Inside Foundations

If you often approach foundations for funding, this excellent article from Stanford Social Innovation Review will be of interest to you.

An excerpt.

“Foundations often undermine their own efforts by micromanaging how social problems are solved. Two insiders explore why foundations have developed this way and what grant makers can do to foster high impact strategies.

“We would probably be better off as a society if the decision makers in the nation’s large private foundations took up surfing. Why? Because surfing is about letting go, and that’s what foundations must do to achieve higher impact. Surfing is incredibly humbling, an encounter with the enormous power, beauty, and unpredictability of the ocean. No surfer would attempt to change the shape of the waves or the schedule of the tides, because these forces are far beyond any one person’s control.

“But two common practices of major foundations—the design of specific solutions to social problems and the narrow focus on one pathway to a goal—are the equivalent of ordering the ocean to change shape. Just as men cannot control oceans, individual foundations cannot control social systems. Such an approach underestimates the vast power and complexity of the systems in which foundations are attempting to intervene.

“The strategic philanthropy movement has been a positive influence in recent years by encouraging foundations to clarify their goals and regularly evaluate their progress. But it has also fueled practices that undermine the nonprofit sector’s impact, rather than amplify it. Too often, funders insist on controlling the ways in which social problems are solved. This is a move in the wrong direction.

“To make steady forward progress solving problems in dynamic environments of complexity and uncertainty, foundations must shift from centrally planned, narrowly focused grantmaking strategies to more decentralized, diversified strategies that are better able to catch the waves of effective leadership, distributed wisdom, and innovation. There are two ways foundations need to let go. The first is to enable effective nonprofits to take the lead in designing solutions to social problems. The second is to diversify investments across multiple solutions or pathways to the goal. Let’s take a closer look at the problems with current practice in philanthropy.

“Problem #1: Foundation-Designed Solutions

“When solutions are centrally planned by people who are distanced from the real work in the field, the solutions are often poorly implemented. This is a classic principal-agent problem. The organizations tasked with implementation feel little ownership or passion for projects they didn’t dream up themselves. For example, in 2004 the William and Flora Hewlett Foundation made a grant to create the Legislative Education Project, as part of its California Education grant portfolio.1 The project was a response to term limits and the loss of institutional memory in the state legislature. It was intended to provide a nonpartisan professional development forum for legislative staff to learn about the history and current status of California education policy. The foundation developed the idea and then invited a respected university research center to implement it. Unfortunately, the researchers weren’t able to keep the legislative staff engaged and satisfied with the programming, nor did they respond aggressively enough to complaints from participants about an imbalance between liberal and conservative viewpoints. Eventually, the Republican legislative staff refused to participate, and those who did participate gave only lukewarm reviews of the sessions. The foundation considered the project a failure and did not renew the grant.”