Foundation Leaders Thinking About, Evaluating Transparency

Foundation CEOs are emphasizing transparency and have identified grantees and prospective grantees as a target audience instead of the likes of government policymakers, journalists and the general public. CEOs of independent foundations identified grantees and nonprofits considering applying for a grant as the intended audience for transparency in 95 and 84 percent of cases, respectively. Both groups are the intended audience for 96 percent of community foundations.

Government policy makers (57 percent for independent foundations and 76 percent for community foundations), journalists who report on philanthropy (46 percent and 67 percent) and the general public (45 percent and 72 percent) made up the bottom of the list. Donors were a target audience for 98 percent of community foundations, but were not offered as a potential answer to independent foundations’ CEOs.

The data comes from a survey of 145 foundation CEOs conducted by The Center for Effective Philanthropy, located in Cambridge, Mass. The survey revealed that, not only are foundation leaders thinking about transparency, they are evaluating what they share and with who based on how it can make the foundation more successful, according to Ellie Buteau, Ph.D., vice president of research and main author of the report.
“It was surprising and promising to see that foundation leaders are thinking about transparency and that they have clear audiences in mind for the information that they are sharing,” Buteau said.

A matrix emphasizing the perceived degree transparency could improve foundation effectiveness and CEOs’ existing self-reported level on such items, showed correlated emphasis on programmatic goals, grant application criteria and strategies to reach programmatic goals. Governance practices and foundation investments landed on the opposite end of the spectrum. Identifying who within the foundation makes funding decisions was the lone item seen as inessential to effectiveness that was oft disclosed.

Other key findings from the report include:

  • Transparency equates to sharing grantmaking information for 51 percent of foundation CEOs, while “being clear, open and/or honest” and sharing financial information was selected by 43 percent and 38 percent of CEOs, respectively. Buteau offered that the differences in priorities could be due to an interest in which type of reporting is most likely to positively impact the foundation.  A 2012 survey of nonprofit CEOs by CEP revealed that 68 percent equated the sharing of grantmaking information with transparency, 44 percent associated general clarity, openness and honesty with transparency and 4 percent linked transparency with the sharing of financial information.
  • Foundations leaders are the most transparent about grant application information and programming and least transparent when it comes to internal performance. On a sliding one-to-five scale, criteria the foundation has for nonprofits applying for a grant and programmatic goals led the way in terms of what foundations are most transparent about with mean scores of 4.2. Foundation experience with what has not worked in efforts to achieve goals and the method in which the foundation rates its own performance brought up the rear with 3.0 and 3.1, respectively. Buteau hypothesized that foundations might not yet have the pieces in place to share or collect such data.
  • A lack of staffing time was cited by 31 percent of CEOs as a cause limiting transparency. Difficulty in having consistent levels of transparency across staff followed with 28 percent. Staff time constraints could be solved by a shift in foundation priorities, Buteau said. Consistent transparency across staff could similarly be addressed with operational changes, she added.

Buteau is hoping that foundation leaders’ willingness to share certain pieces of information will lead to future improvements in disclosures. In particular, Buteau is interested in foundations sharing organizational experiences and things peers could learn from. “It’s a consistent finding and I think we’re wondering what would need to happen for that to change,” Buteau said.