The Source Codes of Foundation Culture

By Tom David and Kathleen Enright

Preface

The Grantmakers for Effective Organizations community encourages funders to make changes in their own work to better support nonprofits and communities, including intentionally building strong relationships; engaging those closest to the issues in decision-making; committing to learning and improving over time; and providing flexible, long-term funding. Yet the pace of change can be slow. We often hear that philanthropic leaders struggle to make even those changes that they know are important.

Over the last several years, GEO has been working to better understand what contributes to and impedes efforts to lead productive change in philanthropy. One theme that has arisen time and again is the importance of creating and nurturing an organizational culture that enables grantmakers to be most effective.

Organizational culture is the personality, behaviors and underlying assumptions of an organization. While culture can be understood in various ways and is hard to pin down, it has a persistent influence on how an organization behaves. Over the course of our exploration we have become convinced not only that a positive internal culture is an essential bedrock for effective philanthropy, but we have also, as a sector, habitually neglected this important contributor to our success.

We designed this publication to spark dialogue and to provide a first set of observations that will support a deeper exploration of culture in the field of philanthropy. We collaborated with Tom David, a longtime senior leader in the philanthropic sector, who has been writing on this topic based on his own experience and observations in foundation senior leadership and consulting roles. His analysis uncovered that many foundations’ internal cultures have corporate, banking or academic “source codes” — a set of influences shaped by the organizations’ founders and leaders. His assertion and ours is that foundations have an extraordinary opportunity to rethink and reinvent key outdated aspects of their cultures while building on long-standing strengths.

Funders can use this document to support conversations among board and staff to articulate and understand the origins of organizational assumptions, examine beliefs and behaviors, and identify aspects of culture that drive or impede effective work. We have provided a few examples of changes foundation leaders have made to better align culture and strategy as well as cases in which culture clearly influences grantmakers’ work. We will do additional work on the role of foundation culture in effectiveness in 2016 and 2017, including providing in-depth examples of grantmakers engaging in culture change work, developing guidance and tools for shifting culture, and uncovering additional evidence of how effective culture change accelerates impact. We hope you will join us in this exploration and share what you are learning and changing about your own culture as a result.

Kathleen Enright
President and CEO, Grantmakers for Effective Organizations

Introduction

Complex Social Challenges Require New Cultural Norms

Philanthropy evolves slowly, despite (or maybe because of) very few external constraints or imperatives. Historically, good stewardship of philanthropic resources has focused on preserving capital and growing assets for the benefit of future generations. But given the complex, evolving nature of challenges like poverty and climate change, as well as what we have learned about how best to support nonprofit success and community impact, we must shift our conception of good stewardship in order to make significant progress in solving large-scale problems.

To more effectively approach complex challenges, philanthropists need to adopt a broader view of their work. Adam Kahane, of Reos Partners, a global consulting group that designs and facilitates projects focused on systemic change, has suggested that we must simultaneously work in a fashion that is:1

SYSTEMATIC — not piecemeal and divided into silos;

PARTICIPATIVE — involving many people’s ideas, energy, talents and expertise; and

EMERGENT — able to move and adapt nimbly in a minefield of uncertainty.

Given the nature of the problems that philanthropy aims to address, this recommended approach resonates deeply. “Everything is interconnected — we can’t ignore what’s happening within our organizations when we’re working on external issues,” says Jennifer Martin, vice president, organizational development, of The Seattle Foundation. “The complex issues we are all trying to tackle require us to look holistically at all the interconnections, the assumptions that are driving our decisions and strategies, and how we as foundations are either helping solve or actually exacerbating the problems.” And indeed, as philanthropy aspires to address complex issues, our field has already started to change its definition of what “strategic” looks like to include practices such as authentic engagement with community; cross-sector funding for systems change; collaboration among funders, nonprofits and others; advocacy to support community policy change; and a broader use of all philanthropic assets, including mission investing.

But changing strategy is unlikely to yield progress without fundamental changes to organizational culture to match funders’ strategic aspirations. Funders of all shapes and sizes need to understand the traditional aspects of culture that are shared by many foundations and earnestly consider how internal culture can evolve to support larger goals and aspirations so that outdated and unexamined patterns of thinking and behaving do not stand in the way.

The late management sage Peter Drucker observed that “culture eats strategy for breakfast.” Generations of foundation leaders, from Alan Pifer (Carnegie Corporation of New York) to Steven Schroeder (Robert Wood Johnson Foundation) to Judith Rodin (The Rockefeller Foundation),2 have voiced similar conclusions. In a recent study by Deloitte, 87 percent of companies surveyed listed culture and engagement as one of their top challenges, and 50 percent said the issue is “very important.”3 Candidly addressing and shifting foundation culture is a critical dimension of effective philanthropic stewardship. 

Organizational Culture

A Powerful, Invisible Force

One way to look at culture is to consider it the personality or character of an organization. It is both immediate and intangible. It shapes the way the members of an organization interact and relate to each other. For those who have long experience in an organization, culture can be almost invisible.

Although culture is transmitted in every interaction, inside the organization and outside its walls, it often takes an outsider to notice and question ways of operating that everyone else takes for granted. Ed Schein, one of the foremost experts on this topic, says that culture is “a set of basic assumptions [that] defines for us what to pay attention to, what things mean, how to react emotionally to what is going on, and what actions to take in various kinds of situations. ... Cultures tell their members who they are, how to behave toward each other, and how to feel good about themselves.”4

Schein identifies three levels at which organizational culture manifests, ranging from overt characteristics that can be seen and felt to deeply embedded, unconscious basic assumptions that represent its essence:5

ARTIFACTS are phenomena that a person sees, hears and feels when encountering a new group with an unfamiliar culture. Artifacts are easy to observe but difficult to decipher without more information. For instance, a hallway of closed office doors might be an artifact of an extremely individualized culture, or it could simply mean that during a very busy period, normally sociable staff members close their doors to improve concentration. 

ESPOUSED BELIEFS AND VALUES include publicly expressed strategies and goals. But espoused beliefs and values do not tell the whole story, and they can sometimes be in conflict with artifacts. For example, an organization may have an espoused value of teamwork while actually rewarding individual competitiveness through its performance reviews or compensation structure.

BASIC UNDERLYING ASSUMPTIONS are the real operating principles of a culture. They are so taken for granted that there is generally little variation within an organization. If a basic assumption comes
to be strongly held by a group, members will find behavior based on any other premise inconceivable. For example, if a grantmaker believes that marginalized community members have insight into their neighborhood’s problems, potential solutions would uniformly find ways to engage those residents, through convenings, advisory groups, board seats and other avenues. 

“Culture is a set of basic assumptions [that] defines for us what to pay attention to, what things mean, how to react emotionally to what is going on, and what actions to take in various kinds of situations. . . . Cultures tell their members who they are, how to behave toward each other, and how to feel good about themselves.”

– Ed Schein 

These tacit or unconscious dimensions of organizational culture — just like individual personality — make culture both powerful and difficult to fully see and understand.

Culture serves many important positive functions in building and strengthening organizations and enhancing their effectiveness over time. It can help ensure alignment of both values and effort and provides a shared sense of coherence, purpose and motivation. Culture can help establish and maintain appropriate standards of behavior and productivity and simplify the task of integrating new staff members into their jobs. 

But cultural norms can also constrain and control behavior in ways that may detract from the fulfillment of an organization’s mission. Culture can manifest the vision and values of founding leaders many years after their departure, to the degree that it sets invisible boundaries for future leaders and their colleagues. One CEO described her orientation process as a study in invisible boundaries: “People were trying to make sure I knew what I could and couldn’t do. I thought I was going to scream if one more person told me, ‘you need to be careful ... we tried that in the past ... our board didn’t like that.’ I was unprepared for this box that I stepped into.” Likewise, pivotal events that predate the tenure of all the current members of an organization can continue to influence behavior for many years downstream. And sometimes, there can be tension between cultural elements, even if desirable. For example, the desire to move quickly and respond with urgency can conflict with taking the long view and supporting systemic change. 

Cultural forces are powerful precisely because they exist under the surface and are rarely identified and addressed, and some cultures can take time to transform. Understanding and changing culture requires foundations to engage in self-examination to identify how organizational culture influences the way in which they see the world, interact with the world and assess opportunities for taking action. The path for changing culture is often not straightforward and can unfold in unexpected ways. Transforming culture can also lead to changes outside a foundation — to its relationships; the roles it plays in its communities; and the perceptions of grantees, supporters and other stakeholders. 

Culture in Action

Values Deeply Lived

Ira S. Hirschfield

"As the staff keeper of the culture, part of my job is to continually ask — how are we living our values?"
- Ira S. Hirschfield
Evelyn & Walter Haas, Jr. Fund 
 

Read more

Connecting the Dots

Risa Lavizzo-Mourey

“Our effectiveness depends on connecting the dots by sharing information and tying it back to strategy and culture.”
- Risa Lavizzo-Mourey
Robert Wood Johnson Foundation

Read more

Beyond ROI

Rajasvini Bhansali

“As a funding organization, we need to acknowledge what we don’t know and invite solutions from unexpected places.”
- Rajasvini Bhansali
International Development Exchange

Read more

Primary Source Codes

Three Primary Source Codes of Foundation Culture

The assumptions, values and practices of foundations often reflect the cultural “source code” derived from other fields. Different types of foundations may have additional influences, reflecting the cultural legacies of families, hospitals, management consulting firms or government — often blended and blurred within any institution. Yet three primary sources stand out as having a particularly common and powerful influence: banks, universities and for-profit corporations.

The core cultures of banks, universities and for-profit corporations demonstrate remarkable strengths. They are among the most enduring and powerful institutions in our society. Foundations benefit if they model the fiduciary integrity and investment acumen of financial institutions; the analytical thinking and high intellectual standards of universities; and the emphasis on leadership, innovation and data-informed decision-making of business. But foundations also display some of the least helpful aspects of each of those three cultural strands, including the lack of transparency of banking, the individualism and arrogance of universities, and the internal inequities and metrics myopia of for-profit corporations. Often, these cultural touchstones persist despite the fact that they are clearly not in the best interests of foundations’ nonprofit grantees or partners — or the communities they serve. 

Banks

Banks

At times foundations can be well served by the emphasis on fiduciary responsibility and careful assessment of risk...

Read more

Universities

Universities

Funders influenced by social science research and the experimental paradigm often conceive of funding initiatives...

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For-Profit Corporations

Universities

In larger foundations, especially, a business-minded emphasis on growing the assets of the foundation can become...

Read more

Conclusion

Exploring a Culture for Our Times

Foundation resources are incredibly precious. One potent way to make the best use of these precious resources is to actively consider whether your organization’s culture reflects the values you care about most and is appropriate for your chosen strategy. If a grantmaker is not satisfied that its current culture best serves its community and allows the nimbleness and boldness to meet new challenges, then what will it take to create a more fitting culture? Defining cultural attributes that best fit the foundation and figuring out how to live them is a long-term process, requiring significant reflection, inquiry and leadership.

In conversations with leaders in the GEO community, a handful of elements have started to emerge as important to a productive foundation culture. The concept of aligning practices with values is frequently mentioned.

Susan Zepeda, president of Foundation for a Healthy Kentucky Inc., explained that in her organization, “the most important thing we’ve done is crafted a set of values in a participatory process. Now we’re making sure that our work is truly aligned with those values.” When culture, practice and talent are aligned, funders are positioned to make change.

Many leaders believe respect and humility are necessary to mitigate the power dynamic inherent in relationships between the foundation and its nonprofit partners. Similarly, many add curiosity, or a spirit of inquiry, as a core trait in a culture that encourages continual learning and improvement in real time. Transparency — in dealings with staff, board and community — comes up as another characteristic of thoughtful and trustworthy foundation cultures.

And finally, many leaders talk about their work to instill a sense of urgency so that all staff and board members share a fierce desire to move quickly and effectively to get funds to organizations, learn rapidly, share learning and figure out how to best effect change with the resources at their disposal. 

GEO is continuing to research and explore what effective foundation cultures need to be in order to accelerate progress and enact meaningful change on the issues we all care about. Moving forward, the GEO community will continue to learn what it takes to build cultures that can support our best work and offer examples and practices to support foundations in shifting their cultures in productive ways. 

We invite you to use this paper as a springboard for your own exploration. Please also add your voice and experiences to the conversation in the GEO community in the coming months.

Acting in a more aligned way will require foundations to explore big questions about their purpose and values, dig deep into their cultural assumptions to see if they are aiding or hindering their adaptability, and find inspiration from peers and possibly from unconventional cultural role models. “Philanthropy is very young in terms of forging its own culture,” commented Robert Hughes, president and CEO of the Missouri Foundation for Health. “And as a field, we are timid. Leaders in philanthropy need to take advantage of the very thing that makes us distinct — insulation from market forces. It’s incumbent on philanthropic leaders to push organizations to not be constrained. If we don’t do it, it’s not going to happen.” 

Contemporary philanthropic organizations do not need to accept the self-imposed limitations of traditional foundation culture. Over the last two centuries, private foundations have incorporated some influences from banks, universities and for-profits that may unintentionally reinforce a culture of privilege that does not serve us well. Private foundations have also enjoyed significant independence from demands for more transparency or public accountability. Our legacy cultures are quite diverse and have many strengths. We can build on those strengths while reinventing the aspects that do not fit with who we want to be and where we want to go. If we are bold and curious, we can open our organizations to creative possibilities and prepare ourselves to make substantial progress on the complex emergent issues facing our world today. 

About the Authors

Tom David advises foundations and other public benefit organizations on program strategy and design, organizational learning, and evaluation. He has worked in and around organized philanthropy since 1987, having been director of organizational learning and evaluation at the Marguerite Casey Foundation in Seattle, executive vice president of The California Wellness Foundation, vice president of the S.H. Cowell Foundation and senior program officer at The James Irvine Foundation in San Francisco. David has been a member of the board of Grantmakers In Health and the advisory board of the Stanford Medical Youth Science Program. He has also served on the boards of Women and Philanthropy and Northern California Grantmakers, including a term as chair. He was the recipient of the 2002 Terrance Keenan Leadership Award in Health Philanthropy from Grantmakers In Health. David received a master’s in architecture and urban planning from UCLA and a doctorate in educational psychology from the University of Chicago. 

About the Authors

Kathleen Enright is the founding president and CEO of Grantmakers for Effective Organizations. Enright speaks and writes regularly on issues of nonprofit and grantmaker effectiveness at national and regional gatherings of executives and trustees. Publications include Investing in Leadership: Inspiration and Ideas from Philanthropy’s Latest Frontier and Funding Effectiveness: Lessons in Building Nonprofit Capacity. She is also a contributing blogger for The Huffington Post. In 2007, Kathleen received the Distinguished Public Service Award from the George Washington University Chapter of Pi Alpha Alpha, a public administration honor society. Enright holds a bachelor’s degree in English from the University of Illinois at Urbana-Champaign and a master’s of public administration from the George Washington University.

About GEO

GEO is a diverse community of more than 500 grantmakers working to reshape the way philanthropy operates. We are committed to advancing smarter grantmaking practices that enable nonprofits to grow stronger and more effective at achieving better results.

The GEO community provides grantmakers with the resources and connections to build knowledge and improve practice in areas that have proven most critical to nonprofit success. We help grantmakers strengthen relationships with grantees, support nonprofit resilience, use learning for improvement and collaborate for greater impact.

Acknowledgments

GEO would like to thank the following people for their contributions to this publication:

Rajasvini Bhansali, International Development Exchange
Lisa Eisen, Charles and Lynn Schusterman Family Foundation
Ira S. Hirschfield, Evelyn & Walter Haas, Jr. Fund
Robert Hughes, Missouri Foundation for Health
Risa Lavizzo-Mourey, Robert Wood Johnson Foundation
Jennifer Martin, The Seattle Foundation
Robin Mockenhaupt, Robert Wood Johnson Foundation
Ann Stern, Houston Endowment Inc.
Susan Zepeda, Foundation for a Healthy Kentucky Inc. 

Acknowledgments

In addition, we are grateful to the foundations that provided grants to support this work, including the following:

Blue Shield of California Foundation
The Duke Endowment
John D. and Catherine T. MacArthur Foundation
S.D. Bechtel, Jr. Foundation
Surdna Foundation 

Acknowledgments

GEO would like to extend a special thank you to the foundations that have supported us with major unrestricted support, including the following:

Bill & Melinda Gates Foundation
The California Wellness Foundation
Charles Stewart Mott Foundation
Conrad N. Hilton Foundation
The David and Lucile Packard Foundation
The Eugene and Agnes E. Meyer Foundation Evelyn & Walter Haas, Jr. Fund
Ford Foundation
John D. and Catherine T. MacArthur Foundation
The Kresge Foundation

Lumina Foundation
Robert Wood Johnson Foundation
Rockefeller Brothers Fund
S.D. Bechtel, Jr. Foundation
Surdna Foundation
Weingart Foundation
The William and Flora Hewlett Foundation
W.K. Kellogg Foundation 

Acknowledgments

Tom David would like to express his deep gratitude to Peter Barnes, Harriet Barlow, Susan Page Tillett and everyone else associated with the Mesa Refuge in Point Reyes Station, California, for providing him with the time, space and encouragement for the development of this paper.

Additional content development and editorial services by Jessica Bearman, Bearman Consulting.

Discussion Starter

In Our Culture: A Discussion Starter, GEO poses a set of questions to help grantmakers begin a conversation about their culture and explore ways that culture shows up and affects the work of their organization.

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