Most foundations are engaged in the art of the possible. They invest in organizations and programs aimed at transforming current realities into better possibilities and in ideas that "push the envelope" in ways that test the edges of what could be.
But few foundations are taking advantage of a proven tool for expanding the possible in their own grant making and mission effectiveness: data analysis. Analytic methods are routinely used and considered essential in nearly every other sector of the economy. In healthcare, retail and financial services, to name just a few hotbeds, analytics has dramatically affected what -- with a given amount of time and money -- is possible to measure, to manage, to learn, to change and to achieve.
The foundation world -- which holds over USD $1.5 trillion in assets globally and $646.1 billion in the U.S. alone, with annual grant making of approximately $100 billion globally and $46.9 billion in the U.S. -- uses analytic methods to assess, select, monitor, and report on its capital market investments for the 95% of its corpus that generates revenue. These very same methods, with even the introduction of the most basic analytic techniques, will provide demonstrable gains for the remaining 5% of the corpus that is distributed for charitable purposes. Foundations can gain visibility into how resources are allocated across their organization, view grant distribution compared to per capita need and explore outcomes data... among many other uses.
For grant making organizations, analytics are a key that can be used to unlock answers to vital questions such as:
- How well does our grant making align with our strategy and stated tactics?
- Which grantees produce the best outcomes in support of our mission and strategy?
- Has this intervention strategy been tried before and, if so, how well did it work?
- Does this strategy merit replication, and is there evidence that it can be replicated and/or scaled?
- If we committed the same grant making budget differently, could we produce a greater impact?
Board members gain visibility into the execution of top-level strategies and timely enough operational feedback to actually refine their strategic plans and, therefore, better influence desired outcomes in alignment with their mission. Foundations leaders and senior managers gain insights into what is working and clear indicators of where improvements are needed. Program managers gain time-saving tools that simplify their work and help them steer toward grant making objectives. Data analysis also improves communication and coordination by helping all participants arrive at a clear and common understanding of what types of grants and/or investments are being deployed and how they are influencing outcomes. Moreover, improved transparency enables stakeholders and the community at large to better see what investments are accomplishing.
This paper looks at some of these early achievements in Kuity's work with The California Endowment (TCE). It also discusses where the nonprofit sector is headed in the implementation of more advanced analytic methods that will yield even greater benefits.