Phil Buchanan: "We've tried to pierce the bubble"

If, as a chief executive or senior program officer of a big foundation, you have the power to disburse large sums of money, people are likely to let you know, in ways both subtle and direct, that you are wise, witty, good-looking and an all-around swell human being. Modest and self-aware you may be, but it is hard to resist flattery. Someone has to come along, like the child in Hans Christian Andersen's The Emperor's New Clothes, and speak the truth.

In the world of foundations, Phil Buchanan, the affable 46-year-old  president of the Center for Effective Philanthropy (CEP), plays the role of that child, albeit in an exceedingly diplomatic way. Buchanan and his colleagues at the CEP prod foundations to set clear goals, become better listeners, measure their progress and share what they learn. The CEP has generated research and built feedback mechanisms -- notably its Grantee Perception Reports -- that work like mirrors, enabling grant-makers to see themselves as they are seen by others.

This is important and challenging work, in large part because there are no simple levers that anyone can pull to improve the performance of foundations. Foundations are fundamentally accountable to no one.

"The freedom foundations have--it's a virtue and a vice," Buchanan told me when we met last week in his office in Cambridge, MA. "It means they can take on issues that other actors in society can't or won't. Freedom also means that you’re free to be totally ineffectual, and people won’t even notice.” 

CEP might notice, but it won't sound an alarm. It's not a watchdog group, but a research organization and think tank, founded and funded by foundations that want to improve the practice of philanthropy. It's my impression that, given those constraints, CEP does its work very well.

CEP was started in 2000 by a group that included Michael Porter, the legendary Harvard Business School professor; Mark Kramer, his colleague at consulting firm FSG; and Joel Fleishman, a law professor and author. Its original funders were The Atlantic Philanthropies, the David and Lucile Packard Foundation and the Surdna Foundation.

Buchanan, a strategy consultant and HBS grad, has led the organization from the start, surviving some early tensions with the board. (Porter and Kramer departed in 2004.) Today, he oversees a nonprofit with an annual budget of about $7.5 million and about 40 staff members, divided between Cambridge and San Francisco.

The timing of my visit was fortuitous: Buchanan has just published Big Issues, Many Questions [PDF, download], a 32-page essay about the challenges facing philanthropy that's livelier and more insightful than its title suggests.

Buchanan is quick to defend the sector against what he views as unwarranted attacks. He has little patience for buzzwords, silver bullets or the arrogance of what he calls the "business-knows-best" crowd that is eager to "disrupt" or "reinvent" philanthropy. What it takes to be effective as a foundation, he writes, is "straightforward and pretty much timeless, albeit very hard to get right. It’s about clear goals, coherent strategies, disciplined implementation, and relevant indicators to gauge progress and fuel improvement."

That said, Buchanan goes on to make a compelling case that foundations should perform better. They ought to be unafraid to challenge the establishment, willing to use investments as well as grant-making in pursuit of mission, better at assessing their own performance, eager to collaborate and smarter about how they support nonprofits.

A few highlights:

On the potential of foundations to support citizen movements that challenge the status quo: My view, for what it’s worth, is that foundations have not challenged sufficiently the fundamental socio-economic and racial inequalities we seem to have grown accustomed to living with in this country...foundations have a unique opportunity to push for greater racial equity and to fight inequality more broadly.

On the need for a more democratic approach to philanthropy: Funders that seek to design and implement “solutions” in a top-down way will meet increasing resistance as citizens rightly rail against a process that leaves them out of the conversation.

On the benefits of setting ego aside: Working together in a way that really creates impact requires us to get over ourselves. We can’t all look good, all the time. We can’t all lead, all the time. We can’t all “punch above our weight.” We can’t always all be the ones “creating leverage” or attracting disproportionate dollars to our ideas.

To which I say...yes, yes and yes! But when we sat down, and I expressed impatience with the fact that foundations and nonprofits aren't making as much progress as they should on those issues, Buchanan reminded me that philanthropy is hard. 

“Foundations and nonprofits are working on the problems that have defied government or market solutions. So they’re harder,” he said. “Andrew Carnegie said as much. Warren Buffet said as much. Sean Parker doesn’t know that yet, but he’ll figure it out.” Parker, in a much-discussed essay for The Wall Street Journal headlined Philanthropy for Hackers, dissed traditional philanthropy as "a strange and alien world made up of largely antiquated institutions."

But is philanthropy, in fact, all that hard? It is, if what we mean by that is achieving the purposes of philanthropy, such as improving education (the single biggest sector supported by foundations), reducing the burden of disease or alleviating poverty. But improving the practice of philanthropy need not be hard. Foundations could, without breaking much of a sweat, be far more transparent about what they do, and share insights about what they know. They could invest their endowments to promote clean energy or create jobs in disadvantaged areas. Most important, in my view, they could bring greater pressure on their grantees to try to set clear goals, report publicly on their progress and share what they learn from the success and failure--and, of course, be willing to pay nonprofits to evaluate what they do.

To its credit, CEP is active around all these questions, publishing research on performance assessment, transparency and governance, among other things. More than half of the 50 largest US foundations and about 250 more use CEP's Grantee Perception Reports to learn how they are viewed by nonprofits.

Buchanan says: “If you are working in a foundation, you live in a bubble. No matter how down to earth you are, you do not hear the candid truth. We've tried to pierce the bubble."

The best foundations then benchmark their scores against their peers, and look for ways to improve. Some do it well. See, for example, the evaluation pages at the Robert Wood Johnson Foundation and the smaller New York State Health Foundation. It's probably no accident that both operate in the health care industry, which tends to be evidence-based.

But for the laggards, a question remains: After CEP points to problems with philanthropy and proposes solutions, who or what will bring pressure on them to do better?