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Governing Social Impact in Philanthropic Foundations 

By Valentin Held

Almost five years ago, I moved to Barcelona for a one-year Master of Finance at ESADE – determined to pursue a business career in consulting. During that year many things happened personally and professionally. I not only met my fiancé, but also began to realize that consulting was not the right step for me. I also learned that my professional interest was more inclined towards organizations with socially oriented (rather than purely economic) goals. While hoping for a professional reason to stay in Barcelona, the opportunity to continue at ESADE for a PhD in management popped up. I did not think twice. Considering my background in finance and my (re)discovered interest in social value creation, I figured it would be a good idea to study impact investing. A few weeks into the PhD I reached out to Lisa Hehenberger, who drove and still is driving social impact research at ESADE, and who became my PhD supervisor. The initial idea for me to study impact investing did not quite work out; however, I got the chance to participate in a research project on the governance of philanthropic foundations, collaborating with Lisa, Leonora Buckland and Cristina Osoro at the ESADE Center For Social Impact (ECSI). This project would form the basis for my dissertation, which I will now turn to. 

My dissertation: How to leverage operative impact evidence for strategic decision making? 

The focal topic of my dissertation is the governance of social impact in philanthropic foundations. Together with Lisa and Ruth Aguilera, we ask: How do boards and managers leverage operative information to assess foundations’ achievement of impact? This question seems relevant from a practical perspective because the assessment of social impact at the strategic level is a pre-condition for impact-driven strategy adaptation, decision making, and monitoring. Yet it is a tricky one, because project staff and managers’ often-intuitive sense for the achievement of impact is hard to aggregate and move up across organizational levels. Together with the ECSI team, we conducted an in-depth qualitative study of six European Philanthropic foundations, speaking with almost 60 board members, senior-managers, staff, and grantees.   

For the academic side of this project, Lisa, Ruth, and I leveraged a multiple-case study design. We found four processes of moving operative information up to the strategic level. These processes vary in terms of the type of impact evidence and decision makers’ level of engagement. We also found that framing information exchange in terms of approval and control can be counterproductive for effectively assessing social impact at the strategic level. Our research found a learning approach to be more effective, while potentially improving the link between strategy and grant-approvals. Put differently, a board coming across as “controller” is in fact less effective in complying with their supervisory duties, than a board perceived as partner and “critical friend”.  A particular challenge in this project is to find the right theoretical angle to show the relevance of our findings to a broader management and organizational research audience.  

The practical implication is for foundations to reconsider the role and design of board meetings. While the discussion is often about “do we have the right type of information?”, our study suggests that the question of “how do we engage with information?” is equally important. Foundation board members typically have very limited time – therefore information exchange ideally motivates and leverages board members’ energy to make the effort of dealing with social impact. While this academic study focused on the issue of information exchange, ECSI’s study on the Governance of Impact provides a more comprehensive picture about the challenge of governing social impact in foundations and provides tools to address them.

My second project originates from a collaboration between ESADE, and the Spanish Association of Foundations. While still at an early stage, Guillermo Casasnovas and I explore how community foundations leverage social capital for social value creation. The motivation for our study is the recognition that systems change is a “hot” topic – but that in fact we know relatively little about how organizations, such as community foundations, address systemic challenges. We use a qualitative, multiple case-study design – and are about to finish the first cycle of data collection and analysis.    

Valentin Held pursues a PhD in Management at ESADE and will soon enter the job-market. Besides his supervisor Lisa Hehenberger he is co-authoring with Ruth Aguilera, and Guillermo Casasnovas on different projects. Throughout his PhD Valentin presented his work at conferences in Austria, Italy, and California. Before pursuing the PhD, Valentin earned a MSc. Finance at ESADE. Currently he is on a visiting stay at Northeastern University. During his undergraduate studies he spent a semester at National Taiwan University, Taipei.