Hey, Darren: Swing That Ax Hard at Ford's Bloat

The Ford Foundation's president, Darren Walker, has a favor to ask: He wants "input and feedback," since, a year into his tenure atop Ford, he lives in fear that he's not hearing enough "constructive criticism."

This is among the points Walker makes in a letter emailed today to Ford grantees and others worldwide. That letter is sure to jangle nerves from New York to New Delhi, with its talk of how Ford is revamping how it works.  

After intensive conversations about the biggest trends shaping the world, Walker says that "we expect to identify, by this November, the four to six key themes that speak to the social justice issues of our era—themes which will organize our grantmaking during the years ahead."

Uh oh, many grantees will be thinking. And for good reason. Whenever foundations draw new lines like that, a slice of current grantees end up on the wrong side. Walker is playing with big ideas and somebody's gonna lose an eye.

Walker acknowledges that will be case, writing: "it would be disingenuous for me to suggest that everything we now support will continue or that everyone will be content." That said, Walker says to look for an "evolution, not revolution."

We'll have all the gory details in November, but in the meantime, since Walker's looking for advice, I'm happy to chime in: Use an ax, not a scalpel, Darren. Err on the side of bigger changes and greater disruption. 

Ford does a lot of different things, and so it defies general critiques about how it might operate better with a new strategy or theory of change. But one thing seems crystal clear: The foundation has been trying to do too much. 

Ford currently works in eight program areas that include some 35 different issues, and it funds across 10 distinct regions of the world. 

That's crazy, even for a foundation that is sitting on a $12 billion endowment and approved $524 million in grants in 2013. While this may sound like a lot of money, it's not. Ford's total grantmaking last year was the equivalent of one week's budget for the New York City public school system. It's about half of what a small U.S. city like Yonkers spends every year to operate. 

Even the biggest foundations have meager resources compared to the problems they're tackling, and things are made worse when funders spread themselves thinly and end up with too many mouths to feed. 

Ford strikes me as a place that hasn't been good at saying "no" for years—not to new issues, and not to new or existing grantees. It spends tens of millions of dollars annually on the kind of vast infrastructure a foundation needs when it makes hundreds upon hundreds of grants, including a great many smaller grants. For example, in 2013, the foundation made over 200 grants of $100,000 or less to U.S. organizations. 

In short, the problem is not just too many areas of work, it's too many grantees. How often can the foundation expect to win big when it spreads its bets so widely? 

And the issue goes beyond the foundation's own impact. Ford's far-flung grantmaking mirrors, and helps enable, a nonprofit sector which is ridiculously fragmented, with too much duplication and way too many slurper organizations that will never get to scale. Staggering amounts of money get wasted in this system.

While greed drives consolidation of the for-profit sector as minnows sell out to whales, the reverse holds for the nonprofit sector, where setting up one's own shop, and sustaining it, is the path to more income.

Only disciplined funders can stop the fragmentation, and Ford hasn't been one of them. 

You can understand how this kind of situation develops. It's hard to say no for good reasons in a world filled with pain and injustice, and harder still in a large organization with an army of caring program officers, engaged board members with their own pet concerns, and historic commitments to many organizations, issues, and regions. 

Ford, it should be said, isn't the only foundation that has this problem. Many legacy foundations are grappling with mission creep, bloat, and watered-down grantmaking. 

All of which stands in contrast to some of the newer foundations we write about here at Inside Philanthropy. I'm thinking of a place like the Laura and John Arnold Foundation, which moves a lot of money annually in very big general support grants with only a skeletal staff and focuses on achieving a handful of disruptive changes. Or Bloomberg Philanthropies, which tends to invest a fortune in a few top-tier partners that it believes can move the needle. 

So Darren Walker certainly has his work cut out for him. And once the big shifts are announced, the real battles may begin. As I wrote earlier this year about the challenge of reorganizing MacArthur, another outfit beset by philanthropic sprawl: 

Every funding priority has a constituency, at both the staff and board level, and these people will fight for their pet causes and groups. 

One way they'll fight, which we've seen at other revamped foundations, is by insisting that such-and-such group really does fit the new criteria for X and Y reasons, even if that's patently silly. 

Regardless, change will happen, and heads will roll, but many exceptions will also be made.  And things will be dragged out, too. Grantees may get de facto severance packages: decent money, with a final cutoff later. 

The reason that Walker should go big and aim for a revolution is because, in the end, he won't get everything he wants. And while an attempt at revolution might produce a major evolution, shooting for an evolution may not produce all that much change once the resistance forces have dug in. 

Swing that ax hard, Darren. Focus in more strategically on fewer issues, yes. But also reduce the number grantees the foundation supports, increase the size of grants, and shift as much as you can to general operating support. That should also enable you to substantially downsize the number of staff and save a bundle on administration, money that can be freed up for grantmaking.

Along the way, the foundation should do whatever it can to consolidate a fragmented nonprofit sector. A slush fund to incentivize mergers would be helpful, as well as a hardball mentality. NGO leaders in duplicative organizations need to be pushed to bury the ego and part with autonomy for the sake of the greater good.