November 2003 IMPACT
Editor???s Note: GEO's board of directors would like to invite input and comment on a new theory of change for the organization. This document outlines our vision for the future and clarifies GEO's role in moving the field of philanthropy toward greater collaboration and impact. In our emerging theory of change, GEO's activities will focus on work to support both individual grantmaking organizations as well as philanthropy as a system. The following article includes highlights of our theory of change. A link to the full version is at the bottom of this article. In addition, GEO members will receive a hard copy of our theory of change in November.
Insiders to philanthropy and outsiders alike are calling for reform in the philanthropic sector. You need look no farther than nonprofit trade publications to find pleas for a greater sense of accountability to the public, more transparency, better coordination of financial and intellectual resources and the adoption of practices that are broadly supportive of rather than inadvertently damaging to nonprofits. Despite the valiant efforts of a few, philanthropy remains diffuse and uncoordinated, and rarely do people or institutions look beyond their organizational walls to the broader system of which they are a part. The ranks of those in organized philanthropy calling for change have grown stronger in recent years, forming what some have termed the effectiveness movement.
Many of the strongest voices for reform have been instrumental in creating and nurturing Grantmakers for Effective Organizations. Our challenge at this point in the movement and in our history is to determine the role we are best positioned to play in elevating the performance of philanthropy and the nonprofit sector as a whole.
Our theory of change articulates a bold vision for GEO, both as an organization and as a community of grantmakers working to achieve a broader impact. It builds on our history and clearly articulates the role grantmakers play in both their own and their grantees??? effectiveness. Fundamental to success is our resolute commitment to working with like-minded colleagues who are engaged in different but equally important approaches to grantmaker effectiveness. We invite you to help shape our work in the coming years.
Defining Effectiveness
Our understanding of the meaning of effectiveness is dynamic and evolving. GEO???s working definition of organizational effectiveness is the ability of an organization to fulfill its mission by measurably achieving its objectives through a blend of sound management, strong governance and a persistent rededication to assessing and achieving results.
GEO???s agenda consists of nonprofit organizational effectiveness as well as funder effectiveness, which includes the effectiveness of philanthropy as a system. The importance of this dual focus can be articulated in a number of ways, the most prevalent of which is that funders need to ???walk the talk??? in order to be credible.
Funders and nonprofits are part of a single system. Ineffective philanthropy distorts nonprofits??? budgets, goals and timelines. Effective philanthropy supports good nonprofit management, growth and planning. Inherent in this perspective is that funders enhance nonprofit effectiveness through changes in their own behavior. Addressing the effectiveness of only one part of the system would never result in the magnitude of change for which we strive.
GEO sees our role as endeavoring to improve the effectiveness of the nonprofit sector through a focus on effective philanthropy. A corollary to this point is that attention to the organizational effectiveness of nonprofits is an essential component of effective philanthropy.
Three Spheres of Influence, Three Areas of Activity
GEO???s theory of change is organized around three distinct spheres of influence: GEO members, all grantmaking organizations and philanthropy as a system. GEO strives to create change simultaneously within multiple spheres of influence. This multi-tiered strategy articluates a vision around which members of the organizational effectiveness movement can galvanize while maintaining focus on incremental and therefore measurable objectives aligned with that broad vision.
There are four distinct roles GEO will play to create change within each sphere of influence:
1. Convener: Bringing together peers, leaders and allies to discuss issues related to effective organizations and effective philanthropy will nurture the development of norms, peer-to-peer networks and collective action.
2. Synthesizer: GEO can add value by identifying the best information and knowledge available and synthesizing it to make it broadly accessible.
3. Originator: Through strategic partnerships, GEO can develop knowledge and services that fill identified needs.
4. Activist/Advocate: Through various forums, GEO leaders and members can advocate for increased attention and resources for improving the effectiveness of grantmaking and nonprofit organizations.
GEO is but one actor among a large and diverse cast working to reform philanthropy. GEO models a systems-level approach by recognizing our own strengths as well as those of colleague organizations and by constantly looking for opportunities to collaborate with the best thinkers in the field.
Spheres of Influence
As we undertake this multi-tiered agenda, we are clarifying where we have direct influence as well as where the most strategic opportunities exist. GEO has different degrees of connection to the organizations and sectors it seeks to influence. To achieve the results we desire, we will need to focus on three spheres of influence:
1. GEO???s most direct influence is on its members. Members attend GEO???s conference, participate in an online discussion list and have access to in-depth information through GEO???s Web site.
2. GEO reaches the field of philanthropy as a whole through activities designed to advocate for capacity building and organizational effectiveness practices.
3. Ultimately, through their work as grantmakers, GEO members and others seek to enhance the capacity and effectiveness of organizations in the nonprofit sector.
Membership
GEO???s credibility is directly tied to its success as a coalition of grantmakers committed to the effectiveness of the sector. For any movement to be successful, it must continually prove to its constituents that it is relevant and provides value. Success in this area is defined by the presence of active and enduring membership and the strength of GEO as an organization.
Understanding success within the membership sphere is straightforward. The three short-term outcomes that lead to an active and enduring membership are
1. satisfaction of GEO members,
2. strong participation in each GEO activity, and
3. GEO???s modeling of effective practices.
All Grantmaking Organizations
For all grantmaking organizations, regardless of membership status, GEO???s efforts target behavior and practice. In this sphere, success is defined by an increase in the number of effective grant-making organizations. Effectiveness is a relative term, and all organizations fall somewhere along a continuum that ranges from ineffective to highly effective. GEO is concerned both with the overall number of organizations that achieve a high standard of effectiveness and the degree to which organizations increase their effectiveness, regardless of where along the continuum they fall.
A Developing Framework of Effective Philanthropy
Defining organizational effectiveness is, of course, a complex matter. For grantmaking organizations, effectiveness is inexorably linked to the effectiveness of grantee organizations. Some practices, such as capacity building, have a direct link to improving the organizational effectiveness of grantees. Whatever the particular practice, its success ultimately must be judged by how well it assists nonprofits to achieve their missions.
To clarify its own understanding of organizational effectiveness, GEO is in the process of developing a working framework for defining the concept. Other organizations and collaboratives are currently working on frameworks of effective philanthropy. To avoid duplication of effort and contribute to consistency within the field, GEO will collaborate with the organizations already engaged in this pursuit. Extensive testing and vetting with as many stakeholders as possible will be important before any framework is adopted.
Outcome Objectives for All Grantmaking Organizations
For GEO to achieve success within the sphere of all grantmaking organizations, members and other organizations need to adopt and maintain specific practices and values. GEO will have achieved success when members and other organizations improve their organizational effectiveness. Because GEO does not have direct influence over other institutions, we must identify and accomplish short-term outcomes that support and motivate positive behavioral change in other institutions.
GEO is focused on achieving five short-term outcomes that will influence grantmaking organizations to adopt improved philanthropic practices and achieve greater organizational effectiveness.
1. Grantmakers have a clear understanding of core competencies of effective philanthropy and increased knowledge of organizational effectiveness issues. Before grantmakers can be expected to improve their practices, they must first have a solid understanding of what effective philanthropy is, why it is important and how it can be achieved.
2. Grantmakers are aware of and have access to effective tools and strategies that support effective philanthropy. Grantmakers are more likely to change their behavior if they have access to effective tools and strategies that support good philanthropic practices.
3. Grantmakers support nonprofit organizational effectiveness. Effective grantmaking organizations take into account the capacity of their nonprofit partners and provide support to enhance their effectiveness. One important way funders can support nonprofit effectiveness is to evaluate their own practices and requirements through the lens of how they impact grantees.
4. Grantmaking organizations demonstrate their commitment to foundation effectiveness. An effective grantmaking organization not only considers the capacity and effectiveness of grantees but also examines and improves internal capacity and practices.
5. There exists a thriving community of practice that supports organizational effectiveness. As important as knowledge, tools and strategies are, it is the development of new norms among grantmakers that represents GEO???s most powerful lever for influencing behavior.
Philanthropy as a System
Defining Success
For philanthropy as a system, GEO will work to develop greater coherence. Making improvements in the way individual grantmaking organizations operate is important to improving the effectiveness of philanthropy. But for philanthropy to see real gains in effectiveness, those institutions with shared missions and common goals need to increase the level and quality of coordination and cooperation. Improvements in this area include greater sharing of information, coordinated funding decisions and a general reduction of fragmentation of the field. Thus, success is defined by growth in practice of strategic cooperation and collaboration among grantmaking organizations with complementary missions to bring about change for the greatest social good.
A more rational and coordinated system will have a direct impact on the effectiveness of the nonprofits that grantmakers support. By facilitating the sharing of information around a particular topic and creating venues where funders can come together to find common ground, the very existence of networks, such as GEO, is a strategy for improving effectiveness of the system.
New approaches to public problem solving are emerging as the government, business, nonprofit and philanthropic sectors work together. Although GEO does not hold itself accountable for creating change in the public or commercial sectors, it does believe that improvements in philanthropy as a system will help position philanthropy to play a more effective role in cross-sector efforts to solve problems.
Outcome Objectives for Philanthropy as a System
GEO???s short- and long-term outcome objectives for activities targeting philanthropy as a system are as follows.
Long-Term Outcome: Grantmaking organizations with complementary missions will act together and with their grantees to bring about change for the greatest social good.
Short-Term Outcome: Grantmaking organizations with complementary missions will experience growth in the practice of strategic cooperation and collaboration as indicated by
- increased quality and impact of funder networks;
- increased pooled grantmaking for organizational effectiveness;
- increased collaborative planning; and
- increased knowledge sharing and the development of coordinated systems for knowledge management.
Increased cooperation is complex and comes with potential downsides including the potential for funders to develop a ???herd mentality,??? where due diligence and strategy are entirely abdicated to the network. Similarly, cooperative grantmaking may make it more difficult for new nonprofits to get a foothold. When working collaboratively it is important that grantmakers remain accountable for the quality and impact of their work and be willing to take risks. Coordination should never come at the expense of innovation.
Conclusion
In a time characterized by growing social needs, economic instability and increased scrutiny, maintaining the status quo is no longer an option for funders. Recognizing the need for a better future for philanthropy, GEO???s board of directors undertook a process to better understand and articulate the role we are positioned to play in improving funders??? impact. Although admittedly ambitious, our theory of change relies on the investment and participation of the hundreds of organizations already engaged in this work. It is our hope that by working together, GEO, its member organizations and the rest of the philanthropic sector can move the field toward greater strategic collaboration and expanded impact to achieve the greatest social good.
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To access the full version of the theory of change, click here. Share your feedback on our theory of change via email with Hannah O???Leary at oleary@geofunders.org.