Foundation Boards Should Demand Failure, Expert Claims

Joel Orosz, founder of the The Grantmaking School,* the first university-based training program for grantmaking professionals, has come out with an extraordinary new book titled “Effective Foundation Management: 14 Challenges of Philanthropic Leadership—And How to Outfox Them.” What makes it extraordinary is Dr. Orosz’s willingness to speak with candor about the challenges, both ethical and practical, of working in a profession that “lacks a salutary external discipline.”  Even those who don’t work in philanthropy will benefit from his honest portrayals of foundation CEOs and program officers struggling against flattery and other forces to do good and meaningful work.

I found what Dr. Orosz wrote on the subject of foundation risk-taking especially revealing.  If foundations have the freedom to try pretty much anything to address society’s problems, he asserts, “if they are indeed boldly exercising [their freedom] to correct the failures of the market, the government, and the fundraisers, it would be virtually impossible to open a newspaper without reading of a groundbreaking social experiment fueled by their funding.”  Unfortunately, the newspapers are more likely to be filled with stories of foundation scandals than of foundations successes.

It’s true that a good scandal sells newspapers, and foundations as a class are not very good at communicating their good work.  But according to Dr. Orosz, there’s a hidden, perhaps more important, reason for the inability of many foundations to move the needle on some of our most pressing social problems.  That reason is embarrassment.  According to Orosz:

Since foundations are undisciplined by the market, electorate, or funders, their only impetus for improvement comes from their (generally) self-perpetuating board of trustees. If you are a foundation leader, your imperative thus is a simple one: keep the board happy, and you will keep your job. So, what makes a board happy? The answer is easy: pride-inducing success. What makes a board unhappy? The answer is equally easy: embarrassing failure. What does this mean for the CEO? As a practical matter, the answer to this question is also very simple: since any kind of success is preferable to any kind of failure, since embarrassing the board members is to be avoided at all costs, it is critically important that every project be a success. What is the best way to ensure that every project will be a success? The key to perpetual success is to keep every project uncomplicated and modest in its ambition. Thus, inexorably, in order to keep their boards happy, in order to assure that embarrassment never darkens the trustees’ doorsteps, CEOs tend to seek the cautious and incremental success. Paradoxically, the societal organization given the most freedom to act hobbles itself; it is as if a superb French chef, capable of creating any gastronomic delight, insisted on making nothing except the blandest of oatmeal.

It was Longfellow who said that “[m]ost people would succeed in small things if they were not troubled with great ambitions.” Dr. Orosz appears to claim that our ambitions in philanthropy are almost criminally modest.  If the responsibility for this faintness of heart ultimately rests with a foundation’s leadership, i.e., its board of directors, how should it modify its practices?  Should boards, for example, demand failure?  Yes, answers Dr. Orosz:

Not sloppy failure, of course, for no one wants that. Boards, however, must demand a certain level of experimental failure, for that is the price of doing business in the nonprofit sector, the cost of true innovation, the payment for clearing the kudzu of modest, incremental, “so what?” success. By demanding occasional experimental failure, boards free foundation leaders from their self-imposed play-it-safe shackles. If not every meal has to be perfect, the French chefs can abandon oatmeal and experiment with exotic new dishes.

Compare Dr. Orosz’s call for “experimental failure” with the tried and true of supporting direct services.  Where should foundations place their bets?

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* Pause for disclosure: I will become a member of The Grantmaking School faculty starting this fall.  Apart from a small honorarium, I will receive no compensation for my services.  Nobody at The Grantmaking School has in any way censored what I write on this blog, nor have they suggested topics for my consideration.

Image source: magnamags.com

Albert Ruesga blogs on civil society, nonprofits, and foundations at White Courtesy Telephone.

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