In 2005, the leaders of the Heinz Endowments realized that the foundation wasnot achieving its full potential for impact. Staff members were frustrated withthe foundation's vague goals and strategies and the board wanted to empha-size outcomes more. "There was a real sense that we were doing too much tobe effective," Endowments ChairmanTeresa Heinz said.

The Pittsburgh-based foundation decided to engage in a comprehensivestrategic planning process to set priorities and create a road map for how itwould change. The new plan was completed in 2007 and called for its five grant-making programs to be more sharply focused and closely integrated, and todirect at least a third of their resources over the next five years to three long-term strategic initiatives.

Paul M. Connolly

briefingpaper

strategies to achieve social impact

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Inside:

Maximizing FoundationEffectivenessAligning Program Strategy, OrganizationalCapacity, Strategic Planning, andPerformance Assessment to Achieve Success

tcc group

But the planning went beyond just grantmak-ing. Grant Oliphant, the Endowments' VicePresident of Programs and Planning, notedthat they "also had to look at the organiza-tional values that guide it, the systems thatsupport it, the structure through which it ismanaged, and the culture in which decisionsare made. Examining those issues over theensuing months transformed a simple plan-ning exercise into a more complicated organi-zational change process." Oliphant conclud-ed: "effective philanthropy often seems spon-taneous, but doing it right demands meticu-lous planning."1

There were approximately 71,000 foundationsin the United States in 2006, more than doublethe number just a decade ago. Yet the $40 bil-lion in grants those foundations made duringthat year represented only about 2% of non-profit revenues, less than other sources, suchas individual donors.2 This has led many foun-dations to strive for a "bigger bang for thebuck," in order to create a wider ripple effectand amplify their impact. Greater scrutiny byregulators, the media, and the public has alsocontributed to a laudable desire within thefoundation community to be more account-able and to better demonstrate results.

Just as importantly, as more foundations havesought to strengthen the capacity of theirnonprofit grantees, some have recognizedthat foundations themselves should try to bet-ter practice what they preach -- to build theirown organizational capacity to be more effec-tive. A 2005 Urban Institute study found thatmany foundations are not engaging in prac-tices that, by their own standards, are crucialfor effectiveness. For example, of funderswho say that having a strong infrastructure isimportant, 30% never or rarely provide staffdevelopment opportunities. And 33% of fun-ders who say that evaluation is importantdon't engage in it.3

According to Grantmakers for EffectiveOrganizations, organizational effectiveness is"the ability of an organization to fulfill its mis-sion through a blend of sound management,strong governance, and a persistent rededica-tion to achieving results." To examine yourown foundation's effectiveness, answer thesequestions:

� Are your foundation's intended outcomesclear?

� Are you dedicating sufficient resources toadequately influence the problems you aretrying to address?

� Does your grantmaking rarely seem tooscattershot and uncoordinated?

� Are outsiders clear about your foundation's activities and purposes?

� Is your foundation governed or managed aswell as you think it could be?

� Are your board and staff focused enoughon responding adequately to externalissues, not just internal processes?

� Have your foundation's goals and strate-gies been recently examined and evaluat-ed?

If any of your responses were "no," keep read-ing to learn more about how to be more strate-gic and strengthen your foundation's perfor-mance.

2 briefing�paper

As�more�foundations�have�sought�to�strengthen�the

capacity�of�their�nonprofit�grantees,�some�have�

recognized�that�foundations�themselves�should�try�to

better�practice�what�they�preach�—�to�build�their�own

organizational�capacity�to�be�more�effective.

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Strategy is a decision-making framework,based on a foundation's external contextand internal capacity, for selecting goalsand activities to achieve results. The Centerfor Effective Philanthropy (CEP) recentlystudied the extent to which U.S. foundationsused strategy.4 CEP discovered thatalthough most foundations believe thatbeing strategic can help them have agreater impact, many foundations do not actstrategically. The study found that mostfoundations fall along a spectrum, withabout one quarter in each of four "profiles"shown above in Exhibit 1, from less to morestrategic. More strategic foundations have

clearer goals and strategies and betterongoing assessment.

While most foundations say they want to bemore strategic, many do not fully under-stand what that means nor make the com-mitment of time and resources to success-fully realize that aspiration. There may, infact, be institutional limits to their ability todo so. For example, a family foundation maybe constrained by the donor's intent, andcommunity foundations often have restric-tions related to donor-advised funds, havelimited discretionary funding, and may needto serve a wide geographic area, therebylimiting their ability to concentrate theirefforts.

There may also be undesirable outcomesrelated to having a narrower strategic focus.In its 2004 report Responsive Grantmaking is

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Exhibit 1: Continuum of Categories of Strategic Decision Making for Foundations

Charitable Bankers(25%)

� No use of strategy� Vague foundation-wide goals

� Internally focused onhistory and process

� Reactive grantmaking

� No or little assess-ment

Perpetual Adjusters(25%)

� Little use of strategy

� Some defined goalsand implicit planning

� Decision-makingframework mostlyinternally based

� Mostly responsivegrantmaking

� Little assessment

Partial Strategists(25%)

� Some use of strategy

� Multiple goals andimplicit planning

� Internal and externaldata to make deci-sions

� Mix of responsive andproactive grantmaking

Total Strategists (25%)

� Significant use ofstrategy

� Clear goals andexplicit planning

� Externally focused,with lots of analysisand feedback loops

� Mostly proactivegrantmaking

� Ongoing assessmentat many levels

LessStrategic

MoreStrategic

Source: Center for Effective Philanthopy

3

Strategic, the California Wellness Foundationnoted that, after originally designing highlystructured five- to ten- year initiatives throughcompetitive Requests for Proposals, it foundthat many community-based nonprofits werethereby shut out and suffered financially. Thefoundation later revised its strategy so that itnow provides core operating support and lessrestricted project support in response to unso-licited letters of interest.5

Each foundation's leaders must decide forthemselves the appropriate strategic level. Agood way to start is by reviewing Exhibit 1:locate your foundation on the continuumshown there. Is that the optimal location foryour foundation? Is that where you would liketo be in five years?

Exhibit 2: Framework for Understanding Foundation Effectiveness

4 briefing�paper

Exhibit 2 (on the previous page) shows acomprehensive framework that can beemployed to comprehend and increase afoundation's effectiveness. The frameworkbegins with designing a program strategyfor achieving impact — which can later alsoserve as a template for program evaluation.Then, since form follows function, it requiresan assessment of how a foundation's organi-zational capacity can be strengthened tosupport and successfully carry out its pro-gram strategy. Strategic planning enables afoundation to pull together plans to devise aprogram strategy and build that organiza-tional capacity. Finally, it requires ongoingevaluation to make continuing improvementand an ultimate assessment of overall foun-dation performance.

Exhibit 2 is, of course, a conceptual frame-work and is not strictly a linear and sequen-tial progression. But it does indicate theimportance of each part and the necessity ofusing a holistic and iterative process thataddresses each activity. A partial or dis-jointed approach will only yield partial or dis-jointed results. For example, without cleargoals, strategies, and plans, it will be veryhard to evaluate programs and assess per-formance. Likewise, a foundation that cre-ates a clear program strategy but does notthen dedicate adequate attention to enhanc-ing organizational capacities — such asthose related to staffing, governance, opera-

tions, or communications — will find itselfstruggling. And if program evaluation andperformance assessment are neglected,program strategy and organizational learn-ing and planning will suffer.

The four major components of the frame-work in Exhibit 2 form the structure of thispaper:

1. Designing a program strategy forachieving impact;

2. Building the organizational capacity afoundation needs to create the impactit desires;

3. Aligning plans for programs and build-ing organizational capacity through astrategic planning process; and

4. Assessing performance and makingcourse corrections.

This paper is based on TCC Group's morethan 28 years of working with philanthropies,ranging from small family foundations withno employees to global ones with largestaffs. It is written primarily for board andstaff members of private foundations,although other types of funders may alsofind it beneficial. Since this paper brieflytouches upon a number of major topics, foot-notes refer to sources of additional informa-tion on these subjects and more resourcesare included at the end on page 23.

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programs�and�assess�performance.

5

In Strategic Giving: The Art and Science ofPhilanthropy, Peter Frumkin writes that "oneof the important gaps in philanthropy is in thearea of strategy." He says that funders "haveinvested heavily on the back end of philan-thropy, spending a considerable amount ofmoney on evaluation and assessment of theimpact and effectiveness of funded pro-grams. Comparatively little time and moneyhas been devoted to the front end, especiallyto thinking systematically and creativelyabout the full range of interventions availableand the underlying causal claims that areembedded in giving."6

A foundation with a robust program strategyhas the best chance of achieving successand, later, of assessing its performance.Devising a program strategy requires care-fully articulating a foundation's purpose,developing a clear understanding of the larg-er environment in which it operates, creatingwell-defined and integrated goals and strate-gies, and then evaluating programs andusing what is learned to modify them.7 Thisstep-by-step process involves:

Considering� the� Foundation's� Charter,�Mission,and�ValuesAt the outset, think about the constraintsunder which the foundation might be operat-ing that influence program strategy, such asa founding donor's stated intent or the philos-

ophy of a corporate foundation. Also considerwhether the mission statement is clear orshould be revised to be more precise and rel-evant. Reflect on the other values that mayguide the foundation's work.

Scanning the Field to Assess Needs, Define andComprehend Problems to be Addressed, andIdentify Comparative AdvantagesCrucial to the process is identifying the prob-lems the foundation is attempting to alleviateand, secondarily, conducting an externalassessment to understand their underlyingnature and the range of possible solutions.Social, economic, and political trends affect-ing the foundation's work must be taken intoaccount, as well as stakeholders’ perceptionsof the foundation's work. Lastly, find outwhat other funders are doing in the areas onwhich the foundation wishes to focus.

Both quantitative and qualitative methodsshould be used to collect this data, including:

� literature review - ground the assessmentin a thorough understanding of existingknowledge related to needs and effectivepractices and models.

� interviews - obtain in-depth, candid infor-mation from stakeholders and experts.

� surveys - gather specific information froma wide array of constituents, includingstaff, trustees, and grantees.

� discussion groups - conduct these beforeand/or after interviews or surveys, to bet-ter understand certain perspectives.

� benchmarking - research the lessonslearned by similar funders and catalogtheir good practices.

The ultimate goal of this research is to artic-ulate and precisely assess how the founda-tion's additional resources would make thegreatest impact, leverage others' invest-ments, fill any gaps, and avoid duplicatingefforts.

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6 briefing�paper

Creating a Clear Logic Model for ProgramsConstructing a logic model, like that shownbelow in Exhibit 3, can assist greatly by pro-viding a visual depiction of a theory of change— the causal connections between whatactions the foundation takes (like grantmak-ing and other activities) and the change ithopes to thereby effect (such as a vibrantregion with opportunity for all.) Logic modelsare often employed for evaluation, but theyare also useful for upfront planning. They canhelp go beyond simply defining a vague set ofprogram areas for possible funding by bring-ing structure, rigor, and specificity into thestrategy development. They also encouragesystematic thinking about what resources areneeded, where and how they can be applied,

and what effects they can realistically have inthe short and long terms. If a foundation hasmultiple programs, logic models may be cre-ated for each one.8

To create a program logic model, begin withImpact and Outcomes (on the right of Exhibit3) and work towards the Strategies and Inputson the left, describing first the desired long-term impact and outcomes and then deter-mining the strategies and resources neededto achieve those ends. Make sure that short-term outcomes are measurable. And stayfocused on the reality of the resources andorganizational capacities that the foundationneeds in order to get the job done.

INPUTS

Financialresources(includingfunds forgrants andinvestments)

Board knowledgeand capacity

Staff knowledgeand capacity

Externalimage andreputation

Networks andcommunityknowledge

STRATEGIES

GRANTMAKINGSelf-Suffiency� Support earlychildhood educationprograms

� Support career edu-cation programs

Arts and Culture� Support artsorganizations’outreach efforts todiverse communities

ACTIVITIESBESIDES GRANT-MAKING� Provide capacity-building training forarts organizations

� Advocate forincreased early edu-cation funding

� Conduct researchand have communityforums on careereducation programs

INPUTS offunding forgrantees toconduct pro-grams andbuild theirorganizationalcapacity

STRATEGIES ofgrantees, suchas early child-hood and careereducation activi-ties and commu-nity outreachactivities to raiseawareness of thearts amongtarget groups

OUTCOMES ofgrantees, such asincreased educa-tional attainment forlow-income childrenand adults, morelow-income resi-dents obtain jobsthat support self-sufficiency, andincreased culturalparticipation ofnon-traditionalaudiences

� Increased financial stability of arts organizations� More private and public funding for early education� Greater knowledge about career education needs and programs

IMPACT

Increased economic self-sufficencyfor low-incomeindividuals andfamilies

Strengthenedregional centerfor arts

A vibrantregion withopportunityfor all

Exhibit 3: Program Logic Model for a Foundation

OUTCOMES

7

Exhibit 3 suggests delineating grantmakingstrategies and activities besides just funding(also described in more detail on page 11).Just as a grant recipient receives funding asan input from a foundation and then imple-ments strategies to achieve results, so thefoundation, if it directly pursues activitiessuch as research and convening, must imple-ment strategies to realize the desired impact.

An additional benefit to program logic mod-els: once completed, they can later also beused as the framework for evaluation. Pro-gram planning and evaluation are together adynamic process; as program activitiesoccur, they should be evaluated, validated, ormodified, and programs adjusted according-ly.

Constructing a program logic model shouldnot be a "staff only" exercise: key stakehold-ers should be involved so they can under-stand and agree to the intended outcomes foreach program strategy. Board membersshould be engaged to some extent since theyare responsible for guiding the foundationand setting its strategic direction.

Setting and Aligning Goals and StrategiesKey to preparing a program logic model is set-ting goals and determining the strategies forallocating resources to achieve them.Foundations often try to address a large prob-lem with insufficient resources and cast toowide a net. A foundation can usually optimizethe effectiveness of its grantmaking by focus-ing on a smaller number of program areasover a longer period, deepening its experienceand knowledge over time. The Phoenix-based

Flinn Foundation, for example, decided in 2002to drop several program areas and commit allof the foundation's resources through 2012 toenhancing the competitiveness of Arizona'sbiomedical research enterprises, which hasresulted in increases in biotech businessstart-ups and jobs in the state.9

How can a foundation narrow its scope? Thelate Paul Ylvisaker, a foundation expert, sug-gested that funders select for support:

� areas of concentration with the greatestneed and biggest unfilled gaps;

� people and institutions of unusual capacityand/or influence that will set the pace andstandard for others;

� organizations threatened by diminishingresources and/or public support;

� ideas and approaches that have the powerto move people and institutions; and

� points of leverage that connect at smallinputs to redirect larger forces.10

An excellent example of a small input thatresulted in major change was the CarnegieCorporation's $35,000 grant in the mid-1960'sfor a feasibility study on children's televisionthat led to the creation of Sesame Street.

Not only must a foundation determine what itwill support, but also how it will do so. Fivecritical questions must be answered by afoundation when determining how to supportits identified programs:

Constructing�a�program�logic�model�should�not�be�a�"staff�only"�exercise:�

board�members�should�be�involved�to�some�extent�so�they�can�understand�and

agree�to�the�intended�outcomes�for�each�program�strategy�since�they�are

responsible�for�guiding�the�foundation�and�setting�its�strategic�direction.�

8 briefing�paper

11)) HHooww rreeaaccttiivvee oorr pprrooaaccttiivvee sshhoouulldd ggrraannttmmaakkiinngg bbee??Most foundations lie somewhere on a contin-uum between two extreme approaches tomaking grants — that is, between waiting toreceive unsolicited requests and, on theother hand, assertively seeking out and guid-ing grantees to develop projects. More reac-tive foundations may post some generalguidelines, wait for proposals to arrive, andfund individual projects across various pro-grammatic areas. While this approach canenable a foundation to be responsive andquick to take advantage of new opportuni-ties, it can also lead to too much passivity indetermining goals and priorities and limitedimpact.

Other foundations are more proactive byfinding grantees that will further their identi-fied aims. They tend to set very specificgoals, design initiatives, and then, throughan intensive due diligence process, selectcertain high-performing nonprofit organiza-tions for long-term support. One advantageof this approach is that it often enables afoundation to increase its ability to addressroot causes of a problem and to create sys-

tem-wide change. But while this engagedapproach can often generate very positiveresults, it can also be too top-down and rigid,providing insufficient opportunity for creativ-ity and initiative by grantee organizations.

Many foundations choose to strike a balancebetween being responsive and proactive. Forexample, some dedicate a portion of fundingto a small number of focus areas, for whichstrong nonprofits are selected through acompetitive process, and reserve the bal-ance of funding for less directive grantmak-ing, enabling the foundation to also respondto innovative ideas and new needs as theyarise. Such a course was adopted by TheCommonwealth Fund: it sets aside roughly10% of its grantmaking funds in an accountused to respond flexibly and quickly to wor-thy opportunities that do not fit within thefoundation's core programmatic strategies.

11

22)) WWhhaatt ttyyppeess ooff ggrraannttss ccaann bbee mmaaddee??Most foundations have limits on the type ofgrants they may make, imposed by the donor,board, or staff. Certain foundations, forinstance, provide only seed funding for new,innovative projects and avoid supporting

9

ongoing programs. Others primarily funddirect program costs, and do not support anyindirect organizational costs to cover over-head such as administrative staff salariesand rent. Some do not offer support forendowment or capital projects.

If a foundation determines that such restric-tions are impeding fulfillment of its goals anddesired outcomes, it might consider loosen-ing them. The Edna McConnell ClarkFoundation found that by providing flexiblegeneral operating support to grantees andbuilding in more accountability into thesegrants, it was able to provide working capitalthat allowed grantees to test new ideas andmanage their growth.12

Endowment and capital grants, used judi-ciously, can also produce potent results.Endowment funding for a mature institutioncan play a critical role in stabilizing its oper-ations. Likewise, for certain nonprofitswhose programs rely heavily on facilities,such as a youth services or performing artsorganization, support for "bricks and mor-tar" can be pivotal to achieving their mis-sions.

33)) WWhhaatt iiss tthhee ooppttiimmaall ttiimmee hhoorriizzoonn ffoorr ggrraanntt--mmaakkiinngg??As Jack Murrah, President of theChatanooga-based Lyndhurst Foundation,observes, "you have to be in the game for along time to build trust, to form collabora-tions that work. You cannot begin to thinkabout meaningful change in the short-term."Grant periods longer than a year may serve afoundation better because they can enablegrantees to have more flexibility in complet-ing their work and allow more time to effectreal change. Essential to the success oflonger term grants are periodic check-inpoints and opportunities to re-negotiateterms.

The timing of grantmaking also relates to thefoundation's endowment strategy. Themajority of foundations still plan to exist intoperpetuity to fulfill the donor’s wishes or tohave lasting influence on a community orfield. Yet more foundations are choosing tospend down their endowments faster in

order to magnify their impact and, in somecases, follow the wishes of donors who areinterested in seeing the results of their giv-ing while they are still living. When theAaron Diamond Foundation was founded in1986, for example, it set a date for its own ter-mination in 1996, creating a sense of urgencythat focused its AIDS research grants. Thisinfusion of vital funding helped lead to thebreakthrough development of proteaseinhibitors, which suppress the HIV virus andprolong the lives of millions.

44)) HHooww aaccttiivvee sshhoouulldd aa ffoouunnddaattiioonn bbee dduurriinnggeeaacchh ssttaaggee ooff tthhee ggrraanntt ccyyccllee??Much philanthropy is front-loaded and trans-actional, geared toward preparing a docket,awarding grants, and getting the money outthe door. But a foundation's interest in theproject or organization should not end withwriting the check. Successful grantmakingrequires the foundation to dedicate time andresources to monitoring grants and collabo-rating closely with the grantees throughoutthe duration of the funding.

Exhibit 4: Evaluation Purposes and Audiences

External

InternalPurpose/Goal: Primary Audiences

Accountability to the foundationmission

Board

Improved grantmaking decisions Board and Program Staff (Directors and Officers)

Improved grantee perfor-mance/learning

Board, Program Staff andGrantees

Program model development and replication

Nonprofit Sector

Improved field-level knowledgebase with respect to root prob-lems and their solutions, includ-ing “best practices”

Nonprofit and Philanthropic Sectors

Mobilizing more philanthropic,governmental, community andindividual resources for address-ing a problem

Nonprofit Sector, PhilanthropicSector and the Public

10 briefing�paper

Table created by Peter York, TCC Group

55)) WWhhaatt ootthheerr aaccttiivviittiieess bbeeyyoonndd ggrraannttmmaakkiinnggccaann aa ffoouunnddaattiioonn ppuurrssuuee ttoo hheellpp aacchhiieevvee iittssggooaallss??Besides awarding grants, there are manyother ways a foundation may be able to furtherits goals and achieve impact, including:

� Research: A foundation can conduct its ownresearch to help advance the state of knowl-edge, enlighten dialogue, and set the agen-da.

� Advocacy: Although foundations are prohib-ited by federal law from lobbying lawmakersdirectly, they may inform debate on issuesrelated to changes in public policy.

� Convening: Another key direct role a founda-tion can play is to bring together nonprofits,other funders, experts, and communitymembers, in person or virtually, to help themshare knowledge, discuss mutual concerns,and create common goals.

� Capacity building: Directly providing man-agement and governance assistance canalso amplify a foundation’s impact.

� Mission-related investments: A foundationcan use the power of its assets to further itsgoals by issuing low-interest loans to non-profits to aid with cash flow and capitalfinancing needs and by screening for socialresponsibility the investments in the founda-tion's endowment portfolio.

While a foundation can provide grant supportto nonprofit organizations to conduct some ofthese activities — such as research, advoca-cy, and capacity building — it can also chooseto do them directly in a more engaged manner.

Evaluating Programs and Using the Findings toMake Improvements The program strategy framework will also pro-vide the basis of the foundation's evaluationplan. That is why clear articulation of programgoals and activities at the beginning is essen-tial to later evaluation. Having an evaluationplan at the outset and evaluating as the fund-ed activities are occurring enables refine-

ments based on what is — and is not —work-ing.

Evaluation can encompass several purposesand audiences. As shown in Exhibit 4, (on thepage to the left) evaluation goals can rangefrom foundation accountability to granteelearning, with audiences ranging from internalstakeholders such as board and staff to exter-nal constituents like the grantees. The pur-pose and audience for evaluation should beclear and the focus must be on improving, notproving — it should be a learning experience,not just an accountability-focused reportcard.

The foundation needs to determine the levelsits evaluation will focus upon, including thegrant, grantee, initiative, and program.Foundations can use the program logic modelas an organizing framework to assist in deter-mining how much concentration there shouldbe on evaluating strategies, short-term out-comes, and long-term impact. The levels anddegree of rigor chosen will determine howmuch time and money is needed for success-ful evaluation.

Ideally, evaluation work should be integratedinto a foundation's governance and communi-cations functions. Involving board members inevaluation, at least in a "big picture" way,enables them to understand the lessons thefoundation is learning and help decide how itcan improve its work. Disseminating evalua-tion findings to grantees and others in thecommunity and field allows them to learnfrom them as well.13

.. .. .. .. .. .. .. ..

With a carefully developed program strategy,a foundation can come closer to being a "TotalStrategist," with clear goals and explicit plan-ning, as described in Exhibit 1. But designinga sound program strategy is far from the endof the job. As former Robert Wood JohnsonFoundation President Steven Schroederemphasizes, "execution trumps strategy." "Atthe end of the day, what matters is thestrength and usefulness of what has beenbuilt, not how elegant was the blueprint."14

11

With a well-designed program strategy inplace, a foundation must then turn to assess-ing and developing its organizational infra-structure so that it can execute its strategywell.

All aspects of a foundation's internal capac-ity — including governance, managementand operations, human resources, endow-ment and financial management, and exter-nal communications — should be scruti-nized. As more grantmakers seek greaterorganizational effectiveness for nonprofits,foundations need to better understand howto build their own organizational capacities.

As depicted in Exhibit 5 on the next page, afoundation needs to build four core capaci-ties:

� Adaptive Capacity: a foundation's abilityto monitor, assess, respond to, and stimu-late internal and external changes.

� Leadership Capacity: the ability of a foun-dation's staff and board leaders to inspire,prioritize, make decisions, provide direc-tion, and innovate.

� Management Capacity: a foundation'sability to ensure the effective and efficientuse of organizational resources.

� Technical Capacity: the ability of a foun-dation to implement all of its programsand other key organizational functions.

Adaptive and leadership capacities are theprimary elements, with management andtechnical capacities playing a secondaryrole. The highest performing foundationstend to have strong adaptive and leadershipcapacities -- they are externally oriented,reflective, nimble, inventive, and influential.

A foundation with weak adaptive and leader-ship capacity but strong management andtechnical capacity may operate efficientlybut have programs that are not highly effec-tive.

Organizational culture — the unique history,language, rituals, values, and beliefs of eachfoundation -— also greatly influences eachof the four capacities. A healthy organiza-tional culture at a foundation engenders opencommunication across all levels of the orga-nization and enables board and staff alike tofeel energized about their work.

Organizational proficiencies in the four corecapacities that high-performing foundationshave in common are described on pages 14and 15. With a better understanding of eachof the four core capacities, it is a good timefor your foundation to assess its capabilitiesin each area, perhaps during a board meet-ing discussion. Where is your foundationdoing well? What are areas for improvement?Which core capacities do you need tostrengthen?

The�highest�performing�foundations�tend�to�have�strong

adaptive�and�leadership�capacities�--�they�are�externally

oriented,�reflective,�nimble,�inventive,�and�influential.

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12 briefing�paper

Initial focus should be on the leadership andadaptive areas because if those are weak itwill be difficult to make progress in general.Adaptive capacity is predicated on excellentboard and staff leadership, since they areresponsible for the assessment, planning,evaluation, and learning that make a founda-tion agile, innovative, and relevant.

Keep in mind that your foundation's organi-zational capacity is a key "input" for its pro-gram strategies, as shown in the programlogic model in Exhibit 3. By strengtheningyour foundation's ability to effectively imple-ment its program strategy, you can enablegrantees to implement their programs welland eventually have a greater impact them-selves.

Exhibit 5: The Four Core Organizational Capacities of Foundations

13

Adaptive CapacityHighly adaptive foundations are flexible learning organizationsthat employ data-driven decision-making processes. Strong adap-tive capacity includes these traits:

� TThhoorroouugghh��rreesseeaarrcchh��rreellaatteedd��ttoo��nneeeeddss��aasssseessssmmeenntt,,��pprroobblleemm��aannaallyy--ssiiss,,��pprroommiissiinngg��pprraaccttiicceess,,��ffuunnddiinngg��ppaatttteerrnnss,,��aanndd��ootthheerr��eennvviirroonn--mmeennttaall��cchhaannggeess��iinn��oorrddeerr��ttoo��iinnffoorrmm��tthhee��ddeevveellooppmmeenntt��ooff��eeffffeeccttiivveessttrraatteeggyy —— including continuous examination of the outsideenvironment to keep abreast of emerging opportunities; learn-ing about all factors that contribute to the problems beingaddressed and the resources being devoted to solving them;and using research to help guide planning efforts (see pages 6and 17).

� RReegguullaarr��iinntteerraaccttiioonnss��wwiitthh��aanndd��ffeeeeddbbaacckk��ffrroomm��eexxtteerrnnaall��ssttaakkee--hhoollddeerrss,,��eessppeecciiaallllyy��ggrraanntt��sseeeekkeerrss��aanndd��ggrraanntteeeess —— includingcommunicating with constituents in order to remain responsive,transparent, and accountable and ensuring that communicationis two-way (the Center for Effective Philanthropy's GranteePerception Report is an excellent tool for obtaining granteefeedback).

� SSyysstteemmaattiicc��aanndd��lleeaarrnniinngg--oorriieenntteedd��pprrooggrraamm��eevvaalluuaattiioonn ——including evaluation efforts that enable a foundation to com-prehend how well strategies are working, why they are per-forming the way they are, and ways to enhance them (see page11).

� RReeccuurrrreenntt��aanndd��ccaannddiidd��oorrggaanniizzaattiioonnaall��ppeerrffoorrmmaannccee��aasssseessssmmeenntt—— including appraisal that "holds up a mirror" to the founda-tion and allows it to understand the strength of its capacitiesand diagnose ways to make improvements (see pages 12-13).

� WWeellll--oorrggaanniizzeedd��aanndd��oonnggooiinngg��kknnoowwlleeddggee��mmaannaaggeemmeenntt ——including synthesizing the data collected through needs assess-ment, stakeholder feedback, program evaluation, and organiza-tional assessment and creating information management sys-tems that are high-tech, low-tech, and no-tech.

� PPeerriiooddiicc��aanndd��tthhoouugghhttffuull��pprrooggrraamm��aanndd��ssttrraatteeggiicc��ppllaannnniinngg ——including using the knowledge gained to inform the founda-tion's efforts to create plans on the programmatic and organi-zational levels, to make the most of its financial and human

resources (see program planning process on pages 6-11 andorganizational strategic planning process on pages 16-19).

� CCoonnssttrruuccttiivvee��ccoollllaabboorraattiioonn��wwiitthh��ffuunnddeerrss��aanndd��ootthheerr��kkeeyy��ssttaakkee--hhoollddeerrss —— including avoiding working too independently toaddress problems and considering partnering with other grant-makers to address gaps and reduce duplication of effort.

Leadership CapacityFoundation leadership — including both senior staff and boardmembers — must articulate a clear vision, set priorities, alignstrategies and resources, motivate others, and maintain a commit-ment to complete the necessary work. Well-led foundationsexhibit these characteristics:

� SSoolliidd��ccoommmmuunniittyy��oorr��ffiieelldd��rreeppuuttaattiioonn��aanndd��lleeaaddeerrsshhiipp —— includ-ing an ability to "get people to the table" to leverage humanand financial resources; exercising external leadership throughconvening, conducting research, raising awareness, and advo-cating for change (see page 11); and prudently using power toelevate issues, frame possible challenges and solutions, andinspire people.

� AA��bbooaarrdd��tthhaatt��iiss��iiss��kknnoowwlleeddggeeaabbllee��aabboouutt��pprrooggrraammss,,��hhaass��ddiivveerrsseeppeerrssppeeccttiivveess,,��aanndd��iiss��eennggaaggeedd��iinn��mmaannyy��rroolleess��—— including help-ing to develop the foundation's mission, vision, and strategy;overseeing investments, finances, and grantmaking; directingand assessing executive staff; ensuring ethical and legal integri-ty; serving as an ambassador for the foundation outside ofboard meetings; ensuring sound governance by being well-informed about the foundation's programs, asking probingquestions, and engaging in respectful debate; and striving for aheterogeneous board composition that ensures a variety ofviewpoints.

� SSttrraatteeggiicc��aanndd��rreessppeeccttffuull��ssttaaffff��lleeaaddeerrsshhiipp —— including staffleaders who comprehend the foundation's programs well andwork together effectively with the board to establish the orga-nization's future vision and strategies; a chief executive whomanages the organization and directs other staff effectively;and staff leadership that is modest and uses their authorityrespectfully, in light of the financial power they hold.

Organizational Capacity Attributes of High-Performing Foundations

14 briefing�paper

� AA��ssttrroonngg��ppaarrttnneerrsshhiipp��bbeettwweeeenn��tthhee��sseenniioorr��ssttaaffff��aanndd��bbooaarrdd ——including relationships that are based on mutual respect, trust,commitment, and communications.

� LLeeaaddeerrsshhiipp��ssuucccceessssiioonn��ppllaannss��ffoorr��tthhee��cchhiieeff��eexxeeccuuttiivvee��aanndd��bbooaarrddooffffiicceerrss —— including cultivation of individuals on the board toeventually take over leadership roles in the future; using boardcommittees to foster responsibility and experience in emergingleaders; and preparing contingency plans for replacing the chiefexecutive and other staff.

Management CapacityAlthough some foundations are cautious about spending onadministrative costs, it is essential that a foundation has ade-quate resources that are well-managed. A foundation canenhance its management capacity by cultivating these attributes:

� EEffffeeccttiivvee��hhuummaann��rreessoouurrccee��mmaannaaggeemmeenntt —— including clear jobdescriptions for all staff and a good recruitment program toattract diverse, talented employees who can help the founda-tion achieve its objectives; receptive and considerate employ-ees who are able to manage collaborative relationships withexternal stakeholders; leaders who give staff clear guidance,link individual and program goals, assess staff performanceregularly, and encourage teamwork and collegial problem solv-ing; and training for staff members who need to be proficientin grantmaking techniques, program area topics, and such tech-nical matters as how to read nonprofit financial statements.

� SSoouunndd��eennddoowwmmeenntt��aanndd��ffiinnaanncciiaall��mmaannaaggeemmeenntt —— includingmanaging the foundation's endowment well and obtaining areasonable rate of return on any investments; developing andadhering to budgets; meeting distribution requirements; com-plying with government regulations; paying bills on time; keep-ing accurate financial records; creating financial statementsregularly and making them available; and using financial datato inform decision-making.

� CClleeaarr��aanndd��pprrooaaccttiivvee��eexxtteerrnnaall��aanndd��iinntteerrnnaall��ccoommmmuunniiccaattiioonnss——including enhancing the foundation's transparency andaccountability by communicating clearly to external audiencesthrough a web site, publications, and other means about pro-

gram goals, activities, and results and providing for effectiveinternal communications with clear channels for each staffmember and regular opportunities for progress updates andreflections on lessons learned.

� SSttrroonngg��ggrraannttss��mmaannaaggeemmeenntt— including keeping track of pro-posals, grant approvals, disbursements, and reports and man-aging this information flow effectively so as to generate usefulknowledge and program evaluation.

Technical CapacityTechnical capacity refers to the operations of a foundation andconfirming that board and staff have the skills needed to gettheir work done well. Foundations can ensure they have thesecompetencies by hiring staff that possess them, training employ-ees, or utilizing outside contractors, such as evaluators, lawyers,or accountants. Specifically, foundations need sufficient skills inthe following areas:

� PPrrooggrraammss, to enable the foundation to effectively set goals andimplement strategies.

� PPrrooggrraamm��eevvaalluuaattiioonn,�to�assess�impact,�learn,�and�make�refine-ments.

� GGrraannttss��mmaannaaggeemmeenntt,�to�administer�the�grantmaking�processwell.

� AAccccoouunnttiinngg,�to�adhere�to�sound�financial�management�prac-tices.

� LLeeggaall��iissssuueess,�especially�related�to�the�foundation's�structureand�compliance�and�taxation�matters.

� FFaacciilliittiieess��mmaannaaggeemmeenntt,�to�manage,�operate,�and�maintain�spaceto�house�the�foundation's�staff�and�work.�

� TTeecchhnnoollooggyy,�to�store,�track,�analyze,�and�distribute�data.

� CCoommmmuunniiccaattiioonnss,, to�convey�information�to�foundation�audi-ences.

15

Organizational Capacity Attributes of High-Performing Foundations

Strategic planning is an ideal way to integratea foundation's processes for developing itsprogram strategy and internal capacity, as theHeinz Endowments learned during their plan-ning effort described above. A strategic planincludes:

� A statement of the foundation's mission,vision, values, and goals;

� A description of the strategies for pro-grams, as well as other organizationalareas, such as governance, staffing, andsystems; and

� An action plan that explains the timeline,responsible parties, and costs for imple-mentation.

Although foundations have the advantage ofpossessing secure financial resources and arenot compelled to generate revenues to survive,they are nevertheless responsible for allocat-ing those resources well. An organization-wide strategic planning process helps a foun-dation understand and address external forcesand internal issues, set priorities, communi-cate its future plans with external audiences,and, ultimately, improve the foundation's over-all effectiveness.

Many foundations encourage their grantees tocreate strategic plans, but do not do sothemselves. Grant Oliphant of the Heinz

Endowments states: "Why shouldn't we sub-ject ourselves to the same planning rigors thatwe so readily expect of our grantees? The dis-cipline of strategic planning forces an organi-zation to think more realistically about itsgoals and its capacity to achieve them.”15 Whydo some foundations resist strategic planningfor their own organization? Some might beskeptical because they have participated inpoorly designed planning processes that weretoo time-consuming and expensive and result-ed in plans that sat on a shelf. Others maythink that a comprehensive foundation-wideplanning process is too difficult or they want toavoid making tough decisions or being con-strained by the resulting plan. In fact, it iseasy for most foundations to operate without acomprehensive road map for the future sincethey are under little pressure to have one.

Yet many foundation leaders have foundstrategic planning to be a very beneficial disci-pline that forces them to reflect and makemore meaningful decisions. The AltmanFoundation, based in New York City, usedstrategic planning to help its board, staff, andgrantseekers obtain a consistent understand-ing of the "what and why" of their grantmakingand to streamline internal communicationsand decisionmaking. It also made it possiblefor them to create clear funding guidelines,which helped grantseekers to better grasp thefoundation's priorities. "The AltmanFoundation's new system of objectives andstrategies allows us to show more clearly howthe foundation's priorities translate into pro-grams and approaches on the ground," com-ments Vice President and Executive DirectorKaren L. Rosa.

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16 briefing�paper

Many�foundations�encourage�their�grantees�to�create

strategic�plans,�but�do�not�do�so�themselves.�Grant

Oliphant�of�the�Heinz�Endowments�states:�"Why�shouldn't

we�subject�ourselves�to�the�same�planning�rigors�that�we

so�readily�expect�of�our�grantees?"

A comprehensive strategic planning process isbased on five major steps:

1) Planning to plan2) Taking stock of the internal and external environment

3) Setting priorities and future direction4) Developing a strategic plan5) Implementing and refining the plan

1)�Planning�to�PlanBoth board and staff leadership should confirmthey are ready to embark on the planningprocess and express a willingness to addressdifficult questions and change old behaviors.Forming a joint board-staff committee to guidethe process is a way to ensure broad engage-ment and buy-in. At the Knight Foundation, aboard-staff team oversaw a strategic planningeffort in 2000 from start to finish, reviewing thescope of work, tracking its progress, and provid-ing ongoing direction.

The process should be inclusive so that all con-stituents have a stake in the outcome. All foun-dation staff should be included to some degree,since their support will be needed to implementthe decisions that are made. Input from addi-tional stakeholders — particularly other fundersand prospective, current, and former grantees— should be encouraged. Community founda-tions will also want to engage their donors.

At the outset, clarify the work plan, schedule,and roles and pose a set of critical questions toaddress through the planning process. A plan-ning process can take over a year if it entailsextensive research and involves many partici-pants, but the schedule can be accelerated toas little as several months if participants areclear about their issues and challenges.

2)� Taking� Stock� of� the� Internal� and� ExternalEnvironmentDuring this stage, assess what is—and is not —working well internally and analyze externalopportunities and threats. This phase is char-acterized by gathering and analyzing data thatwill inform the choices in the next phase, soavoid jumping ahead to decision-making at thispoint.

Start by documenting the current programstrategy in the form of a logic model to serve asa baseline (see Exhibit 3, page 7). This will helpclarify assumptions and frame questions forlater in the planning process.

Next, assess needs in the community or field,how stakeholders perceive the foundation, andwhat other funders in its interest areas aredoing in order to identify problems, gaps thatneed addressing, resources available to buildupon, comparative advantages, and effectivepractices (see page 6). The Pennsylvania-based

17

Brandywine Health and WellnessFoundation, for instance, collected censusand other health-related data, interviewed asample of community leaders, and studiedcurrent service providers to begin strategicplanning discussions on how to best to usethe foundation's resources.

Also look inward to examine the foundation'sown core capacities (see pages 12-15) andperformance (see below, pages 19-21.) Aftergathering data on the external environmentas well as the foundation's internal capacity,summarize and synthesize it, and beginthinking of possible consequences for thefuture.

3)�Setting�Priorities�and�Future�DirectionThis phase is often accomplished during aretreat that involves both board and staffleaders. At this time, they reflect on the find-ings of the previous "taking stock" phase andtheir implications for the foundation's futuredirection. For example, after conducting astudy of the field, the Emily Hall TremaineFoundation, which supports people withlearning disabilities, found that its work infunding a nationwide learning disabilities

public awareness campaign had becomeless compelling. "We saw that we could bemore effective by redirecting our resourcestoward programs that explicitly address theneeds of children, educators, and serviceagencies," says Tremaine President StewartHudson.

Consider possible future scenarios and artic-ulate an image of where the foundationwants to be in five to ten years. Once thefoundation's general long-term vision isclearly expressed, flesh out some of themajor goals and strategies necessary toachieve it. Then begin to contemplate howthe foundation's own organizational capaci-ties might need to change in order to makethis vision a reality.

4)�Developing�a�Strategic�PlanThe strategic plan is the detailed blueprintfor the foundation's future. Initiate thisstage by developing the new program strate-gy (see pages 6-11). This may be expeditedby forming a working group to affirm the cur-rent program theory or to create analternative aspirational logic model that out-lines the new activities and outcomes to be

18 briefing�paper

achieved. As mentioned earlier, this will alsoserve as the framework for later programevaluation.

At this point, the foundation's core organiza-tional capacities must be appraised in lightof their ability to execute the program strat-egy (see pages 12-15) and, where necessary,a plan to strengthen and align them pro-posed. This could be accomplished by form-ing teams to set objectives and strategies insuch areas as governance, systems andoperations, and communications. A case inpoint: during a work group meeting onstaffing, the Community Foundation ofGreater Buffalo determined that it couldenhance its program strategies by hiring aknowledge management officer to organizeresearch and information about communityneeds and program outcomes.

Lastly, create an implementation plan thatserves as an organizational "user's guide" tothe strategic plan. It spells out the cost,duration, priority, and accountability foreach strategy and tactic. After the plan iscomplete, this can also become a tool formonitoring progress.

5)�Implementing�and�Refining�the�PlanOnce approved by the board, implementa-tion of the plan begins. The ideal plan will layout a clear map for all participants, but it isalso important that the plan not be viewed ascarved in stone. It is a living document that,to be kept alive, must be monitored andaltered as circumstances dictate. Regularopportunities for assessing and refining theplan should be embedded as an ongoing dis-cipline at the foundation. Those who partici-pated in forming the strategic plan shouldremain open to change when unanticipatedconsequences and opportunities arise. Asthe foundation progresses and the outsideworld changes, modifications along the wayare almost certain if the plan is to be keptrelevant.

Assessing a foundation's performance pre-sents numerous difficulties. First, there is nosingle universal measure of success, like thevalue of stock represents for profit-makingcompanies. In addition, results often dependon factors outside a foundation's control,such as the economy or government poli-cies.

Frequently it is hard to find or claim a directcausal connection between a grant and anyconsequent impact, particularly if the prob-lem being addressed is a large one. Finally,there may appear to be no pressing need toevaluate a foundation's performance sincethere are few immediate consequences ofineffective performance: unlike for-profitcorporations, foundations have no obligationto generate revenues and therefore have lit-tle market feedback and competition.

Despite these challenges and lack of incen-tive, however, it is essential to measure afoundation's performance if it is to learn,improve, excel, and be a more accountablesteward of resources. If a foundation doesnot appraise itself, critics may conduct their

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19

own assessments and develop their own perfor-mance metrics, which may be inaccurate orunfair.

The key to successful performance assessmentfor the foundation is to create a range of per-formance indicators, nurture an organizationalculture that values learning, and acknowledgeand learn from any errors.16

Developing a Sufficient Array of PerformanceIndicators The strategic plan should serve as the basis ofthe foundation's performance assessmentframework since it outlines the goals for allaspects of the foundation, including programsas well as other organizational areas such asmanagement and governance. As the founda-tion implements its plan, it should track eachmeasurable performance indicator that islinked with a strategy. When Kathy Merchantbegan as Executive Director at the GreaterCincinnati Foundation in 1997, the foundationlacked an organizational strategic plan or anyperformance measurement systems. So shebegan by working with her board to first createa strategic plan and then, based on the plan,produced a set of assessment tools for apprais-ing the foundation's financial results, donorsolutions, internal competencies, and learning.17

Some foundations rely just on one main sourceto assess performance, such as the results ofthe Center for Effective Philanthropy's GranteePerception Report, which, although quite bene-ficial, focuses on customer satisfaction. Otherfunders concentrate on evaluations of theirgrantmaking programs, ignoring other signifi-cant aspects of their organization. Use the tableon pages 14 and 15 to appraise progress in eachof the core organizational capacities —adaptive, leadership, management, and techni-cal. The wise foundation leader will chooseenough indicators to adequately reflect theentire scope of the foundation's work.

Tracking too many performance indicators,however, may lead to frustration. When theWallace Foundation tried to improve its perfor-mance assessment, it created a comprehensivescorecard that examined how every aspect of

the foundation's activities was contributing tomeeting the foundation's goals, including pro-gram progress, investment returns, operatingexpenses, staff capabilities and diversity, publicoutreach, and reputation. Wallace FoundationPresident Christine DeVita eventually discov-ered that "this level of detail proved unhelpful increating a usable management and planningtool for staff use, or in communicating ourprogress clearly and concisely to our board.""In organizational performance assessment,less is more," she asserts.18

The James Irvine Foundation strikes a manage-able balance between being comprehensiveand selective in their performance assessmentindicators. The foundation developed six mainelements for performance measurement. Threerelate to program impact: inputs; outcomes;and results, learning, and refinements. Theother three relate to institutional effectiveness:leadership; constituent feedback; and financeand organization.19

Cultivating a Culture of Learning Among Board andStaff Performance measurement works best in anopen and safe environment in which both staffand board feel free to discuss what is and is notworking well, what they have learned, and howthey can refine the plans for future activities.Internal discussions should go beyond "showand tell" sessions to foster respectful and can-did debate regarding how the foundation isdoing and how it should alter its strategies.

A range of methods are available to learn aboutthe foundation's performance. Start with indi-vidual grantee reports; they should be studiedcarefully. As soon as program activities com-mence, evaluation activity should begin.Examine clusters of grants to assess broad-strategies. Conduct surveys of a range of stake-

Performance�measurement�works�best�in�an�open�

and�safe�environment�in�which�both�staff�and�board�

feel�free�to�discuss�what�is�and�is�not�working�well.

20 briefing�paper

holders, including foundation employees,board members, grant recipients, and reject-ed grantseekers. Analyze the foundation'sfinancial trends and results. Display thedata using visual methods such as score-cards or dashboards to monitor perfor-mance.

Having the Courage to Admit MistakesTo achieve social impact through philan-thropy, a foundation must take risks — andrisk always involves the possibility of mis-takes. Melinda Gates says of the GatesFoundation, "the list of lessons we learned isabout as long as the mistakes we havemade." But by using the same experimen-tal-model approach that scientists utilize torecognize and learn from failure, founda-tions can make great strides. As MelindaGates expresses, "we're learning, we're try-ing things and we're changing."20

In an unusual move in 2007, for example, theHewlett Foundation released a report criti-cal of its Neighborhood ImprovementInitiatives, a 10-year, $20 million programwhich aimed to decrease poverty in threeBay Area neighborhoods, but which did notmeet the foundation's expectations for sus-tainable community change.21

Historically, foundations have been muchmore willing to acknowledge successesmore than their disappointments. But, grad-ually, some are realizing that candid discus-sion of mistakes can enhance accountabili-ty—and help prevent other funders frommaking the same errors.

While making a foundation more effective ishard work, the rewards of successfully doingso can be extremely gratifying. As GrantOliphant of the Heinz Endowments reflects,the intense organizational change processthe foundation underwent during its strate-gic planning "became especially messy, butthe product is not only a plan notable forblending continuity and change, but also, webelieve, an organization better equipped toreact nimbly to changes in the communityand the world around us."22

If your foundation wants to begin thisprocess, know that you are not alone: otherfoundations who have gone through theprocess may be available to give guidanceand help. Grantmakers for Effective Organi-zations, the Center for Effective Phil-anthropy, and (for foundations with no or fewstaff) the Association of Small Foundationscan possibly identify foundations who mayprovide mentoring and assistance.

Try to make steady progress to design ahigh-impact program strategy, build organi-zational capacity, assess overall perfor-mance, and align these processes throughstrategic planning, so that you, too, can max-imize your foundation's effectiveness.

Finally, don't discount less analytical, moreintuitive approaches to increasing effective-ness. As Gayle Williams, Executive Director

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21

of the Mary Reynolds Babcock Foundation,observes, "logical thinking is essential to thework that we do in foundations, and it is essentialto the work that the organizations we fund do, too— but it's not sufficient. It's dangerous for us asprofessionals in philanthropy not to balance ourattention to the logical, the mind-centered ways

of knowing with more intuitive-, gut-, and heart-centered ways of knowing."23

If you employ the rational, step-by-step methodsoutlined above to make a foundation more effec-tive, be sure to allow room for serendipity, impro-visation, and intuition in the process, too.

22 briefing�paper

Endnotes:1. Oliphant, Gary. "Drafting the Plan." Heinz Endowments. March 15, 2007. (www.heinz.org/UserFiles/Library/h-w07/-strategicplan.pdf)

2. Pollack, Thomas, and Amy Blackwood. “Facts and Figures From the Nonprofit Almanac 2007.” (Accessed at www.urban.org/publica-

tions/311373.html.)

3. Ostrower, Francie. Attitudes and Practices Concerning Effective Philanthropy. The Urban Institute: Center on Nonprofits and Philanthropy,

2004.

4. Bolduc, Kevin, Ellie Buteau, Greg Laughlin, Ron Ragin, and Judith A. Ross. Beyond the Rhetoric: Foundation Strategy. Center for Effective

Philanthropy. October, 2007. (CEP staff interviewed both the CEO and one randomly selected program officer from each of 21 foundations

randomly selected from among the largest 450 private foundations in the United States.)

5. California Wellness Foundation. Responsive Grantmaking is Strategic. 2004.

6. Frumkin, Peter. Strategic Giving: The Art and Science of Philanthropy. The University of Chicago Press, 2006. p. 26 and p. 187.

7. See Joel Fleishman's The Foundation: A Great American Secret and Peter Frumkin's Strategic Giving: The Art and Science of Philanthropy for

more detailed advice about designing a program strategy for foundations.

8. For additional guidance on how foundations can use logic models and theories of change, refer to Peter York's A Funder's Guide to Evaluation

and Andrea Anderson's Theory of Change as a Tool for Strategic Planning: A Report on Early Experiences.

9. Grantmakers for Effective Organizations. Foundation Effectiveness: A Report on a Meeting of Foundation CEOs, Senior Executives, and

Trustees, October 9-10 2003.

10. Ylvisaker, Paul. "Small Can Be Effective." Council on Foundations, 1989.

11. Craig, John R. Executive Vice President's Report: Assessing the Value of Presidential Discretionary Grants. The Commonwealth Fund.

www.cmwf.org/publications.

12. See Grantmakers for Effective Organizations' report, General Operating Support, for more on general operating support grants.

13. For more specific guidance on foundation program evaluation, refer to Peter York's A Funder's Guide to Evaluation and Mark Kramer's From

Insight into Action: New Directions in Foundation Evaluation.

14. Schroeder, Steven. "Lessons for Effective Grant Making."The Chronicle of Philanthropy. June 13, 2002.

15. Oliphant, Gary. "Drafting the Plan." Heinz Endowments. March 15, 2007. (www.heinz.org/UserFiles/Library/h-W07/-strategicplan.pdf)

16. Refer to Kristen Putnam's Measuring Foundation Performance: Examples from the Field for additional information on foundation perfor-

mance assessment.

17. Center for Effective Philanthropy. "Higher Impact: Improving Foundation Performance." June, 2005.

18. DeVita, Christine. "How Are We Doing? One Foundation's Efforts to Gauge Its Effectiveness." The Wallace Foundation. April, 2005.

19. www.irvine.org/evaluation/assessment.shtml

20. Heim, Kristi. "Melinda Gates: Philanthropists Need to Help Solve Problems." Seattle Times. May 1, 2007. p. B1.

21. Brown, Prudence, and Leila Fiester. "Hard Lessons about Philanthropy and Community Change from the Neighborhood Improvement

Initiative." The William and Flora Hewlett Foundation. March, 2007.

22. Oliphant, Gary. "Drafting the Plan." Heinz Endowments. March 15, 2007. (www.heinz.org/UserFiles/Library/h-w07/-strategicplan.pdf)

23. Council on Foundations 56th Annual Conference; April 10, 2005 session on "The Power of Intuition in Powerful Grantmaking."

Published January, 2008.

Paul Connolly is Senior Vice President at TCC Group and leads the firm's Philanthropy Practice.

Richard Mittenthal, Peter York, Alice Hill, Carol Gallo, Ashley Blanchard, Alexandrea Ravenelle, RitaHealy, and Caroline Lagnado contributed to the development of this paper.

Grantmakers for Effective Organizations, Northern California Grantmakers, Minnesota Council onFoundations, and Donors Forum of South Florida also provided support by sponsoring professionaldevelopment sessions on the topic of this paper that the author helped facilitate and during which hereceived very helpful feedback from participants that enabled him to refine the content.

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Resources on Effective Philanthropy

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About TCC GroupFor over 28 years, TCC has provided strategicplanning, program strategy development, evalua-tion and management consulting services tofoundations, nonprofit organizations, corporatecommunity involvement programs and govern-ment agencies. During this time, the firm hasdeveloped substantive knowledge and expertisein fields as diverse as community and economicdevelopment, human services, children and fam-ily issues, education, health care, theenvironment, and the arts. From offices in NewYork, Philadelphia, Chicago, and San Francisco,the firm works with clients nationally and,increasingly, globally.

Our Clients We serve a wide range of funders. Among ourgrantmaker clients are such leading foundationsas The Ford Foundation, the John S. and James L.Knight Foundation, the David and Lucile PackardFoundation, the Freeman Foundation, and theWilliam Penn Foundation. Yet, we also haveserved smaller foundations such as theBrandwine Foundation in Philadelphia and theMary J. Hutchins Foundation and Keefe,Bruyette & Woods, Inc. Family Fund in New YorkCity. Corporate grantmaker clients includeGoldman Sachs, Pfizer, and UBS PaineWebber.

Our Services to PhilanthropiesIn an age of impressive growth and increasedscrutiny of the philanthropic sector, TCC has theskills, background, and resources necessary tohelp foundations increase their effectiveness.Many TCC staff have firsthand experiece work-ing as program officers and directors of philan-thropies of all sizes.

The following are our services:

Needs assessmentWe help funders analyze marketplace informa-tion to gain a better understanding of needs in aspecific area of operation or focus.

Strategic planningWe assist grantmaking organizations to focustheir missions, identify internal strengths andweaknesses as well as external opportunitiesand challenges, articulate a vision of what theywant to accomplish, determine the resourcesthey will need to accomplish their goals, and layout a plan and timeline for achieving their objec-tives.

Program planning and strategy developmentWe help funders identify and focus on those pro-grams and strategies that most clearly addresstheir long-term vision and mission and have thegreatest potential for impact.

Design and/or management of program initia-tivesWe help funders assess initiatives under consid-eration, identify potential grantees, developRequests for Proposals, review and evaluatespecific proposals, and implement and monitorthe initiative's ongoing grantmaking.

Planning for new foundationsWe help donors create a mission, a vision, andstrategies for giving, and assist in setting up sys-tems for doing so.

Full-service foundation managementWe assist new or existing foundations by han-dling all administrative and grantmaking ser-vices, including creating and maintaining agrants database and other records, reviewingand evaluating grant proposals, sending outgrant and decline letters, paying bills, workingwith investment advisors and accountants, andfacilitating board meetings.

Design and/or management of capacity-build-ing initiativesWe work with funders to plan and implement ini-tiatives that direct support to a cohort of organi-zations over a defined time period to addressspecific capacity-building needs. We can designand coordinate the initiative, provide “case man-agement” services to grantees, monitor andmaintain quality control, and communicateabout the initiative to internal and external audi-ences.

Organizational assessment of granteesOur Core Capacity Assessment Tool (CCAT)allows funders to analyze their grantees’strengths and provide recommendations forfuture growth and change. It can be adminis-tered to a cohort of nonprofits as a tool for deter-mining the need for long-term capacity-buildingservices or as a grantee benefit.

Evaluation system planningWe design evaluation systems, processes, andtools for the purposes of effective planning anddecision-making. We also help executives andstaff increase their understanding of evaluationtheory, design, implementation and data collec-tion.

Program evaluationWe evaluate philanthropic organizations' pro-grams, initiatives, internal processes and capac-ities, and systems.

Evaluation of capacity-building initiativesWe work with funders evaluate their capacity-building efforts, both long and short-term, byproviding a critical combination of program eval-uation and organizational assessment. We utilizefindings to evaluate capacity-building resources,strategies, and activities – not just outcomes.

New York31 East 27th Street4th floorNew York, NY 10001phone: 212.949.0990fax: 212.949.1672

PhiladelphiaOne Penn CenterSuite 410Philadelphia, PA 19103phone: 215.568.0399fax: 215.568.2619

Chicago875 North Michigan Ave.31st FloorChicago, IL 60611phone: 312.794.7780fax: 312.794.7781

Websitehttp://www.tccgrp.com

Emailinfo@tccgrp.com

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