Foundations Face Growing Turnover, Causing Instability for Many Charities

When the nonprofit group Virginia Organizing first tried to obtain a grant from the Cameron Foundation to support community organizing in Petersburg, Va., the foundation’s program officer conceded that she didn’t really understand what organizing was about, says Joe Szakos, the charity’s executive director. Virginia Organizing didn’t get a grant.

The next year, in 2010, another program officer took over the charity’s application, and he made clear that he understood the charity’s mission. Virginia Organizing won an $18,000 one-year grant to advocate for improvements to health-care policies and other social-policy issues in Petersburg, where the foundation is also based.

Last year, the charity’s grant application was handed to yet another program officer at Cameron, and the application fizzled again.

The process had become so unpredictable—and depends so much on the whims of the latest program officer—that Mr. Szakos says he won’t apply this year.

“It’s just really hard to figure out,” he says, “You start thinking, OK, forget it—I’m not going back there. It’s not worth the time and energy.”

Turnover Obstacle

Virginia Organizing’s experience is not an isolated incident. The weak economy and changes in foundation leadership could be adding to the number of groups that face turnover in dealing with foundations. In 2010, program officers had been at their current foundation jobs a median of three years—-the shortest amount of time on the job since 2002, according to the latest annual salary survey by the Council on Foundations.

Concern about turnover expressed by grantees recently helped prompt two of the nation’s biggest foundations, the Bill & Melinda Gates Foundation and the Gordon and Betty Moore Foundation, to create positions to improve relations with grantees.

“Transitions are inevitable,” says Phil Buchanan, president of the Center for Effective Philanthropy. “The question really becomes, does the foundation handle with sensitivity the fact that grantees rely on that relationship with the program officer? Some foundations manage to do that much better than others.”

The financial crisis three years ago led to mass layoffs at a number of foundations, exacerbating the problem of program-officer turnover, says Joel Orosz, an emeritus professor of philanthropic studies at Grand Valley State University in Grand Rapids, Mich.

Mr. Orosz also believes that the shorter tenures of chief executives at foundations may be leading to greater turnover among program officers.

The CEO’s realize that achieving long-term outcomes from grant making may take a long time—perhaps longer than they intend to be on the job—so instead t hey “make their mark” by cutting jobs or replacing an existing program with a new one, Mr. Orosz says.

“For the grantees, suddenly you’re out,” he says. “And it’s not that your program isn’t effective or your work isn’t valuable. It’s that your ambassador just got beheaded.”

Few grantees, aside from Virginia Organizing, like to talk publicly about such rejections.

“If charities ‘name names’ and complain about foundation performance, that’s the killer that will make sure they never get a grant from that foundation again,” Mr. Orosz says.

Risha L. Stebbins, a senior program officer at the Cameron Foundation, declined to comment on Virginia Organizing’s grant applications, aside from saying the charity’s work is not a current priority for the foundation.

Ms. Stebbins says it’s not uncommon for the eight-year-old foundation to assign grant requests to different program officers from one year to the next. The practice has several benefits, she argues, including reducing “the risk of an officer developing favoritism for one organization over another.”

Donor Staff

In some cases, concerns about program-officer turnover have been flagged by the foundations themselves, after surveys of grantees revealed the problem.

Following a 2010 survey of more than 1,500 Gates Foundation grantees by the Center for Effective Philanthropy, the foundation’s CEO, Jeff Raikes, conceded in a public letter that turnover among the foundation’s 250 program officers was creating problems for grantees.

In response, Gates created a high-level job to focus on relations with grantees and filled it with Greg Shaw, who had previously handled other grant-making tasks at the foundation.

Chris Williams, a Gates spokesman, says that as the foundation’s rapid growth has slowed, it has begun to provide more support and professional-development opportunities for program officers, which could help reduce turnover.

And a recent survey of 500 grantees yielded better marks for the foundation than in 2010, Mr. Williams says.

“Turnover has its downsides, which we try to mitigate,” he says. “But it can also be one way to ensure creative and innovative thinking in grant making.”

Complaints about “constant turnover” in a Center report for the Moore Foundation also prompted it to take action.

Carol Ting was named the Moore Foundation’s first associate director of grantee approaches in November.

“My role is to be really thinking about the grantee experience from end to end in a comprehensive way, and part of that is examining how important the program-officer role is in that relationship,” Ms. Ting says.

Not all foundations are looking for longevity in their program officers—and some actually prohibit it.

The Ford Foundation allows program officers, who handle individual applications, to stay for a maximum of six years, but it allows people who oversee entire grant-making programs to stay as long as they want.

Another grant maker, the William and Flora Hewlett Foundation limits the tenure of program officers to eight years.

“When you stay for a long time, it can be easy, if you’re not careful, to lose touch with the field,” says Jacob Harold, a program officer who oversees Hewlett’s grants and other efforts to improve philanthropy and charity effectiveness.

“With this policy, we insure that we have folks who we hope are in touch with the realities on the ground,” he says.

Mr. Harold’s term is up in 2014. He says he hopes to take his successor on a tour to meet grantees——as his predecessor did when he joined the foundation six years ago—in part to help make the change easier for grantees.

“Even if it’s a predictable transition, grantees can be justifiably nervous about a new person who controls an important part of their funding stream,” he says.

The anxiety about losing an important foundation grant is heightened by increasingly tight government budgets.

“The uncertainty about funding, particularly at the state and local level, makes it even more important that the funder and grantee stay in as close contact as they can,” says Edward Skloot, director of the Center for Strategic Philanthropy and Civil Society at Duke University.

Adding Contacts

Charities can hedge against the departure of a program officer by developing other contacts at the foundation.

“It’s common sense to not put all your eggs in one basket,” says Lisa Philp, vice president at the Foundation Center, and director of GrantCraft, which helps program officers work more effectively.

She says, “It’s not about going around someone, but about making sure the knowledge about the outcomes your organizations is achieving don’t reside just with just one person.”

Virginia Louloudes, executive director of the Alliance of Resident Theatres/New York, a charity that makes loans and provides rehearsal and office space to its 300 member theaters, says she likes to put people who are affiliated with the foundations that support the alliance on her organization’s board.

Some private foundations prohibit employees from serving on charity boards, but corporate foundations are generally more open to the practice, she says. In one case, a new board member went to bat for the charity after it had already received word that its grant would not be renewed.

“The board member went to the company and said, ‘I just got on this board and I’ll look like the bad guy if we cut the funding,’” Ms. Louloudes says. “He was able to retrieve the grant.”

ART/New York is now “desperately” trying to replace a departing board member who works at a company that provides a critical source of funds to the charity with another employee at the company, Ms. Louloudes says.

Some foundation veterans say that charities need not go to such lengths if they are achieving impressive results.

Kristi Kimball, a former program officer at Hewlett who left in December after hitting her eight-year limit, says charities can take basic steps to ensure that more than one person at the foundation knows about the charity’s accomplishments.

“Sometimes it’s as simple as cc’ing the other program staff or program director on the regular updates that you send,” Ms. Kimball says.

How Charities Can Minimize Harm When Program Officers Change

Stay close to the current program officer

“If you have a relationship, the program officer can give you a heads up and say, ‘Our board is going to change direction, and this might be your last year’” to win a grant, says Joe Szakos, executive director at Virginia Organizing.

Develop more than one contact at the foundation

Some groups put a foundation employee on their boards; others simply make sure that additional members of the program staff are receiving e-mail updates.

Don’t rely on a single foundation

Changes in priorities and personnel are most grueling for charities that depend on one grant maker.

Maintain a cash reserve

Charities that suddenly lose an important grant won’t have a crisis if they have at least six months of operating reserves in the bank. “Until the check clears, I take a conservative view,” says Virginia Louloudes, executive director of the Alliance of Resident Theatres/New York.