Creating New Knowledge in Management: Appropriating the Field’s Lost Foundations

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Ladd Library Borrow it. Library Links. About Library Policies Services. Embed Experimental. Layout options: Carousel Grid List Card. Include data citation:. Copy to clipboard Close. Cite Data - Experimental. Structured data from the Bibframe namespace is licensed under the Creative Commons Attribution 4.

Additional terms may apply to data associated with third party namespaces. Link Analysis Experimental. Network Analysis Inbound Links 1 1 Total. Shared in Network This resource is rare in the Library. Link network. Today some foundations are carrying out activities with such potentially high impact.

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The Pew Charitable Trust, for example, recently created the Pew Center on Global Climate Change to study global warming, educate the public, and coordinate international negotiations. Despite cutbacks in government funding for social programs, foundations can still create enormous value by advancing the state of knowledge and practice in the social sector. Unfortunately, too few take this path.


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In practice, the four approaches to creating value—selecting grantees, signaling others, improving the performance of nonprofits, and creating and disseminating new ideas—are mutually reinforcing, and their benefits are cumulative. The more foundations are able to improve the performance of social enterprises, create new knowledge, and influence larger public and private sector efforts, the greater will be their impact.

But the ability to create value in any of these four ways requires a real strategy. A company must either produce equivalent value at a lower cost than rivals or produce greater value for comparable cost. It can do so only if it stakes out a unique positioning or a distinctive way of competing that is tailored to the kind of value it has chosen to deliver. To learn more about the fundamentals of strategy, see Michael E. The goals of philanthropy may be different, but the underlying logic of strategy is still the same.

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Instead of competing in markets, foundations are in the business of contributing to society by using scarce philanthropic resources to their maximum potential. A foundation creates value when it achieves an equivalent social benefit with fewer dollars or creates greater social benefit for comparable cost. For a foundation to achieve superior performance, its activities, investments, and grants, taken together, would achieve greater social impact per dollar expended than any other organization tackling the same objective.

Aiming for superior performance is not a matter of self-aggrandizement or zero-sum competition among foundations. It is the best way for foundations to raise their overall contribution to society. In practice, of course, precise, apples-to-apples measures of peer performance among foundations are hard to come by. At the very least, a foundation can measure its own performance over time, challenging itself to continual improvement.


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The Ewing Marion Kauffman Foundation, for example, has taken the reduction in high school dropout rates as a primary objective of its Youth Development division. Over ten years of constant experimentation and careful evaluation, the Kauffman Foundation has fundamentally changed its approach because it has learned that community partnerships and the attention of caring adults is more powerful than direct educational reform. As a result, it has been able to redirect its funding to achieve greater results with the same dollars and to demonstrate superior performance.

A foundation should also measure its own success by the performance of the organizations that it funds. This view is not widely held today.

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However, because grant-making foundations can create value only through others, they must accept responsibility for the success or failure of their grantees. For a foundation to be successful, its roster of grantees, taken as a group, should perform consistently better than average.


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Of course, not every grant will succeed—progress usually requires taking calculated risks. But superior social performance per dollar of funding should be the aim.

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Because grant-making foundations can create value only through others, they must accept responsibility for the success or failure of their grantees. As a starting point, it is important that foundations accept the legitimacy of the goal of superior performance. Then they must be committed to measuring results and acting on what they learn. No organization can achieve superior performance if it tries to be all things to all people. The starting point for strategy is to limit the number of social challenges the foundation addresses.

A foundation must determine where it will make its impact and how. Avina works in the environmental field—that is where it seeks to have its impact. However, limiting grants to one or two fields is not the same as having a strategy. Within the broad category of environmental work, Avina pursues a more pointed target: sustainable development in Latin America. Of all the ways to foster sustainable development, Avina has chosen to promote environmentally friendly business practices. Avina is thus very clear about both dimensions of positioning—where it will make its impact and how.

Creating New Knowledge in Management: Appropriating the Field's Lost Foundations

Consider again the Charles and Helen Schwab Foundation, which is positioned to strengthen the organizational capacity and management of human-service and family-service organizations. Positioning thus reflects both personal values and a realistic assessment of opportunities, strengths, and weaknesses. Every major activity of the foundation—its selection process; the size, mix, and duration of its grants; the composition and roles of its staff and board; the types of nonmonetary support it provides grantees; and its evaluation and reporting procedures—must then be tailored to its positioning.

In the field of education, the Philanthropic Ventures Foundation in Oakland, California, for example, focuses on grassroots funding. Working within the large field of education, PVF chose a specialized positioning appropriate to its small size. Since its positioning is to help under-resourced teachers and it makes thousands of small grants, the Philanthropic Ventures Foundation developed a no-paperwork rule, freeing teachers from time-consuming grant applications.

PVF finds that an elaborate process around the receipt, investigation, consideration, and funding of grant requests is not necessary in its chosen area. PVF is a perfect example of a foundation that tailored its activities to create value. Only by doing things differently from others, in a way that is linked tightly to what the foundation seeks to accomplish, can it achieve greater impact with the same grant dollars or enable its grantees to be more successful.

Tailoring activities to strategy is the way a foundation institutionalizes and reinforces its distinctive strengths. To achieve excellence at what it does, a foundation must forgo opportunities in other approaches and in other fields. Deciding what not to do is the acid test of whether a foundation or any organization, for that matter has a strategy. For the Philanthropic Ventures Foundation, that means saying no to many interesting opportunities in education.

It means saying no to large concentrated grants or multiyear initiatives that might create model programs, train teachers differently, or even affect public policy. Such grants would require not only a different allocation of funds but also different staffing and a different operating model geared toward research and deliberation. The point is not that one goal is more worthy than another; it is that positioning requires trade-offs. This aspect of strategy is particularly difficult for foundations.

So many organizations clamor for their help, every grant seems to do some good, and there is so little accountability for results. It is hard to resist the pressure to oblige a trustee or a colleague. Even foundations that start out in one field find themselves drawn into many others.

But if superior performance is the goal, making trade-offs is essential.

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There has been no comprehensive study documenting foundation practices or the effectiveness of foundation giving. However, available data paint a picture that is far from the approach we are advocating. Strategy demands focus, yet foundations generally spread their resources—both money and people—too thin. A fragmented pattern of giving and the constant pressure of responding to individual grant requests leaves little time for developing expertise, assisting grantees, or examining social problems in depth.

Staff members are frequently trapped by the tyranny of the grant cycle, with barely the time to write up pending grant requests between board meetings. Resources Are Scattered. The average foundation, for example, makes grants in ten unrelated fields every year, where fields are such broadly defined areas as education and health care.