations Respond to Crisis: Lasting Change?, found that many foundation leaders say they have changed their practices since 2020. While we don’t see differences by funder type, geography, or size (which is pretty typical), we did find some factors that play a role in the extent to which funders are making change. One such factor, a key finding in the report, is board racial diversity: Foundations that have boards with more racial diversity tend to adopt more practices to support grantees and the communities they serve.
Additionally, our analysis surfaced another characteristic that relates to the extent to which foundations are changing their practices: whether or not foundation leaders have prior experience working at a grant-seeking nonprofit.
Just over three-quarters of the 284 participants in our study said that they have worked at a grant-seeking nonprofit.[1]
Our analysis surfaced a consistent pattern of statistically significant differences — across a number of dimensions of funder practices — in the way foundation CEOs who have experience working at grant-seeking nonprofits have changed their foundation’s practices since 2020, compared to CEOs without experience working at a nonprofit.
First, foundation leaders with nonprofit experience were more likely to have more substantially increased their foundations’ grantmaking budget in comparison to the last fiscal year.
Further, even as most foundation leaders told us that they streamlined processes and provided more unrestricted support — changes they say they plan to sustain — we found that foundation leaders with prior experience working at grant-seeking nonprofits more frequently reported streamlining their application process to reduce the burden on applicants and grantees. (When it comes to streamlining reporting processes, interestingly, we did not find differences in practice based on whether the CEO had nonprofit work experience.)
And while the majority of foundation leaders said they are providing a higher percentage of unrestricted grant dollars compared to pre-pandemic giving levels, leaders with prior nonprofit experience were more likely to say that the foundation has made providing general operating support (GOS) an organizational priority after the pandemic is contained.
Finally, while most foundation leaders in our study said that their foundation does not currently collect demographic data from grantees, leaders who had worked previously at a grant-seeking nonprofit more frequently indicated that they do collect grantee demographic information.
Importantly, we are not claiming causality. Rather, we are noting a clear pattern between foundation leaders having prior experience working at a grant-seeking nonprofit and the extent to which we observe changes in funder practice.
And we are certainly not the only ones to make such observations on the topic of foundation leaders and staff having prior nonprofit experience. Vu Le, author of Nonprofit AF, has repeatedly called on nonprofits and foundations alike to hire people with nonprofit experience. “If you plan to hire anyone who will advise, give money to, or otherwise have any say in how nonprofits run,” he wrote in a 2019 blog post, “please make sure they have some experience working at a nonprofit.”
As Moira Sinclair, chief executive at the London-based Paul Hamlyn Foundation — and a leader with experience at grant-seeking nonprofits — reflected in a 2020 CEP profile about the foundation’s higher than typical provision of the sought-after multi-year GOS grants, “Having staff with recent, direct experience working in the nonprofit sector has really informed our practice.”
Nonprofit leaders also take note when foundation leaders know what it’s like to run a nonprofit organization. In a recent interview with us, a nonprofit leader described the unique challenges of nonprofit work and the frustration of navigating difficult funders and onerous processes. This leader noted how important it is that funders “see it from the other side, as a grantee,” and suggested that “maybe more foundations should hire former nonprofit workers.’”
Indeed, maybe they should.
Maria Lopez is an analyst, research at CEP. Naomi Orensten is director, research at CEP.
[1] Some points of not quite apples-to-apples comparisons: A 2010 study published by The Foundation Review found that between 2004-2008, 25 percent of foundation CEOs had immediate prior experience working at a nonprofit organization. A 2015 CEP review of the 100 largest foundations in the United States found that out of 100 foundation CEOs, only 10 had immediate previous experience at an operating nonprofit that wasn’t a college or university. In 2012, that number was 14. These examples used different parameters and reference points than this study, so they are not a direct comparison, though do provide additional context.
