Philanthropy tends to value deep thoughts, strategic plans, fidelity to process and careful monitoring. But there’s an underappreciated attribute that too few funders deploy even though only self-imposed constraints limit its usage.
The world changes fast. Sometimes making the right decisions is all about thinking long and hard about your options. Other times the most important skill is learning how to make quick decisions.
According to Drowning in Paperwork, Distracted from Purpose by Project Streamline, the definitive report on the crippling bureaucracy that strangles much of institutional philanthropy, the average grant cycle – the period of time it takes to decide what grants to make – is seven months. Yet philanthropy has chosen to operate on this time lag. Organizations like Philanthropic Ventures Foundation and the Mulago Foundation demonstrate that philanthropy can be executed with far more speed.
To most people in philanthropy, operating quickly is equated with operating without adequate thought. Yet we know that Warren Buffett, the greatest investor of all time, has often made multi-million dollar investment decisions after a few days of due diligence.
“Last year, Buffett offered to buy an RV company one day after getting its proposal, and sealed the deal with a single 20-minute meeting. The RV company’s founder told the Wall Street Journal the process was easier than renewing his driver’s license.”
Considering the average foundation grant is for less than $25,000, it is certainly plausible that philanthropist might be able to speed up how they operate.
It isn’t just that moving slowly wastes time, it is quite possible that speed can help overcome other constraints faced by foundations.
Consider the Oregon Ducks who played in this year’s college football championship.
From the New York Times article titled Speed-Freak Football:
“The nature of [coach Kelly’s] innovation has to do with the speed with which he is able to communicate signals to his players from the sidelines — and their ability to quickly line up and run play after play at a pace that ultimately debilitates the opposition…
“Some people call it a no-huddle offense, but I call it a no-breathing offense,” Mark Asper, an Oregon offensive lineman, told me. “It’s still football. We hit people. But after a while, the guys on the other side of the line are so gassed that you don’t have to hit them very hard to make them fall over.”
Asper, who is 25 and served a two-year Mormon mission before starting college, is among several Oregon players who told me that opponents sometimes beg them to slow down. “A guy from Tennessee said to me, ‘If you keep running plays that fast, I’m going to throw up.’ I just said, ‘Sorry, but Coach will get mad at us if we slow down.’
Kelly’s overarching philosophy owes to business texts, most directly, the writings of Jim Collins (“Good to Great” and “Built to Last,” among others), who argues that successful organizations coalesce around a concise, easily communicated core mission. Kelly said: “If someone says to me, ‘What do you stand for?’ I should be able to invite them to practice and in five minutes, they’d say: ‘I see it. I get it.’ They stand for playing hard and playing fast.”
What Oregon’s innovative offense is really about is conditioning, repetitions in practice, precision and, most of all, agreement on the core mission — to go fast. Any team with a nimble, quick-thinking quarterback and an assortment of quick skill players could do it.”
For Oregon, speed under their new coach became a “great equalizer”. It allowed them to compensate for other deficiencies. It didn’t require any special gift or asset, it just required a decision to act with a relentless commitment to speed.
I’m struck by the fact that coach Kelly attributes his philosophy to Jim Collins’ books, which have also been a major inspiration in the social sector. Collins was a direct inspiration for one of the best selling social sector books of recent years, Forces for Good.
Is it a stretch to related football play calling to institutional philanthropy? Maybe. But just yesterday Google made a hugely surprising shakeup of their management team and said the reason behind the move was so they could make faster decisions.
Yes, making quick decisions can be reckless. But it is just as reckless to think you can slowly come to a supposed optimal solution while the problem you are facing increases with relentless speed.
One San Diego-based foundation just announced its efforts to address exactly this issue: http://www.alliancehf.org/sites/default/files/Mission%20Supports%20Release_FINAL.pdf
Going faster and providing unrestricted grants. Thanks for the link Michelle.
Yes, but look what happened to the Oregon Ducks in the national championship game – they came across an intractable problem (the Auburn defense) that short-circuited their signals….
Also, I think of the Buffett example in terms of Malcolm Gladwell’s Blink – snap decisions can be as good as if not better than those made with tons of deliberation if (if!) the person has a lot of experience with similar situations – like Buffett. The cognitive processing that happens at an unconscious level can be lightning-quick – but it’s only likely to be really good if the “database” on which it’s drawing is deep. Otherwise you’re just an average joe making an uninformed stock pick on “instinct”….
But yes, foundations could stand to move more quickly!
Chris, SEVEN months… If foundations cut that time in half they’d be no where close to running the risk of making “snap decisions”.
I don’t think speed is the most important thing. It baffles me that Buffett makes investment decisions so quickly. But institutional philanthropy is laughably (cryingly?) slow.
Quicker response is a necessity. Technology has made possible very rapid response and, in fact, most people in the business world require it. We’re not given the time to meditate and ponder a response to anything. That said, a quick response doesn’t mean an unthinking response. I’m sure Buffett’s decision was based on his deep experience and general knowledge, as well as his instincts. To respond quickly, we need to build on our experience — both positive and negative — and have some basic quick-response decision trees in place.
Chris, I understand your point about having a good “database” to draw from to make decisions. But I would argue that any Program Officer worth their paycheck is in that position specifically because of their vast knowledge in the field. If that’s not the case then their the wrong person for the job. And, as Sean mentioned, we’re not talking about 24 hour turnarounds here (although I would also argue there’s a place for this as well). 7 months is ridiculous.
At The Energy Foundation, we’ve spent the last two years tackling the speed problem. When I joined EF as Chief Information Officer in 2009, the average time it took to get a grant out the door was about 90 days. And, while that’s half the average that Sean quoted, it was still in my mind too slow. Fast forward to today, and our average grant takes 27 days – from initial request to final approval and checks out the door. Here’s some background and insight into how we made this happen.
1. We no longer bring individual grants to the board for approval. Our board agreed that we needed to make grants faster, and had confidence in our ability to choose grant recipients wisely based on our program team’s knowledge of the sector.Our board no longer approves each grant. Instead, our board meetings are focused on allocating funds for future grantmaking strategies. I’d like to see more boards move in this direction.
2. We analyzed our grantmaking processes with a fine tooth comb. We make an average of 800 grants totaling over $110mm each year. We have a lot of requests moving through our organization, and with a staff of 80 we were overwhelmed. By spending a few months understanding our processes, we were able to identify the bottlenecks and where things were falling through the cracks.
3. Armed with an assessment of our processes and workflows, we spent the next few months standardizing those processes across programs. This took a lot of negotiating, but in the end we wound up with a solid and documented way of doing business at the foundation.
4. We built a grants management system that allowed us to manage and track all of our requests and grants. The workflows we mapped out are now built directly into our grants management system – everything flows smoothly from one approver to the next and nothing gets lost. Ever.
5. The fact that we had to build our own grants management system was not ideal, but it was clear that none of the existing vendors had a solution that solved our pain points. So, we decided early on to open source the code to the rest of the grantmaking community so others could benefit from the work we put into our system. There are now several other foundations who have adopted Fluxx to streamline their own business processes. You can check out the project at http://projectfluxx.org if you’re interested.
One other note – I’ve been on both sides of the game, and I can tell you from the nonproft’s perspective the current state of foundation grantmaking is extremely frustrating. I’ve also been in the startup/VC world for a long time, and it’s a whole different world over there. I’ve been involved with startups who have raised $5mm in 2 weeks, all based on a crazy idea and a prototype. VC’s are willing to take enormous risks in search of enormous returns. They understand that 9 of their investments will fail, but that 1 will hit it big and make those other 9 failures worthwhile. The startup community doesn’t hide their failures in a closet – in fact, they celebrate them. Why can’t we do the same?
This exact topic has been on my mind since I was fortunate to attend a workshop conducted by Bill Somerville last year (PVF). The question staring me in the face, as a program director for a *community foundation*, is how can this concept be best applied in our world? Community Foundations are still one of the fastest-growing forms of philanthropy, and their asset growth is often too meteoric for their infrastructure to keep up with, even for the ‘big dogs’. Our CF went from serving 1 county to 20 in the space of about 9 months, and we only added 1 staff (and not in the grants “department”). We process around 2000 grants per year, with one program officer: me. When you do that math, that results in an average of 8-10 grants every work day.
When you factor in the trend toward ‘community leadership’ roles that CF’s are expected to (and should) play, donor relations efforts that are just as important as the foundation’s grantmaking functions, their ‘mandate’ (which is debatable) to fund the varied charitable needs across a community (often resulting in LOTS of small grants), and the volunteer grant review committees inevitably involved (vs. program officers making the majority of the funding decisions), discussions about *process* are few and far between, unfortunately taking a back seat to just trying to get the work DONE, in whatever way possible. All in all- except for the very large community foundations which are fortunate to have the capacity to function much like a private foundation (with very targeted program areas, multiple professional program staff, etc.), community foundations, like any other small to mid-sized nonprofit, are often overwhelmed by the sheer volume of their activities and the number of constituencies they serve, and program staff may not have the latitute to initiate grantmaking process/systems change.
So from my perspective- the key is *leadership* on this issue. The San Diego example above also points out the important role of unrestricted support, and for me- the same questions arise around both topics: Who in a community foundation, (especially the majority of CFs which are very small) can or must make the push for this kind of innovation in our (not so little) subset of the philanthropic sector? How can community foundation grantmaking, which is often limited to those smaller amounts you mentioned, Sean, still be as responsive as possible, and who can drive that change? Finally, the $64,000 question in my mind is: How can we get this message more widely heard?
Invest in effective organizations to affect real change (Unrestricted grants). Be flexible and responsive (Faster turnaround). And put away the egos in favor of doing what’s right for our communities (Work with other funders? Forego some ‘feel-good’ grants in favor of more effective strategies?). Hmm…much easier said than done, isn’t it? The status quo feels mighty comfortable.
(For reference- our CF’s discretionary grantmaking turnaround is typically 3-4 months, and we do provide operating/unrestricted support, upon request. The vast majority of our grants are under $10,000.)
Thanks for chiming in Carolynn. It seems to me that the speed of donor advised grants is a pure administration issue, whereas the speed of discretionary grants is more about the issues I’ve tried to raise here.
Sounds like you’re working fast and hard as your foundation grows!
Exactly, Sean- Donor Advised grants can go much more quickly, precisely because there are fewer people involved in the decision making (really just the donor and the Foundation staff verifying their recommendation).
It’s the discretionary side where the strategy (or lack thereof) take a lot longer with a volunteer Board/committee taking the lead…the balance between Board and staff leadership roles is a really key consideration for community foundations.