Abstract
This research provides detailed descriptive information about decision-making behaviors and processes of community foundation boards. Our study responds to Graddy and Morgan’s (2006) call for research that examines how community foundation leadership (board and staff) affects strategic direction. We provide an understanding of how community foundation boards interpret organizational and environmental realities while balancing what has been described in the literature as “competing” mission-related objectives among donors, recipients, and the community. We find decision making to be influenced by three powerful forces; fear, tradition, and serendipity.
Introduction
This work responds to Graddy and Morgan’s (2006) call for research to examine how community foundation board decision making affects strategic direction. We do this by capturing how community foundation boards interpreted what the authors refer to as organizational and environmental realities while balancing what has been described as competing mission-related objectives among donors, recipients, and the community (Graddy & Morgan, 2006; Leonard, 1989; Philipp, 1999).
Leonard’s seminal work on community foundation roles, demonstrated that leaders must successfully balance the expectations of donors, grant recipients, and community needs simultaneously. This categorization remains consistent in subsequent work (e.g., Bernholz, Fulton, & Kasper, 2005; Carson, 2004; Hamilton, Parzen, & Brown, 2004) that suggests community foundations fulfill three basic roles: donor services, matchmaking, and community leadership (Graddy & Morgan, 2006). Brown and Guo (2010) suggested six more functional roles: fund development, strategy and planning, financial oversight, public relations, board member vitality, and policy oversight, which arguably align with the categorizations above.
The list of board roles is not in debate. The implicit assumption in much of this work, however, is that these roles compete for attention and board members select, prioritize, or implicitly favor one role over the other. Furthermore, the presumption is that the selections they make among these roles help set the strategic course for the community foundation and its work. Thus, community foundation board decision making is characterized as a highly rational process where individuals interpret organizational and environmental realities and transform them into action that ultimately informs strategic direction.
The core purpose of our research was to understand how community foundation boards affect strategic decision making. The data we collected tell an impressive story about how community foundation board members make decisions that ultimately help them fulfill their various roles as grantees, grantors, and community leaders. Yet, the decision-making processes of the boards we examined rarely involved the kinds of balancing discussions posited in the literature. Rather, our data suggested that choices between these roles, or role preference, was not always a strategic choice among competing expectations, but rather an expression of how the leadership expressed its commitment to “doing good” that was often moderated by fear, tradition, and serendipity.
Drawing on conversations that took place in the board room and subsequent interviews with board members discussing those conversations, we focused on two types of decisions; those that lead to inertia and those that preceded change. Our data suggested that inertia tended to be related to fear or tradition. Fear manifested in two ways, fear of alienation or fear of the unknown. Tradition was closely associated with the notion that, “we have always done it this way.” When boards participated in decisions that resulted in change, we found that quite often change was a result of serendipity, being in the right place at the right time, or what they described as “visionary leadership.” Interestingly, serendipity did not always result in change. Sometimes, even when there was a fortuitous event, board members engaged familiar tactics to thwart efforts at change (because of fear and tradition). And they used what we describe as hedging tactics to avoid painful decisions, or post hoc justification to rationalize the lack of bold maneuvers.
We argue that although the board is presumed to take a leadership role in setting organizational direction by balancing multiple competing expectations, these kinds of strategic discussions rarely take place. This is not to suggest that the board does not affect decision making. In fact, quite the opposite is true. What we found was that more often than not, even though board members might not be wrestling with competing expectations or envisioning a potential future, these groups spent a great deal of time justifying inertia or rationalizing serendipity. This finding is actually quite consistent with Graddy and Morgan’s (2006) assertion that board decision making results in either adaptive strategy in the form of a proactive response to environmental stimuli (serendipity) or inertia, strategy that is constrained by fear or tradition.
We begin with a review of relevant literature to frame this work. Next we explain the research methodology, data collection strategy, and data analysis. We then detail how the struggle between competing strategic roles actually played out in practice. We discuss the underlying influences that either led decision makers to reinforce adherence to the status quo or serendipitously resulted in incremental strategic change that eventually had the capacity to make appreciable differences in local communities. We conclude with implications for practice.
Research Niche and Review of Relevant Literature
Over 20 years ago in a study of managerial elites, Pettigrew (1992) called for research on boards of directors that went beyond testing the explanatory power of organizational theories to predict board behaviors. He suspected that the public availability of demographic data regarding boards of directors led to studies that made “great inferential leaps . . . from input variables such as board composition to outcome variables such as board performance with no direct evidence on the processes and mechanisms that presumably link the inputs to the outputs” (Pettigrew, 1992, p. 171). He strongly encouraged “serious social science research on the conduct and performance of boards and their directors” (1992, p. 172).
Ostrower and Stone (2006) echoed this call for research when they asserted that there were “major gaps in our theoretical and empirical knowledge” regarding nonprofit boards of directors (2006, p. 612). Although the authors acknowledged a small but growing body of research that suggested an increase in scholarly interest in “understanding rather than describing” board governance, they concluded that future research must address the contextual and contingent elements of governance and make explicit the implications of these considerations. Graddy and Morgan (2006) took an initial step at this task by isolating the organizational life cycle effects (age, size, major founding gift), community characteristics (philanthropic capacity, local partners, competitors), and external forces (strategic partners, national competitors) of community foundation strategy. Our study extends their work by providing insight as to how board members interpret these variables, advocate the significance of their interpretation, and use those interpretations to inform decision making.
As public institutions with a long-term commitment to specific geographic areas, community foundations are uniquely positioned to engage members of the community in philanthropy, develop a thorough understanding of community needs and nonprofit capacity, and lead strategic community-based efforts. While community foundations are a rapidly growing and influential part of today’s nonprofit sector, very little is known about how they discharge their responsibilities.
Leonard (1989) argued that community foundation growth and flexibility relate to their ability to balance needs among donors, recipients, and the community. She further asserted that most community foundation decision-making processes implicitly favor one or two of these basic elements of mission, such as donor services, grantmaking, or community leadership, resulting in “disparate fundraising strategies and rates of growth,” particularly when investment strategies conflict with donor service strategies or grantmaking strategies.
Wolfe (2006) noted there was tremendous pressure from the field urging community foundations to assume a community-focused leadership role and promote social justice. More recent research supports the notion that community foundations take on these leadership roles by serving as knowledge brokers, facilitating the exchange of information across sectoral and organizational boundaries; coordinating collaboration among multiple stakeholders to formulate grassroots solutions to community problems; accessing necessary resources by connecting government and funding to community needs; and proactively involving private philanthropists by soliciting new money and by asking donor-advisors to direct their gifts to existing community needs (Bernholz, Fulton, and Kasper, 2005; Hamilton et al., 2004; Millesen, 2005; Ragey, Masaoka, & Peters, 2005).
Because community foundations enjoy what Noland referred to as a “special double trust: a promise to respect and honor thousands of generous benefactors while advancing new visions for communities” (1989, p. 121), it is essential that we understand how board decision-making strategies reflecting a particular mission-related orientation have the capacity to influence community capital (Leonard, 1989). Graddy and Morgan (2006) echo this call for research specifically noting the importance of understanding how leadership decisions influence strategic direction.
Sample and Method
Sample
Using the 2003 Columbus Survey, a comprehensive longitudinal view of the community foundation field reporting on basic operating metrics such as assets, gifts, grants, and expenses, we created a sample of 45 community foundations proportionally representative of the field. Geographic regions were specified using criteria in De Vita’s (1997) report that divided the country into nine regions each sharing similar characteristics with regard to the number of public charities, population density, and nonprofit finances including expenses, public support, and assets. The sample was sorted not only by region but also by size. Market value was used as the second sorting criteria. We used a stratified random sampling technique to extract a final sample that was proportionally representative of the field. Table 1 visually depicts the sampling frame, which included nine geographic regions and four size categories 1 .
Sampling Frame.
Data Collection
Data collected for this study emerged through a two-stage process from four main sources between July 2004 and October 2005. In Stage 1, results from the BoardSource Community Foundation board self-assessment survey were the primary source of data. In Stage 2, data sources included organizational archives, observation at meetings, and intensive interviews with board members.
Stage 1
Self-assessment data were collected from 45 foundation boards using the BoardSource online self-assessment survey specifically designed for community foundation boards. Board members from each of the 45 participating community foundations were asked to complete the self-assessment survey and evaluate board performance related to 12 specific responsibilities and one supplemental responsibility. They were also asked to complete an individual assessment, answer several demographic questions, and respond to nine open-ended questions designed to identify particular actions they believed would enhance board performance.
Completed self-assessments were received from 629 of the 751 board members asked to complete the online tool, resulting in an 84% response rate. Sixty-one percent of the sample was female; 39% male. Average age varied across the boards; just over 3% reported being less than 39 years old; while the majority of respondents (75%) indicated they were over 50 years old. One percent of the sample was Asian American, 4% Latino/Hispanic, 7% African American, and 87% Caucasian. While 20% of the responding board members were retired, a majority work in the private sector (29%) or were self-employed (24%). Over 90% reported that they attended 75% or more of the scheduled meetings.
Stage 2
An important consideration of this research was to maintain the integrity of the sampling protocol throughout the project. To that end, the research team recruited 15 of the Stage 1 participants whose geographic and size characteristics also mirrored the field (see Table 1). During this stage of the process, data sources included organizational archives, direct observation at meetings, and interviews with the CEO and five members of the board. Because a fundamental goal of this research was to understand decision-making processes, the findings rely primarily on data collected during this stage of the process.
Organizational documents were collected from each of the 15 community foundations and used to provide insight as to how the board balanced the three essential elements of mission, how it upheld its public trust and fiduciary responsibilities, and how the board communicated with its various publics. Archival data collected included bylaws and articles of incorporation, mission and vision statements, annual reports, grant guidelines, gift/fund acceptance policies, investment policies, marketing materials, and meeting minutes from the previous year.
Direct observation at board meetings provided an opportunity to observe board members in a natural setting as they engaged in various governance activities. During this stage of data collection, we were able to identify patterns of behavior that were similar across community foundations, and those specific to individual boards. We appreciate Fenno’s (1978) description regarding the process of observation, “I tried to observe and inquire into anything and everything these members did. I worried about what they worried about. Rather than assume that I already knew what was interesting, I remained prepared to find interesting questions emerging in the course of the experience” (p. xiii, quoted in Johnson & Joslyn, 1995, p. 204).
The final data collection strategy in Stage 2 was to conduct interviews with the Chief Executive Officer (CEO) and members of participating boardsCEOs were asked to nominate members of the board and were specifically asked to include the board chair, someone who served on the investment committee, and someone who served on the grants committee. Each potential interviewee was sent an email that explained the research project and requested an interview. Follow-up telephone calls were made within 1 week to schedule interview appointments. The CEO and five individuals from each of the 15 boards participating in Stage 2 of the project were interviewed with two exceptions (four from one, six from another) The vast majority of interviews (87%) were conducted in person. The remaining 13% (10) were conducted via telephone.
Data Preparation and Analysis
The multimethod approach used in this research helps us to understand role of the board in strategic decision making, which responds to various calls for research (Graddy & Morgan, 2006; Ostrower & Stone, 2001, 2006; Pettigrew, 1992). The self-assessment data provided basic information regarding board roles and responsibilities. Although these data were valuable in terms of assessing individual board members’ overall understanding of various expectations, the data were somewhat limited in providing insight as to how (or if) the board balanced competing expectations and made choices among various governance roles. For example, if we were to have relied only on the self-assessment data, we could have concluded that because the majority of board members (84%) stated they were satisfied that the board’s planning process addressed the need to balance responsiveness to the community with the obligation to maintain the endowment, we may have wrongly concluded that decisions made in the board room would reflect strategic priorities that explicitly balanced multiple expectations (the “great inferential leaps” suspected by Pettigrew). Stage 2 provided more depth.
The second stage of the research process moved this work beyond board responsibilities described in the self-assessment to a more vivid, detailed, and contextually based understanding of how board members interpreted those responsibilities. Archival data, meeting observation, and interviews provided us with rich descriptions of a complex social phenomenon that has not been addressed in previous research. We were able to observe board behavior as it unfolded and hear about the kinds of things that influenced decision making. We were then able to ask questions of board members regarding those decisions, informing our understanding of how community foundation boards interpreted their roles and made decisions that informed strategic direction.
In all, 15 board meetings (one for each of the community foundation participating in Stage 2 of the project) were observed. Field notes were taken at all meetings, elaborated, coded, and analyzed. Analytical emphasis focused on discerning patterns of meaning and/or interaction that contributed to developing a comprehensive understanding of the ways in which board members informed their decision-making processes. Returning to the planning process example, only one of the boards we observed made any reference to a strategic plan at the meeting. Typically, agendas were not organized around strategic initiatives, discussions tended to be dominated by committee reports, and we rarely heard a board engage in the kinds of discussions we might have expected if we were to only have collected the self-assessment data. Meetings provided a perfect setting for us to observe whether the roles and responsibilities defined on the self-assessment were playing out in the boardroom. Such observations then guided our interview protocol.
Intensive interviews (Lofland & Lofland, 1995) were conducted with a total of 75 board members. Lofland & Lofland (1995) describe intensive or unstructured interviewing is a guided conversation whose goal is to elicit from the respondent rich, detailed accounts using their own descriptive terms. Each interview had a flexible format and specifically sought to learn more about how board members defined their roles and responsibilities; how they talked about and understood issues of collaboration, competition, and accountability; and how they gathered relevant information to inform their decision-making processes. Board members were also asked to comment on accountability, conflict, diversity, board recruitment, and the overall philosophy that guided policies related to grantmaking, spending, and investments. Archival work and observations provided focus for the interviews, which provided the depth needed to learn more about how the board made decisions.
Findings
Our goal was to provide detailed information about the community foundation board’s strategic decision-making processes in ways that responded to numerous calls for research that not only supplanted information about what boards should do with information about what they actually do; but also to provide specific insight as to how board members influence strategic decision making. We recognize that foundation leadership is a shared responsibility between board and staff, and several recent NVSQ articles discuss board staff dynamics (see Chadwick-Coule 2011; Reid and Turbide 2012). We further acknowledge that staff is likely to play a significant role in long-term vision, planning, and strategy. Even so, we have limited our inquiry to developing a better understanding of board decision-making processes particularly those choices regarding role preference and strategy.
In general, we found board decision making to be consistent with what Graddy and Morgan (2006) would call strategic. Referencing Hambrick (1983), the authors define “strategy as a stream of decisions that guides an organization’s alignment with its environment and shapes its internal policies and procedures” (Graddy & Morgan, 2006, p. 610). The presumption is that decisions and the resultant strategy are either inert, constrained by power, values, and resources or adaptive, proactively responding to environmental stimuli. Our findings are quite similar, yet we extend this work by explaining how the board influences such decision making.
Our data show that a conservative, risk-adverse desire to “do some good in the community” retrospectively justified most decisions. Factors such as fear and tradition profoundly influenced strategic direction irrespective of any focused planning efforts, which meant there was often very little strategic movement away from the status quo (providing support for inertia). When community foundations were engaged in community leadership activities (providing support for adaptivity), board members were quick to credit an individual “leader” or a serendipitous event.
Board Decision Making and Inertia
Although board meeting minutes and individual interviews expressed both a desire to plan and actual engagement in planning processes, what we noticed in archives and at meetings was very little movement away from the status quo. Our interview data suggest two key factors, fear and tradition, were frequently used to explain this inertia. Fear commonly played out in two ways. First, fear of alienating existing or potential donors was a dominant consideration. And second, fear related to uncertainty was often at the heart of stories shared by board members when they talked about not really knowing how to do something. Tradition seemed like a perfectly reasonable way to manage both types of fear and legitimize adherence to the status quo.
Alienation
Many respondents expressed concerns about alienation. This manifested in two ways—fear that some might say, “You guys are too controversial, I’m not going to put my money in here”; and fear about what might happen if the community foundation took on an issue that was “too heated.” Consider this comment, We have to be careful not to get too politically charged on one thing or another. We had a proposal come before our board for trying to take a leadership position in community planning— growth issues, transportation issues, air quality, water quality, development and so forth. But we have two counties and a town… [each with] different governing bodies and planning departments and there’s not a wonderful cohesive approach—After six to eight months of discussing this and talking about how we’re going to do this our board backed down and said ‘No, we’re not going to do it because we could get into trouble.’ We could be viewed as anti-growth, pro-growth or something bad and it would damage our young reputation, our future ability [to raise money]. We can’t afford that.
Uncertainty
How uncertainty influences decision making might best be understood by sharing an example about how board members talked about what the foundation was expected to accomplish with its grantmaking. Board members questioned whether it was better to grant small sums of money to many causes or invest substantial amounts of money into one or two major issues. “Are we really making long-term changes to the community or just moving money around?” asked one board member. Another questioned, “Do we want to continue spreading bread crumbs or do we want to smack ‘em in the head with a loaf of bread?” We were told, “This conversation has been going on for years and we still have not resolved it.” Another board member said, We give lip service and say we want to be an organization that has impact in the community, but if all we’re doing is writing small checks at donor’s requests to various things we’re not impacting the community. We’re just providing a service and not making a difference in the community whatsoever, and I think we as a board need to come to grips with what do we want to be. Do we want to be an entity that changes the community that impacts the community by encouraging our donors and by focusing attention on relevant issues; or do we just want to write checks to several hundred designated charities that our donor advised funds want us to write those to?
CEOs expressed similar concerns. For example, one chief executive asked, “how do we help the board emerge from a reactive grantmaking mode?” She explained that although the board expressed an interest in proactively learning more about community needs and leading change, they were stifled by their long-time involvement in reactive grantmaking procedures. These kinds of responses demonstrate how tradition was used as a way to justify the status quo.
The Rationalizing Power of Tradition
Tradition emerged as a way to manage fear and influence strategic direction in ways that sometimes stagnated efforts at meaningful change particularly when the board became complacent, either after an unresolved debate about possible courses of action or by simply choosing not engage and continue with familiar practices. Yet, for both alienation and uncertainty, the end result was often inertia or adherence to the status quo.
One of the most illustrative examples of the interplay between fear and tradition is in the realm of donor services. Community foundations in this study attracted resources in a number of ways including planned gifts and bequests; donor-advised gifts; scholarship support; contributions to special interest or initiative funds; pass-through funds; gifts of appreciated assets or real estate; and managing endowment funds for local nonprofit organizations. Yet, in spite of Leonard’s (1989) claim that “few community foundations have examined how their implicit preference for any of these three roles [grants-focus, donor-service, community-oriented] guides the way they ask for an accumulate money” (p. 95), our findings suggest that not all community foundations were that self-reflective. That is, many community foundations did not articulate a clear role preference and for many, their asset-development “strategy” was a result of past practices.
Rather than form dictating function as Leonard suggested (we are a grants-oriented foundation so our fund-development strategy should emphasize unrestricted funds), our data indicated that function (how funds have historically been raised) actually influenced form. This was particularly true among younger community foundations (less than 10 years) and those with less than US$50 million in assets. Many of these foundations spent their infancy aggressively seeking growth by attracting many different types of funds including donor-advised funds, scholarships, field of interest funds, endowment money, annual funds, and bequests. Now, in their adolescence, these same community foundations were dealing with the administrative quandary they created and were struggling to define a clear role for themselves in their communities. One CEO nicely articulated this frustration, We have been so focused on our own growth and sustainability, that we have not shifted to facilitating collaborative initiatives to address community problems. I think we all agree that we would like to get to that point, but right now, we are challenged with raising enough money to keep the organization running.
Our findings do not suggest community foundations were opportunistic fundraisers, rather we argue fundraising strategies were not always reflective of role preference. In fact, many board members tried to retroactively make sense out of past practices to articulate a vision for the future. Consider this comment from one board member, What is the goal, how do we address it and what policies do we put in place to make sure that they’re met? I don’t know that we have those right now . . . It’s really hard for me to read the investment policy and understand what our goal is with the money. Is it to make as much money as we can? Is it to manage risk? Is it to hit a certain return? What is it we’re supposed to be doing here? . . . I was asking questions about those things and no one could really articulate [the goals], it was just, “well we are supposed to be managing this money.” Everybody has a very strong desire to make good decisions. It’s not about that. It’s just a lack of understanding or congruence. Just to be able to say, “All right, if we think we have to give as much money to this community as we possibly can, then we’ve got to grow this principal faster”; or “do we want this corpus to be much higher ten years from now?” You know, that kind of ties in to fund raising and all that sort of thing. So it’s not a lack of desire to do the right thing . . .
Out of what was described as a sincere desire to be responsive to community needs, community foundations placed an emphasis on asset development. They did this by embarking on aggressive fundraising campaigns that attracted a broad-range of donors, not because the foundation had a “donor-oriented” role preference but because they wanted to “do some good.” As a result, many community foundations attracted a substantial amount of donor-advised, restricted money they are now expected to manage without adequate administrative capacity. Even when these boards articulate a desire to be community leaders, past practices and lack of knowledge about how to mitigate the effects of these previous decisions result in inertia— the community foundations continue to serve in the capacity they have traditionally served.
Adaptive Strategic Decision Making
Graddy and Morgan (2006) argue that strategy is adaptive when it is responsive to environmental changes. How exactly and under what conditions do nonprofit boards develop strategy that is responsive to trends in the community or in the field? We found that serendipity and leadership play important roles in determining a particular course of action. Board members provided stories about how “being in the right place at the right time had a profound influence on the way we now do business” or how having a “visionary leader” was essential to community foundation “success.”
Serendipity
One board member explained how the community foundation’s visibility “skyrocketed” because “the environmental trust fund put a lot of money through the foundation” to coordinate the construction of a community park. The board member noted that prior to this “pass-through gift,” the community foundation had not assumed a convening role; but now with the responsibility to coordinate the construction of the park, the foundation embarked on a new direction of community leadership.
Others talked about significant charitable gifts that mobilized the community foundation around a particular course of action. For example, in one community a donor provided the funding needed to purchase a building with the condition that the community foundation agree to share the space with the local Chamber of Commerce and the United Way. In the end, the close proximity resulted in collaborative efforts not previously experienced. Similarly, in another community, the community foundation was chosen to receive a “Community Works” grant that would provide general operating support for three years so that the community foundation could strengthen funding for programs in three targeted areas not previously identified as priority areas for the foundation: workforce development, child care, and land use and protection. The response from the community was quite positive. The grant required the community foundation to raise US$225,000 in support of these efforts, which would be matched dollar for dollar by the funder. Local donors not only met the challenge but exceeded the initial goal and the community foundation expanded its presence in each of the three areas.
While it certainly could be argued that the boards acted strategically by adapting to opportunities in the external environment, the leadership roles assumed by the community foundation in each of these examples was result of serendipity. This is not entirely a bad thing; it is simply another way to think about how strategy develops. Rather than a zero-based effort focused on transitioning the work of the foundation; strategy may be an emergent process in response to environmental stimuli, which may eventually lead to a new role for the community foundation.
Leadership
There was also some evidence to suggest that what board members called “visionary leadership” made a difference in whether the community foundation is leading change or reactively responding to community needs through the grantmaking process. As one board member advocated, someone has to say: We are going to concentrate our efforts on these five issues . . . identified as the major problems confronting the community. We are going to encourage our investors to fund activities in those areas. We’re going to encourage new funds to address those areas and we’re going to develop metrics by which over a five-year period we can say that we have either failed to address these or we have moved toward solution of these problems. I think that’s the way you make a difference . . .
Our data certainly suggested that visionary leadership made a difference. We saw this play out at two different community foundations. In one community over 4,500 jobs were lost (a 38% reduction in local employment) as a result of a declining agricultural economy and the sale of a paper mill. In response to this economic devastation, one community foundation worked collaboratively with the local Business and Economic Alliance to transform community culture by promoting civic engagement and building social capital. The community foundation CEO took the lead in an initiative to promote responsible, collaborative, and visionary citizenship to transform community culture and invigorate economic development (see authors).
In another community, we found a community foundation that successfully institutionalized board structures and processes in ways that continually emphasized the importance of focusing on mission and strategic direction. The committee structure and quarterly meeting agendas were organized around the foundation’s three strategic goals. The board chair explained that the foundation participated in two annual retreats— “where we think strategically and move our vision down the road so that all the activities can converge on that vision. . . . Are we doing what we said we wanted to do and is there anything else that we would like to do? . . . We answer these kinds of questions to make sure that we have accountability to the vision.”
Perhaps it is somewhat serendipitous to be in the right place at the right time or have a visionary leader who can clearly articulate a strategy for the future; particularly one that encourages board members to conquer their fear and stretch beyond familiar practices to take on new roles in local communities. Yet, more often than not, it is probably an evolutionary process prone to periodic setbacks and common traps. According to one board member, organizational philosophy influenced whether a community foundation would lead community change; and adopting this philosophy takes time.
I would say over the last four or five years that the foundation recognized that it might be able to leverage its resources. And since it had the resources it could hire professional staff, have access to consultants, and have access to the types of things that you would need to perform an initiative function or serve as a catalyst in the community. To start dialogs in the community; to recognize the big needs; and then to actually say, “well . . . where is the best place to spend the dollars overall?” Is there some sort of coalition where you can bring together lots of people who have been working on individual pieces of this problem to think together about it . . . so you couldn’t do all of that without the size, but you could have the size and still decide not to do that. That is a philosophical development and it’s a long-term visionary function.
When Serendipity Results in the Status Quo
Even when board members may have every intention of embarking on a strategic planning process that sets a new course of action, things like fear and tradition can sometimes limit implementation. As a result, little meaningful change takes place. Every so often, a serendipitous event or a dynamic leader moves the foundation closer to an articulated vision for the future. Yet, even then, the board must insulate itself from the kinds of things that impede this evolutionary process. Our data suggest boards experience two very common diversionary tactics.
The first was a delay or hedge, where the board spends so much time either debating potential courses of action or “scurrying about,” that when pressed for a decision, there is no way the board can process all the information and decide a new course of action. They simply cannot be sure they understand the implications for all stakeholders and the choice is not to act. It just seems more practical to do things the way they have always been done to be sure there is no harm.
Conversations around the topic of the community foundation’s role provide an illustrative example of the hedge. Many board members were familiar with trends in the field regarding community foundation leadership; yet many were unclear about how best to fulfill that role. For example, while we heard some board members express concerns about “taking sides” on issues or advocating one position over another, we heard just as many board members argue that taking a leadership role in the community was about bringing hot topics into the open and convening those with the resources and skills necessary to address those concerns. We do have data to suggest that some community foundations led convening efforts, however, more often than not, the leadership efforts seemed to die off after the convening was complete, leading us to ask whether such convening was really meant to catalyze change. Leadership seems to demand not only recognition of a problem and identification of those with the resources to address problem, but some effort at mobilizing action around solutions.
A second common diversionary tactic was a post hoc rationalization to justify decision making, which can be seen most clearly in the area of board recruitment. Board member attitudes regarding board recruitment converge around the notion that to be effective, the right people need to be in the right place at the right time. These board members seem to understand that just because individuals have great wealth or specialized areas of expertise, does not mean these resources will be deployed in support of the community foundation’s mission-related goals and objectives. They claim that board recruitment goes beyond inviting influential community members to lend their name to the letterhead; it involves intentional strategies that align individual interest with organizational priorities.
The problem is that even though board members profess to be strategic in their recruitment efforts, the demographic composition of community foundation boards is quite similar across this sample; as is the rationale offered to explain the homogeneity. For example, several board members (serving on different boards) explained the board’s decision to stop looking for demographic representation because the community was not diverse. In these instances, the decision was to seek out geographic diversity or to identify recruits who could contribute to the current or anticipated work with particular skills or connections.
The bottom line is that they philosophically embrace the broad concept of representation but they don’t want to derail the practical process of engaging “hard working people who can get the job done.” So they justify the lack of diversity on the board.
There is constant pressure to find trustees, which is always a struggle on any board…there’s the issue of minority [representation] . . . we have not had a lot of success in finding them. Anyway, just to weigh a vote because of someone’s orientation, color or whatever it’s not a good thing. It doesn’t strengthen the board. It may look good, but what you need is hard working people no matter what color they are or what gender they are.
This “needing to get the job done” mindset was the most common explanation for board homogeneity. As one board member said, It takes a lot of expertise [to serve on this board] and that’s why I feel like board members ought not to be solicited from ethnicity, gender, community residence as much as they should be for their expertise in knowing the bigger vision and how to strengthen the community. But there are a lot of people on this board and I’m sure there are on every board that feel like you’ve got to represent the Hispanic, represent the Black, represent the women, represent the poor, represent the rich, represent the hospital, you know, that kind of thing, and I think you get too bogged down in the little trees where you can’t see the forest anymore . . .
Although board members could articulate the benefits of a diverse board, they did not engage in practices that would ultimately result in board diversification. Instead, they justified their decision-making process arguing that the community was not really diverse so the board did not have to be either, or by saying the work was too important to leave to just anyone—what was needed was hard working people who could get the job done. As a result, despite the rhetoric around diversifying the board in strategic ways, the demographics for people serving on community foundation boards were similar across the sample. In fact, when asked to explain the current composition of the board, a common tactic was to rationalize the status quo.
Concluding Thoughts
At a time when American communities are struggling with major social issues due to increased unemployment and poverty, community foundations are in a unique position to coordinate and lead change. Indeed, Hamilton and colleagues (2004) provided wonderful examples of how six community foundations lead community change amidst a sea of competitive forces that posed significant asset-development challenges. “They are taking on more complex and demanding roles to convene, connect, inform, influence, and lead solutions to pressing problems. They are helping their communities take broader, bolder, and more comprehensive steps to build better futures. And they are connecting their donors to these efforts, expanding the influence, resources, and knowledge that are brought to bear. In short, they are becoming ‘community change makers’” (Hamilton et. al., 2004, p. 2).
While we saw evidence of this kind of leadership activity, particularly when a catalyzing event mobilized residents around shared purpose, yet we also saw a considerable amount of activity focused on justifying adherence to the status quo. This finding does not surprise us. Community foundations operate in an environment where adhering to tradition has historically resulted in significant charitable gifts; no wonder decision making might be constrained by fear of alienating powerful community members who control access to those resources. We saw these conservative, low-risk behaviors play out in board recruitment efforts, grant-making strategies, and community leadership initiatives.
So how might we thwart the negative effects of board decision making that tends to succumb to forces encouraging adherence to the status quo? We offer four key ideas. First, capitalize on serendipity. Serendipity is fine; yet, being in the right place at the right time should not be interpreted as being strategic. In fact, most of the people we talked to referred to these types of fortuitous situations as somewhat opportunistic. When not carefully thought out, these kinds of opportunities could be problematic and a burden for the staff even though they may be a source of substantial administrative funding. Which bring us to our point, although serendipity might not be a strategic stance, what the board does in response to these kinds of opportunities and threats could very well be strategic.
Our findings show that there were instances where chief executives and board members were thoughtful, inquisitive, imaginative, or purposive in their response to serendipity or visionary leadership. We provided examples of leadership (board and staff) carefully weighing the pros and cons of a particular serendipitous event. In each case, the discussions and resulting plans were actually quite strategic. For example, in the community experiencing economic decline board minutes reflected serious discussion about what might happen if the community foundation took on a leadership role; and perhaps more interestingly, what might happen if the community foundation failed to get involved. The lesson for community foundation boards here is clear, boards must work closely with the staff to fully understand the operating environment so that when change moments present themselves, the foundation is poised to act.
Second, do not allow visionary thinking to be thwarted by fear and tradition. Prudent decision making is a key aspect of governance and community foundations must think hard about their role in the community. While careful balancing of competing board roles may not be the norm, prudent alignment of the foundation’s assets is an important aspect of “going good.” At issue is whether the board will continue to justify and rationalize past practices, or will the board encourage action that positions the foundation to deploy its resources (broadly defined) in ways that meaningfully align grantmaking and leadership activities with the top issues facing each community.
Third, even with a history of conservative funding, community foundations are uniquely positioned to remain cautious while taking prudent risks by rethinking how they make grants. One strategy might be to promote the traditional, typically risk-averse use of restricted funding, while directing discretionary money (no matter how limited) at community leadership initiatives. Another might be to consider how mission-related or program-related investing might be used to leverage existing philanthropic dollars in ways that encourage innovative solutions to pressing community problems. Making truly strategic, community-changing gifts, certainly risks alienating some donors, yet the payoff might be worth it. Such action may, in the long run, help long-time donors and future generations of givers to recognize that traditional ways of “doing good” in the community are evolving.
And finally, we encourage practices that discourage the responsive, passive nature of community foundation boards so that these practices do not become institutionalized. It is true that historically, community foundations have been expected to be risk-averse, status quo stabilizers that maintain a hearty endowment so that future generations can benefit. Yet, recently community foundations have been promoted as change agents that should fund innovative solutions to the most pressing local problems in ways that create real and dramatic change. Community foundations seeking to take on a leadership role need not wait for a catalyzing event to mobilize people around a common purpose. Perhaps a bit of serendipity and a focused effort to overcome the fear of alienation and the desire for stability anchored in tradition could spur the change they want to see. Leaders might consider overtly addressing these fears, traditions, and serendipitous events by making them the subject of future strategic discussions.
Footnotes
Acknowledgements
The authors would like to thank the Nonprofit Sector Research Fund of the Aspen Institute for its generous support of this project. We would also like to thank our colleagues at BoardSource for their contribution to this work and the many community foundation leaders, both board and staff, who so graciously gave their thoughts, opinions, and time in ways that help us to learn more about community foundation governance. A final note of thanks to the three anonymous reviewers whose comments greatly strengthened this article.
Declaration of Conflicting Interests
The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The authors received summer research funding from the Aspen Institute.