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What Do Foundation CEOs Say about Their Effectiveness?

October 12, 2011

The Center for Effective Philanthropy recently released the results of a survey of the CEOs of grantmaking foundations with annual grants of at least $5 million to answer the question: What are the current attitudes and practices with respect to foundation performance assessment at larger foundations? The survey was sent to 537 organizations with 173 responding, a 32 percent response rate. The report is entitled "The State of Foundation Performance Assessment – A Survey of Foundation CEOs (2011)."

What were the findings?

73% of foundation CEOs say that assessing their foundation's effectiveness is among their highest priorities, and 60% say that too few foundations understand their overall performance today. While progress has been made, more work needs to be done.

As the report notes, grantmaking foundations pursue their goals largely through the nonprofits that they fund, so one would assume that the effectiveness of their grant recipients is a significant concern for these foundation CEOs. And sure enough, 70% say that they should be placing a greater emphasis than they currently do on understanding the effectiveness of the programs and organizations that they are considering supporting, but only 56% say that nonprofits should be held to higher standards of evidence than they are today to demonstrate the effectiveness of their work.

Foundations appear to using a broad range of information to assess their operations and finances. The most common types of information gathering includes investment performance (93%), administrative costs (92%), and benchmarking of staff compensation (79%) while the least common are staff composition (39%), staff turnover (34%) and employee surveys (31%).

On the programmatic side, the most common methods of assessing the effectiveness of their grantmaking are: anecdotal feedback (94%), written reports (92%) and site visits (90%) while the least common are: cost-benefit analysis (26%), focus groups (19%) and beneficiary surveys (16%).

More than 90% of CEOs report that their foundations conduct some kind of formal evaluation of their work, but 65% report that having these evaluations result in meaningful insights for the foundation is challenging or extremely challenging.

Lastly, foundation CEOs were asked whether they attempt to coordinate their measurement systems with other funders working in the same issue areas. 26% say that they are already using such information sharing, 33% say that they are considering it, and 42% say that they are not considering it.

So, what does all this mean? Foundation CEO's clearly believe in the importance of performance measures, and the Center for Effective Philanthropy notes that these CEOs are undertaking more assessment activities than they were a decade ago. But, most foundation CEOs are not engaged in any coordinated assessment with other funders, and many of the practices regularly carried on by businesses to assess their performance (e.g., focus groups, surveys) are not being utilized by foundations.

Yet, according to the survey, foundation CEOs who do collect information from their beneficiaries perceive themselves as having a better understanding of their effectiveness and a more accurate understanding of their foundations' impact.

This makes sense to me. The more one learns from employees, potential grant recipients and current grantees, the better a foundation head is able to gauge his or her effectiveness as a leader and a funder in the community. Foundation CEOs might consider using some of the same tools that corporate CEOs use to measure their effectiveness (besides financial performance): employee surveys, customer surveys and focus groups, external benchmarks and cost-benefit analyses.

What about you? What do you think? Let us know by clicking here.


Robert L. Lynch
Thanks for the details on what foundation CEOs say about effectiveness. Very interesting but I find it peculiar that for organizations of that size only 73% rated measuring effectiveness as important. At first blush 73% may seem a high number but the fact that 27% don't think it is important to find out if they have been effective is sobering. I think it goes hand in hand with a trend toward more interest by foundations in using foundation resources to advance the interests of the funding institution rather than the needs of a general client base.

Thanks for keeping us all thinking.
Ed Wood
Great post Tim! I think most foundations and philanthropic organizations want to ensure grant recipients are using resources wisely. If fact, without some form of reporting or metrics, I believe funders are not willing to commit resources beyond a couple of years. Our foundation is often asked to support three, four or even five year programs with large grants. It's hard to make that kind of commitment if there is no means of accountability.

Thank you for the article.
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