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The Grantseekers Guide to Foundation Transitions

September 05, 2012

(Bradford K. Smith is president of the Foundation Center. In his last post, he wrote about philanthropy's data dilemma.)

Foundation_transitionsThings are going just great for your nonprofit. You've painstakingly constructed a stable group of foundations that is providing a steady stream of grants to your organization, program officers like you and invite you to their convenings, and you've achieved that much-desired goal of having a diversified funding base.

Then comes the press release: "Mary Doe, president of the Acme Foundation in Anywhere, USA, has announced that she will retire after twenty years of service. The foundation’s board has contracted the services of Russell Reynolds/Spencer Stuart/Heidrich & Struggles/Issacson Miller to conduct a national search." The Acme Foundation is your main funder and the future is in doubt. The headhunters call you to inquire about what qualities the foundation should be looking for in their next leader, and you have to stifle the urge to scream, "Just find somebody who won't feel s/he needs to change everything and screw it up!"

Then the first symptoms appear. Big-name consulting firms start lining up at the foundation's door. Foundation communiqués include phrases like "no new commitments will be considered while the foundation undergoes a strategic review." Your program officer is unable to commit to your proposal. It's difficult to get a meeting with someone at the foundation who can tell you what's going on. After a year or more, a letter from the president explaining how the foundation's new priorities will further its mission appears on the foundation’s Web site. Eventually, you learn that the "urban poverty" program under which you've been funded is being phased out in favor of a new "innovation economy" initiative.

As a grantseeker, you don't have to remain powerless on the sidelines while the foundation finds its new path. There are things you should know and can do that will help you and your organization weather the storm.

Take heart, the odds are in your favor
If you are already a grantee of the foundation, there's a good chance you will remain one. Between 2008 and 2010, some 1.1 million grants tracked in Foundation Directory Online went to 128,000 recipients. In other words, the number of new organizations entering the funding portfolio of a foundation is far less than the number of grantees who are renewed year after year. Foundations are more faithful than you may think.

Give it your best shot
The above notwithstanding, if you are not currently a grantee of the foundation, a transition is a great time to lob a proposal into the process. It just might be that your ideas align with its new direction or provide the spark that helps the foundation find one. Even if you can't submit a proposal, write a blog piece or share your ideas with a foundation consultant or insider -- anything that might get your insights noticed at a time when things are in flux.

Remember, the foundation is still making grants
The kinds of form letters and statements foundations crank out during transitions can sometimes give the impression that all they are doing is reflecting and planning. Not true. Regardless of how much a foundation is refreshing, revisioning, or renewing, the IRS still requires that it pay out 5 percent of its assets or be hit with a higher excise tax. Organizations are still getting grants; it might as well be yours.

Ask who your contact at the foundation is
It's amazing how many foundations drop the ball on this one during transitions. Ensuring that grantees know who their contact is at the foundation is a basic tenet of grants administration. But with the inward focus and many moving parts that typically accompany a transition, grantees sometimes get left in the dark. Asking who your contact will be during a transition conveys an impression of good management while reminding the foundation that you exist.

Be careful about praising the past
If you find yourself in a meeting or at a reception with a new president or program officer, don't go on and on about how great the foundation was in the past. Especially in the early years after a transition, s/he may feel the need to break with the past so as to focus on creating a new future for the organization. Lest your remarks be interpreted as a critique of the new direction, you are better off listening and engaging about the future than waxing nostalgic.

Think like a chameleon
Very few foundations ever make a radical break with their past -- donor intent, mission, history, boards, and relationships all work against it. Transitions are more like a variation on a theme. So your organization needs to act a bit like a chameleon in adapting to the new direction. There's nothing wrong with this. A chameleon does not stop being a chameleon because it adapts to a new environment; it survives. Besides, it might be that the new priorities and programs articulated by the foundation point to the kind of re-think you should be doing in your own organization.

Foundation transitions are seldom seamless affairs. Incoming presidents, more often than not, are replacing an incumbent that has been there for a decade or more. Typically, they must navigate a range of time-honored practices and figure out a way to unlock the knowledge in the heads of existing staff, family members, and/or trustees. Getting the information needed to run the ship and chart a new course is challenging and time-consuming. Moreover, because foundations are free from market pressures and insulated by endowments, foundation leaders just don’t have a whole lot of levers to encourage staff to work in different ways. As a result, transitions are often drawn out and anxiety-provoking affairs for grantees. Take heart. While you can't control what happens inside a foundation, as a grantseeker you have more power than you think.

-- Brad Smith

Comments

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Brad - this is a great post with lots of useful information for grantseekers. But I want to highlight the reality of the situation you describe - foundation executives transitions are really interesting points in time. The first piece of research I ever did on philanthropy, while still in graduate school at Stanford, was to look at the situations under which foundations changed their program guidelines. Was it when they accomplished something? Achieved their goals? Grantees were stable and operating with independent funding? No, no, and no. It was when new leadership came on.

I'm a big believer in leadership and change. But for foundations that are working with grantees on hard, long challenges, changing course for internal reasons only (executive transition) is irresponsible. These transition moments are key to being successful on long and short term goals, and how an institution handles them vis-a-vis their immediate external stakeholders can say a lot.

Lucy

Board transition is often less public but more disruptive than staff transition. Changes in direction led by newer directors looking to make their mark are typically incremental--until those voices gain a majority. Brad is optimistic about the leverage nonprofits have during staff transitions (maybe overly so), but there is usually no access at all to board members as they rewrite the foundation's mission.

The most important takeaway might be that legacy is never your strongest argument for foundation funding. As for praising the past, see my Number 4 in Five Things Never to Say in a Site Visit: Don't Wax Nostalgic About My Predecessor! http://bit.ly/TdLaEj

Great piece of early research, Lucy, linking change in program directions to change in leadership. PO Confidential, I see the date on your linked blog piece is September 3, so we must have been channeling each other's thoughts. The board dynamic is an interesting one, which is especially true in smaller, thinly-staffed, foundations. But I have also seen nonprofits do an incredibly good job of mapping out a foundation's board and finding a way in. How successful they are depends on how much the board members want to be program officers. By the way, I found your piece of advice about not dissing other organizations in order to promote your own to be very insightful. For the many years I made grants and supervised program officers, I use to be very suspicious of those that went into scathing critiques of other organizations in order to convince me to fund their own. But as a nonprofit it can be tough not be drawn into some degree of criticism of other organizations or their projects when one sees program officers (or presidents, or trustees) sometimes chase new ideas and organizations almost irrespective of whether those have any chance of sustainability. The reality of being a nonprofit without an endowment is that there are only two ways to fund your budget--selling services or getting grants/donations: both are competitive processes.

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