Performance Measurement and Best Practices
March 28, /2008 - While most non-profits think of measurement as a way to satisfy funders' requirements, there are some who use it to transform their organizations from the inside out. A new study highlights successful performance measurement practices at several Chicago community-based organizations. Representatives from the organizations profiled in the study, including Patricia Watkins, Executive Director of TARGET Area Development Corporation, Lisa Kuklinksi, Mercy Housing Lakefront, and Steven McCullough, CEO of Bethel New Life, participated in a discussion moderated by Debbie Plager, author of "Leadership and Change Implications within Performance (Outcomes) Measurement: Using Cognitive Lenses to Examine Nonprofit Leaders."
The Chicago Grantmakers for Effective Organizations hosted a session on Performance Measurement Best Practices. The session was introduced by Shelley Davis, Chicago Foundation for Women, and featured contributions from Debbie Plager, organizational effectiveness consultant; Richard Townsell, Bethel New Life; Patricia Watkins, TARGET Area Development Corporation; and Lisa Kuklinski, Mercy Housing Lakefront.

Performance measurement can play an important role in helping organizations better understand what they are accomplishing and focusing them on activities that bring about the best results. By integrating performance measurement into different levels of an organization and making it part of organizational culture, both grantors and grantees can improve their success and better accomplish their mission.

Organizations that have successfully used performance measurement techniques tend to demonstrate the following characteristics:

• They integrate measurement activities into basic organization functions. The more measurement is part of a system, the less the organization will have to rely on individual leaders to make sure measurement happens.
• Leaders need to be open to new ways of doing things and be willing to follow directions indicated by their data.
• Leaders also need to ask questions about how an organization functions and see how the organization's mission connects to the day-to-day activities of staff and board members.
• In developing performance measure techniques, leaders must remember that one size does not fit all, and there is not one single technique that will work for every organization.

When designing performance measures, organizations need to keep their basic purposes and mission in mind. Sometimes organizations are too attached to specific programs, especially if the programs have been around for a long time or are central to an organization, and they may not be willing to change or even abandon those programs if they are not performing well. However, if organizations remember their focus should be on the people they serve, then it will be easier to adjust programs to gain the end results they desire.

In developing performance measures and navigating organizational change, it can be important to learn how to speak to different parts of the organization as well as to elements outside the organization. Different groups within an organization have their own sets of priorities and values, and learning to translate information from one group to the priorities and values of another can help different parts of an organization understand the importance of performance measurement data.

Performance measures can also help an organization focus on what they can and cannot affect. By working through the results they can expect to see from programs, organization staff can better understand what concrete results they want to measure and ensure that their activities remain focused on priority goals.

Discussions about performance measures and the changes tied to them often reveal divides in an organization, especially between those who focus on an organization's mission and those who focus on the bottom line. Achieving a balance between these groups can help an organization become more efficient without losing focus on crucial mission-related goals.

that the non-profit group has defined. Imposing other measures on an organization may not capture an accurate picture of what staff members learned and achieved in the capacity-building process.

One of the major challenges faced in capacity-building efforts is executive turnover. Often a change in the executive director position can put an organization in turmoil while disturbing existing relationships between that organization and the foundations that fund it. One option available to capacity-building programs is helping organizations prepare for leadership transitions. This could involve paying for interim leaders who can guide the organization while the search for the next executive director is completed, or it could involve building staff teams who understand the organization well enough to carry its mission forward should one of them depart.

One of the most important things capacity-building programs can provide is space and time for leaders of non-profit organizations to share ideas with each other and build collaborative efforts. Surveys of organizations who have participated in capacity-building programs have shown that they often find the chance to exchange ideas and build partnerships to be the most valuable part of the process. Foundations can serve as conveners to bring people together while also helping pay for the time leaders spend working together.

Collaborative efforts that grow out of capacity-building programs can take many shapes. Sometimes, organizations can learn from each others' management and administration styles, while other times they might discover a common area of policy interest. By working together, these organizations can have a stronger, broader voice in policy issues than they did on their own, which enhances their capacity to achieve system-wide reform.

Foundation staff who had been involved in capacity-building programs found that it can be useful to take a step back and have the foundation serve more as a resource rather than a guiding force, allowing the non-profit organizations to determine what they need on their own.

Sometimes a capacity-building grant may not be different than a general operating grant-in fact, general operating grants often play important roles in capacity-building efforts. However, foundations may wish organizations to enhance their efforts in a particular area, which could necessitate certain restrictions on general-operating grants. These restrictions can be the result of foundation staff and non-profit leaders working together to discover an organization's strengths and weaknesses and seeing what improvements may be needed.

Foundations can be creative with the amount and nature of restrictions they place on capacity-building grants; for example, restricting organizations from using grant money to hire new staff can encourage them to find new ways to become more productive and efficient with existing staff. The support from foundations can also be flexible; sometimes providing the right connections or educational opportunities can be just as helpful as a direct grant.

When developing capacity-building goals in partnership with non-profit organizations, it is important to build in and accept the measures of success that the non-profit group has defined. Imposing other measures on an organization may not capture an accurate picture of what staff members learned and achieved in the capacity-building process.

One of the major challenges faced in capacity-building efforts is executive turnover. Often a change in the executive director position can put an organization in turmoil while disturbing existing relationships between that organization and the foundations that fund it. One option available to capacity-building programs is helping organizations prepare for leadership transitions. This could involve paying for interim leaders who can guide the organization while the search for the next executive director is completed, or it could involve building staff teams who understand the organization well enough to carry its mission forward should one of them depart.

Knowing the best ways to help a troubled nonprofit organization get back on track and deciding when it might be best for an organization to merge with another or shut its doors are problems without simple solutions. A funder's role in these situations depends in part on the relationship the funder has built with the organization and how the organization plans to recover and go forward. Funders also need to consider the community impact of closing an organization so they can help ensure that people do not lose much-needed services.

The role of funders in shaping grantee organizations has been the subject of much discussion, and different funders approach the issue in a variety of ways; some funders build deep relationships with their grantees and may become practically a partner in the grantee's work; other foundations are more wide-ranging, putting more control in the hands of the grantee organization. An individual funder may have more than one approach, building closer relationships with some grantees while taking a more hands-off approach with others.

One of the difficulties funders face is how to work with a grantee when certain aspects of the grantee organization need to change. What a funder is able to accomplish depends in part on their relationship with the grantee and with other funders. A meeting between funders and staff and board members of a grantee organization can present an opportunity to discuss some of the issues and help the organization develop a plan to improve its capacity and work through its problems. Such a discussion can serve as an open way to discuss issues while still leaving control and decision-making powers in the hands of the grantee organization.

Sometimes funders are confronted with organizations that, for one reason or another, are considering shutting their doors. Issues that need to be considered at these times include:

• There may be different tensions operating when an organization considers shutting down. On the one hand, an organization may want to gather what resources it can to pay obligations and settle any outstanding matters. On the other hand, there may be pressure for the organization to use any resources it can obtain to continue the organization and its services, even if that eventually means a more messy shutdown. Funders that have an existing relationship with an organization can help them think through responses to these pressures.
• The question of the community impact of closing an organization needs to be addressed. If the loss of an organization would leave a void in the community, it may be desirable to find a way to keep it open. On the other hand, shutting an organization down might open up opportunities for organizations with new approaches that could generate substantial community benefits.
• If a troubled organization has a recovery plan, funders may be able to help that organization survive by providing technical assistance and/or emergency funds. By setting aside discretionary, emergency funds, funders can position themselves to be responsive, leverage other dollars, or play leadership roles by providing needed funds.
• The future of an organization often depends greatly on the existing leadership; experienced leaders have a better chance of overcoming difficulties than do leaders with little or no management experience.
  When making funding decisions, funders should understand how much risk their staff and board are willing to take on. Funding an organization that fails is not necessarily a sign of a bad decision; it could simply indicate a willingness by a funder to take risks.

Participants expressed interest on following up on some parts of this discussion by having a session on the different approaches for developing a funding strategy, with a discussion of the pluses and minuses of each approach.

A Discussion of "Good to Great and the Social Sectors"
January 25, 2007 - The Chicago Grantmakers for Effective Organizations hosted A Discussion of "Good to Great in the Social Sectors". The discussion was facilitated by Frank Baiocchi, Polk Bros. Foundation, and Julie Simpson, Urban Gateways: Center for Arts Education.

Organizations need a certain drive to become truly successful, and that drive must be a part of the organization rather than something that comes solely from a charismatic leader. If organizations are focused on goals at all levels and are able to discover the best methods of reaching those goals, they greatly increase their chances of success.

In discussing ways of meeting goals, participants looked at the description of "foxes" (people who have multiple foci and interests) and "hedgehogs" (people who have a deep, consistent focus on a single goal or concept). The division is somewhat of a false dichotomy; people may be more fox-like or hedgehog-like at different stages of their life, or they may need to exhibit some characteristics of each depending on the task at hand. Gaining information from multiple sources and looking at a problem or situation through multiple perspectives (which is a fox trait) can be the prelude to moving forward with concerted effort on a specific solution (a hedgehog trait).

Just as individuals may display fox or hedgehog classifications, organizations may also demonstrate more traits of one than the other. Some foundations may be more scattered in their activities, writing checks without any concerted purpose. Becoming a more focused organization could increase that foundation's success, and there are different ways to achieve that focus. One is to narrow the foundation's giving areas and concentrate on strategies in a particular area that present good opportunities for change. Another is to keep a broader focus but to be more deliberate in choosing what kind of organizations receive grants; by giving grants to success-driven organization whose goals match those of the foundation, the foundation increases its own effectiveness.

Participants mentioned that some of the concepts contained in "Good to Great and the Social Sectors" serve more as a snapshot of a particular point in time rather than as inevitable truth. Both the for-profit and non-profit sectors are currently undergoing significant change. On the for-profit side, a new generation of management is emerging that focuses more on collaboration and employee buy-in than did previous generations of more authoritarian managers. On the non-profit side, there is increasing recognition that non-profit leadership often demands separate skills than for-profit leadership, and those skills have value. As the non-profit sector continues to expand, there will be more opportunities for people to spend their entire careers in non-profits, developing skills particular to that sector, rather than crossing between for-profit and non-profit sectors.

Organizations are more likely to be successful if they have the right people involved, and site visits present a great opportunity to gain an understanding the people at the different levels of an organization. While a charismatic leader can have initial appeal, an organization needs more than that. Too often, organizations without such a leader falter when that leader is gone, even for short periods of time. Healthier organizations do not rely on the energy of a single person, but on the strength of organizational practices that drive them toward a specific goal.

Sometimes the process of developing specific goals can be painful, especially if an organization has strayed from its intended mission. Paring back extraneous programs or activities can be difficult and can alienate some people, but in the end it can lead to greater success if it is part of an overall strategy of concentrating on organizational goals.

"Daring to Lead" CGEO Learning Circle
November 28, 2006 - The Chicago Grantmakers for Effective Organizations hosted a discussion on Leadership Development and the "Daring to Lead" Report. Paul Botts, Gaylord and Dorothy Donnelley Foundation, Leslie Ramyk, Ravenswood Health Care Foundation, and Julie Simpson, Cricket Island Foundation, facilitated a discussion focused on the findings of the 2005 "Daring to Lead" survey and an article entitled "The Leadership Deficit," both of which examine the challenge of developing a new generation of nonprofit leaders.

Many of the frustrations and difficulties faced by nonprofit executive directors have roots in a lack of coordination and understanding between funders, board members, and staff. Closing existing gaps between these groups and improving training and education for all parties would reduce some of the frustrations executive directors face, which would improve their willingness to stay on the job. It would also help prepare a next generation of nonprofit leaders.

Participants identified the following challenges and ideas for improvement:

- Board members often need to realize that nonprofit organizations are not only different from for-profit corporations, but also that each nonprofit organization faces its own challenges. Practices used in one organization do not always carry over to another. Board members can help organizations focus on ideas and practices that lead to success. As volunteer leaders, they are less successful when they attempt to force an organization to adopt concepts that are not a good fit for the organization, or when they engage in rivalries or power struggles with the organization's staff.
- Clarifying the role of board members through board education and improved communication with staff can help circumvent conflicts. The role of a board has changed over the years and is now often unclear to both staff and board members. The emphasis has shifted away from the board performing oversight and toward the board acting as fundraisers or direct funders, which can cause problems and misunderstandings when roles and expectations are ill-defined.
- Organizations need to find a way to improve their administrative capacity (either through training existing staff or bringing in people with management training) without losing their community roots. Often, executive directors have more experience with program development than with administration. Organizations continually struggle to balance their programmatic abilities and front-line experience with administrative capacity, and the nature of nonprofit organizations often tilts them toward the former.
- Communication between nonprofit organizations and foundations about finances is often dysfunctional because there is no
commonly understood definitions of terms like "overhead"-what expenses count as overhead, and what amount of overhead is appropriate, often differs from foundation to foundation. By creating a common set of definitions, foundations could promote greater transparency by grantees while also reducing the frustration of dealing with multiple definitions.
- Being clear on a foundation's expectations can help potential grantees improve their practices. For example, including the Donors Forum's Illinois Nonprofit Principles and Best Practices booklet with a request for proposals tells organizations what practices they should consider implementing if they want their proposal to succeed.
- Earmarking funds for professional development activities, capacity building, or improved benefits for staff can help ensure those dollars fulfill their intended purpose. During a budget crunch, nonprofit organizations often eliminate professional development before anything else if they have the option to do so; they also generally show a preference for more tangible purchases, like new computers, over professional development activities if they have the option.
- Finding ways to encourage mentoring would help develop the next generation of leaders. Many of the skills needed by an executive director are best learned through mentoring, which is often in short supply due to lack of resources.
- Promoting strategies for funders to improve nonprofit leadership and address future leadership gaps.

Measurement, Schmeasurement! CGEO Learning Circle
May 16, 2006 - The Chicago Grantmakers for Effective Organizations hosted a learning circle entitled Measurement, Schmeasurement! Julie Simpson, Cricket Island Foundation, introduced and facilitated the discussion, which featured contributions from Myron Rogers, Rogers River North LLC. An article written by Myron Rogers and Margaret Wheatley entitled "What Do We Measure and Why? Questions About the Uses of Measurement" served as the starting point for the discussion. The article is available at http://www.nonprofitquarterly.org/content/view/160/28/.

In the nearly ten years since the article was written, the drive to develop standardized systems of measurement has only gotten stronger. Rather than generating successful results, most measurements act as both a means and an end-the measurements generate a high degree of work, and the measurements, not the goals they are supposed to represent, become the target of most work efforts. For example, in public schools standardized tests were supposed to measure how well a student has mastered basic skills, but increasingly tests are being emphasized instead of real education, and the price is that students often do not get to participate in a well-rounded curriculum. They are taught how to take a particular test rather than given a basic education.

Many of the ideas behind existing measurements are based on a mechanistic world view that ignores the human dynamic of any group of people. By trying to divide up tasks in a machine-like way, this world view can lead to fragmented systems that have a kind of organizational multiple personality disorder, with each section of the system having their own understanding of what needs to be done. There is no common set of goals or basic shared understanding of what the organization is doing.

While there will always be a variety of perceptions and understandings in any group of people, it helps if there is a common understanding of some basic goals. Continual conversation can help build this understanding, especially if the conversation is geared toward looking at the group's actual activities rather than engaging in rationalizations for actions or parceling out blame for perceived mistakes. Rigorous, collective learning can lead to a better understanding of a system's activities and help people know when these activities are leading to a desirable outcome.

Translating these ideals into grantmakers' everyday lives is not simple. Funders need to employ some kind of measurement, as they are constantly faced with more proposals than they can fund, and they must develop ways to evaluate those proposals and determine whether the programs they eventually funded were successful.

Evaluation can be helped by involving the grantees in the feedback process from the beginning. In their proposals, potential grantees can develop their own measurements for success, and involving the grantees and their constituents in feedback processes for the duration of the project can help develop a clear picture of what the project accomplished. Evaluative processes that are more open and not tied to artificial deadlines or other constraints can show the complete story of a project's activities.

Learning Circle: Shared Practices in Grantee Reporting
March 21, 2006 - The Chicago Grantmakers for Effective Organizations hosted a learning circle on Shared Practices in Grantee Reporting. Leslie Ramyk, Chicago Community Organizing Capacity Building Initiative, and Julie Simpson, Cricket Island Foundation, introduced and facilitated the discussion.

The discussion began with each participant talking about their organization's reporting requirements, which revealed a diversity of approaches. Some organizations require both mid-year and year-end reports, while others require only year-end reports for certain grantees and no reports for others (for example, grantees receiving general operating support may not be required to file a year-end report since the foundation has confidence in the organization, which is why they funded it in the first place). Some foundations directly tie the final report to goals made by the grantee organization during the proposal process.

Mid-year and year-end reports can be used by foundations in different ways. To some, the mid-year report is more important than the year-end, as it provides an opportunity to talk with the grantee about their initial progress and offer any assistance with problems that may have developed. Other foundations find the year-end report to be more important, as it can provide tangible measures of the effects of the foundation's efforts. However, participants noted that foundations should be cautious about claiming a grantee organization's success as their own.

Gaining an understanding of the results of a grantee's efforts can mean striking a balance between qualitative and quantitative information. Stories and anecdotes can be effective in putting a human face on a grantee's activities, but stories themselves cannot provide the whole picture, as almost any organization can tell a heartwarming story about the results of their efforts. Foundations need to be able to look beyond the stories to see how efficiently and effectively the grantee organization is able to channel their resources into obtaining such results.

One way to strike the balance is to focus on what one participant called "quantitative stories;" that is, stories that contain enough specific information to show how an organization works and what steps it takes to obtain desired outcomes. Foundations must be careful, though, when gathering such information; there are many eventualities that no organization can control, and not every person who receives the similar spectrum of services will respond the same way. A grantee organization can control the effort they put into a project and the way the project is designed, but they cannot control the decisions made by the project participants.

When helping grantees set goals and designing questions for year-end reports, it is also important to ask about outcomes that truly matter to the foundation. Grantees may list the number of people that attended a certain seminar or how many children were signed up to a tutoring program, but those outcomes do not necessarily measure the true effect of the programs-measuring the number of participants in a program is not the same as measuring the effect the program had on the participants. Grantees may need training and technical assistance to help them develop such outcomes.

Having a close partnership with a grantee and being able to provide assistance where needed can help the evaluation process. Grantees can give more honest assessments of their abilities and performance when there is a level of trust between them and the foundation, especially if they understand that they will not automatically be financially punished for any mistakes or missed goals. Working closely with grantees on both goal-setting at the beginning of a project and evaluation at the end can move foundations toward participatory evaluation, which can provide grantees with useful information about their own performance and what they can do to improve in the future.

Participants also discussed the merits of offering general operating support versus project-based support when it comes to evaluation. Reporting on general operating support can be easier, as a project budget and final report may not be necessary, while project-based funding can make it easier to track the exact effect a foundation's donations may be having.

Measuring Success
January 24, 2006 - The Chicago Grantmakers for Effective Organizations hosted a learning circle on Measuring Success. Introduced and facilitated by Leslie Ramyk, Chicago Community Organizing Capacity Building Initiative, and Julie Simpson, Cricket Island Foundation, the learning circle featured a presentation from Nancy Zweibel, Retirement Research Foundation, followed by discussion among all participants.

The opening presentation focused on performing evaluations at a foundation that has a broad range of grants, including research, direct service, capacity building, and training. No single method could be used to measure the effectiveness of all grants, so the foundation has employed a variety of methods, including the following:

• Asking specific evaluative questions on the year-end report form submitted by grantees;
• Investigating the sustainability and impact of funded programs;
• Occasionally performing a formal evaluation for projects that lend themselves to rigorous study;
• Surveying grantees about their opinions on the funder and their thoughts on their own effectiveness (this works best when the grantees can remain anonymous);
• Looking at unintended outcomes, both positive and negative, of a grantee's efforts;
• Following up with grantees two years after a grant for a particular project has been closed to see if the project is still ongoing and if it has grown or shrunk in the past 24 months; and
• Performing evaluations of a cluster of grants focused on a single policy or program area to see how they affected the overall landscape.
  

In the discussion following the presentation, participants brought up the following issues and ideas:

• Questions on year-end evaluation forms should be specific and should tie into questions asked on the original application form.
• Evaluation measures should be continually adjusted and modified based on the needs of the funder and feedback from grantees.
• Grantees, with assistance and feedback from funders, should be able to choose what measures could be used to demonstrate the effectiveness of their program.
• Both grantees and funders should be able to discuss their "theory of change"; that is, they should be able to clearly define the problem or issue they are addressing and how their chosen methods will bring about change in that area.
• Startup programs can be evaluated simply on whether or not they survive and generate a degree of interest, as such programs often do not have the sophistication or resources to perform more in-depth evaluations. Early in their existence, information should be gathered about how well the program seems to be working (e.g., program staff's thoughts on how they are doing, participants' reaction to the program), and that information can be used as a baseline for future evaluations.
• Evaluation training materials can be posted on a funder's website, and there can be two sets of these materials, one targeted toward researchers and another toward non-researchers.
• Evaluations are most useful if a funder knows how the evaluations will be used in future grantmaking activities. If there is no plan to use information from an evaluation, a funder might be better off not performing one and viewing the philanthropic gift itself as a positive outcome.
• Using key informants (i.e., people knowledgeable about a specific field but not directly connected to a program funded by a grantmaker) to talk about the changes in a specific field over time can help funders understand the effects of certain initiatives.
• Small foundations can ask evaluative questions on mid-year and final report forms to get some idea of grant effectiveness. That can often be enough to form an understanding of how well a program is functioning, especially if the questions tell the story of the program rather than report numbers that might not give an accurate overall picture.

Participants agreed that the learning circle was useful, and said that there were many topics and questions that could be discussed in more detail. The group agreed to continue the discussion at a learning circle on March 21.

Learning Circle:Building Collaborations and Social Capital
November 3, 2005 - The Chicago Grantmakers for Effective Organizations hosted a discussion on the Effectiveness Matters Symposium and a learning circle on Building Collaborations and Social Capital. Leslie Ramyk, Chicago Community Organizing Capacity Building Initiative, introduced and facilitated the discussion, with contributions from Joan Gunzberg, Arts & Business Council of Chicago; Toya Randall, Grand Victoria Foundation; and Chris Brown.

Participants reviewed feedback on the day-long Effectiveness Matters Symposium held on September 28. The meeting attracted about 60 participants and featured speakers coming from as far away as Alaska. Attendees included foundation staff, board members, and foundation directors. Though a few sessions drew criticism for covering too broad a range of topics, or for engaging in too much jargon, the overall response was very positive. Participants thought most of the information presented at the symposium was relevant and useful. The group agreed to consider planning another symposium or similar event to take place in two years.

The meeting then moved to a learning circle on collaboration and social capital. One key to increasing collaborations is realizing that there are several types of communities; some communities are defined by physical location, others by work or shared interests. Knowing the different ways in which individuals and organizations might be able to interact with each other while also understanding that groups that share common ground often remain unaware of each other's existence can help build collaborations that increase the social capital in a community. There is particular difficulty in building connections between groups of different natures within a single community-for example, churches of a single denomination may work together, but churches of different denominations within the same physical community often have difficulty making connections.

Participants broke into small groups to share their experiences in building collaboration and increasing social capital, then returned to tell the larger group what they had learned from each other. They discussed ways of connecting groups who should know about each other's existence but don't, and the value of simply bringing groups together to talk. However, one potential difficulty is that groups may attend meetings intended for collaboration with the motive of increasing their chances to get funding, which can lead to an atmosphere that is competitive instead of collaborative.

Building an atmosphere where collaboration can take place requires being clear and upfront about your intentions. Building trust is crucial. There can be an imbalance of power in the funder/grantee relationship, which can lead to mistrust and suspicion. While some of this is inherent, it can be mitigated somewhat by being open and honest with grantee organizations. Providing multi-year funding that gives a grantee some degree of future security can also help build trust.

Participants then discussed the difference between being liked and being trusted, noting that the desire to be liked can sometimes lead to activities that destroy, rather than build, an organization's reputation for trustworthiness. Working with a troubled grantee is one example of this tension-how much help can a funder offer an organization? A funder would not want to offer help to one group that would not be offered to another, while at the same time funders need to be cautious about offering so much assistance to grantees that they spread themselves too thin.

The discussion then moved to risk management, talking about when it might be acceptable to have a grantee fail. Some boards are more willing to take risks than others; in fact, some may view a lack of failure among grantee organizations as an indication that the funder is not taking enough risks. Foundation staff should communicate with the board to know how much risk they will tolerate.

Effectiveness Matters
September 28, 2005 - Effectiveness Matters was a symposium for Donors Forum Members. It provided an opportunity for foundation trustees, executives and program staff to explore the complexities of organizational effectiveness work. The symposium highlighted funding initiatives and feature governance and management tools developed to assist foundations achieve effectiveness. The symposium offered a stimulating learning experience for grantmakers and provided access to colleagues and thought leaders from the field. This one-day event included a morning and afternoon plenary, six 90-minute breakout sessions and a networking lunch for attendees. Handout materials are available upon request.

Sessions with Joel J. Orosz
May 17, 2005 - Dr. Joel J. Orosz is the Distinguished Professor of Philanthropic Studies at The Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership at Grand Valley State University. His duties at the Johnson Center include the directorship of the Philanthropic and Nonprofit Knowledge Management Initiative which seeks to capture, organize, disseminate and promote the use of the best practices in the nonprofit and philanthropic sectors; and the development of The Grantmaking School, the first university-based training center for new program officers of charitable foundations.

Before coming to Grand Valley State University, Orosz spent 15 years with the W.K. Kellogg Foundation of Battle Creek, Michigan, one of the ten largest private foundations in the United States. At the W.K. Kellogg Foundation, he was responsible for the $64 million Michigan Community Foundations' Youth Project, which founded 23 Michigan community foundations and trained more than 8,000 young people in raising and giving money. Dr. Orosz has authored and edited several books on the history of museums, numismatics, and philanthropy, most notably For the Benefit of All: A History of Philanthropy in Michigan and The Insider's Guide to Grantmaking: How Foundations Find, Fund and Manage Effective Programs. He serves on the boards of three charitable foundations, and is a trustee of numerous nonprofit organizations.

Afternoon Session
The afternoon session was open to foundation members and nonprofit partners. Dr. Orosz began the program by giving an overview of the public's current perception of nonprofits. Recent scandals at several large charities have unfortunately painted a very negative picture for all nonprofits - so much so that federal regulators will soon step in to "clean up the cesspool" as Senator Charles Grassley (R-Iowa) phrased it.

Government officials are considering revamping Form 990, requiring nonprofits to re-apply for 501(c)(3) status every five years, taxing nonprofits to help fund government oversight programs, limiting salaries for CEOs and board members, and enforcing stricter accountability. Dr. Orosz emphasized that these plans are an over-reaction to a few bad apples: abuse occurs among 1/100th of 1% of all nonprofits.

Ricardo Millett, President of the Woods Fund of Chicago, sparked a discussion to brainstorm ways that the nonprofit community could - as a whole - communicate its objectives and successes. This would help nonprofits be pro-active (instead of always being on the defense) when changes loom in federal policy. However, Dr. Orosz pointed out that the nonprofit community has become so large and 'uncharted', that no single association could possibly represent even one-quarter of all charities.

Capacity Building Assessment Tools
October 19, 2004 - CGEO held a roundtable exploring the role of organizational assessments. Samples of these Tools were presented. But this practice of gathering potentially sensitive information raises ethical issues for our field. How are foundations using the information gathered in an Assessment process? What if nonprofits are not funded based on what is learned? This session was highly interactive, allowing for a discussion of these and related issues. Foundation staff, trustees and MSO's engaged in capacity building--or exploring the possibility--were encouraged to attend. Panelists included: Toya Nash and Barb Knoff, Grand Victoria Foundation; Sharon Markham and Mario Garcia, Retirement Research Foundation; Joan Gunzberg and Suzanne Connors, Arts & Business Council; and Leslie Ramyk.

A Year to Remember
April 6, 2004 - The meeting opened with introductions and a brief review of FY04 CGEO programs. Members discussed the importance of sponsoring programs that are relevant and useful. It was noted that over the past year, several member issue groups offered programs covering the same topics.

Toya then proposed focusing on a central theme in FY05. After some discussion, it was decided that CGEO would focus on foundation effectiveness instead of offering programs on grantee/nonprofit effectiveness. With input from Joan and Arlene, the committee agreed to include the opinions, perspectives and experiences of Forum Partners in our efforts to promote foundation effectiveness. Members agreed that future programs should target Forum Members and their boards of directors, particularly staff and boards from corporate giving programs and family foundations.

Members remarked that a key to good attendance is to include representatives from foundation staff and boards in planning and developing subsequent programs. Suggestions included asking executive directors to develop content and a list of questions to be explored as part of programming for the upcoming year. It was noted that not all boards have the same level of engagement and that some boards view effectiveness differently.

The committee then developed the following list of potential programs.

1. Board Effectiveness: What is a board's role in building its own foundation's effectiveness?
2. Center for Effective Philanthropy: Indicators of Effectiveness: Understanding and Improving Foundation Performance
3. Professional Development
4. Regional meeting with national GEO

Examining Elements of Grantee/Funder Relationships
March 9, 2004 - The Chicago Grantmakers for Effective Organizations and Arts and Culture Funders Group met to discuss elements of productive and trusting grantee / funder relationships. Panelists included: Evette M. Cardona, Polk Bros. Foundation; Luther Goins, The Central Region; Charles Twichell, Prince Charitable Trusts; and Jill Zimmerman, Alternatives, Inc.

The panel, comprised of grantee and non-profit representatives, was asked to answer a series of questions:

• How would you suggest nonprofits and funders work to build and maintain long-term relationships?
• How honest can or should a grantee be with a funder in reporting and self-evaluation?
• How honest can or should applicants and grantees be with a funder in reporting and self-evaluating?
• When does a request from a foundation change from a "hands-on" productive approach into a counter-productive or excessive or intrusive approach?
• How do you suggest funders who want to be "hand-on" work with applicants and grantees?

Personal experiences articulated the lessons learned in building positive long-term relationships. Panelists stressed the importance of honesty and transparency. Funders should articulate the action steps and decision points involved in the application process. A focus on sustaining a program is a better way to maintain a long-term relationship between funders and grantees than focusing on the personal relationship between non-profit staff and foundation staff. A back-up plan for program funding will make it easier for a non-profit to be more open with their program officer.

The session highlighted the challenges a funder can experience in balancing the desire to be non-intrusive with the need to understand an organization's capacity to do their work. Non-profits identified foundations' counter-productive requests. It was noted that shaping programs around foundations' missions may divert nonprofits from their own mission. Another trouble spot is when a disproportionate amount of non-profit time and energy are spent for a small grant.

Funders and non-profits alike discussed the awkwardness in the discussion around declined proposals. Some non-profits want to hear the reasons a proposal was declined, but not immediately after they have been told they will not receive funding. Funders who offer an opportunity for the non-profit to follow-up on the rationale for the decline find it yields a productive conversation for both the funder and applicant.

CGEO Mid-Year Planning Meeting
January 20, 2004 - Toya Nash, CGEO co-chair, reviewed the three program principles the group members set at the July 2003 retreat. The principles included: involve nonprofit participation in programming; incorporate case studies; and provide take home resources after the programs for attendees.

The group discussed its four fall programs. It was agreed that the United Way program was well attended. The group was disappointed that the program was not very informative and did not portray a full understanding of what was occurring at United Way. Those who attended disliked the PowerPoint presentation, stating it made for a stale presentation.

Mergers, Downsizing and Closures had great attendance, prompted discussion, and provided relevant take home resources. The group enjoyed Peter Handler's perspective and honesty in his role as a funder with ArtsBridge. Some of the group felt that there was not enough time to cover specifics for each decision. Potentials for follow-up to this program included: a review of the STRIVE structure 6-months later; a discussion with ArtsBridge Board Members; and a review ofadditional organizations who experiences similar circumstances.

Risky Business of Grantmaking's weakness was its broad overview of ethics in the profession, as well as in legal issues, Board composition, and program officer behavior. A plethora of information was covered in a short amount of time that did not provide answers to ethical issues. However, this program was well attended and provided a thought-provoking discussion that revealed the range of practice and diversity in the field of philanthropy. Suggested follow-ups to this program included a program to assist funders in the development of their own best practices and moral framework as well as to create an ethics list serve.

Partnerships with Grantees, The Diana Princess of Wales Memorial Fund was an educational program and was enjoyed by those who attended. A future program idea included inviting one of the national organizations supported by The DPWMF to discuss how they are functioning without The DPWMF funding.

Other ideas discussed included:

• Post case studies on the Donors Forum web site.
• Videotape and archive programs online or in the Donors Forum library for future use.
• Hold a program to better understand organizations in situations similar to those in Mergers, Downsizing and Closures. One idea included case study training on resolution management.

The transitional phase the sector is experiencing was identified as a potential theme for CGEO during FY05 and the theme could develop into a yearlong series for grantmakers and grantseekers. Programming could address: How do funders respond to organizations in flux? How do program officers evaluate organizations in these situations? This idea will be addressed in more detail at the 2004 summer retreat.

Partnerships With Grantees
November 12, 2003 - Members of the Youth Development Task Force and Chicago Grantmakers for Effective Change welcomed Kathryn Wittneben and Lisa Hoffman of The Diana, Princess of Wales Memorial Fund (US), who shared their lessons learned on building effective partnerships with youth.

The funders at The DPWMFUS found it was important to validate the work of the youth involved and to have youth participation integrated at every level in order to develop a successful partnership between the funder and grantees. The most important benefits gained were learning together while going through the process of implementing the funded project. Establishing a common vocabulary and having a clear understanding of the different non-verbal languages that youth and adults use can help create mutual understanding and respect, leading to more successful results. This includes funder responsiveness and flexibility in communicating at non-conventional times of day, which may work best for the youth. Ms. Hoffman suggested hiring an intermediary to work with youth if your foundation is interested in this type of capacity building but does not have the capacity to work directly with them.

Megan Carney from About Face Youth Theatre (AFYT), one of the organizations funded by The Diana, Princess of Wales Memorial Fund (US), was present to discuss the role funding played in expanding their touring component of the theatre and creation of an on-site leadership program for youth. Overall, organizations which received funding vocalized the additional opportunities to step out of their daily routines and conduct research, dialogue with others, and spend more time focusing on the broader goals of the organization.

Brenna Conley Fonda and Tony Alvarado-Rivera, interns at AFYT, agreed that through the experience they gained a better understanding of nonprofits and learned how to create change in their communities. The youth organizations selected by the Diana, Princess of Wales Memorial Fund (US) also formed a peer-learning network to share experiences, challenges and strengths, and provide each other support.

Mergers, Downsizings and Closures
October 16, 2003 - Dimitra Tasiouras, Lloyd A. Fry Foundation, welcomed program attendees. Sunny Fischer, The Richard H. Driehaus Foundation, introduced the panelists. Panelists were: Delena Wilkerson, executive director at the Nonprofit Financial Center; John Plunkett, president and CEO, Suburban Job-Link; Steven Redfield, former executive director, STRIVE Chicago Employment Services; Jobi Peterson, executive director, Illinois Caucus of Adolescent Health; Henrika McCoy, board member, Illinois Caucus of Adolescent Health; and Peter Handler, program officer, The Richard H. Driehaus Foundation. Key points in this session included:

1. Nonprofit financial assistance
   • Organizations seeking financial assistance are desperate and bewildered.
   • Nonprofit organizations need diverse income portfolios; time; talent to make the long-term decisions in the short term; and management depth when critical decisions are needed.
   • It was recommended that nonprofits have an active strategic plan in place that includes restructuring opportunities.
     
     
2. Nonprofit merger process
   The merger process consumed a great deal of time devoted to: numerous e-mails and telephone calls; speaking with the Board Chair; combining Boards; filing the Articles of Merger; naming the new organization. Merger costs were approximately $50,000 in legal fees and software upgrades; additional costs continue to mount. Resource: Nonprofit Mergers Workbook: Leader's Guide to Considering, Negotiating, and Executing a Merger by David La Piana. The Kellogg School of Management will be releasing a case study on the STRIVE merger.
   
   
3. Nonprofit downsizing
   Critical decisions were made in two weeks; the organization reviewed its policies and dropped programs that were not aligned with the mission; utilized services at Nonprofit Financial Center. Process had opportunity costs: losing good programs; good people. Organization began 2002 out of debt; attracted four new funders. Agency that successfully downsized took advantage of trusting and open communication with funders to make the case for their survival.
   
   
4. Nonprofit dissolution
   Vacant executive director position contributed to strained relations between staff and board. Agency that dissolved failed to take advantage of opportunity to talk honestly with funders.

Funders discussed how to assess strengths and weaknesses of nonprofits. Suggestions included: review board minutes to assess board participation; ask about board participation and the relationship between the board and agency leadership at site visits.

United Way Update: Impact on Philanthropy
September 22, 2003 - Richard H. Sewell, senior vice president, United Way in Chicago, provided an update on changes in the organization's structure, allocations policies and operations.

United Way in Chicago and United Way of Suburban Chicago are in the process of restructuring to reduce the number of independent suburban United Ways and consolidate some areas of administration. The United Way of Metropolitan Chicago will begin operations effective January 1, 2004.

The allocations policies in Chicago have undergone changes that eliminate the former "base allocation" annual awards to agencies. The organization has instituted a new fund distribution model that focuses program support on three Impact Areas, beginning with Youth this year, and introducing Children and Adults, respectively, in the next two subsequent years. Organizations that United Way does not currently support are eligible to apply for multi-year program support through Impact Area Funding. A new RFP will be issued in Fall 2003. Future changes are likely to include decisions about an area- or region-wide needs assessment and area-wide allocations once Chicago and suburban operations are joined.

Chicago's focus on Life Cycle began with a needs assessment process to identify critical issues and recommend strategies and outcomes. The United Way is working with nonprofit agencies to educate them about the logic model that identifies specific outcomes such as "youth stay in school" and about how to prepare a program plan including strategies that will result in those outcomes.

United Way in Chicago has closed the membership process for three years; the issue of adding new "partners" will not be raised again until 2007.

To request a copy of United Way in Chicago's Community Impact Plan, please contact Lorrie Lynn at (312) 876-1808.

Leadership Succession in the Nonprofit Sector
April 24, 2003 - The group held a session to address issues specific to succession, such as how organizations can prepare for impending succession and the role that funders can play in facilitating the process. The morning program was moderated by Kassie Davis of Giving Greater Chicago and Caroline Girgis of the Field Foundation of Illinois.

Sarah Solotaroff of the Chicago Community Trust provided background on the need to collect information on succession plans for arts organizations and the report "Succession: Arts Leadership for the 21st Century" . Leadership succession emerged as a priority for the Trust as a direct result of their strategic planning process, and while the report focuses solely on arts organizations, the issue has relevance across the nonprofit sector. Chris Perrius, from the University of Chicago Cultural Policy Center, provided a more detailed review of the report's findings, highlighting specifically three areas: satisfaction, succession and skills. Nearly 76 percent of organizations reviewed have no succession plan in place, although nearly 1/3 of employees will turn-over within the next two years.

In an effort to provide a variety of personal perspectives on leadership transition, the program included brief accounts from Libby Chiu of Urban Gateways; Lee Koonce of Sherwood Conservatory of Music; B.J. Jones from Northlight Theatre; Karen Fishman of Music of the Baroque; and Peggy Wise, The Suzuki-Orff School for Young Musicians. Each shared their experiences with transition; either stepping into a new leadership position in an organization with no plan for succession, or working within an organization during a transition from a founder to a new leader.

Finally, Pru Biedler, an Executive Committee Member for the Chicago Community Trust, provided an overview of strategies that grantmakers can use to support effective leadership succession. Foundations should continue to support those organizations in transition, and talk about transition plans with others. An important tool to support transition is the insistence on leadership evaluations, not for the purposes of monitoring performance, but rather to encourage open dialogue between the board and leaders.

Building Trusting Relationships
March 19, 2003 - CGEO held a peer dialogue on building trusting relationships between foundations and grantees related to improving nonprofit effectiveness. During the session, moderated by Shelley Davis of The Joyce Foundation, participants engaged in a candid discussion that covered a variety of topics identified by an informal survey conducted by the Donors Forum. This survey, which was sent to all participants in the most recent Member Luncheon as well as to those individuals active in the MIGs, sought to have foundations and nonprofits identify key issues in developing trusting relationships between the two. Based on the feedback some key areas were identified: first, both funders and grantees acknowledged that the power imbalance between them is almost insurmountable; both also agree that building a lasting relationship is dependent on time; and some funders felt that creating a trusting relationship with grantees would lead to losing objectivity and possibly create false expectations.

Connect Combine Consolidate - Merger Strategies for Nonprofits
January 21, 2003 - In a panel discussion moderated by Toya Nash of the Grand Victoria Foundation, the audience heard funder and nonprofit perspectives on the risks and benefits of mergers. Jane Bilger from Illinois Facilities Fund provided an overview of the different reasons nonprofits consider merging, like financial concerns or the desire to expand programming scope; the different types of mergers, from acquisitions to consolidations; and the steps all parties of a merger must go through before finalizing the process, such as internal examination of goals and services, the negotiation process to determine the desired outcome and legal documentation.

As a case study, the audience heard from Debbie Hinde, the executive director for Vital Bridges, which is a consolidation of Open Hand Chicago, Community Response and HIVCO. Ms. Hinde reviewed the environment that led to the consideration of merging and the many steps the organizations had to go through to finalize the process. Three components were key to the merger process:

• Planning process, which includes organizational analysis and future projections
• Due diligence
• Negotiations

Ultimately, Ms. Hinde revealed, the decision to merge must come from the board, and not the staff. Mark Ishaug, executive director of the AIDS Foundation of Chicago, provided the perspective of the funder's role in facilitating a merger. As a partner in the merger process, the AIDS Foundation offered financial support to facilitate the process. Their approval, and subsequent funding, was a reflection of confidence in the process and partnership between the three organizations. Abe Eshkenazi, managing director of the Chicago Consulting Group division of American Express Consultants, provided insight to the process as the consultant involved in the merger.

Survival Strategies
December 4, 2002 - During this co-sponsored program between Chicago Grantmakers for Effective Organizations and the Community Building Task Force, the audience heard from both nonprofits and foundation staff on strategies to survive the economic downturn and identify alternative resources for support.

Kassie Davis, of Giving Greater Chicago, provided an overview of the philanthropic environment based on the results from a survey conducted by the Flintridge Family Foundation in California. Key findings include: Foundations are less likely to provide grants to new projects, opting instead to support established programs; and foundations are more likely to support smaller organizations and require strong nonprofits to diversify their resources.

Leslie Ramyk, director of the Chicago Community Organizing Capacity Building Initiative, reviewed the benefits of investing in capacity to strengthen organizations during an economic downturn. CCBI, specifically, has received $32,000 to give to 12 different organizations to support technical assistance, fundraising or public policy to enhance effectiveness. Patricia Watkins of T.A.R.G.E.T. Area, a CCBI grantee, outlined the continued success of her organization, even during difficult times, as a direct result of the capacity building grant that supported infrastructure (technology and leadership training).

The audience also heard from Greg White, a general partner with Chicago Venture Partners and a board member of Lakefront SRO, as he outlined the role of the board during a difficult economic period. His key points included that boards should:

• Plan for the bad times during the good times
• Use a difficult time as an opportunity to strengthen the infrastructure of the organization
• Search for diverse sources of support (including investigating the possibility of program-related investment, board support or for-profit ventures) and examine cash flow projections.
  

Finally, the audience heard from Lee Koonce, the executive director of the Sherwood Conservatory of Music, as he outlined how the organization has been able to increase their earned income by 30 percent during these economic times by using business-minded practices. His most effective decisions have been:

• Managed human resources through smart hiring and training
• Automated systems to avoid overlap of services
• Improved the budget process
• Improved the fundraising methods through the use of staff and faculty, rather than depending on one person
• Increased earned income through renting out space and fees for services

Building Nonprofit Capacity through Regular Grantmaking
April 4, 2002 - Chicago Grantmakers for Effective Organizations hosted a discussion among funders and their grantees focused on both formal and informal approaches to capacity building. Participants discussed examples of capacity-bu