Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

October 8, 2007

Foundations face strategic ‘disconnect’

Despite believing it would make their work more effective, private foundations are not using strategy.

That finding from a new study by the Center for Effective Philanthropy underscores the gap between what big private foundations say and do.

Insulated by their endowments from the need to raise money or compete in the marketplace, foundations occupy a closed, clubby world in which they are accountable to no one and can delude themselves about their own importance, smarts and impact.

Their freedom, the Center for Effective Philanthropy says, arguably is private foundations’ greatest strength “because it allows them to take on issues that other societal actors cannot, or will not, address.”

But the Center also says critics see that freedom as foundations’ greatest weakness “because there are few checks on the decision-making of foundation leaders and no forces compelling foundations to be effective and strategic.”

And that’s the rub because, as the Center has found in its research in recent years, strategy is widely seen as key for foundations to “maximize their impact.”

And good strategies, the Center says, “are essential to foundation effectiveness.”

Yet its new study, based on interviews with CEOs and program officers at 21 of the biggest U.S. foundations, finds a “fundamental disconnect between what foundation CEOs and program officers believe about the importance of strategy and their use of it in their daily work.”

And that suggests foundations are “not reaching their full potential,” the study says. “The gap between what CEOs and program officers say they believe and what they actually do poses an important challenge for foundation leaders.”

As they increasingly demand more strategic planning from nonprofits that want their support, foundations should make sure they practice what they preach.

By working more strategically themselves, foundations can help ensure that their investment in nonprofits will help them be more effective and have a greater impact.


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