“OD – a smart investment to multiply impact”: Learning from five foundations

Many foundations are shifting their funding strategies towards core support. But few foundations are yet taking seriously the organisational development of grantees. Now, more than ever, we need to invest in strengthening civil society organisations.  In such an environment, five Swiss Foundations, Laudes, MAVA, Mercator, Oak and PeaceNexus stand out. They have all invested in Organisational Development (OD) of their grantees. Earlier this year they reflected on, articulated and shared their learning about supporting. They concluded that “OD is a smart investment to multiply impact”. They are convinced that supporting OD increases the likelihood of achieving their mission and therefore should be a key part of the daily work of any foundation.

Their fascinating report Funding Organisational Development shares insights on how to engage in OD, discusses the institutional set-up is needed, explores the OD process and highlights ongoing dilemmas. They address key questions:

What is OD?

For these five foundations OD is a strategy to deliver on their core outcomes through the improvement of a partner’s organisational health by increasing the resilience and sustainability of partner organisations, thereby helping them achieve their goals. It can include core OD needs (e.g., strategy, governance, structure and sustainability planning) to internal systems (such as HR, finance, monitoring, evaluation and learning and digitalisation) and external relations management (e.g., fundraising, communication and advocacy). PeaceNexus[1] and Mercator have found strategy development to be a frequent entry point for OD.

Why invest in OD?

Almost all foundation efforts to transform society take place through funding projects within organisations. But as with a car, if it has a flat tyre, a broken gear box or problems with steering,  however much fuel (or funding) is put in, it will not make much of a difference. Foundations have to pay attention to the organisational vehicles through which they work. Their funding will only have an impact if the grantee has the capacity to bring about change.

Some funders believe that they can ignore the organisational aspects of grantees because they say: ‘we only fund competent organisations’. Yet we know from our own experience that there is always room for improvement, irrespective of size or strength. We also know that COVID-19, changing aid flows, increasingly restrictive governments are placing even more onerous demands on civil society organisations throughout the world.

Having the end in sight tends to focus the mind on what is most important. For example: “when MAVA reaffirmed its decision to end its grant-making in 2022, it was clear that the sustainability of its partners was a key component of the sustainability of its impact. Therefore, MAVA put an emphasis on OD to make sure MAVA’s key partners are robust and financially autonomous enough to pursue their activities after MAVA’s closure.”

What do partners need to benefit from OD?

The five foundations agree that the partner’s readiness for change represents a key precondition for success. They point out: ‘The level of dissatisfaction with the current situation should reach a point where apathy or resistance to change can be overcome, on the basis of a shared vision and some first steps to implement it. A critical mass of change champions, willing to invest their time in OD, is critical to ownership and success. Consequently, OD is typically provided to those partners that exhibit readiness for change and have a high strategic relevance for the funder’.

What does OD require of foundations?

The foundations recognise that OD support is a significant commitment, one that requires specialist insight. They found OD needs:

• To be a core part of strategy. OD needs to be anchored in the foundation’s overall strategy. It cannot remain as a ‘nice-to-have’ add-on. OD has to be a part of both the overall direction and underlying theory of change. OD therefore needs strong leadership support and commitment from the board.
• Dedicated OD staff and engaged programme staff. All five foundations hired staff (ranging from 0.3 to 10) to develop and implement their OD work. This OD manager develops the strategy, sets priorities and acts as an OD expert for programme staff as well as for partners. The foundations also expect all staff to see OD as part of their daily job[2].
• Quality consultants. Consultants play a critical role in OD in all five foundations. They bring ‘a neutral layer between the funder and the grantee, permitting more openness during the OD process, but also bringing the relevant skill set and contextual know-how’. Most of the five foundations have been seeking to strengthen the supply of quality consultants[3]. Several foundations have exchanged experiences to set up a dedicated online database.
• Trusting relationships. OD is only successful where there is trust. The foundations seek to build that trust through increasing core funding; through treating transparency as a mutual obligation; managing and clarifying expectations on both sides; and establishing an “art of failure” attitude. All five foundations try to be flexible and handing partners as much decision-making in OD as possible, such as deciding OD priorities, timelines and consultants.

Does this mean that OD only something that larger foundations can do? Are small foundations exempt? I do not think so. OD is an approach, a way of working, that even the smallest funders can encourage and support.

How do you know what difference OD is making?

Impact assessment in OD remains a complex challenge for all five foundations. Immediate OD results are often incremental and intangible, while longer-term results are difficult to measure and attribute. It is almost impossible to make any reliable assertions that we can directly attribute change ‘a’ to input ‘x’. Because impact is so complex, it is more promising to look at the ‘contribution’ OD support makes – something the foundations are currently working on together.

Join the OD learning journey!

Despite the lack of incontrovertible proof, the five foundations are convinced, ‘beyond reasonable doubt’ that OD is a smart investment. Their first-hand experiences with OD over many years demonstrate that OD support had not only enabled grantees to overcome challenges like leadership crises, outdated strategies, overstretched, failing systems, but also to thrive and have greater impact.

They have also found that learning from each other is incredibly valuable. This has helped them create more internal ownership, shared buy-in and new insights on what works and what needs further improvements.

The current group of five is keen to welcome other foundations to share their learning journey. Contact:

• Adriana Crăciun adriana.craciun@oakfnd.ch
• Carole Frampton carole.frampton@peacenexus.org to join the journey.

[1] See PeaceNexus Practice Paper on their partners’ lessons learned from strategy development processes: https://peacenexus.org/wp-content/uploads/2020/04/PEN_PracticePaper_DOC_EN_WEB_page.pdf

[2] Oak and Laudes Foundations work closely with INTRAC to increase POs’ capacity to engage with OD.

[3] Such as MAVA Foundation and PeaceNexus Foundation collaborating in West Africa