Grant-making foundations in Norway – the myth of a strategic player?
(Working paper - To be continued )
Susan T Furrebøe
Institutt for Statsvitenskap og Ledelsesfag
Universitetet i Agder
1
Introduction
Grant-making foundations have caught attention from scholars during the last decades, due to their peculiar
features of complete institutional and financial autonomy. Their ability to allocated alternative resources for the
public good presumably provides them a unique position and there is a bulk of literature referring to their position
as third sector players in democratic societies (Anheier and Toepler 1999; Lagemann 1999; Prewitt 1999; Lorentzen
2004; Anheier and Leat 2006; Dogan, Heydemann et al. 2006; Frumkin 2006; Prewitt 2006; Anheier and Daly 2007;
Anheier and Hammack 2010; Crutchfield, Kania et al. 2011; Fleishman and Tierney 2011). The combination of three
main development patterns in society provides an argument for continuing to study such organizations; 1)
Increasing wealth in liberal economies, of which some ends up in philanthropic efforts for the public good, 2)
Growing economic instability and increasing social challenges, leading to a greater pressure on governments to
demount established welfare arrangements, and 3) An increased focus on the effectiveness and efficiency of
foundations, to secure a high enough return to society, as a substitute for taxes which instead has been allocated in
the foundations’ endowments.
The debate on effectiveness that has been developing the last decade in the field of philanthropy has to some
degree its roots in a rational economic understanding, framing the concept of strategy within technical and
economic terms. This understanding of strategy has to a large part been dominating the scene of philanthropy, and
to some extent kept the hegemony of the focus on rational factors such as measurement, positioning and logic.
In this paper, I will concentrate on the third discussion mentioned above. This debate appears to be central in the
philanthropy literature, positioning foundations as “sui generis” organizations and labeling rational strategic
orientation as a fundamental criterion to enable them to respond to society needs. In order to engage in this
debate empirically, I pose the following questions; how does this strategy-debate fit the Norwegian context, and
what are possible explanatory factors for a fit or a non-fit?
Grant-making foundations in Norway are fewer and smaller than in most Northern-European countries, but
growing. A recent development is an increasing establishment of banking-foundations, representing comparatively
larger financial capacity than usual in the Norwegian foundation community 1. There has been research on roles
and regime-types and an initial mapping of foundation contributions (Lorentzen 2004; Anheier and Daly 2007;
Lorentzen 2007; Lorentzen and Dugstad 2010), however, we know little about strategic work according to the
“strategy-paradigm”. This paper presents a qualitative study of a selection of the largest grant-making foundations
and an analysis of strategies according to the “strategy-paradigm”.
1
Resulting from an amendment in financial law….
2
Method and selection of foundations
The selection of grant-making foundations for the empirical study has been drawn from the official register
‘Stiftelsesregisteret’ at the national authority of foundations, ‘Lotteri- og Stiftelsestilsynet’. This register includes all
foundations in Norway, involving organizations engaging in a range of activities and varying financial capacities,
counting a total of 8 237 entities (Stiftelsestilsynet 2010). The focus for this study is grant-making foundations with
a public benefit objective, of which the significant implications are that they represent alternative and independent
sources of funding for the public good. The activity of grant-making is made possible from revenue yielded in the
capital-base or equity and has to amount to a considerable size to provide any prominent revenue. Grant-making
public benefit foundations count approximately 3 500 entities, but the bulk of these foundations include
testimonial gifts with small equities and hence without meaningful manoeuvring capacity. Moreover, those holding
equity more than 50 million NOK counts only approximately 50 foundations, which also limits the selection in this
study, and reduced to 48 after singling out “family foundations” and likewise 2 (selection drawn January 2010).
Hence, size, grant-making and public purpose are the selection criteria.
The data collection for the empirical part started out by addressing the issue of strategy, asking how strategic work
actually looks like among the selected foundations. Studies had already revealed that in-depth knowledge about
strategic ambitions is an area we know little of (Carlenius 2009; Lorentzen and Dugstad 2010). The first part of the
data collection took place as e-mail correspondence to all 48 foundations, requesting for their strategic plans. This
initial data collection resulted in 35 responses. Twelve responded that they operated according to written strategic
documents, of which nine forwarded these documents. When examining these documents they reveal little that is
identifiable to the characteristics of strategic/proactive orientation in table 1. Furthermore, they expose little
objective information, but rather tend to portray their achievements by glossy presentations of their good deeds.
The remaining respondents counting 23 replied that they do not have strategic documents, whereas five referred
to their statutes as their leading strategic guidance. The analysis shows no connection between a written strategic
document and a strategic orientation. This suggests that it is not sufficient to study documents in order to reveal
strategic orientation, but rather that it is necessary to employ in-depth methods to get to the qualitative
components of how the foundations work.
The next part involved 18 foundations and in-depth interviews of the administrative leader or the chairman of the
board. The interview was structured by a semi-structured interview guide and led by an open approach in order to
2
The Norwegian law does not distinguish public benefit and grant-making foundations from other activity. Also, the
law allows the establishment of family foundations, limiting distribution to the donators’ family members or a
limited group within a family or company. According to the public benefit definition applied in other European
countries, the term ‘public benefit’ does not apply to limited groups of people, like a family or company, hence this
definition is being applied in this study.
3
secure important information. Arguably the number of interviews could be higher, but the resulting number so far
has been limited by lack of resources and a struggle to get appointments with the foundation leaders. On the other
hand, the interviews counting 18 have been randomly, but evenly distributed among the selection of 48
foundations, as follows3:
-
4 foundations among the top 10, equity more than 800 million NOK
-
4 foundations among the top 20, equity more than 200 million NOK
-
5 foundations among the top 30, equity more than 100 million NOK
-
5 foundations among the top 50, equity more than 50 million NOK
Foundation effectiveness; the “Strategy paradigm” – what is the debate about?
The debate on foundation effectiveness and the different ways of adopting a strategic orientation has been voiced
with emphasis on different dimensions of the concept of strategy. In this section I will outline various contributors
on this subject and draw up the main trajectories. The aims here are to make and overview of the “strategyparadigm” and join the central concepts in order to make a framework in which I can analyze the strategic
orientation of the Norwegian foundations in this study. First, it is useful to mention the arguments that have
preceded this debate - why strategy is important. One point of departure is that foundations are favored through
the tax-system and that we therefore should expect foundations to achieve a social impact (Porter and Kramer
1999; Prewitt 2006; Fleishman 2009). To be able to utilize the inherent, distinguishing qualities of philanthropy and
to operate effectively for society, there is a need to develop “sound strategy” (Frumkin 2006). Others have found
indications suggesting that those that are clearly strategic are in a better position to understand the difference they
make, reinforcing the idea that foundation strategy is a necessary component of effectiveness (Buteau, Buchanan
et al. 2009). Finally, the debate about how to measure impact is an ongoing concern for foundations. That
foundations insist on attempting this is most likely a consequence of the lacking accountability mechanism 4. Still it
persists to be quite insuperable because it embodies the problem of how to identify the causal factors among a
range of factors, together with how to determine whether change would have occurred anyway (Prewitt 2006). The
ambition to establish a firm knowledge of causality and counter factuality is out of reach, and an undue concern
about the problem will only be good for paralyzing attempts of doing the best job possible (Fleishman 2009).
The earlier approaches to philanthropy were developed in the early-mid twentieth century and were strongly
influenced by the industrial founding fathers of large American foundations like Carnegie and Rockefeller. The
3
The following analysis will only add up to 17, because one of the foundations was recently established and had
not yet started operating. The answers in the interview were based on thoughts of intended strategy orientation.
4
In contrast to government institutions that meet claims for accountability through a voters mechanism, and the
market that meet accountability claims through price or competition mechanism (See Fleishman 2009)
4
strategies emerged from varying concepts of “scientific philanthropy” and had clear connotations to natural
science, industry and business. The notion of “social engineering” was evident, making a direct link between
understanding the underlying causes and the application of scientific solutions (Bulmer 1995; Bulmer 1999; Anheier
and Leat 2006).
Perhaps (re)starting the debate in 1999 Porter and Kramer states that for philanthropy it is especially critical to
focus on strategy, based on the argument of inability to measure impact. Their recommendations for strategic
orientation is based upon what they see as common problems for foundations; 1) They scatter their distributions
too widely, 2) They overlook the value-creation potential of closer working relationship with grantees, and 3) They
pay insufficient attention to the ultimate results of their funding (Porter and Kramer 1999). They point out that
there is a distinction between business and philanthropy but that the logic is the same, underlining principles like
superior performance and measurement, unique positioning and activities, and trade-offs (ibid). Other contributors
follow this line of logic, emphasizing regularly assessment of plans, proactive orientation of grant-making and
measurement of achievements (Buteau, Buchanan et al. 2009), and the use of tools to identify best practice
(Fleishman 2009). Many of these contributions contain practical guidance on how to perform effectively. This
includes identification of systemic and managerial features that characterizes successful foundations in the US
(Ostrower 2006; Fleishman 2009). The Ostrower study contains a typology of different approaches on how to be
effective, of which the “Proactive” dimension contains components of measuring outcomes, actively seek out areas
to address and to collaborate (Ostrower 2006). Yet another book focus on evaluation as a method to be used on all
levels in order to advance foundation practice (Braverman, Constanstine et al. 2004). Partly opposing Porter and
Kramer, Fleishman and Tierney argues that the aim of strategy in philanthropy is fundamentally different from
business; instead of revolving around competition to earn profits, it revolves around collaboration to achieve social
impact. However, they seem to agree after all, saying that the essence of strategy for both is resource allocation
(Fleishman and Tierney 2011). Although they underline the need for collaboration to achieve social impact and the
importance of maintaining an external orientation, the other key elements of strategic thinking is to rigorously
pursue facts and to measure the few things that matter most. The pathway to the right allocations is guided by
different “logic models” describing the inputs, outputs and anticipated outcomes (ibid). The common features of
strategic approaches can be summarized into what comprises a “logic of deep focus”; selecting a field, establish
specific and achievable goals, and choose an approach (Katz 2005). He reaches this summary by a critical view on
the actual differences between the various brands of philanthropic strategic approaches of strategic philanthropy,
effective philanthropy and venture philanthropy. He argues that the nominal changes are less profound than often
claimed and that the differences mainly lies in the distinction between charity and philanthropy (Katz 2005).
Anheier and Leat (2006) introduce a need to reinvent the models of strategy. By assessing the philanthropic
strategic approaches of charity, scientific philanthropy and new scientific philanthropy, they suggest a fourth
approach; creative philanthropy. The difference from the earlier approaches is the focus on knowledge and social
5
dynamics, by factors such as embracing uncertainty, build knowledge, reach across established boundaries and
actively seek out dissenting voices (Anheier and Leat 2006). Later contributions follow this line of focus, pointing to
observations of grant-making foundations in the US, showing that the most significant contributions by foundations
have been made in partnership with others (Anheier and Hammack 2010). In another recent book, the authors’
outline the “catalytic approach” of which is based on six practices of how to be a proactive player in the field of
philanthropy. Their focus is on highly leveraged cross-sector activities producing an effect that is much greater than
the sum of its parts, and at the same time maintaining the need for a clear choice of focus (Crutchfield, Kania et al.
2011). Another study have attempted to formulate a model for high impact philanthropy, through identifying three
stages of problem-solving that seems to matter when looking for results; choosing a “good” problem, development
of coherent designs, and the use of social dynamics (Thümler and Bögelein 2010).
When viewing these contributions together, it is possible to detect a development towards a stronger reliance on
elements of social dynamics, collaboration and cross-sector activities. In the table below I will sum up the debate
on strategy and use the following dimensions as broad guidelines for further operationalization:
1) Choose a strategic focus
2) Measurement
3) External orientation and social dynamics
Table 1. Strategy criteria
Authors:
Criteria:
1 Establish specific and
achievable goals
Porter &
Kramer
1999
Katz
2005
X
1 Actively seek out areas to
address
2 Have measure to assess
X
Thümler &
Bögelein
2010
Fleishman & Crutchfield
Tierney 2011 et al 2011
X
X
3 External orientation /
Committing collaboration
Ostrower Anheier & Buteau
2006
Leat 2006 et al
2009
X
X
X
X
X
X
3 Use of social dynamics
X
X
X
X
X
X
X
X
X
X
Further operationalization includes the following elements:
-
Methods of grant-making; Advocacy support; Focus on root causes; Foundation designed initiatives
-
Organizational capacity
-
Transparency and legitimacy
-
Perception of own proactivity
6
Foundation strategies
When analysing the interviews they split into three groups and accordingly I will treat them separately in the
presentation below. The largest group consist of 11 foundations and is marked by negative deflection on strategic
criteria according to table 1, and will be referred to as “Passive orientation”. The second group consisting of 4
foundations is distinguished by being targeted solely at research and will be called “Focused orientation”. The last
group consisting of only two foundations, discern strategic criteria according to table 1, and is referred to as “Active
orientation”. There is however a problem connected to placing the foundations in these groups constructed on the
passive-focused-active continuum. On the outset, the total selection of 18 has distinctions on what appears to be
one passive group and one active group. The active group still divides into two distinct categories, placing research
foundations in a group of its own. I therefor argue that there is a need for a middle category to handle the research
foundations. They share some important strategy criteria that would otherwise place them in the “active” group,
but I argue that they are merely “accidental” strategists, because the criteria they deflect positively on are so
closely linked to their extremely narrow focus and the one single grantee.
Passive orientation
This group consists of 11 foundations, of which seven have a private origin, three have a collective origin and one
has a public origin (a special case where the endowment originates from a gift given to King Oscar II by the people
of Norway)5. Five of the foundations are located in Oslo, two in Bergen and four in smaller cities close to Oslo.
Three have quite narrow objectives and eight have broader objectives. The group is relatively varied when it comes
to combinations of positive and negative deflections on the indicators based on table 1, but all have less than four
positive deflections.
1.
“Advocacy support”: All foundations in this group share negative deflection on this indicator, suggesting
that they avoid stepping into areas that might have a political “flavor” or involve in projects that are aimed
at policy change or direct lobby-efforts. These interviewees in general express reluctance towards entering
controversial issues, using statements like “we are not political actors”. At the same time, there is
evidence of willpower to contribute to changes, but something is holding them back when it comes to
action.
5
1) Private origin refers to the endowment being donated by a private person or a private company, 2) Collective
origin refers to the endowment coming from accumulated capital by a savings bank, residue from a merger of
banks, or insurance company, or 3) Public origin refers to the endowment coming from municipalities or
government body.
7
2.
“Establish specific and achievable goals” and “Actively seek out areas to address”: All 11 share negative
deflections on “Actively seek out areas to address” and 8 on “Establish specific and achievable goals”. The
four corresponding to “yes” on “Establish specific and achievable goals” belongs to a fringe area, and does
not clearly categorize to a “yes”. Accordingly, some have chosen some priority areas, but may not actually
have made any operationalization. Contrary to what these indicators associates with, the foundations in
this group explicitly emphasize the original objectives, exactly the way they originally were formulated by
the foundation donor. There is no doubt that the legal framework secures the formal objective laid down
in the foundations’ statutes. However, in most cases there is a certain room for maneuvering through
operationalizing the objective and thus creating more tangible and assessable goals. Moreover,
considering that eight of the foundations in this group have broad objectives, makes it plausible to ask why
so few boards wish to explore this scope of action that actually exists. Typical for this group is an idea of
sustaining a broad interpretation of the objectives, in order to have a broad and diverse group of
applicants. This way they apply a passive approach to selecting projects for their grant-making, hoping for
something exciting to turn up. In much the same manner, the term “gift” or “donation” is widely employed
when the interviewees in this group talk about their grant-making. This reflects a basic attitude of
emphasizing charity over strategic efforts. There are absent discussions in the boards on changes in the
foundations’ behavior, reflecting a conservative attitude to their own “production”, and resulting in
reproductive methods and ways to relate to the environment. A typical statement in this regard is “..we
have always been doing things this way…”.
3.
“Foundation designed initiatives”: All but one have negative deflection on this indicator. Assessed isolated,
foundations operating without foundations-designed initiatives, does not necessarily mean that they are
“un-strategic”. Evidence from the other groups show in fact that neither they have a high degree of selfdesigned programs or projects and all but one when seeing the groups together base their grant-making
primarily on an open application process. However, in the “passive” group, foundation designed initiatives
are minimal and the overall impressions from the interviews are that, in these cases they are very far from
adopting such approaches.
4.
“Focus on root causes”: All but one foundation have “no” on this indicator. They display little reflection on
whether their contributions will bring about changes in causal factors or if it only will relieve symptoms.
However, quite a few have attention towards aspiring to contribute in areas where public money do not
reach, but not to the extent of change.
5.
“External orientation/Engage in committing collaboration/Network”: All but two have negative deflection
on this indicator. Most of these foundations reflect a high degree of internal orientation instead of
external. Again, the emphasis on the formal objectives seems to serve as a deterministic hindrance to
explore possibilities, as they express that there is little need for obtaining inspiration from outside of the
organization. They express that relations to others are less important in order to reach their objectives,
8
and they neither engage in cooperation with other organizations nor foundations. Furthermore, they rely
unilaterally on their own competence, especially within their board of trustees. They have less focus on
cooperating with other organizations and they have less contact with other foundations. Generally, their
distribution resembles a more incidental process, which takes place without background analysis or
documentation. They neither include external expertise in decision processes apart from very few
examples of single, special cases. There are no examples of review systems, either internally or externally.
It appears endemic to this group to have a limited awareness to relational network.
6.
“Perception of own proactivity”: These foundations does not have a general perception of the “sui generis”
properties of public benefit foundations. At the same time, some express a desire to be perceived as a
flexible and proactive driver for society, and a will to initiate important projects. However, the essential
action to substantiate this is absent and neither does their operational activity lend proof to it. Those
expressing this desire, tend to be constrained in situations that otherwise would be proactive. Some show
a lack of reflection on making changes in their own methods of grant-making and areas of distribution.
Focused orientation
This group consists of four foundations, all with objectives committed exclusively to research. All have private
origin, although one is a result of a merger of approximately 30 smaller foundations, and may contain endowments
from other origins. Two are located in Bergen and two in Oslo. These foundations show varied deflections on the
indicators based on table 1, but otherwise they share some important characteristics:
The research foundations have a narrowly defined objective, and in these cases also determining one single
recipient institution. This secures important preconditions for applying a strategic focus, involving thorough and
regular discussions and planning for how to obtain objectives successfully. As such, this leaves little room for
random grant-making, and involves established systems for quality-assurance and review-systems. Further,
systems for background analysis and documentation, as well as assessment tools are easier available within their
own research community. Regarding external orientation and collaboration, the research foundations have an
explicit focus on an international orientation, both for building the recipient institutions’ reputation and to enable
the recipient institution to be competitive regarding recruitment. The research foundations engage in long-term
financing to a great extent.
9
Active orientation
Only two foundations comply with the characteristics of the strategy criteria based on table 1, and deflect
positively on seven and eight out of ten indicators. One has a broad objective and one has a narrower objective.
They are located in Bergen and Oslo respectively.
1.
“Establish specific and achievable goals” / “Foundations designed initiatives”/ “Actively seek out areas to
address”: This indicates that they actively seek to operationalize the objectives beyond the formulation of
the objectives in the statutes. They reflect deliberation of their own role in society through principle
discussions in the boards and planning for how to obtain objectives successfully. These indicators also
entail the essential aspect of choices to exclude some areas.
2.
“Focus on root causes”: They have an explicit focus on targeting their grant-making on projects that are
aimed at causal factors, more than relieving symptoms.
3.
“External orientation/Engage in committing collaboration”: These foundations have an overall
commitment to search for different ways to achieve their objectives, through pioneering activity and
engaging in new knowledge or methods. They emphasize making synergies and achieve added value in a
broad sense, which involves allowing the “outside world” and knowledge from different disciplines to have
influence and to induce change. They engage in collaboration with other organizations, which also includes
other foundations. An important aspect related to this indicator is that these foundations often base their
decisions on background analysis or documentation in general.
4.
“Use of social dynamics”: The leaders of the two foundations in question reveal a peculiar reliance on
personal properties that are oriented outwards to the foundations’ environment, in mission of the
foundations’ objective. They show true commitment and a persuasive attitude related to the foundations’
cause. Accordingly they exhibit a strong reliance on their own and others knowledge, social abilities,
connections and intuition. Furthermore, they reflect heavy emphasis on human capacities, internally and
externally, and move their overall attention beyond the borders of the formal objective. This way they
expand their objectives to encompass a larger context than their formal intentions ascribe.
5.
“Advocacy support”: They have clear examples of support to projects that have ambitions to change policy
through lobby-efforts, funding reports or research that might be provocative or controversial.
6.
“Perception of own proactivity”: These examples share a pronounced attention to the “sui generis”
properties of public benefit foundations, emphasizing the roles of being driving forces, the importance of
representing alternative funding to public funding, along with explicit thoughts of bringing about change
to selected parts of society.
10
Common characteristics:
1.
“Methods of grant-making”: More or less all the foundations belong to a passive tradition in grant-making.
They apply a broad approach in search for projects. Still being assessed as passive in most regards, there is
one foundation that has announced to abandon the custom of receiving applications. Furthermore, most
of the foundations apart from those being research oriented, more or less end up scattering their
distribution widely.
2.
“Organizational capacity”: There is little that distinguishes any of the interviewees regarding relative size
of staffing, relative resources for administrative cost, outsourcing versus in house capacity and so on. Also,
level of competence and knowledge acquisition is high. The boards reflect a composite selection of
trustees with high skills and competence. Generally, an element of what might be an expression of
preservation or at least continuity is a very high tendency of internal recruitment for staff or trustees.
Internal recruitment means from within the originating organizations, and hence implying that the
recruitment base is somewhat limited. Another element of continuity applies to the boards, whereas over
half of the foundations have no limitations to duration period for trustees other than age limit. These
elements of continuity bring forward a question of what the consequences are for adaptation and change.
3.
“Transparency and legitimacy”: Here too, there is little that distinguishes the interviewees. All show
concurrent will and awareness to the necessity of being transparent and accessible. All have web-pages
and relate professionally to the media and the public. Moreover, most of them report that they would
appreciate more interest from the media. All apart from one foundation have never been scrutinized
through media. The one in question has been characterized “active orientation” and often meets critical
attention due to their choices in grant-making.
Table 2. Summary of Strategy
criteria
Total
Criteria
Establish spesific and
achievable goals
Actively seek out areas to
adress
Have measure to assess
External orientation /
Committing collaboration
Use of social dynamics
Passive
Focused
Active
Yes
No
Yes
No
Yes
No
Yes
No
9
8
4
7
3
1
2
0
4
13
0
11
0
4
2
0
4
13
1
10
3
1
0
2
7
10
1
10
4
0
2
0
8
9
3
8
1
3
2
0
11
Reflections on explanatory factors
I will outline three different directions for possible explanatory factors for why the Norwegian foundation sector
largely appears to operate without strategic guidance according to the dominating comprehension of strategy.
Contingency theory helps to back up the first explanation. The essence of contingency theory is that organizational
effectiveness depends on connecting the characteristics of the organization, to contingencies that reflect the
situation (Donaldson 2001). A contingency is any variable that moderates the effect of an organizational
characteristic on organizational performance, and making a connection between its contingency and some aspect
of organizational structure, for instance task uncertainty and the organic structure, or size and bureaucracy.
Contingencies that are relevant in this case include the environment, organizational size and capacity. The
environment contingency affects organizational structure, whereas technological, market or policy change in the
environment affects whether its structure is mechanistic (hierarchical) or organic (participatory). The mechanistic
structure fits a stable environment, making a hierarchical approach efficient for routine activity and a centralization
of decision-making. The organic structure fits an unstable environment, making a participatory approach efficient
for innovation and decentralization of decision-making. The complexity or size of the organizational structure
makes the other dimension, affecting the degree of bureaucracy. The bureaucratic/complex structure fits a large
organization, whereas repetitive activity and rule-driven (and de-centralized) decision-making is likely and efficient.
An un-bureaucratic/simple structure, which is not rule-driven and centralized, fits a small organization, whereas top
management can make all decision personally and efficiently (Donaldson 2001).
In this view, the foundations will show variation in their organizational structure, due to contingencies as size,
degree of formalized operation and competence. A miss-fit between the organizational structure and the
environment would indicate that the foundation is inefficient.
Table 3. Summary of organizational structure and environment (based on Donaldson 2001)
Organizational
structure
Environment
Complex
Simple
Stabile
Dynamic
De-centralized
De-centralized
Bureaucratic
Organic
High formalization
Low formalization
Centralized
Centralized
Mechanistic
Simple
High formalization
Low formalization
12
Hypothesis: The size and competence in the foundations affect their ability to adopt the needed strategies in order
to fulfill their objectives.
A second explanation is based on theory of institutionalised myths (Meyer and Rowan 1977; Christensen, Læreid et
al. 2004), which argues in lines of prescribed rules being imposed on the foundations by their professional
environment, creating a false idea that they operate according to modern and effective strategies. Meyer and
Rowan suggest that conformity to institutionalised rules often conflicts with the need to be effective, creating a gap
between the formal structure and the objectives and activities of the organization by becoming loosely coupled
(1977). Brunsson refers to the same process of external norms versus efficiency , when institutional norms fail to
agree with requirements for action, creating two sets of structures and subsequently making a separation in the
organisation, or “de-coupling” (Brunsson 2006). The myths or rules make organisations look alike on the surface, as
many only adopt the rationalised concepts ceremonially (Meyer and Rowan 1977). The rules give the organization a
legitimised recipe on how to organize, and the incentive for appearing to incorporate the prescription goes beyond
the intention of being effective. Seeking legitimacy is an important factor, through proving to adapt to modern
organizational standards of progress, renewal and rationality. This leads to a situation where organizations
dramatically reflect the myths of their institutional environments instead of the realities of their work activities
(Meyer and Rowan 1977; Christensen, Læreid et al. 2004). This also relates to what is termed “organizational
hypocrisy”, describing how organizations handle inconsistent norms; to talk in a way that satisfies one demand, to
decide in a way that satisfies another, and to supply products in a way that satisfies a third (Brunsson 2006). The
motivations for adopting the rules are the same as for all isomorphic adaptation according to DiMaggio and Powell,
either; 1) Coercive isomorphism, which describes adaptation coming from statutory changes, 2) Mimetic
isomorphism, stemming from a situation of uncertainty and a need to imitate successes, and 3) Normative
isomorphism, referring to professionalization processes and power thereof to define conditions and values
(DiMaggio and Powell 1991).
Hypothesis: The need for legitimization makes the foundations adopt the prescriptions of strategy in a ceremonial
manner, simultaneously preventing real strategic work.
A third explanation finds support in classical institutional theory and the argument of formal-legal framework for
determining institutional development (Selznick 1957; Selznick 1996; Stinchcombe 1997; Scott 2001; Rhodes 2006).
Rhodes point out that the position as successor that the “new institutionalism” holds to the “old institutionalism”,
is taken for granted and that the formal-legal analysis is still alive (Rhodes 2006). The early institutional analysis was
grounded in constitutional law and moral philosophy. Attention was given to legal frameworks and administrative
arrangements, and the underlying tone of the work was normative (Scott 2001). Although most of the early
13
institutionalists underlined the normative and moral aspects of institutional analysis, Eckstein (in Scott 2001)
promotes a positivist approach with a great emphasis on formal political institutions, charters, legal codes and
administrative rules. It is positivist in the sense that he relies heavily on the hard facts of legal codes (Scott 2001:7).
The general view of the classical institutional approach is conservative in the sense that it emphasises origin and
preservation of values rather than change (Scott 2001; Rhodes 2006). Scott (2001) refers to an influential work by
Robert Merton “Bureaucratic structure and personality”, depicting an organizational process leading officials to be
rule-oriented “to the point where primarily concern with conformity to the rules interferes with the achievements
of the purpose of the organization”. A result of this situation is rigidity and bureaucratic deadlock. Selznick provides
a view on institutionalism as a process that is shaped by the social system within the organisation and over time is
“infused with value”. By internalising these values the organisation takes on its specific features and identity. An
important element in this view is that Selznick emphasises that a vital role of leadership in this institutional setting
is to define and defend these values (Selznick 1957). Stinchcombe elaborated the element of preservation of
values, to incorporate the elements of power; values are preserved if those holding them possess and retain
power, and that institutionalisation implies stability over time (Stinchcombe 1997; Scott 2001). Later Selznick
accentuated a need to reconcile the “old” and the “new” approaches (Selznick 1996), but his point made about the
pervasive theme in “new” institutionalism; the prevalence of incoherence in complex organizations and the loose
coupling in open systems, contrasting the “old” approach with the core idea of organisations as devices for
achieving specific goals, is useful to underline the explanatory strength of the classical institutional theory in this
case. Defining features of the old institutionalism according to Scott (2001) and Rhodes (2006):
-
Preoccupation with formal structures and legal systems
-
Organisations regarded as completed products, emphasis on original objectives instead of change
-
Historical reconstruction, with more attention to normative principles than formulation of testable
propositions
-
Rules are prescriptions; behaviour occurs because of a particular rule
In this view, the foundations reproduce traditional practice, through relying unilaterally on the legal framework and
the formal objectives embedded in the statutes.
Hypothesis: The formal frameworks prevent the foundations from exploring the potential of their objectives, hence
displacing the need for adopting appropriate strategic orientation.
14
Discussion and conclusion
The empirical material indicates a low degree of strategic orientation, whereas only two foundations in this study
comply with the so-called “strategy-paradigm”.
The first hypothesis related to size and competence seems not to have explanatory strength, because the findings
suggest that there are no significant variations in relative size or organizational capacity. There is no evidence
suggesting that the foundations have too weak organizational capacity. Moreover, the foundations mainly fit the
mechanistic structure, reflecting a stable environment and simple structure, thus implying a non-dynamic
organization and tied to formalistic activities, thus indicating that this is not the explanation for not adopting the
strategy-paradigm.
The second hypothesis neither has much explanatory strength, because the interviews reveal little awareness at all
to a conformity pressure or what might be an expectation of adjusting to external norms, regarding strategic work.
There is however, a vague indication of some sort of “myth” among the foundations as they, after all tend to speak
about strategy. This understanding of strategy is not based on the definitions of strategy applied in this study.
Moreover, this can be attributed to a more general tendency of a fuzzy use of the term “strategy”. Also, the
findings show an apparent absence of isomorphic motivations, as the need for strengthening their legitimacy has
little relevance. This is to some extent surprising when comparing this to what seems to be the case in a European
or American context.
The third hypothesis stands out with more explanatory strength. From the classical institutional perspective, the
majority of foundations in this study adhere to a conservative mode of operation, leading to preservation of values
and in effect a resistance to change. The clear absence of anything resembling the “strategy-paradigm” seems to be
connected to a non-reflection about ways to arrange their work, in order to be an effective organization as to reach
their objectives. In this view, the foundations reproduce traditional practice, through relying unilaterally on the
legal framework and the formal objectives embedded in the statutes. The law emphasizes the original objectives
very strongly, of which protects the whole idea and intention of the foundation as an organizational structure.
However, in some cases this feature can be pushed to a point that in effect creates a counter-achievement of the
objective. An additional support for this explanation is that the institutional environment for foundations in Norway
have been structured upon the political hegemony of a social-democratic regime (Lorentzen 2004; Anheier and
Daly 2007), leading to a context of constraining institutional development, in terms of change and adopting new
thinking.
The foundations that were found to have adopted the so-called “strategy-paradigm” show the exact opposite
qualities. Contrary to the largest group of foundations in the study, they show reflection and deliberation on their
own role, which involves to bring them to the “out-side” world. Their activity and attitude contribute to lift them
15
beyond the borders of their formal objectives and generally reflects the term “change” to a much greater extent
than “preservation”.
The “strategy-paradigm” has to a large part been dominated by a rationalist conceptual framework. However,
looking closer at the debate reveals that parts of it have moved towards a stronger focus on social dynamics and
human capacities, thus widening the scope for adaptation to a broader specter of organizations. This illuminates
new possibilities for adjusting strategic orientation to organizational peculiarities and different institutional
settings. My main argument in this study, and answers to my research questions can be summarized in the
following two points:
1) The “strategy-paradigm”, the way it traditionally has been focused in economic and rational terms, have
not been sufficiently adjusted to peculiar organizations like grant-making foundations, at least not in all
institutional contexts.
2) The formal institutional structure offers one explanation for the reluctant and passive foundations in
Norway, of which stimulates traditional reproduction and obstructs creativity. Formal structures affect the
foundations to neglect their scope of action.
This study is not adequate to make solid conclusions, and the above reflections are suggestions for parts of the
explanatory picture. An important part of the study is to illuminate the debate on strategy in order to expand the
usefulness and to question it. After suggesting that the institutional structures and formal rules obstruct a proactive
foundation sector together with the non-fitting strategic recipes, make the next question importunate; what makes
some foundations, as shown in this study and despite the institutional structure, end up with a proactive
orientation anyway? Will the social dimensions contribute to shed light on this question? Another question that
needs to be answered is how this appears in other countries, whereas the Nordic context is especially interesting.
16
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