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Foundations

The Artful Juggler

Foundation CEOs play a complex, ever-more-demanding role—a role that may not lend itself to on-the-job training.

 

Most foundation CEOs come into their role with no professional experience in philanthropy. According to research conducted in 2012 by the Center for Effective Philanthropy, 60 percent of CEOs from the 100 largest foundations came from outside the foundation world. The Council on Foundations, moreover, reports that 67 percent of all foundation leaders appointed from 2004 to 2008 did not come from grantmaking organizations. In some cases, newly installed CEOs had previous experience at nonprofits, but foundation boards generally seem to prefer hiring their chief executives from external fields such as academia and business.

The practice of expecting new foundation leaders to learn their trade on the job is noteworthy, in part because that job is essential to the operation of a growing—and increasingly important—sector. In the past two decades, the number of foundations in the United States alone has more than tripled, rising from about 32,000 foundations in 1990 to approximately 115,000 today. The job of foundation CEO is also one that makes considerable demands on those who do it. “As a leader in philanthropy, you want to take the long view and act with urgency. This is one of the key tensions to navigate,” notes Thomas Beech, a retired CEO who led three very different institutions (the Minneapolis Foundation, the Burnett Foundation, and the Fetzer Institute) over a period of 33 years.

I spoke with Beech as part of an extensive research project that I recently undertook. Although the world of philanthropy has begun to receive more media attention than previously, as well as more attention from scholars, little attention has been paid to the topic of foundation leadership. If we were to walk through the opaque doors of the executive suite at a foundation office, what kinds of people would we meet? What are the qualities that enable a foundation CEO to succeed? I set out to answer those questions by learning from the experience of others. Along with reviewing the slim body of literature on this topic, I interviewed 65 people who have served on the front lines of philanthropy, including active and retired foundation CEOs, board members, and other leaders in the field.

A Tough Act

(Illustration by David Pohl)

My research led me to conclude that successful CEOs at foundations of all sizes tend to be artful jugglers—people who can pursue multiple high-pressure goals at once. They are able to tend to their board of directors, to manage their organization internally, and to drive their foundation to make an impact externally. By their own reckoning, few CEOs are equally successful in all three domains.

Engaging the board | The CEO must ensure continuous alignment between the daily work of a foundation and the interests, passions, and values of its board members. As one CEO put it: “Never get too far ahead of your board.”

When a CEO cannot achieve such alignment, unexpected challenges and failures occur: Board behavior becomes idiosyncratic; unresolved interpersonal issues fester; board members end up being either disconnected from the work or over-involved in it. “People who in their business life are very disciplined fall asleep in a nonprofit or foundation board role. They display no rigor,” one CEO complains.

Conversely, when a CEO and a board are in tight alignment, the CEO is in a strong position to cultivate a sense of shared understanding. “I spent a lot of time getting the board members comfortable with one another,” recalls Chris DeVita, who served as CEO of the Wallace Foundation for 25 years. “I gave them common experiences and created a climate of open inquiry. We created a terrific board team that is enormously helpful, unusually engaged, and committed.”

Cultivating a healthy organization | The CEO is, ideally, the number-one culture leader in a foundation. Successful executives usually embrace the opportunity to build a healthy internal culture. Charles Edelsberg, CEO of the Jim Joseph Foundation, offers this advice: “Obsess about the human architecture of the organization.”

In some cases, CEOs view the responsibility of organizational management as a burden. One CEO tells this story: “At one point, I was working with an executive coach who asked me what I was looking forward to next week, and what I was dreading. And I realized that everything I was looking forward to was outside of the organization, and everything I was dreading was inside—dealing with the board meetings, the organization, the hiring and firing.”

In reflecting on her time as the founding CEO of the Bill & Melinda Gates Foundation, Patty Stonesifer acknowledges that she could have paid more attention to the issue of organizational culture. She cites an axiom drawn from the hospitality industry: “The front of the house has to match the back of the house.” In other words, if you want to ensure that your customers will receive first-rate service, you have to treat your employees in a first-rate way. Foundation culture is the same. A foundation cannot have strong, trusting, productive grantee relationships if it doesn’t have strong, trusting, productive staff relationships.

Achieving impact | All of the CEOs whom I interviewed are quite sophisticated about their approach to driving change in the world, and they eagerly share lessons on achieving impact. Here are two such lessons. First, learn from those with field experience. “The real knowledge is in the community,” says Beech. “It is essential to develop relationships of trust and exchange with our grantee partners. The key lesson for me is that—contrary to the mythology of foundations—I can’t control anything.” Second, be humble in your work and be skeptical of silver-bullet solutions. “Never presume that a great idea for solving a complex social problem is either original or sufficient. It likely isn’t either,” says Stonesifer.

A Difficult Choice

Selecting a new chief executive is no easy task, and foundation board members take it seriously. It’s interesting, therefore, that in hiring their next “artful juggler,” so many boards choose a candidate for whom philanthropy is a new field. Boards, in fact, seem to have little confidence not just in internal candidates, but in any candidate with philanthropy experience. As rare as it is to hire from the inside, it is equally rare to hire laterally—from other foundations. (The Barr Foundation recently hired a new president, Jim Canales, who previously served for many years as president and CEO of the James Irvine Foundation. That decision is a notable, and perhaps promising, exception to the rule.)

Almost all of the CEOs I interviewed, from both large and small foundations, emphasized how long it took them to understand their job, their organization, and the sector as a whole. It took time to learn about relevant fields of practice, to investigate donor intent, and to cultivate new donor relationships. It took more time to chart a grantmaking path, and still more time to build an effective organization. And finally, it took time to implement policies that would achieve actual change in the world.

Foundation boards have a strong tendency to resist hiring from within. Board members focus on finding the best CEO "in the marketplace."

Why isn’t internal promotion more common? My research suggests that foundation boards have a strong tendency to resist hiring from within. Board members view hiring a CEO as one of their primary responsibilities, and they focus on finding the best CEO “in the marketplace.” The practice of hiring outsiders is reinforced by the executive search industry. Search firms have an obvious incentive to cast a wide net, nationally and internationally, when they generate names for boards to consider.

Some attribute the rarity of internal succession to a lack of bench strength. They argue that most foundations have too small a pool of leadership talent from which to choose a new chief executive. But for several reasons, this argument is not entirely convincing. First, large foundations do have a sizable pool of experienced leaders. Second, many foundations have hired an executive (such as a chief strategy officer or a vice president) specifically to serve in a kind of number-two role; that person could be groomed for the top job. Third, foundations have more flexibility than almost any other kind of institution. If it were a priority for foundation boards to plan for internal succession, they could do so.

In his book Good to Great, Jim Collins explores how companies that he deems “great” handle succession, and he contrasts that approach with how other, less great companies tackle this challenge. Rather than pursue charismatic leaders from the outside, high-performing companies often promote their CEO from an internal role. Such leaders, Collins argues, can seamlessly build on the work of the CEO who preceded them.

In some cases, that principle clearly applies to foundations as well. Nancy Roob, president of the Edna McConnell Clark Foundation (EMCF), for instance, was a program officer and then COO at EMCF before assuming her current role. She had worked side by side with her predecessor and the EMCF board as they reshaped the foundation around a strategy that focuses entirely on disadvantaged youth. Because she knew what she was doing when she stepped into the presidential role, Roob has led EMCF to become an influential foundation that punches well above its weight. (A trend in this direction may be under way. The Kellogg Foundation and the Ford Foundation both recently selected internal candidates to be their next president.)

In short, when foundation boards are looking to hire someone for the CEO job, they should consider people who understand philanthropy. Or, better yet, they should consider grooming that leader from within.

 
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COMMENTS

  • Larry Kramer's avatar

    BY Larry Kramer

    ON May 15, 2014 09:05 PM

    As President of the Hewlett Foundation, I am a beneficiary of the hiring practices Fay’s article questions. I think I brought something to the Foundation, despite having no real prior experience in philanthropy, but there is a great deal of force in her analysis.  To say it isn’t always a mistake to hire foundation CEOs from outside philanthropy doesn’t mean it isn’t a mistake always to hire foundation CEOs from outside philanthropy. The rarity of internal promotion to CEO and near complete absence of lateral movement of CEOs between foundations is peculiar, to say the least, especially given the quality of talent that is out there. There may once have been a time when prior experience didn’t matter, but philanthropy today is a very complicated profession. Surely there are many talented leaders who already know the ropes.

  • BY Ruth Eliel

    ON June 17, 2014 06:18 PM

    CEP has done lots of research indicating that foundation CEO’s and program officers who come from the or one of the nonprofit field(s) that the foundation funds can be more effective than their peers, as they know what it is like to sit “on the other side of the desk” (my words).  My observation is that individuals who have worked exclusively in philanthropy are easily out of touch, so there are obvious pros and cons in lateral hiring or even internal promotion.

  • BY Henry Berman

    ON June 18, 2014 01:35 PM

    Faye’s commentary that the best Foundation leaders are artful jugglers is both insightful and accurate.  We, at Exponent Philanthropy (formerly the Association of Small Foundations), have used the moniker Master Juggler since 2010.  Our Master Juggler program started as a 2-day retreat and now is a year-long Executive Institute designed to serve the needs of these very leaders.  We find that these foundation leaders benefit greatly from the rare opportunity for training and self-reflection in a group of professionals – who face similar challenges juggling the unique power dynamics and the multifaceted roles inherent in foundation leadership. We’ve been listening carefully to these executives as we work with them, and are looking forward to sharing reflections later this year about the skills most important for foundation leadership success.

  • BY Fay Twersky

    ON July 2, 2014 11:53 AM

    Thanks Ruth and Henry for the thoughtful comments.

    Ruth, I am familiar with CEP’s research on foundation CEO’s (full disclosure - I am a CEP board member). I agree that it is often smart to look to nonprofit leaders to fill Program Officer and sometimes foundation CEO positions.  I do not think of that choice as exclusive of also looking within the philanthropic sector.  Often, there are leaders in philanthropy who have also spent considerable time working in nonprofits.  Darren Walker, the new Ford CEO is one such example.  What I learned from my research was that a radical change in foundation leadership was often associated with considerable lag time in learning the sector and THEN figuring out how to best apply the tools available to a grantmaker.  Looking within can reduce the volatility that often accompanies changes in the top job.

    Henry, I LOVE the title of your foundation executive training program—Master Juggler—and the smart way you seem to be approaching the training.  Thanks for your comments.

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