The Future of Effectiveness for Nonprofits and Foundations

March 6-8, 2002, Washington, D.C.

A record number of grantmakers and support providers, 550 to be exact, gathered for the third biannual conference of Grantmakers for Effective Organizations, co-sponsored by the Forum of Regional Grantmakers and the Grantmakers Evaluation Network. Titled "Capacity-Building for Impact: The Future of Effectiveness for Nonprofits and Foundations," the conference offered participants a chance to converse about the art and science of helping nonprofit organizations do a better job. Interest in the meeting was so strong that organizers were forced to cut off registration.

Paul Connolly, The Conservation Company, and Carol Lukas, Amherst H. Wilder Foundation, set the stage in a preconference presentation by defining capacity building as "activities that strengthen an organization and help it fulfill its mission." These activities can include consulting, training, convening, research, and the purchase of equipment or facilities. Funders that engage in capacity building do so in various ways, including grants for general operating support or specific capacity building activities, direct management assistance, grants to providers of technical assistance, loans, and support for organizational research and the dissemination of research findings.

The formal conference began with a plenary session led by Katherine Fulton and Diana Scearce, both from the Global Business Network, a futurists' think tank that specializes in "scenario planning." The session, Philanthropy's Alternative Futures, began with Fulton's statement, "We are seeing the birth of knowledge age philanthropy." What does this mean exactly? According to the presenters, "knowledge age philanthropy" is marked by the growth of venture philanthropy and social entrepreneurship, an increased emphasis on the measurement of results and strategic thinking, and an increase in interest in building the capacity of nonprofit organizations and the nonprofit sector as a whole. New mechanisms available to support this new age include email and the Web and a move toward collective action and collaborative strategies. New frontiers for philanthropy include charity bonds, philanthropic mutual funds, and foundation mergers.

Venture philanthropy was well represented among conference attendees. Representatives from the Robin Hood Foundation, Social Venture Partners, Roberts Enterprise Development Fund (REDF), and Venture Philanthropy Partners (VPP) were presenters in several workshop sessions. In fact, the conference seemed to mark a turning point in the sometimes turbulent relationship between venture philanthropists and traditional foundation philanthropy. Mario Marino, VPP chairman, acknowledged during an evening program that venture philanthropists had been "too strident" in the past. Both he and his co-presenter, Julie Rogers, president of Agnes E. Meyer Foundation, agreed that "old and new philanthropy are coming closer together."

Barbara Kibbe from the Packard Foundation, Bob Templin of VPP, and Melinda Tuan from REDF discussed different approaches to grantmaker involvement with grantees. Templin reported that VPP, which is still selecting grantees in the Washington, D.C. area, accepts no applications and chooses organizations based on their mission, the clarity of their aspirations, and their leadership. A three-to-five year commitment is planned. Organizations will be measured against milestones, and VPP may place a representative on a grantee's board of directors, much like a venture capitalist operates in the for-profit world. Templin said that although VPP disliked the term venture philanthropy, the partners believe "they know something they learned from growing their own companies." Tuan said that REDF's commitment is ongoing to the seven social service organizations that make up its portfolio. No term limits are set. Annual grants can be as high as $175,000 or more. According to Tuan, building strong relationships with grantees is a key to success. Kibbe, who is a co-founder of Grantmakers for Effective Organizations, represented a more traditional approach to capacity building grantmaking. She noted that both VPP and REDF "worked deep" with a narrow set of organizations while Packard makes between 130 and 200 capacity building grants each year, many of which go to existing grantees on the recommendation of a Packard program officer. Foundation staff often will coach grantees in the consultant selection process and look at the consultant's work plan as one means of quality control, but staff do not suggest which areas grantees should focus on in capacity building.

In another session on approaches to capacity building, three program officers described approaches used by their organizations. In one case, beneficiaries of the fund were named in the donor's will and represent a wide range of nonprofit types that includes hospitals, universities, and religious groups. Having a predetermined set of grantees allows the foundation to follow progress in capacity building over time. Leadership training is offered to management staff through an institute program. Another grantmaker focuses support on organizations that enhance the nonprofit sector, such as the Foundation Center, Independent Sector, Volunteer Match, Tech Soup, and BoardSource. The third foundation represented in this session employs an approach similar to the Packard Foundation by encouraging program officers to look at the capacity needs of grantees across all program areas. The foundation convenes peer groups and promotes the development of peer networks among grantees while also acting as a broker to provide outside consultants to assist organizations when needed.

Despite these sessions featuring various approaches to capacity building, this conference was more about the "why" of capacity building than the "how;" and more about the abstract than the concrete. There was more talk about the need to make organizations more effective than specific ways to accomplish it; more questions were raised than answered.

Maybe this was so because no one really has the answer for what makes one organization effective and another not. Paul C. Light (see article, page 23), Brookings Institute Fellow, talked about his study on nonprofit effectiveness, published recently as Pathways to Nonprofit Excellence. Light and his research associates set out to determine the characteristics of high-performing nonprofit organizations and the steps to be taken by nonprofits that wish to become more effective. Surveys were sent to 250 "opinion leaders," drawn in more or less equal numbers from three groups: Alliance for Nonprofit Management members (providers of technical assistance and training to nonprofits), ARNOVA members (Association for Research on Nonprofit and Voluntary Action members primarily are academics engaged in university-based research) and members of GEO, Grantmakers for Effective Organizations. These opinion leaders also were asked to identify effective organizations with which they were familiar. Surveys were then sent to 250 organizations identified as high-performing nonprofits. However, no clear path could be drawn for creating an effective organization. The presence of strong leadership, a focus on the organizational mission, and a continuing push within the organization for better performance were noted as common characteristics. But no particular type of leader stood out as performing better than another type and no clear strategy emerged. It appears that the desire to improve is the best indicator of future improvement. It seems to make little difference where one begins as long as there is a commitment to getting better.

Stan Hutton is program officer, Clarence E. Heller Charitable Foundation.