Why Foundations Need to Make a Leap of Reason

When it comes to nonprofit performance assessment, Foundations need to do a better job of bringing their practices in line with their attitudes.

  • A majority of CEOs said nonprofits should be held to a higher standard of evidence than they are today, in a survey of large foundations we conducted earlier this year.
  • And fully 70 percent said they believe foundations should be placing a greater emphasis on understanding the effectiveness of the grantee programs and organizations they are considering funding, in the same survey.

These are two in a series of attitudinal questions we asked CEOs, which we will describe in a soon-to-be released-report, that paint a clear picture.  Simply put, funders are looking for more data and evidence to assess both their performance and that of their grantees.

But here is the disconnect between attitude and practice:

  • Just 11 percent of grantees from some 200 foundations surveyed by CEP over the past eight years say they received assistance beyond the grant focused on the development of performance measures.

To be sure, more than 11 percent of grantees may be receiving support – perhaps in the form of general operating support or capacity building grants – to help them assess performance.  But there isn’t much evidence to suggest this is the case.

This disconnect is troubling, to say the least.  After all, who will support nonprofits’ progress in the area of performance measurement if not foundations?

Funders won’t ever see the fulfillment of their wish for better data to judge effectiveness if they aren’t willing to support nonprofits’ efforts in this area.  Do funders expect that capacity and skill to magically increase without resources or support?  Because it won’t.

That’s why the argument about the role of funders made by Mario Morino in his new book, Leap of Reason: Managing to Outcomes in an Era of Scarcity, is so important.  Morino writes:

“I know many nonprofit leaders who are not managing to outcomes but are strongly predisposed to do so.  They inherently know what their outcomes are and very much want to assess and manage to them.  But they are severely hamstrung by the lack of available funding to do this hard work. … At a minimum funders should be supporting efforts to help nonprofits to …. (a) track the outcomes of those served; (b) undertake at least basic analysis of this information; and (c) identify how they can use the information to learn and improve their programs over time.”

This should not be a radical proposition.

Yet, frequently, the pressure to fund programs and not “administrative costs” leads, paradoxically, to funding approaches that surely result in worse outcomes per dollar spent because of a lack of good data to gauge effectiveness. As Morino puts it, the “understandable desire to be careful about costs can deeply undermine the pursuit of impact.”

There are too few examples of foundations investing in building the data management capacities of individual grantees or of a field – as, for example, the Stuart Foundation did in California.  Stuart recognized that its goal of improving life outcomes for foster youth in that state could never be achieved without the data systems to allow for tracking of progress.

Currently, many foundations won’t invest in this kind of infrastructure.  Leap of Reason makes the moral case for ending this dysfunctional practice, or non-practice – starting today.  Morino writes powerfully about the imperative for “managing to outcomes” and includes a set of practitioner essays that bring his arguments right down to the ground, where the proverbial rubber meets the road.

Perhaps most poignant of the practitioner essays is one by Isaac Castillo of the Latin American Youth Center (LAYC), who writes candidly of how his organization learned that its efforts to change attitudes about domestic violence were having the opposite of the intended effect.

How did the organization know its program wasn’t working?  Because it had invested in performance assessment – carefully tracking clients’ attitudes before and after the program. This allowed LAYC to right the ship, making the necessary changes to ensure the program is having the desired effect.

How many instances are there like the one Castillo writes of that we don’t know about – because organizations and their funders have not invested in the data systems that would allow us to know?

It is a frightening prospect.

Morino’s book is a powerful call to action for both nonprofits and funders.  And one of its many virtues is that it doesn’t gloss over the difficulty of doing this work.

But the book also finds much reason for hope. Another of the excellent practitioner essays comes from Tynesia Boyea Robinson, executive director of Year Up, National Capital Region.

Robinson notes that nonprofit employees have the “intrinsic motivation” needed for this challenge – why else would they be doing this work?  She beautifully articulates how passionate commitment to a nonprofit’s mission is the only force that will get you through the tough slog of “managing to outcomes.” (Rather than seeing passion and a commitment to assessment as in tension, she sees them, as I do, as complementary. See my recent blog post on Tactical Philanthropy on this issue.)  She also lays out some common mistakes of those who advocate for assessment in a way that falls flat, noting the need for those coming from the for-profit sector – as she did – to become “bilingual.”

“It’s amazing how many outcome initiatives fail simply because of language,” she writes.

The book is a must read for anyone who cares about impact.  Funders who are not currently supporting their nonprofit grantees’ efforts to assess and improve would do well to read it.  Better yet, if funders want to help grantees with this difficult task, they could, as a very modest first step, order them the book and open up the conversation about what is standing in the way of assessment – and what they can do to help.

Indeed, Leap of Reason should be the first assignment in the foundation-grantees book club.  Here is my suggested discussion question:

  • What do grantees need from funders in order to be able to better execute the difficult work of assessing performance?


Phil Buchanan is President of CEP.

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