Never Mind Those Reassuring Words. The Conrad N. Hilton Foundation Is Headed for a Shakeup

It's a big moment at a family foundation when day-to-day leadership responsibilities are handed to an outsider. That's even more true when the place has been largely built and run over three decades by a family member. Invariably, anyone new that walks in the door will have their own ideas for how to do things, and reconciling the past and future can be rough.

Which is why the Conrad N. Hilton Foundation is in for an interesting ride now that Steven M. Hilton is stepping down as its president. Hilton said that it was time to bring in another executive who "can take us to the next stage of our evolution.”  

Which will mean what, exactly?

First, some backstory. The 63-year-old Hilton is the grandson of the founder, Conrad Hilton. Steven joined the Hilton Foundation as a program assistant in 1983, joining a small staff that awarded $6 million in annual grants. A lot has changed since then, considering that $92 million in grants was awarded last year and that the $2.4 billion foundation has increased its staff size to 50 people.

And more changes will eventually be coming: Barron Hilton has committed to leaving his sizeable fortune to the foundation when he dies (he's in his mid-80s), which could vault this operation past the Rockefeller Foundation in terms of assets. 

Steven Hilton is saying the usual reassuring things that existing grantees are dying to hear at moments like this. “We do not foresee significant changes in direction or funding in the near future, and we look forward to continuing to advance our strategies in tandem with grantees and others involved with our program areas,” he wrote.

We certainly hope there is continuity in places, since Hilton does some pretty cool stuff. Most recently, it partnered up with Los Angeles County to provide homes to homeless patients with complex mental and physical health issues. "There is a lot more coordination between the city and the county, foundation people and even the business community," Hilton told the LA Times. "If you provide housing with services to somebody, it makes all the difference in the world." (Read Conrad Hilton Foundation: Los Angeles Grants).

Steven Hilton engaged in a heavy lift to get the foundation to its present position, especially considering that he could have spent his days jetting around and enjoying free hotel accommodations worldwide. So kudos to him. But it does seem that the foundation could use some new thinking at this point. Even for a place with a couple billion dollars, it's spread pretty thin, funding 11 different "priority areas." And the foundation's theory of change is not all that clear, nor is the central animating principle of Hilton's grantmaking. Hilton is savvy about partnerships between sectors, but it tends to embrace direct services and doesn't seem all that attuned to pulling policy levers to achieve more systemic change. 

Of course, this is par for the course for family foundations, which tend to evolve over time and reflect the historic commitments and disparate interests of different family members. In this case, there's a big faith component, with the foundation committed to a number of Catholic organizations. At some point, though, a serious shake-up is needed if family foundations want to step up their game and increase their impact. So our prediction is that whoever takes over at the Conrad N. Hilton Foundation is going to make some big changes. In fact, it may be hard for the foundation to hire truly top talent unless they expressly empower that person to orchestrate the "evolution" that Steven Hilton alluded to. 

And preparing for the eventual infusion of Barron Hilton's wealth creates an imperative to further professionalize the foundation, with a greater focus on strategy, impact, and assessment. 

Regardless, the intensive nationwide search for Steven’s replacement is on. Although he made the announcement about his resignation last month, Hilton is prepared to stay the course through the end of 2015, or until a suitable replacement is found. It doesn’t appear that the foundation’s board of directors has any interest in hiring internally, since the executive search firm, Spencer Stuart, has already been retained to beat the bushes. 

One last thing: Steven does plan to remain chairman of the foundation’s board of directors, which should make things even more interesting for the next president. Reporting to your predecessor sounds like fun, right?