Infrastructure Design as Innovation

Here is a well-kept secret: the most innovative, transformative foundations have the most robust infrastructure. In other words, the foundations that are the bravest, the most visionary, and become trailblazers in the philanthropic sector, take great care to design the most thorough organizational infrastructures. It seems antithetical to believe that the more a foundation embraces risk management, strategically integrates compliance into its operations, and focuses on the efficiency of its policies and processes, the more innovative it will become, but, that statement is entirely accurate.

Often, foundations look almost exclusively to their programmatic strategies and work plans to determine how innovative and forward-looking their grant making is or they themselves are. They spend significant time focusing on programmatic goals, positioning, and priorities and often believe that focusing solely on these areas will determine how innovative they can be in the field. This belief is likely widely shared, but can also be short sighted. In fact, it is the combination of both programmatic strategy and infrastructure design that fuels and supports a foundation’s innovation.

Good organizational infrastructure design is comprised of a foundation’s governance, grants management and grant making, and compliance. Without this design, a foundation cannot innovate because staff have no framework to creatively guide, support, inform, or refine the foundation’s programmatic vision. Specifically, good infrastructure design provides proper oversight over foundation operations and programs, creates policies and processes that support grant making and foundation-led projects, and informs how the foundation itself should be holistically designed for optimal performance.

Infrastructure design is an area where many foundation departments – grants management, legal, finance, and operations – focus their time. It also appears in pockets of practices throughout foundations and is thus often isolated, leaving its impact ineffective and rendering its application nonstrategic. This often overlooked incoordination is why many foundations believe they have good processes, but then do not understand why they are unable to innovate or identify new ways to address more complex socio-economic problems. It is no surprise then that many foundations do not realize the power that infrastructure design has over a foundation’s impact or how it can catapult a foundation’s programmatic strategy. Indeed, incorporating infrastructure design as part of foundation strategy requires a fundamental leadership mindset shift.

Infrastructure design that leads to innovation must contain the following six elements:

o    Forward-looking governance. The design must ask the right questions, both in terms of the paper and the people, to create governance that provides appropriate oversight for the foundation, its strategy formulation, and execution. The governing documents should provide guidance for the foundation’s operations and work, which means they need to create bodies to provide oversight over the foundation’s work, offer clear delegation of the board’s authority, and provide a clear guide for the board itself about its operation, requirements, and vision, which will ask the right questions of board members. This design should be sturdy enough to withstand time, yet flexible enough to adapt to the most trying times.

o    Policy management. The design must ensure that policies are forward thinking, flexible, and reflective of the foundation’s reality. A foundation should periodically undergo an organizational “audit” to evaluate how it is operating against these policies and determine the need for revising these policies or creating new ones. Each policy should be evaluated against the foundation’s vision, mission, values, and outcomes to determine the policy’s application and relevance.

o    Diversity of thought. A foundation that has diversity of thought is tremendously more innovative than one that does not. Diversity often generates more disparate ideas than homogeneity and diverse foundations need good processes to analyze these ideas and collectively arrive at the best one. This diversity must permeate a foundation’s processes and practices so that each thoroughly analyzes and holistically reflects the perspectives of each relevant stakeholder, leading to sustainable impact.

o    Interconnectivity. Rare is the foundation that requires strategic planning from its operational and administrative teams. And rarer still is the foundation that requires this strategy complement programmatic strategy to create an overall, organizational strategy. This approach requires programmatic, operational, and administrative teams to identify a strategy that addresses all of the foundation’s challenges and weaknesses, and builds on all of its strengths and opportunities. By doing so, the foundation significantly reduces its blind spots and is thus able to take better risks, helping it innovate.

o    Strategic grants management. Grants management should be viewed as an integral part of a grant investment instead of a compliance after-thought. When making a grant investment, program teams therefore address both grants management and programmatic considerations. Grant-making processes are built to be legally sound, but nimble, and reflect the foundation’s innovation.

o    Clear organizational structure. In the gaps of clearly defined organizational roles and responsibilities, processes become clunky and prevent a foundation from efficiently operating, let alone innovating, because no one knows who is to lead that part of the process. Good infrastructure design clearly articulates the responsibilities of each role in a foundation, highlights areas of overlap or voids, and articulates how to move forward in those instances.

These elements alone do not create an innovative foundation; innovation also requires exceptional leadership and a strong programmatic strategy. When infrastructure design, programmatic strategy, and leadership align, the combination produces the most innovative foundations that lead with vision instead of chasing it.

This article was originally published on April 2, 2019 in Philanthropy New York’s Insights.