Boards: 5 Trends That Require Serious Discussion

Foundation board members should be having critical conversations and asking questions around five relevant trends to ensure their philanthropy is done well, according to a new report from the Center for Effective Philanthropy (CEP).

The Cambridge, Mass.-based CEP today released “Big Issues, Many Questions: An essay on the pressing issues facing U.S. foundation leaders and boards,” in which the organization’s President Phil Buchanan lays out the five trends and related questions that board members should be asking.

In a letter accompanying the 32-page report, CEP Board Chairman Grant Oliphant of The Heinz Endowments described the piece “as a good discussion starter,” suggesting it be used for a board or senior leadership meeting or retreat.

“My view, and that of CEP, is that what it takes to be effective as a foundation is straightforward and pretty much timeless, albeit very hard to get right,” Buchanan wrote. “It’s about clear goals, coherent strategies, disciplined implementation, and relevant indicators to gauge progress and fuel improvement.”

Buchanan laid out five trends that are especially relevant today and “need to be the subject of serious conversation” in every boardroom.

* Fundamental questions about the role of philanthropy as the so-called establishment comes under fire;

* Questioning the traditional approach to endowment management;

* An evolving notion of what good strategy and measurement look like in philanthropy;

* The embracing of – or return to – aligned action among funders (and with other actors); and,

* A new sophistication in considering how to support nonprofits effectively.

Recent critiques raise questions about whether major donors and large foundations should be able to wield influence on policy in the ways they do, Buchanan writes. Concerns about foundations’ role in policy debates are not new but appear to be on the upswing and come from both ends of the political spectrum. As institutions and the “establishment” are challenged, the question is whether more foundations that are working in relevant areas can support movements that challenge the status quo, as some did during the civil rights movement in the 1960s.

Foundations tend to default to the same endowment management approach, investing to maximize returns to sport the foundation’s existence in perpetuity, seeing the endowment and programmatic sides as separate. That may be changing, Buchanan said, with more discussion about impact investing and screening. But activity still lags rhetoric as CEP data suggest that “perpetuity remains the overwhelming time horizon for large foundations.”

Foundation boards play a key role in performance assessment and can embrace the complexity rather than take a punitive approach, Buchanan said. Boards can work with staff to define indicators that make sense to gauge progress and learn from the data.

“In business, you want your strategy to be yours alone,” Buchanan said, but for foundations, if “your strategy is yours alone, you will fail.” Working with others in an aligned way to produce results necessitates more open sharing of information about what does and does not work — including information from foundations’ assessment efforts. “We need to deepen the conversation on transparency in philanthropy,” he said.

For all the talk about how best to support grantees, nonprofits need a great voice, Buchanan argues. CEP’s research has helped amplify the grantee voice, through its Grantee Voice Panel, regularly surveyed on key issues. “Foundations seek to achieve their programmatic goals by many means,” he said. “Grants to nonprofits are just one of them – but a central one for most.”

The “big issues” identified in the report aren’t meant to be an exhaustive list. There are many other questions, such as about technology, but it “addresses the five that strike me as particularly important,” Buchanan said. “If there is a theme here it is that philanthropy is uniquely challenging, at least if you’re going to do it well. But it’s also vitally important. Foundations, after all, can do enormous good.”

You can access the report at http://research.effectivephilanthropy.org/big-issues-many-questions.