Foundations Talk About Strategy, but Few Follow Clear Plan

While many foundations say they have a strategy for their giving, a new report suggests only a small number of grant makers actually do.

Based on interviews with 42 chief executives and program officers at two dozen large philanthropies, the report identifies 11 staff members who could articulate a coherent plan for their fund’s efforts.

While almost all the grant makers said they believed in the value of having a strategy, few backed up their words with action, according to the Center for Effective Philanthropy, a research group in Cambridge, Mass., which produced the study.

“There’s this huge chasm between rhetoric — ‘We believe in strategy’ — and reality,” said Phil Buchanan, the center’s president. “People tend to think they are more strategic than they are.”

To examine the foundations, the center developed a simple definition for strategy: basing decisions on the external conditions a grant maker wanted to change and assuming a causal connection, if only a tentative one, between its giving and its goals.

After conducting hours of interviews with officials from the foundations, which ranged in size from $100-million in assets to more than $1-billion, the Center for Effective Philanthropy organized the respondents into four categories. Often staff members from the same foundation were placed in different ones, a sign perhaps of the confusion about strategy.

The categories included:

• “Charitable bankers,” who do not use strategy but instead focus on internal management processes and how the foundation reviews grant solicitations. Ten foundation leaders and program officers fit this bill.
• “Perpetual adjusters,” who use strategy infrequently and instead spend a lot of effort searching for the next local or national problem to help fix, instead of keeping their focus on a smaller, more attainable, set of goals. A total of 11 people were placed in this category.
• “Partial strategists,” who use at least one strategy to guide their decisions. But they fail to make the connection between their charitable giving and the goals they want to achieve. The center put 10 officials in this basket.
• “Total strategists,” who fully embrace strategy by having well-defined goals, tools to assess their efforts, and a written plan they refer to regularly. Eleven people fit into this category.

The center’s report does not identify the foundations where officials were interviewed; it does highlight the Gill Foundation, in Denver, which the center said was an organization with strategic vision.

Mr. Buchanan said the center did not tell the participants which category it placed them in and did not give them the opportunity to contest the center’s conclusions.

When the center revealed its preliminary findings in March during a conference in Chicago, Mr. Buchanan said, “people were joking it was like an Al-Anon meeting, because they would stand up and say, ‘I think I’m a perpetual adjuster.’”

Mr. Buchanan said he hopes the report will spur a greater conversation in the foundation world about effective giving. The center plans to publish profiles of philanthropies it considers strategic and offer other tools to help philanthropic funds develop a framework for making grants.

The 28-page report, “Beyond the Rhetoric: Foundation Strategy,” can be found online.