Majority of Foundation Leaders Expect Increased Scrutiny, Study Finds

Six in 10 foundation chief executives believe that grant makers will come under increasing scrutiny by government regulators in the next 10 years, according to a survey that examined leaders’ attitudes on foundation performance. And nearly one-quarter of foundation leaders predicted that over the next decade the federal government will start requiring grant makers to distribute more of their money annually.

The survey of foundation executives is part of a new study on foundation performance and how best to measure it. Produced by the Center for Effective Philanthropy, an organization in Boston that examines the workings of grant makers, the study also used survey responses from foundation grantees, interviews with trustees, and analyses of foundations’ informational tax returns to draw its conclusions.

The study, part of a larger effort by the center to help develop a common strategy by which foundations can measure their financial and grant-making performance, found that directly measuring the social benefits wrought by foundation grants is “difficult — if not impossible — to implement on a foundationwide basis.”

Even though many foundations have used traditional measurement tools, such as grant evaluations or program evaluations, “most foundations have not yet been successful in aggregating these results to describe the performance of the foundation as a whole,” the report said.

Curbing Spending

The center’s eight months of research also found that grant makers said they are facing increasing pressures to improve what they do and how efficiently they do it.

Citing the prospect of more scrutiny from lawmakers and state and federal regulators, and uncertainty over economics, foundation leaders said they are more likely to be held accountable now than in years past, and that they must find ways to use dollars more wisely during a time of extreme stock-market volatility.

Thirty-eight of 77 chief executives of large foundations reported making some budget cuts this year, while 25 of them said they will be awarding less money because of the effects of the national economy.

In the survey of grant recipients, the center asked questions of 3,500 beneficiaries of 23 of the nation’s largest foundations.

Grantees surveyed said that it takes four months, on average, between the time they submit a grant proposal and receive an answer from large foundations.

Over the duration of the average grant, charities said they spent roughly 100 hours, on average, preparing the proposal, providing information so the foundation could evaluate the results of the grant, and dealing with other monitoring by the foundation.

The most time any organization said that it spent on such activities was 227 hours; the least was 26 hours.

Grantees reported being “highly satisfied” with the performance of those foundations that made grants to them. However, many of them said they had received little help beyond the money foundations provided — even though most of the chief executives of the foundations interviewed for the study said they thought it was important for foundations to do much more than simply give charities money.

The study was financed with $345,000 from the Atlantic Philanthropies, in New York; the Surdna Foundation, in New York; and the David and Lucile Packard Foundation, in Los Altos, Calif.

Free copies of “Indicators of Effectiveness: Understanding and Improving Foundation Performance” are available on the Center for Effective Philanthropy’s Web site, http://www.effectivephilanthropy.com or by calling the organization at (617) 956-0800.