Hard Choices: A Big Foundation Gets More Focused

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News that a foundation is engaged in strategic planning is rarely welcomed by its grantees, who often worry—and rightly so—that they'll be in a portfolio that gets whacked by a funder looking to sharpen its focus.  

So it was probably humane of the Conrad N. Hilton Foundation not to make a big deal of the fact that it was rethinking its program priorities over the past year. This funder, which tends to be low-key in general, quietly sorted things out without a lot of fuss creating jitters among grantees. And today, it delivered the news that it’s phasing out four programs.

The foundation is ending its longtime work on avoidable blindness, substance abuse prevention, Catholic education/school choice, and multiple sclerosis. But it’s exiting some of these areas slowly. It will wind down the substance abuse work, for example, over three and a half years and “with enough funds to do so thoughtfully,” said Hilton CEO Peter Laugharn.

Laugharn took the helm at Hilton in 2016, after decades of work in global health and development, including many years living in Africa. He arrived at a foundation that stands out for its deep compassion—and was also a textbook example of an overstretched grantmaker. Hilton had 11 priority areas, “which is a bit of an oxymoron,” Laugharn told me in an interview.

Inside Philanthropy had made the same point about the foundation in 2014, when Steve Hilton, the grandson of the founder, Conrad Hilton, said that he would be stepping down as president. In a post titled “Never Mind Those Reassuring Words. The Conrad N. Hilton Foundation Is Headed for a Shakeup,” we noted: “Even for a place with a couple billion dollars, it's spread pretty thin.” And we predicted that whoever took over the foundation "is going to make some big changes.”

Of course, change takes time in the foundation world. It’s been four years since Steven Hilton announced he would be stepping down at Hilton to bring in another leader who "can take us to the next stage of our evolution.” And it’s been two and a half years since Laugharn started the top job. 

Laugharn said that the streamlined grantmaking was the result of discussion by the board. Describing this process, he said, “We agreed that our resources could be used more strategically and with greater leverage.” Laugharn said the board looked at how long the foundation had been working in its various areas, what impact it was having, and where things stood with current commitments. Deciding which lines of grantmaking to wind down “was not an easy process.”

Foundations can find themselves trying to do too many things for many reasons. In the case of an older family foundation like Hilton, an overly broad agenda can reflect the interests of both the founding donor and subsequent generations of family members engaged in managing the giving, as well as non-family board trustees.

In a world with no shortage of problems, it’s always tempting for foundations to tackle new challenges. What’s much harder is ending programs once they’ve started. This requires cutting off grantees that are often doing important work and may be hard-pressed to replace funds that go away. Internal dynamics at foundations can also make it hard to end programs that have defenders on the board and staff.

Rather than doing the hard work needed to become more focused and strategic, foundations can just drift along—sometimes for many years. When Julia Stasch took over at the MacArthur Foundation, it had over 20 priorities. When Darren Walker became president of Ford, it was also wildly overstretched—even though Walker’s predecessor, Luis Ubiñas, had worked tirelessly to streamline an organization with 200 separate lines of grantmaking when he arrived.

By eliminating four program areas, the Conrad N. Hilton Foundation has taken a big step to become more focused. It’s made tough choices, the hardest of which—according to Laugharn—was to eliminate its substance abuse prevention work. The move comes amid the worst drug epidemic in U.S. history, with opioid overdoses claiming tens of thousands of lives every year.

Why pull the plug on this program, especially given that Hilton is one of the only big funders for substance abuse prevention? Laugharn didn’t provide an exact rationale, but said the foundation had been working on substance abuse since 1982, and added, “There’s never a good time to transition out of a field like that.”

This comment captures the difficulty of streamlining foundations. In some cases, all of the work a foundation does may be important. But some things still need to be pushed overboard. 

And even after making tough choices, foundations can still end up with too much on their plate. After he took over Ford, Darren Walker unveiled an initial round of streamlining in 2015. But earlier this year, he announced a new round of program consolidation aimed at “reducing our overall number of grantmaking areas in order to emphasize our most essential work and maximize our flexibility.” Nevertheless, Ford arguably continues to do too many things.

In Hilton’s case, its winnowed set of priorities—which include homelessness, foster youth and safe water—remains a lot to juggle for any foundation that’s determined to make a major impact on the issues it cares about.

Even if Hilton bet its entire annual grantmaking budget of $110 million on just one of its priorities, it’d be limited in how much it could move the needle. For example, 2 billion people lack access to safe water worldwide.

The painful reality of foundation planning is that it can feel like an inescapable duty to stay focused on multiple urgent problems—even if that means a foundation can only effect limited change in any one area. Is achieving less impact in more areas the right strategy? Probably not, but it's how most major foundations operate. 

Another reality is that no sooner have foundations finished streamlining, then new demands and opportunities start popping up, creating fresh temptations for mission creep. That’s especially true right now, in an era of rapid change and emerging threats.

A case in point: Shortly after the Boston-based Barr Foundation finished a strategic planning process to get more focused a few years back, Donald Trump was elected. Now, Barr has a special initiative underway that’s directing grants outside its core focus areas to help “communities under threat.” If Boston is devastated by a class 5 hurricane this fall, you can bet that Barr will find itself with another special initiative.

Getting more focused and staying focused is no easy thing for any foundation. Which is why the job of leading these institutions is harder than it looks.