April 1, 2014Partner Material

William and Flora Hewlett Foundation – Benchmarks for Spending on Evaluation

Federal/ 2014/


IN NOVEMBER 2012’S BOARD MEETING, A QUESTION WAS RAISED ABOUT HOW MUCH THE Foundation should spend each year on evaluation.1 The question was prompted in part by a presentation made earlier, at the September Board Retreat, which laid out our plans to incorporate evaluation planning into the programs’ strategy development process and to be more systematic about using third- party evaluations. These changes, in turn, call upon us to articulate benchmarks for the expected costs of evaluating our grantmaking programs’ progress and outcomes.

Under Paul Brest’s leadership, the Foundation developed a rigorous, nine- step process for designing grantmaking strategies that we call “outcome- focused grantmaking” (OFG).2 While OFG recognizes the importance
of evaluation, the practice remained loosely defined and inconsistently employed until 2012, when the Foundation developed the “evaluation principles and practices” discussed at the September 2012 retreat.

In order usefully to inform ongoing decision making in areas as diverse as performing arts, education, environment, and global development, these principles and practices must be pragmatic and flexible. To support their implementation and ensure consistent, high-quality evaluation across programs, we hired the Foundation’s first evaluation officer in 2013. Programs remain responsible for commissioning their own evaluations, with the evaluation officer providing technical assistance in design, planning, and analysis.

By providing information about what is or is not working, evaluations can improve not only our funding decisions but also the work of our grantees, with whom we share the results and who likewise learn from them. Beyond even this, by providing evidence of success or failure in areas where others also work, evaluations can help to improve practice generally. Who benefits from an evaluation affects how we pay for it. If an evaluation benefits others, whether this be particular grantees or a field generally, it is recognized as a “direct charitable activity” by the IRS and can be budgeted out of grant dollars. If not, it is considered an administrative expense and will be funded from our administrative budget.

In practice, the line between work that has use outside the Foundation and work that is wholly internal is often fuzzy (which means we have some discretion about funding an evaluation from our grant budget or our administrative budget). For present purposes, our focus is on evaluations that at minimum influence and improve our own funding decisions, recognizing that these are sometimes useful to outside actors and regardless of their funding source.