As a strategy consultant, I spend a lot of time working with professional staff members at foundations.
Many of these thoughtful people have developed robust approaches to help them understand the landscape in which they operate, articulate clear goals for their grant making, and gather relevant evidence to help them track their progress. And even when they don’t have those ways to think about their grant making, they recognize that they should.
Moreover, the resources devoted to the task reflect this earnestness of intent: It’s not uncommon for professionally staffed foundations to spend many months and hundreds of thousands of dollars to develop a new strategy or conduct an evaluation, especially if we’re taking staff time and salaries into account.
All too often, though, the work we can do together is fundamentally constrained by decisions that were made much earlier in the life of the institution by different people and under extremely different circumstances.
Foundation staff members may have budgets to spend, but rarely do they have decision-making authority over the mission of a foundation, the distribution of resources to each grant-making priority, or who, exactly, the foundation seeks to serve. And even if they do, they must still work under the weight of history hanging over their institution, including the reputation it has developed among its constituents and the perceived obligations it has accumulated over time.
Decisions like these — decisions about mission, values, and scope of concern — are arguably the most important an organization will ever make, and they are usually made right at the beginning of a philanthropic institution’s life. But how often do these considerations get the kind of attention they really deserve?
To answer that question, we must look beyond the rarefied world of foundation staff members to the even more rarefied world of foundation board members and living donors. A good place to get a glimpse of the people creating foundations is the Purposeful Planning Institute Rendezvous, an annual gathering of advisers to wealthy individuals and families. Attending the event for the first time this past summer, I left with the distinct impression that the most important philanthropic decisions we make are often the ones we think about the least.
For one thing, it’s crucial to understand that the first conversation many wealthy families have about how to structure and systematize their philanthropy is not with a philanthropic adviser. Instead, such discussions come about naturally in the context of existing relationships with wealth managers, tax lawyers, or estate planners. (I learned that at least one bank’s wealth-management practice has donor-advised philanthropic assets that together rival those of the Gates Foundation.)
Not surprisingly, these professionals tend to focus conversations about charity not so much on the details of effective philanthropic program design, but instead on issues like how to minimize tax obligations, avoid running afoul of regulations, and manage internecine disputes within the family.
To the extent that philanthropy itself is discussed, moreover, it’s often through a lens focused mostly on the donors themselves. “Does the family serve the philanthropy, or does the philanthropy serve the family?” was an actual question I heard asked, seemingly with no hint that one answer was better than the other.
The questions advisers said they asked donors were nearly all inward-looking: “What are your motivations for giving?” “What values best describe who you are?” “What organizations do you already have a strong connection to?” Thoughtful and informed perspectives on how the money could offer the most benefit to communities or the world tend to enter the conversation later, if they ever do.
That’s a shame because the formation of philanthropic program strategy represents a rare opportunity for every philanthropist to think deeply about the unique contribution he or she can make in a large, complex, and ever-evolving ecosystem of foundations, nonprofits, government agencies, and businesses.
Much like a theatrical production, a philanthropic ecosystem offers a wide range of roles to be played, and effective casting in those roles is crucial to a satisfying result. But unlike in theater, all of the participants in the show have the ability to cast themselves, inevitably resulting in some parts being duplicated and others neglected, not to mention lots of toes being stepped on among those on stage.
Our only hope of bringing some order to this chaos is to take on the responsibility of leading in a context that is intrinsically leaderless. That means whenever we bring new capital into a philanthropic ecosystem and cast ourselves in one of those roles, we should ask: Who else is in the cast? What are the roles that aren’t currently being covered? And which of those roles is my foundation best suited for?
Ironically, the level of attention and process given to these incredibly important choices at the beginning of a foundation’s life are often less than what is devoted, years later, to the question of whether to support a single organization with a small part of the annual grants budget.
Think about the number of hours it takes for a grant seeker to fill out a typical grant application and then for a program officer to review it, discuss it with superiors, conduct a site visit, and prepare a write-up and analysis for board approval — all to manage risk on the distribution of perhaps a 10th or even a 100th of a percent of the foundation’s endowment.
Then multiply that by 50 to 1,000 grants per year, and we still haven’t even touched discussions of grant-making strategy for each priority or an evaluation of what past grants have achieved.
Choices about mission and grant-making priorities cast a longer shadow than all of those put together, and yet they are typically resolved with no more than a long meeting or a few working sessions over the course of a year.
It is true, of course, that missions and scopes can always be adjusted later. But one need not look far to see the power and attraction of inertia. When philanthropic institutions change direction midstream, it is never without delicate political conversations among leadership, significant stress felt among staff, and, of course, immense disruption to grantees and their constituents.
Even when it’s the right choice, it comes with serious costs to everyone involved.
The good news is that more resources are available than ever before to help donors resolve these fundamental questions.
For those with more money than time to spare, working with a philanthropic adviser may be best. There are several professional networks for such advisers, including the Purposeful Planning Institute (which, it should be noted, is taking admirable steps to encourage wealth advisers with different kinds of expertise to collaborate more effectively with each other), the International Association of Advisors in Philanthropy, and the National Network of Consultants to Grantmakers.
In addition, if you’d like to work with someone close by, your nearest regional association of grant makers may be a good source of recommendations. When selecting a consultant, it’s important to give priority to those that specialize in developing philanthropic program strategy.
For philanthropists who desire a more hands-on experience, there are a number of training programs and efforts to help donors learn from one another such as the Philanthropy Workshop or Effective Giving that provide an expansive view of giving possibilities. And for those who prefer to educate themselves, a deep dive into the materials published by the likes of the What Works Network, the Copenhagen Consensus Center, or GiveWell can prove rewarding.
The birth of a philanthropic institution is a special and rare event, with no less possibility contained within it than the birth of a child. And just as with our children, the decisions we make in the early months and years of life reverberate and reinforce themselves through time. The intention we bring to those choices ought to match the challenge and opportunity they present us.