Lessons for Effective Grant Making

As I prepare to retire from the Robert Wood Johnson Foundation after a dozen years, I have distilled my experience into several lessons. My hope is that the lessons will stimulate others to take up the challenge of helping philanthropy achieve its full potential:

Execution trumps strategy. Foundation staff members spend a great deal of time pondering how to approach complex social problems. If they do their homework, they will understand at a minimum what has been tried before, what the evidence shows, what confluence of forces affects the problem and the current thinking of experts, and the attitudes of the general public or specific constituencies. In the best of worlds, they will then develop a well-designed grant-making strategy. But the critical next step is planning that strategy’s execution. In my experience, our preoccupation with strategy all too often causes us to gloss over the equally important decisions about the way a goal — or an individual program — will be carried out.

When I first arrived at the foundation, I wanted to harness our reputation and moral and financial capital to promote specific strategies to improve health and health care. In the years since, I have come to appreciate that leadership and tactics are every bit as important as strategy. Identifying and cultivating individual leaders can be frustrating, because the result isn’t, and can’t be, totally within our control. The very human qualities of creativity, personality, unpredictability, and variability in performance come into play, sometimes for good, sometimes not. Developing effective tactics requires a solid sense of how the world actually works, again a messy science at best, as conditions on the ground change, as progress is made (or not), as midcourse corrections are needed. Sometimes totally extrinsic events — like the September 11 terrorist attacks and their aftermath — can destabilize efforts that were previously on course.

Foundations tend to overemphasize strategy at the expense of execution because of internal reward structures, because of our relative isolation from the front lines, and because we typically recruit staff members whose backgrounds are stronger in conceptualization than in operations. Common mistakes in planning to carry out a program include selecting the wrong leader, permitting lines of authority between foundation staff members and the program director to become tangled, missing opportunities to communicate about the program, and having unrealistic expectations that set grantees up to fail.

Achieving a proper balance between strategic design and implementation requires that we address each of these factors by shifting internal reward structures, staying more in tune with what is happening in the broad environment, and looking for staff members who are strong in both strategy and execution. All of these are easier said than done, but at the end of the day, what matters is the strength and usefulness of what has been built, not how elegant was the blueprint.

Know when to hold ‘em, know when to fold ‘em. Knowing how long to stay with a particular goal, strategy, grantee, or program leader is part of the art of philanthropy.

We have a natural suspicion of staying too long in a particular field, pouring good money after bad, becoming unduly enamored of a favored set of grantees, pushing lost causes, or creating undue grantee dependence. At the same time, we recognize the risks of getting out of an area too early, perhaps just short of the tipping point, as well as the symbolic import of exiting a field, particularly for a large foundation like ours. The trick is in the timing. In my tenure we have made both errors — staying too long in some arenas and getting out too early in others.

No one can recommend specifically when a foundation should fold its hand and get up from the table. What I can offer are two bits of wisdom:

• Leave the table carefully — foundations generally exit too soon rather than too late.
• Keep questioning and debating, internally and externally. It is the only way to know for sure when it is time to move on.

Establish a strong internal culture. When I came to the foundation, I told our staff that my aspirations were simple: “Best possible programs, best possible place to work.” Implicit in that formulation was the hope that these two goals would reinforce each other.

In a small philanthropy it may be possible for a single leader to drive program development, leaving to the staff the back-end functions of execution and monitoring. A foundation of our size, however, relies on the creativity and passion of its staff to design programs and oversee their execution. We must recruit and retain the best possible people for this complex job and establish working conditions that allow them to flourish. Because it is almost as hard to assess individual accomplishment as it is to measure foundation performance overall, subtle incentives and institutional rewards take on heightened importance.

The combination of ambitious goals and ambiguous performance measures can create a permanent undertow of anxiety among a foundation’s staff, who worry that they are not “doing enough.”

The key is to build a culture that will reinforce a sense of mission, stimulate and reward performance, and help with recruitment and retention. It remains important, as well, to give staff members opportunities to help make the foundation a better place to work. At Robert Wood Johnson, managers are now assessed by people above, below, and alongside them on the organizational chart. And we are preparing for our second survey, in which staff members can anonymously assess the foundation’s culture and management. The previous survey revealed some significant opportunities for management improvement that we moved quickly to deal with.

To accomplish all of this requires holding certain principles dear: treating staff members with respect and dignity, and making sure they know they are expected to treat grantees and applicants the same way; maintaining integrity of purpose and conduct; avoiding ostentation; undertaking a relentless internal quality-improvement program for staff and for organizational processes; and instituting regular feedback about organizational and individual performance and goals, involving both internal colleagues and external constituencies. I would also recommend sprinkling in a little humor; philanthropy sometimes takes itself too seriously, and its ambassadors can appear self-important.

Pursue accountability. Accountability requires letting the world know the results of our grant making in depth, in ways that can be acted upon. As with any enterprise, foundations need to know if they are making a difference.

The question is rarely whether to measure success; it is more often what to measure and how. Foundations lack the usual yardsticks of success used in business, government, or academe. No financial bottom line, periodic election returns, or U.S. News & World Report rankings exist against which to calibrate our performance.

Collectively, foundations vary greatly in missions, goals and strategies; the scope, scale, and nature of the grants we make; the time frames of our grant making; and the degree to which our contributions are even identifiable. Although I have enjoyed reading the occasional reports on the large foundations that are written by professional foundation-watchers (and they have generally been kind to our foundation), they are highly subjective and their methods are not reproducible.

We have spent a great deal of time and energy developing and pursuing three interrelated approaches to assessing how we are doing: evaluations, performance measurements, and public disclosure.

Independent, external evaluations of the foundation’s national programs and some major grants, conducted by some of the health-care field’s leading researchers, have long been a hallmark of this organization. In recent years we have developed a variety of internal performance measures with the intent of integrating the results and feeding them back into future grant making. We spend an increasingly large proportion of our quarterly Board of Trustees meetings wrestling with how to measure the impact of our proposed and existing programs.

Some of our pioneering efforts lie in the realm of public disclosure. For example, our growing library of 600 Grant Results Reports (available online) looks carefully at what was accomplished by the scores of grants made each year.

Despite those efforts, our quest for performance measurement remains incomplete. In part this is because it is so difficult to establish causality when we are working on complex social issues, often alongside many others. For example, during the past decade we have invested heavily in programs to reduce the number of Americans who lack health insurance. Despite our efforts, the number of uninsured has resumed its upward climb. Should we accept some blame for that lack of progress? Did our efforts prevent worse results? How can we know?

The widely disparate strategies we employ defy ready comparison. For example, seeing the results of our efforts in leadership development takes years, if not decades, as compared to the next-day results we can obtain from an opinion poll. While the latter may help us or others shape a short-term action, design a program, or make a policy decision, the former contributes in some way to the development of people who will assume important leadership positions some 20 years hence.

Despite these difficulties, we in philanthropy owe it to ourselves, our constituencies, and the fields in which we work to try as hard as possible to judge the worth of what we do. We must not abandon attempts at assessment because the tools are crude.

To be sure, the problems that philanthropy deals with are daunting. We often feel more like Sisyphus than Sir Edmund Hillary. Still, we remain enthusiastic and committed. So it is that I often find myself rephrasing Robert Browning: “Ah, but a foundation’s reach should exceed its grasp, Or what’s a heaven for?”

Even better, I like to think that our arms are getting just a little longer, day by day.

Steven A. Schroeder is president of the Robert Wood Johnson Foundation. This article is adapted from his message in the foundation’s latest annual report, which is available in full at http://www.rwjf.org.