“Foundations” is an occasional series of informal question-and-answer sessions with employees and others affiliated with The William and Flora Hewlett Foundation to give them an opportunity to explain their work.
Jennifer Ratay is an officer with the Foundation’s Philanthropy Program, which works to improve the practice of philanthropy within the larger philanthropic community and within the Foundation. She leads the Foundation’s organizational effectiveness program, which makes grants to strengthen the organizational health of Hewlett grantees. She also works with senior Foundation management to promote strategic grantmaking within Hewlett through planning, evaluation, and cross-program learning, among other activities.
Ratay has a decade of experience working in nonprofit, public sector, and multinational organizations. Before joining the Foundation, she was associate director of the public management program for the Center for Social Innovation at Stanford University’s Graduate School of Business. She served as a consultant to the Aspen Institute’s Comprehensive Community Initiatives work and as a legislative aide to U.S. Representative Marty Meehan, for whom she managed energy, environment, foreign affairs, and international trade policy work. Ratay has a B.A. in government and environmental studies from Dartmouth College, where she was selected for membership in Phi Beta Kappa, and an M.P.A from Princeton University’s Woodrow Wilson School of Public and International Affairs.
How does the Hewlett Foundation help its grantees become more effective?
Our premise is that healthy, well-managed organizations are more likely to achieve their goals, so some grantees also receive targeted grants designed to strengthen their organizations. We make these so-called organizational effectiveness grants in collaboration with the Foundation officers working in our different program areas. These relatively small, targeted grants are designed to enable the recipients to focus on how well their organizations function, as opposed to the field or cause on which they work. Typically, grantees use these funds to hire outside consultants who help them think through issues related to planning, fundraising, leadership transition, and developing board members’ governance skills, among other topics.
Each year, the Philanthropy Program also works with the Foundation’s communications department to conduct the Hewlett Communications Academy, which trains grantees to think through strategies to be as effective as possible, and then develop messages to convey those strategies.
What characterizes a healthy, well-managed organization?
Typically it has a combination of strong governance, strong leaders, and effective systems for management. It’s also able to adapt to changing circumstances in the field in which it works. And its people are committed to continually reassessing how well they are moving toward their goals.
Do organizational effectiveness grants typically go to nonprofit organizations of a particular size?
No, it’s all over the board. We fund large, international organizations as well as small, community-based groups. Part of the reason is simply the life cycle of all organizations: they need different things at different stages of development, from their founding, to the departure of leaders, to rethinking their goals as the world changes.
But issues the organization wants to tackle do vary with its size. A common problem for small organizations is having just one or two people in charge of all functions. As an organization grows and matures, staff members need to specialize in certain tasks, and an outside consultant can be helpful in guiding them in that direction. Sometimes when a founder leaves, a consultant can help an organization develop new leadership.
The issues large nonprofits might address with an organizational effectiveness grant can be broader. Board development is important. Board members often need to define what their roles are and the most productive ways to relate to an organization’s executive director. Ultimately, what you want is a board that isn’t micromanaging, but focusing on strategy.
What is the process for getting an organizational effectiveness grant?
Usually, a grantee will make a proposal to a program officer during their work together. Of course, the program officer might also see areas where a grantee would be helped by an organizational effectiveness grant and suggest an application. The grant program is structured to be flexible. We can make these grants at any time, not just when the Hewlett Board meets to approve overall program grants. This enables recipients to embark on needed improvements in a timely way.
How large are these grants, and how big is the program overall?
They typically range in size from $20,000 to $80,000. In the five years since we started the program, we’ve made more than 200 organizational effectiveness grants averaging slightly more than $32,000. Most have been targeted to help organizations with strategic planning; the next most common uses have been designing systems of evaluation and fundraising projects. Most grants last about a year.
We’re making twice as many organizational effectiveness grants now as we did in the program’s first year. In 2008, the program made 59 grants totaling about $2.4 million.
What happens once a nonprofit receives an organizational effectiveness grant?
Typically, if the grant is for strategic planning, the recipient hires an outside consultant to give some perspective on what actions would be helpful. The consultant interviews board members, collects data, and generally tries to ascertain an organization’s strengths and weaknesses, particularly in relation to other players in its field. From that, a thoughtful plan can be developed.
The types of work a consultant might do can vary considerably. The strategic planning I just described is the most common use of organizational effectiveness grants. But to meet other needs, a consultant might analyze how an organization’s board functions, plan executive transitions, or help design a system to evaluate its work.
What kinds of needs are you seeing among grantees lately?
In today’s difficult economic climate, when a lot of organizations are strapped for funding, many need to take a step back to see if they can achieve both their short- and long-term goals. We’re starting to hear more interest in exploring a range of collaborations with other organizations, from loose affiliations where some organizational functions can be shared to outright mergers.
What if an organization needs equipment or staff to become more effective? Could it use an organizational effectiveness grant for that purpose?
No, usually those needs are met through a regular program grant. The Foundation makes a lot of general operating grants, and organizations can use that money as they see fit.
How do you measure the success of an organizational effectiveness grant?
We ask a grantee certain questions to try to assess the effect a grant has had: Did the project meet its goals, and why? And did meeting those goals change its behavior in a way that increased the organization’s impact?
It’s interesting. Sometimes when an organization comes with a proposal, it becomes clear that the group is focusing on a symptom, rather than on an underlying cause, of a challenge it’s facing. For example, a lot of grantees will ask for help with fundraising. But in many cases, the consultant or those running the organization learn that it might benefit from examining the clarity of its goals. The true challenge is planning strategy, rather than fundraising. And once the organization resolves that, it is better positioned to go back and look at fundraising.
It can be a bit of a dance to work with grantees to get to their fundamental issues. And time and time again we see that success hinges on having an influential champion within a grantee organization who can drive this important work forward.