Source Codes of Foundation Culture and Streamlining Imperatives

Source Codes of Foundation Culture and Streamlining Imperatives

I am a long-time resident of Menlo Park, California, perhaps best known these days as the physical home of Facebook.  Over the past 27 years, I’ve had a bleacher seat to observe the evolution of the economic and social phenomenon we refer to as Silicon Valley.  There’s lots of rich satirical material on daily display in this milieu, as evidenced by the success of the hilarious (and often spot-on) HBO series.  But it’s also hard not to feel at least some admiration for the sustained creative energy that has made this kind of success possible.

After all, those of us who have worked in a variety of organizations know that it’s no simple feat to build and grow an enterprise that relies on continuous innovation as its core business model.  How do Google and Apple and their competitors do it? Of course they have access to almost unlimited capital. But I’ve been particularly struck by the high value placed on organizational culture as a magnet for top talent and springboard for consistently superior performance.

While there are certainly some easy-to-satirize elements of Valley culture, there’s also serious attention paid to every element of organizational design to minimize unnecessary inefficiencies and distractions and maximize opportunities for creative cross-fertilization and cutting edge thinking.  When the pace of change in your industry is akin to “warp speed,” constant, real-time learning and adaptation is not a luxury, it’s a necessity.

The Philanthropy Perspective

As someone who has worked in and around private foundations as long as I’ve lived in the Valley, I am constantly struck by the degree to which our organizations have basically ignored the lessons about organizational culture that are embraced as core operating principles by the Tech sector. Philanthropy is certainly not under the same kind of pressure to adapt and perform in real time. But for a field that likes to think of itself as “society’s risk capital,” we’re remarkably stodgy about examining how our own self-imposed institutional constraints may be blinding us to historic opportunities or making us too slow to act.

Let me quickly and emphatically state that I’m not an advocate for “venture philanthropy” or for transforming philanthropy so that it operates “more like a business.”  There are a number of natural experiments of that sort underway, underwritten by Tech entrepreneurs as their contribution to philanthropy. So far, I would argue that the evidence of their effectiveness compared with “traditional” foundations is inconclusive at best. But that’s not to say that foundations have nothing to learn from organizations that prioritize culture as one of the keys to their success.

Streamlining Progress

I’ve been a big fan of GMN’s efforts to streamline foundation operations. You have articulated a set of clear, sensible principles that if fully implemented across the field significantly enhance the responsiveness, efficiency and effectiveness of foundations.  You’ve devised useful tools and creative ways of sharing learning across your members.  Real progress has been made. But you’ve also been frustrated by just how hard it can be to convince your colleagues to change  outdated and inefficient institutional practices, even if the potential benefits of change seem manifestly clear (at least to us advocates).

Alas, I have no quick and easy prescriptions to ignite change in organizations that are buffered from external (and internal) challenges by formidable invisible walls of power and privilege. We know that there are many concrete ways in which foundations could come closer to realizing their full potential. But if we’re going to succeed in our change efforts, I’ve come to believe that our efforts must be informed by a deeper look at the way shared aspects of organizational culture shape and constrain the ways that foundations act, including resistance to streamlining their operations.

Finding the Roots of Foundation Culture

Grantmakers for Effective Organizations has recently published a report I co-authored with Kathleen Enright entitled  It attempts to trace some of the organizational antecedents of contemporary foundation culture that shape our behavior as organizations.  GEO is planning to use it to stimulate conversations across the field about the ways that some of our shared cultural characteristics can actually detract from our potential effectiveness.  We’re also hoping it will be a useful resource for those of you who are on the front lines of Project Streamline.

Some aspects of organizational culture are readily observable, such as the design of our offices, our manner of dress, and style of public communications, including websites, documents and application procedures. Others are largely invisible to outsiders and can be so subtle and pervasive that insiders simply accept them as “the way things are meant to be.” In my experience, few foundations have made an effort to fully map and understand their own culture, let alone examine which of its elements are successfully aligned with their aspirations (and which may actually be working against them).

Project Streamline has done an excellent job of spotlighting readily fixable flaws in foundations’ cultural interface with grantseekers and other external stakeholders. But to fully realize our agenda, we will likely have to engage with senior leadership to jointly illuminate some of these less obvious cultural barriers to change.

In “Source Codes,” we identify three strands of cultural influence on foundations: banks; universities; and for-profit corporations. The core cultures of all three organizational types demonstrate remarkable strengths, to be sure. But one could also argue that foundations unduly manifest some of the least sanguine aspects of each of those three cultural strands as well.

We’ve borrowed a good deal of foundation lingo from banking culture. “Program Officer,” “portfolio,” “due diligence” and “docket” are all reminiscent of their banking equivalents. Highly structured grant approval procedures driven by calendar deadlines once again parallel the internal process of financial institutions. But at the deepest level, banking culture has most influenced foundations’ notions of fiduciary responsibility. Performance is more often measured by how much staff has been able to grow the funds under management than by how generous or successful they have been in distributing dividends.

Since many foundation leaders and staff have come from universities, it’s also not surprising that our organizations incorporate key elements of that culture, i.e. the priority placed on written analysis and background research. Much time and effort is spent in preparing board materials, modeling the rounds of peer review and comment involved in preparing an article for publication in an academic journal.

Foundation governance draws directly on for-profit corporations for its inspiration. That influence can be seen in the power wielded by the investment committees of our boards and the high priority placed on dynamic leadership at the CEO level. Tech entrepreneurs have brought a different form of corporate thinking to the board room, including the truly disruptive idea of challenging perpetuity in favor of a more planful spend-down of assets.

A New Consciousness

These are but a few examples of the often unexamined cultural factors that guide (and constrain) foundation thinking and behavior.  If our organizations are to prepare to act in a different way, i.e. in accordance with Project Streamline principles, it will require a new consciousness about the influence of organizational culture. I believe that Individual foundations can benefit from revisiting the big questions about their purpose and digging deep into their shared cultural assumptions to see if they are aiding or hindering their adaptability and effectiveness.  As Project Streamline has done, we also need to continue to seek inspiration and support from peers … as well as potentially from some unconventional cultural role models.

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