Strengthening the Nonprofit Sector: Investing in Capacity for Learning

The last two decades have seen a growing number of philanthropic organizations adopt outcome-oriented models, coupled with broader efforts to harness some of the best practices of corporate management. In the process, many foundations have embraced robust data collection and the use of performance indicators to measure the efficacy of their grantees’ programs and drive internal decision-making.

This shift is a significant improvement over earlier, less rigorous practices, but the pendulum may have swung too far. In some cases, organizations—both foundations and grantees—have risked becoming preoccupied with data for its own sake.

As a result, some organizations, including Overdeck Family Foundation and the William and Flora Hewlett Foundation have renewed their attention on learning alongside outcomes. While a data-centric approach is necessary to understand grantee impact, we believe it is equally important to incorporate learning-oriented goals that support continuous organizational improvement.

Experience has given us the humility to know that more data does not automatically drive more or better learning. Data is imperfect, and its interpretation requires a healthy measure of analytical judgement and the capacity to fully utilize it.

What does it mean to be a learning organization?

To be sure, developing new insights still depends on gathering and analyzing meaningful data, but doing so represents only the first step in becoming an organization that prioritizes learning alongside results.

Our emphasis on learning has roots in the corporate management experience, though adapted for the social sector. The notion gained traction in the early 1990s, after David A. Garvin articulated a framework for organizational improvement through discovery and knowledge-sharing. He defined a learning organization as one “skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights.” Since then, a vast array of new digital tools and methods for organizational learning and measurement have become available, and corporate culture (led by the technology sector) has embraced learning as a critical firm-level competency.

Foundations have an opportunity—and an obligation—to take a similar approach through our grantmaking. Our unique position allows us to support the work of our grantee partners in a way that not only makes them stronger organizations, but also collectively enhances the impact we all achieve.

Even though we have been committed to this work for some time, we are still setting the building blocks for a strong learning culture at our own foundation. This includes building psychological safety, encouraging individuals and teams to take risks, and making mistakes, analyzing them, and applying lessons learned to improve. As we continue to build our learning culture, we’ve also paired the culture and expectation-setting work with structures and processes that support our program team to regularly engage in the scientific method in partnership with our grantees.

With our newly structured Strategic Impact and Learning Team (SIL), we have strengthened our portfolios’ grantmaking to align it to clearly articulated strategies and tactics; stated the assumptions, hypotheses, and learning questions that drive our grantmaking; and created timelines for the validation or invalidation of those assumptions and questions. We believe this learning orientation is key in helping our team feel more confident making decisions about where and how to provide deeper financial and non-financial resources, where to more deeply partner with systems and philanthropic partners, and where we may not be best suited to play a role at all.

We have also expanded our communications efforts to be more transparent with the field about what we have funded, what we have learned, and what we have moved away from and why. We believe communicating with both peer funders and grantee partners is a key component of being a strong learning organization and are striving to regularly share information that previously may have sat on our hard drives.

The role of foundations in supporting learning

If you agree that learning is critical to the success of an organization, you may be asking what role funders can play in increasing the likelihood that nonprofits build a data capacity that allows them to meaningfully learn.

Here are four steps we suggest all funders consider if they are interested in supporting grantees’ capacity for learning:

• Understand the current state of data and learning within the nonprofits you support.
  • Why: The current state of the data infrastructure, data culture, and learning orientation of a nonprofit can help paint a picture of an organization’s skill and will for future data and learning success.
  • How: Consider administering a diagnostic to help assess the current state of an organization’s data and learning capacity.
• Know that a learning organization relies heavily on a strong data infrastructure and data talent.
  • Why: Data infrastructure and talent can be expensive and scarce. They are also key to a nonprofit’s ability to use data for learning and improvement
  • How: Consider supporting the matching and placement of data talent through programs like the Harvard SDP fellowship and the Bain externship program. Additionally, consider a funding structure that allows organizations time to build up the capital to meet future financial needs.
• Provide scoped consultative supports that strengthen the evidence-building plans or pilots of new tools
  • Why: It can be difficult for nonprofits to support data expertise in-house, which makes external consultancies a potentially cost-efficient and effective solution.
  • How: Work with your nonprofit partners to understand what types of services and supports can be provided by an outside expert, like Project Evident, which helps build capacity for nonprofits to gather, use, and share data. Make sure there are individuals internally who can execute on the plan once the consultancy is complete.
• Support R+D for ongoing learning
  • Why: Nonprofits struggle with the lack of interest from funders to support ongoing research and development, yet it is this function that often enables an organization to identify clear learning questions, allocate resources against it, and achieve organizational improvements over time.
  • How: Consider supporting grants designed for R+D, and that aim to answer specific learning questions over a set period of time. Make sure to evaluate both the achievement of the central R+D goals and the ways the organization was able to adapt to new learnings and make pivot versus persevere decisions as new discoveries were made.

Given our access to significant resources, we believe foundations should lead the way in this work, incentivizing nonprofits to make critical data investments and adopt organizational learning orientations, cultures, and mindsets.

Committing to a robust learning mindset, both as nonprofit organizations and philanthropic communities, will drive greater innovation and productivity—and ultimately help us all contribute more meaningfully to the important shared causes we support.

If your organization is already on this path, we would love to learn more about how you are approaching learning as a central goal. And for those yet to embrace learning as a priority, we invite you to consider piloting one of the above approaches and seeing whether they make tangible differences in your organization and the organizations you support.