Why it’s Important for Foundations to Align Their Investments with Their Values

Posted by on May 7, 2019 in Articles, Blog

When working with foundations in strategic planning or evaluation efforts, I always advise that we start with the organization’s values. What are the fundamental drivers of the foundation’s work, what it wants to achieve and how it will be successful in those efforts. In a recent conversation with Brad Norton, Director of Endowment Solutions, for Winfield Associates, we looked at another important area for foundations to consider – aligning their investments with those core values. Q: First off, why do you advise your foundation clients to prioritize aligning their investment criteria with their core values? A: We advise all our foundation clients, regardless of size, to create an Investment Policy Statement (IPS) that articulates the investment return objectives, asset allocation ranges, and responsibilities of Trustees and third-party advisors/managers. Incorporating trustees’ values into the investment strategy is a process. This requires trustees to reflect on the foundation’s mission statement and consider selecting investments that have value alignment in their business practices. These practices could range from workforce diversity to reducing environmental waste to shareholder-friendly policies. Q: I’d imagine that sometimes achieving that alignment is easier said than done. What sort of guidance do you provide foundations in exploring what alignment can look like for them? A: Every foundation has its own culture and value system. The first question to ask is “Do we want our portfolio to seek maximum returns, regardless of investment type, to provide the highest level of funding to communities?” or “Do we want to align our values with investments that will seek competitive returns but may constrain our opportunity to earn the highest returns?” If values alignment is the primary objective, then a foundation must determine whether to: exclude certain types of investments such as tobacco, alcohol, and weapon manufacturers pursue an inclusive strategy of owning investments that support positive societal values such as diversity and clean environment, or a combination of exclusions and inclusions. Identifying corporate citizens making positive contributions to society should be a goal. A caveat is the more restrictive the values screening, the ability to generate higher returns may be constrained. Q: Do you have a couple of examples of how different foundations have used their core values to clarify or strengthen their investment policies? A: Yes, we have seen foundations clearly set expectations with their investment advisors in terms of acceptable types of investments. As the IPS is an internal document, the foundation can rely on the advisor to select appropriate investments as well as communicate to the underlying investment manager what are acceptable attributes. Investing in companies pursuing sustainability practices is an area of focus for many foundations. Trustees can confidently “advocate” their foundation’s values through the investment process. Q: What advice might you have for a foundation that is thinking about how best to follow its core values into an investment strategy? A: There are numerous approaches a foundation can consider. Incorporating core values into an investment strategy does not have to be an all-or-nothing proposition. Spend meaningful time discussing trustees’ values and how to incorporate these values during your next IPS review. An IPS is a “living” document that should be reviewed every few years. Similar to corporations that may seek to reduce fossil fuel consumption every year, a foundation could set a goal to increase its value aligned investments...

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Supporting Innovation to Tackle Poverty

Posted by on Apr 16, 2019 in Articles, Blog

What was it that wise person once said about expecting different results from doing the same thing over and over again? Well, what would happen by coming at a particularly challenging issue like poverty from another angle? What would happen if you took a page from the handbook on entrepreneurship, injected the spirit of innovation and mixed it up with funding and coaching support for smart folks who bring new ideas? The Sisters of Charity Foundation of Cleveland did just that with the launch of the Innovation Mission: Fighting Poverty with Big Ideas. Foundation President Susanna Krey talked with me about what they, the social entrepreneurs and the community are learning. Q: The Foundation made a crucial strategic decision with its Innovation Mission. How did you land on this approach? A: We have spent the last two decades deeply immersed in seeking ways to break the cycle of poverty here in Cleveland. We’ve seen some really incredible results, like a forecasted end to chronic homelessness by 2020, but when all is said and done, a full one-third of Clevelanders still live in poverty. A fellowship was merely the vehicle we used to develop more impactful ideas that could address the issue of poverty in Cleveland. We believed that innovation can be learned and wanted to begin to develop this capacity in our partners. We know that innovative approaches can provide depth in understanding the problem. We hope these individuals will help their organizations incorporate these ideas into everyday practice. Q: What have been some of the most significant moments in the process you launched? A: We kicked off The Innovation Mission in December 2017 with an opening reception. It was such a memorable evening, and we were inspired by the fellows’ presentations and passion for the issues they chose to address. It felt like a very exciting moment, for all of the stakeholders who had been involved in the fellowship’s development to see the program come to fruition with such energy. The beginning of the design process was also a milestone. During the beginning months of the fellowship, the fellows faced various challenges and obstacles that seemed insurmountable at different times. Some of these required the fellows to pivot or refocus their projects. But, at 10-12 months into the fellowship, all of the fellows seemed to hit their stride; they had adjusted their projects and were moving confidently in a direction that held opportunity for success. And our first big result from one of the fellowship projects came from the work of Hazel Remesch, a supervising attorney for the Legal Aid Society of Cleveland. Hazel’s work led directly to a new rule in the Cleveland Housing Court that will make it easier for residents to seal their eviction records, eliminating a major barrier to safe and stable housing. Q: What would you say have been the key learnings thus far from the people which the Innovation Mission is supporting? A: Each of the fellows has made significant progress on their initiatives through research and partnerships, and all have credited The Innovation Mission with helping them think differently about their approach to work in their professional careers. The fellows have learned that true innovation is not just a bright idea; it involves constant iteration, some failure and plenty of learning. When they began...

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Compensation Approaches When Long-Serving Chief Executives Transition Out

Posted by on Apr 2, 2019 in Articles, Blog

Compensation Approaches When Long-Serving Chief Executives Transition Out

I recently assisted a small-staffed, private foundation in a planned leadership transition of their chief executive who had a tenure of 20-plus years. To get a sense of how other foundations approached creative retirement/transition packages for long-serving foundation chief executives, I posted a list-serv inquiry with Exponent Philanthropy, 21/64 and Philanthropy Ohio. With the permission of the foundation, I’m sharing some of what we learned. I have edited the comments to ensure the privacy of the respondents and organizations. We have a local private foundation work with us as a community foundation to establish a named endowed fund in honor of their former staff and board alumni to benefit the organizations or initiatives that the person identified as the most meaningful to them. Everyone has really appreciated this dedication to honor their community impact legacy and the private foundation enjoys supporting the local community foundation. Director of Donor Services, Community Foundation I was involved with a private foundation whose executive director left after many years. While he requested compensation upon his exit, their attorneys cautioned the board on giving too significant an amount of compensation after the executive had left the organization, because it might appear to be “excessive compensation” for a nonprofit. Instead, they made a grant to a nonprofit where the outgoing executive director became a fellow, and worked part-time for a couple of years. Executive Director, Philanthropic Support Organization I’ve heard of a grantor family that donated to a Charitable Remainder Unitrust with the income payments to the retired Director for life; with remainder to qualified public charity(ies). Vice President, Financial Services Corporation I’m happy to be able to weigh in on this one. When our (previous) Executive Director retired, the Board elected to honor his 25 years of service in the following ways: We retained him as a salaried employee with the title of Executive Consultant for six months. During this period, we paid him the same salary, but without any fringe benefits. Our board also established a grant award fund in his name. The award of $50,000 will be given to one organization annually that best exemplifies excellence in our strategic focus area. Executive Director, Private Foundation I took over as the CEO of a small foundation back in mid-2017 and I assumed the role because the exiting CEO of 20 years was retiring. There was a one-month overlap between us; his institutional knowledge being passed to me over 30 days allowed for him to be needed a bit less after his exit. My board also supported on-going support from the prior executive as needed for up to one year (that was in my court). We contracted with him for two additional items afterwards. There were a series of client/donor/investor meetings that he flew to so warm introductions could be made and so he also could serve as my guide (we cover a large geography with different groups of influence). We paid all of his expenses and a consulting fee based on his hours of work. In total it probably worked out to be about $1,000/day + expenses. He also completed a report for our constituents that was an annual report that he worked with me on but largely did the work for. That was all we needed in our space but I still...

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Learning Organizations

Posted by on Feb 28, 2019 in Articles, Blog

I’m always interested in finding out how different organizations pursue a learning agenda. I talked with Connie Hawk, Director of the Licking County Foundation in Newark, Ohio, who oversees a staff of six. Here’s how Connie inculcated a learning culture inside this community foundation.   Q: I understand the Licking County Foundation (LCF) has a team approach for staff professional development. How did this approach develop – intentionally or organically over time? A: It was a bit of both! There’s a culture of learning, sharing, curiosity, and openness to trying new things at LCF. Our team approach helps a small staff take advantage of the many and varied professional development opportunities available to our field. These opportunities are shared by everyone at weekly staff meetings to gauge interest. Sometimes, we’ll decide to participate together—like watching a webinar (always better with pizza). Sometimes, we’ll divide and conquer—attending individually and then sharing insights with the team. Sometimes, we’ll invite others in our community—board and committee members, donors, nonprofit partners, and other funders—to join us as we learn.   Q: How do you identify priority issues for staff learning? A: Key factors are: LCF’s strategic and succession/leadership development plans, Licking County’s community blueprint, opportunities/challenges/initiatives which bubble up and we’re asked to get involved, trends, new things we’d like to try—and, importantly, individual staff interests/growth.   Q: What have been some of the outcomes of this kind of professional development approach? A: There’s been a rippling effect. This team approach extends to sharing best practices or new ideas with our community. LCF has a robust series of workshops which are offered to area stakeholders. For example, last year, teams of nonprofit board and staff members attended a series of six workshops to strengthen their organizations and our community through endowment building. We also partnered with an area university to host a workshop on civil discourse skill-building at the public library. This year, we’ll focus on succession planning and board development. One of our staff members has taken the lead in organizing a successful women’s leadership conference. Another staff member leads a youth philanthropy program. LCF has become a go-to for best practices and new ideas.   Q: What advice would you share with other foundations based on this team effort in professional development? A: Be open to and encourage all kinds of learning—you never know where ah-ha moments of inspiration will come from. Make professional development a priority for not only your own organization, but for sharing it with your community. Include it as an operational budget line item with each staff member having an equal share of this learning pool. Allocate strategic grant funds annually which are restricted to offering capacity-building opportunities for the community. Professional development creates...

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Who Do You Turn To?

Posted by on Feb 19, 2019 in Articles, Blog

Who do you turn to when navigating board, staff or community dynamics?   I’ve served as executive and senior staff for several foundations and been an advisor to dozens of grantmakers and nonprofit organizations around the country.  It’s not unusual to find myself in a coaching role with a chief executive or board chair in these assignments.  They place great value on having a trusted, experienced voice to provide objective and reliable guidance through the twists-and-turns of their work. I asked two foundation chief executives that I’ve coached to share their stories.  I always conduct such work on a confidential basis so am not including their names or affiliations. What moved you to seek executive coaching in your work? Executive 1:  As the ED and our sole employee, I was looking for support to improve my leadership skills.  This would in turn create more effective management of the foundation and greater impact in our community. Executive 2:  Sometimes working so closely in the day-to-day activity interferes with examining all the possibilities.  I wanted to have a fresh set of eyes, particularly as we were updating our strategic plan.  I appreciate the spectrum of philanthropic support groups out there, but I’ve not found a peer group from a similar enough circumstance to our foundation. I was seeking someone who understood philanthropy, someone of expertise. What did you learn through your coaching experience and how did you apply that learning in your work for the foundation? Executive 1:  I learned how to better navigate the ins-and-outs of strategic planning, and how to maneuver through the delicate dynamics present in the board room.  Jeff also encouraged me to find my stance in leading our board to find a balance in maintaining our foundation’s independence while continuing to partner with much larger funders. Executive 2:  This coaching helped me learn ways to utilize input from multiple stakeholders more effectively.  This helped me incorporate more input into our activities and goals, and more tangible ways to evaluate what success means for the foundation.  I added more indicators to consider if our actions had the intended impact and to better test our assumptions. What counsel would you share with other foundation executives about using coaching to strengthen their work? Executive 1:  It was helpful to have an independent, experienced professional to take a closer look at my personal skills and to lean where I could be more effective.  Jeff provided concrete suggestions and examples on implementing change so I could achieve more impact in my work.  He also connected me with like-institutions.  Being able to network with others when it requires confidentiality was extremely helpful. Executive 2:  When you are passionate about your work, it is personal to you and that can mean you don’t want to give up control.  In working with a coach, develop a trusting relationship – and remember trust goes both ways.  This work can involve sharing vulnerabilities in order to be most helpful.  An open, trusting and confidential relationship will provide for the best possibilities to carry out your responsibility. For more information on how we help foundations and nonprofits strengthen their impact through executive coaching, strategic planning, evaluation and organizational development, contact Jeff Glebocki at or...

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The Sunk Cost Fallacy – 5 Red-Flags That Tell You It Might Be Time to Move On

Posted by on Aug 14, 2018 in Articles, Blog

I recently read an article on behavioral research about the sunk cost fallacy (The Economist, 6-2-18)and it got me thinking about how much of this goes on in philanthropy. As many economists and writers have described, the sunk cost fallacy is irrational decision-making driven by emotion and based on past investments – and which disregards actual data and experience. Put more succinctly, it’s the proverbial practice of throwing good money after bad. I’m not talking here about the hard work of tackling significant problems that take years of focus and commitment to have an impact on. I am talking about foundations and nonprofits that continue to invest time and money in programs and initiatives that aren’t going anywhere soon… but maybe if we give it one more year of funding or another redesign or hire different staff, then we’ll see some change. Or more likely, maybe not. As I’ve written before, knowing the difference between when to stay the course and when to pull the plug – and having the gumption to do so – is called leadership. Here are five red-flags that suggest the sunk cost fallacy may be driving your decision-making to put more time and money into a project or organization when it’s actually better to move on: You see lots of “activity” going on and very little real action There’s no evidence of substantial change, and there’s an inability and/or hesitance to set measurable objectives or targets Senior leadership stops showing up for meetings or they start sending their lieutenants Meetings result in agreements to have more meetings and not much else It’s a favorite endeavor of one or more board members and easier to keep funding it or working on it rather than calling the question. If you see these red-flags popping up in your work, hit the pause button to re-consider if and how you continue your efforts. For more information on how we help foundations and nonprofits strengthen their impact through strategic planning, evaluation and organizational development, contact Jeff Glebocki or...

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A Must Read Article on Foundation Transparency

Posted by on Jun 13, 2018 in Articles, Blog

Transparency has become a watchword in private philanthropy, but far too much of the discussion of this timely topic remains steeped in opinion rather than research. A new Foundation Review article reports critically important and some surprising findings from new research not previously addressed in foundation literature. This article provides new guidance regarding potential benefits and risks inherent in foundation transparency practices. Foundations should carefully consider their transparency-related policy/strategy from perspectives framed in this article. The article is available for free download at the Foundation Review. I encourage you to read this article as you think about transparency within your foundation. A tip of the hat to colleague and author Bob Reid, CEO of the J.F Maddox...

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Funding Opportunity for Foundations & Their Grant Partners

Posted by on May 17, 2018 in Articles, Blog

I don’t usually work the fundraising side of the street, but here’s a unique opportunity for foundations and their grant partners to ramp up their work together. The Fund for Shared Insight is now acceptingapplications for Listen for Good grants. Submissions are due by June 29, 2018; click here for all the details. Listen for Good is “an initiative dedicated to building the practice of listening to the people we seek to help.” Nonprofits and funders are invited to join this effort “to explore simple but systematic and rigorous ways of getting feedback” from people philanthropy is meant to serve. In non-foundation-speak, this is helpful market research for nonprofit service providers and the grantmakers who fund them. Local funders nominate a nonprofit grantee and commit to providing $15,000 to $30,000 for selected organizations in addition to the funding the nonprofit receives through the Listen for Good initiative. This national funding partnership, supported by 69 co-founders, has made 158 grants totaling more than $21 million across the country. Hint: The Fund for Shared Insight has not received as many applications in the past from the Midwest, Upper Midwest and the Western US as other parts of the country. This is an opportunity to change...

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3 Reasons to Plan for Leadership Succession Now

Posted by on Mar 29, 2018 in Articles, Blog

Research tells us that most foundations and almost half of nonprofits nationally do not have written leadership succession plans in place. Here are three reasons to start succession planning in your organization now.

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Advocacy – Yes, you can!

Posted by on Feb 22, 2018 in Articles, Blog

“I thought nonprofit organizations weren’t allowed to participate in advocacy.”  “Foundations can’t fund advocacy efforts…can they?” Well, actually, nonprofits can advocate and foundations can (and should) provide support for them to do so! One of the best resources for both foundations and nonprofits on the topic is Bolder Advocacy, an initiative of Alliance for Justice. If you are a nonprofit, check out their Advocacy Capacity Tool to benchmark your advocacy skills and help determine resource allocation for your efforts. If you are a foundation, look into the Philanthropy Advocacy Playbook to get your questions answered on legal rules and how to leverage your grantmaking by supporting advocacy activities. For more information, or...

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