This is a guest post by Kristi Kimball of the William & Flora Hewlett Foundation and Malka Kopell, formerly of the Hewlett Foundation, founder of Community Focus and founding managing director of the Center on Philanthropy and Civil Society at Stanford University. This post is an excerpt of Kristi and Malka’s article Letting Go, which appears in the current edition of the Stanford Social Innovation Review. The full article presents examples, discusses additional problems with control and presents strategies for lower control grantmaking.
By Kristi Kimball & Malka Kopell
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.
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.
In addition, when each foundation develops its own unique strategy for solving social problems, it becomes difficult for a grantee organization to have a coherent vision and strategy of its own. Implementation efforts suffer greatly when the nonprofit groups doing the work are pulled in 10 different directions, carrying out 10 different foundation strategies, to get adequate funds.
The more that foundations dictate to grantees how they should solve social problems, the more they constrain the grantees’ leadership, expertise, and ability to innovate—and the more bureaucratic work they create for them.
Exerting too much control also causes foundations to ignore highly effective programs and organizations. If a foundation’s strategy focuses on one specific way of solving a problem, then all other solutions do not fit that strategy and cannot qualify for funding, even if they produce great results. In this way, foundations are choosing control over impact.
Although reliance on top-down control is not exclusive to philanthropy, many attributes of the sector make it susceptible to this mode of operation. The feedback loops in business and government that create pressure for organizations to improve are missing in the philanthropy sector. Foundations are not set up to be accountable to shareholders or constituents. The private sector has standardized public information flows about profits and losses, but foundations don’t have good ways of comparing outcomes across different kinds of investments. There is little transparency in the philanthropy sector, so when funders do collect good data, it is hard for others to learn from it or to recognize trends. In addition, the power imbalance in the grantor-grantee relationship makes it hard for grantees to challenge funders’ plans and breeds a belief among funders that they know best. All these factors insulate foundations from honest feedback on their investment strategies, making it easier for them to maintain the belief that they can design the best solutions from on high.
We aren’t suggesting that foundations give up all control. In other sectors, the leaders of high-performing organizations typically set clear goals, create accountability mechanisms, and provide constant information flows to drive performance. They also provide the flexibility and support to allow those who are working in the trenches to experiment, innovate, and continuously improve. The leaders of these organizations have figured out how to be tight on goals and loose on means. If foundations want better results, they also should adopt a tight-loose approach.
Several forward-looking foundations have chosen strategies that relinquish control over solutions to social problems. They are tight on goals and loose on means. One of these strategies is to provide general support to nonprofits and individuals with proven track records. General support funding promotes effective implementation by supporting grantees’ own strategies and allows them to invest in their organizational infrastructure and capacity. This approach is naturally diversified, because each grantee may have a different way of achieving a foundation’s ultimate goal.
The Edna McConnell Clark Foundation (EMCF) is a good example of this approach. The foundation’s goal is to help economically disadvantaged young people become independent, productive adults, as measured by outcomes in education, employment, and reduction of risky behaviors. The foundation’s approach is to identify high-performing youth service organizations with effective programs and growth potential, and to support the entire organization rather than a few projects.
Other foundations focusing primarily on general support for organizations and leaders include Ashoka, the Draper Richards Foundation, the Mulago Foundation, New Profit Inc., Sea Change Management, the Skoll Foundation, and the Sobrato Family Foundation. In addition, the Boston Foundation, the California Wellness Foundation, and the Hewlett Foundation have made substantial investments in general support, although it is not their sole focus.
Of course, as funders shift away from more prescriptive approaches and toward general support, field-developed strategies, and innovation, it becomes tougher to predict what kind of solutions will be generated by their investments. But as Alberto Ibargüen, president and CEO of the Knight Foundation, recently said: “It is incredibly liberating to admit you don’t know the answer. Then you don’t have to go out and pretend and say, ‘I am the foundation, I have an idea, and I have the money.’ Instead you can afford to say, ‘I have some money, here’s the problem we’re worried about, do you guys have any ideas?’”
The fundamental question is whether foundations are ready to relinquish some control to increase their impact. We think this change is long overdue.