Foundations and Donors Urged to Move Quickly to Adapt to Changes in the World

Foundations, donors, and others involved in giving away money need to change quickly to keep up with the world around them, argues a new report by the Monitor Institute.

The report says that philanthropists are still going about their work in many of the same ways as they did a century ago. While some forward-looking donors have tried new approaches—for example, embracing a focus on efficiency, effectiveness, and responsiveness—they ought to also coordinate their activities with other organizations and find ways to adapt more quickly based on new information and changes in the world around them, says the report.

The study, by the Monitor Institute, a group in San Francisco that provides research and consulting services, outlines 10 ways of working that will help donors operate in a fast-changing world.

They include:

Understanding the context. New technologies are enabling donors to better understand what others are doing to solve the issues they care about, the report says. For example, foundations and nonprofit groups in the Midwest created a map of organizations working on clean energy and the approaches they are taking so they could come up with a way to move forward together.

Choosing the right tools. Grants are only one way that foundations can advance their goals, the report says. For example, the Vermont Community Foundation is offering donors the opportunity to invest in local, socially responsible businesses and using the fund’s shareholder rights to influence the behavior of companies whose stock it owns.

Creating and supporting networks. A single grant is rarely enough to improve a complex problem, the report says. Donors ought to support networks of grantees working on an issue. For example, it notes that the Barr Foundation is building a network of Boston groups that run after-school programs.

Demonstrating a willingness to change. Most donors lack ways to solicit ideas or adapt their programs and processes based on changes in the world, according to the report. It cites the Rockefeller Foundation as an exception, noting that it decided to replace its longstanding grant-making programs with a set of interconnected projects that operate for set periods of time. That change was designed to allow the foundation to respond more nimbly as things changed.

Sharing much more information with others. “For mission-driven organizations like foundations, it makes sense to start from a place of sharing everything and then make a few exceptions rather than a place of sharing little where transparency is the exception,” says the report. The study describes how Ashoka’s Changemakers Web site seeks answers to social problems by asking people to choose their favorite proposed solution and give feedback on how they can improve their approaches.

Recognizing that risks can bring big rewards. The report says that the most-effective foundations will be the ones that realize failures are a natural part of achieving breakthroughs. One risk highlighted in the report is the decision by the Heinz Endowments, the Grable Foundation, and the Pittsburgh Foundation to cut support to the city’s struggling schools abruptly and publicly to wake people up to the dire need for change.