Foundation Chiefs Say They Need to Make Sweeping Changes

Foundations must make major operational changes if they want to tackle pressing issues including wealth inequality, climate change, and failing schools, according to a self-assessment of philanthropy leaders released Monday.

Leaders of 208 of the nation’s biggest foundations said in interviews and survey responses that they can make significant progress but only if they ditch a business-as-usual approach and spend more time listening to the concerns of their grantees and the people those grantees serve.

In the study, commissioned by the William and Flora Hewlett Foundation on its 50th anniversary and conducted by the Center for Effective Philanthropy, 57 percent of foundation leaders said sweeping changes are necessary. About 41 percent believe foundations must make modest changes.

The findings surprised Ellie Buteau, the center’s vice president for research. She anticipated outside factors — such as navigating complex social systems in which a variety of players all seek to influence the policy-making process — would be the biggest hurdle faced by foundation executives seeking to improve society.

“Many of the challenges standing in the way of progress for them are within their control to change,” she said. “My expectation was the barriers would be more external.”

Several practices that have received a lot of attention among nonprofits do not hold a lot of promise, the foundation executives said. For instance, only 9 percent said divesting their endowments from certain industries would increase their impact. Sixteen percent thought quickly spending down their assets was a good idea, and less than a third thought impact investing would enhance traditional grant-making efforts.

Learning from Grantees

So what do foundations need to do to become more effective?

Nearly 70 percent of foundation leaders said they could increase their impact if they tried to learn from the people their grantees serve, and 67 percent said listening to grantees holds a lot of promise.

To accomplish that would require a significant “mind shift” among foundation leaders, Ms. Buteau says, that would allow them to become more attuned to the expectations they place on grantees. In 2014, the center found that most grant makers don’t understand the needs of the people they support.

Perhaps the biggest surprise, she said, was the level of self-criticism among foundation chiefs. Unprompted, 80 percent of them volunteered in the surveys and interviews that they are not humble enough in their work.

“They feel there’s too much ego,” she says. “They believe foundation CEOs need to listen and learn more.”

That desire to listen to grantees and work with other grant makers without getting into turf wars was reflected in several personal essays from foundation leaders that the center included in the release of its report.

For instance, Darren Walker, president of the Ford Foundation admitted that occasionally Ford has treated grantees like “contract workers” rather than collaborators.

For foundations to reach their potential, “we might start with doing everything we can to enable our grantees to reach theirs.”

Nicky Goren, president of the Eugene and Agnes E. Meyer Foundation, sounded a similar note.

“Foundations are often quick to preach about the importance of grantees working together and aligning efforts,” she says, “but are slow to put this in practice themselves.”