There was an article on the Center for Effective Philanthropy’s (CEP) website in April that I felt started to give me some insight into why it seems that foundations and non profits often aren’t in synch with each other’s needs.

CEP President Phil Buchanan writes about research he and research analyst An-Li Herring did on the backgrounds of the CEOs of the top 100 Foundations. I was actually surprised to find that 60 of 100 came from outside foundations. Of those that came from foundations, only 21 were promoted internally from the foundation ranks. Seven had come from another foundation, four of them were already CEOs of those foundations, three of those four had come from outside philanthropy.

That seems like an exceptionally small number of people with philanthropy experience leading foundations.

The profile of the 60 CEOs from outside foundations broke down like this:

Twenty-seven had experience in the nonprofit sector broadly defined:

Those who ran operating nonprofits (not including institutions of higher education) number 14.

Those whose experience was in higher education, typically as a college president or dean, number 13.

Seventeen came directly from a role in business.

The remaining 16 CEOs who came from outside the world of organized philanthropy had positions in government, law, or other domains.

Since boards and CEOs set the tone and operational philosophy of the foundation, this can have a lot of influence on the manner in which they interact with non profits and the criteria they set for funding. After reading the article, I started to wonder if foundations have contributed to the pressure for non-profits to run themselves more like a business. I have never argued that operational discipline isn’t important for non profits, but they are quite different from for-profit entities.

Some observations Buchanan makes:

Second, foundation boards don’t much value experience at other foundations. Again, perhaps a focus on leadership development within philanthropy will change that, but moving from being a Vice President at Foundation A to CEO of Foundation B happens only very rarely (at least at the largest 100).

Third, experience as a grantee, if you exclude colleges and universities (which I’d argue are a different animal) isn’t much valued by most foundation boards when they’re searching for a CEO. It’s striking that there are more foundation CEOs who came to the position from a job in the corporate world than a job running a nonprofit (again, excluding colleges and universities).
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All that said, I’d still argue that boards might want to prize operating nonprofit experience more highly than they apparently do. Leaders who have experienced the pressure to meet payroll with no endowment to fall back on, and have felt what it’s like to be on the other side of the table from foundations, bring something important. They come to the role with a hard-earned understanding of the challenges of doing the on-the-ground work foundations fund – and of what nonprofits really need from their funders.

After reading these findings, I wondered what it is exactly foundations value in CEOs if it isn’t experience, empathy and knowledge about the sector the foundation serves. Buchanan also makes an “if it ain’t broke” argument in support of foundation boards looking to promote internally rather than introducing a potentially disruptive element.

Having read the piece I am really curious to know if external hires are generally more effective than internal hires or not.

It would also be interesting to learn if non-profits would give the highest marks to their relationships with organizations lead by CEOs with a long career in philanthropy. Likewise, it would be interesting to know if foundations would give the highest marks/most support to non-profits whose practices/values are similar to those of the CEO’s past industry.