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Capacity Building

How Is Nonprofit Overhead Still a Thing?

nonprofit overheadLest you think we’ve made headway on overcoming the Overhead Myth (the false notion that nonprofits must keep their fundraising and administrative costs cripplingly low) you need only look as far as a recent Forbes article, “5 Nonprofit Leaders Share How to Keep Overhead Costs to a Minimum.” And this is perhaps even worse because it is nonprofit leaders themselves, not philanthropists or business leaders, telling nonprofit leaders that overhead is bad.

The Forbes Nonprofit Council made up of “top nonprofit execs [who] offer insights on nonprofit leadership & trends” compiled these 5 “tips” for keeping nonprofit overhead low. And the tips are as insidious as you might think. I know I should take the high road and just ignore this ridiculous article, but I simply can’t. In fact, it boggles my mind that overhead (to borrow a phrase from the brilliant John Oliver) is still a thing.

The Forbes article neglects to point out that the concept of “nonprofit overhead” has undergone a real transformation in the past few years. It assumes that “overhead” is still a dirty word, but anyone who has been paying attention knows that that is no longer a given.

There has been a movement among nonprofits and their philanthropic and government funders to evaluate nonprofits based on their results, rather than just their overhead rate. The federal government and some local governments have moved to increase the indirect costs paid to nonprofits. And just last month a new Bridgespan study analyzed the indirect costs of 20 different nonprofit organizations and found, not surprisingly, that overhead rates vary greatly depending on the business model and industry of a given organization (just as it does in the for-profit sector).

So for the Forbes article to simply encourage nonprofits to keep their overhead as low as possible ignores the changes that have occurred in the sector and the very real fact that different organizations, business models and issue areas might require very different administrative and fundraising costs.

But beyond those huge oversights, the Forbes article does a further disservice to the nonprofit sector by providing 5 ridiculous and crippling “tips” for keeping overhead low. Here’s why each one is so wrong:

  1. “Look for Low-Cost IT Options”
    To the contrary, I would say that many nonprofits don’t spend enough on IT. So often nonprofit leaders are using outdated technology and systems, or worse, not gathering data at all because they simply don’t have the funds. Nonprofits need to spend more, not less, on IT.

  2. “Don’t Overwork Your Team”
    Seriously? Isn’t overwork simply a given in the nonprofit sector? Because nonprofit leaders often don’t have the funds to hire enough staff, they ask the staff they do have to wear too many hats. The solution is not to tell nonprofit leaders to stop overworking their team. Rather nonprofit leaders must raise the funds necessary to fully staff the work. And that means we need more money in the sector for capacity building.

  3. “Reward Innovation”
    The Forbes article advises nonprofit leaders to “create a culture that rewards innovation and encourages employees to be scrappy.” Certainly on this point nonprofits already win in spades — nonprofits are nothing if not scrappy. But I’m not sure scrappiness and innovation go hand in hand. It’s hard to be innovative when you are worried the doors may close tomorrow. Innovation comes with more capacity capital — once nonprofits have the tools, systems and people they need, innovation can follow.

  4. “Maintain a Clear Business Methodology”
    And here’s where Forbes falls back on the old stand by — nonprofits need to act more like businesses. But what clear business methodology advises undercutting the sales function (fundraising in the nonprofit sector), systems, and staffing? Why do we choose only some of the ways we want nonprofits to “be like businesses,” but ignore others? No successful business leader will tell you that is a smart strategy.

  5. “Invest in Community Leaders”
    The Forbes “experts” encourage nonprofit leaders to hire more volunteers, students and interns in order to save on staff costs. NOOOOOO! If we are truly going to solve the challenges we face, we need more experts, not fewer. While volunteers and students are great for rote tasks, that only gets you so far. Nonprofits need expert fundraisers, brilliant program people, IT geniuses and more. We don’t encourage Silicon Valley to hire more volunteers and interns to create the next tech solution, so why tell nonprofit leaders to hire more volunteers and interns to create the next social solution?

Can we please, please, please move beyond this broken and damaging view of nonprofits? We would never ask the makers of the next shiny widget to cut their sales, staff and systems to the bone. So let’s not demand that of those working to save the world.

Instead, let’s have a smarter conversation about how social change leaders must ask for (and receive!) the tools they really need to make our world a better place.

If you want to learn more about raising capacity capital to strengthen your nonprofit, check out the Launch a Capacity Capital Campaign Guide and the Power of Capacity Capital book.

Photo Credit: Adrian

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10 Great Social Innovation Reads: May 2016

social change

May offered some interesting insights into the world of social change. From a plea by nonprofit infrastructure groups for more funding, to some criticisms of philanthropy’s unwillingness to invest in rural economies or provide a realistic runway to nonprofits, to digital’s impact on journalism, to the evolving sharing economy, to a call for more nonprofit board resignations, to a way to break the nonprofit starvation cycle, there was a lot to read.

Below are my picks of the 10 best reads in the world of social change in May. But you can always follow me on Twitter (@nedgington) for a longer list.

And if you are interested in past months’ 10 Great Reads lists, go here.

  1. Perhaps the biggest news of the month was the letter written by 22 groups, which provide support to the entire sector (like the National Council of Nonprofits, the Nonprofit Finance Fund, and GuideStar), asking foundations to provide more funding for the nonprofit ecosystem. GuideStar CEO Jacob Harold (here) and National Council of Nonprofits CEO Tim Delaney (here and here) explain why this issue is so important.  But Pablo Eisenberg disagrees.

  2. National Committee for Responsive Philanthropy Executive Director Aaron Dorfman takes philanthropy to task for not investing enough in rural communities, where change is needed most. As he puts it: “The philanthropic sector continues to neglect rural communities. A changing national economy, entrenched racial inequity and foundations’ reliance on a strict interpretation of strategic philanthropy has meant philanthropic resources for rural communities are few and far between, just when the opportunities for change are most urgent. This has to change if we want to see progress on the issues we all care about.”

  3. Piling on to the criticism of philanthropy, Laurie Michaels and Maya Winkelstein from Open Road Alliance, encourage their fellow philanthropists to help nonprofits deal with risk and disruption. As they put it: “Most grant budgets are designed with zero cushion even when the nonprofit is working in tough conditions that can turn the simplest obstacle into an unmanageable issue…any unexpected but inevitable change or deviation in the budget is potentially catastrophic. The nonprofit’s inability to fluidly adapt the budget to manage these roadblocks, however minor, can jeopardize even the largest of undertakings…Risks alone are threatening, but when the concept of risk goes unacknowledged, undiscussed, and unaddressed, those risks are more likely to become realities. All this adds up to lower impact, turning manageable events into liabilities.”

  4. Maybe female philanthropists can turn the tide. The Lilly Family School of Philanthropy released some fascinating new research about how women are changing philanthropy. And Megan O’Neil, writing in The Chronicle of Philanthropy, explains how nonprofits must adapt in order to tap into this growing philanthropic force.

  5. Journalism is changing rapidly, due in part to the growth of digital. Research shows that different social media platforms connect people to news in different ways, and long-form journalism is seeing a resurgence thanks to mobile.

  6. And it’s not just journalism that digital is changing. The Nonprofit Tech for Good blog offers 16 Must-Know Stats About Online Fundraising and Social Media and 5 Ways the Internet of Things Will Transform Fundraising.

  7. The growth of the “sharing economy”, where consumers rent or borrow goods and services rather than buy them, has huge implications for the social change sector. Pew Research outlines 8 key findings about how Americans relate to the sharing economy and interviews NYU professor Arun Sundararajan about how the sharing economy is evolving.

  8. Nonprofit Law blogger Gene Takagi pulls no punches in offering 12 Reasons Why You Should Gracefully Resign from a Nonprofit Board. Yes, yes, yes, to more accountability, honest conversations, and clear expectations on nonprofit boards.

  9. Writing in the Stanford Social Innovation Review,  Jeri Eckhart-Queenan, Michael Etzel, and Sridhar Prasad discuss the findings of a new Bridgespan Group study that analyzed the indirect costs of 20 different nonprofit organizations. What they found, not surprisingly, is that indirect rates vary greatly depending on the business model and industry of a given organization (just as it does in the for-profit sector).  The authors argue that if more nonprofits understand and report their true costs, nonprofits could break the starvation cycle: “It’s clear that philanthropy’s prevailing 15 percent indirect cost reimbursement policy does not take into account the wide variation in costs from segment to segment. Doing so would have far-reaching effects on philanthropy and grantees. If nonprofits committed to understanding their true cost of operations and funders shifted to paying grantees what it takes to get the job done, the starvation cycle would end.”

  10. A nonprofit dashboard is a good way to monitor and report on a nonprofit’s effectiveness and sustainability over time. Hilda Polanco, CEO of FMA, explains how to create a great one.

Photo Credit: Omarfaruquepro

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Is Your Frustrating Board a Symptom of a Larger Problem?

nonprofit board frustrationOne of the biggest complaints I hear from nonprofit leaders is that their board is not working well enough for them — most often around fundraising. From board members who are largely in name only, to others who refuse to fundraise, to those who meddle or micromanage, to those who don’t understand the organization or its programs, there can be a large list of grievances that nonprofit leaders have about their board. So nonprofit leaders often look for a magic bullet to get their board in gear.

Just last week a nonprofit leader approached me seeking help getting her board engaged. She thought that if she hired a consultant to rewrite their board by-laws and rework the board committee structure, all would be well.

But it just isn’t that simple.

An ineffective board is often just a symptom of a larger problem at your nonprofit. And while nonprofit boards can be incredibly frustrating, it is often not their fault that they aren’t working harder for you.

If you are frustrated with your board, ask these questions to uncover the larger issues at play:

Do We Have a Compelling Case?
You simply cannot get people excited to help further your nonprofit’s cause if they don’t fully understand and embrace that cause. Have you had a conversation with your board about why your nonprofit does the work it does? Have you articulated together your nonprofit’s Theory of Change? Have you involved your board in creating your nonprofit’s Case for Investment? It surprises me how often I see nonprofit leaders leaving these critical and investing conversations at the staff level. The number one way to get your board excited about your work is to get them involved in articulating to others why that work is so critical.

Do We Have a Long-Term Strategy?
But it’s not enough to articulate what you hope to accomplish as a nonprofit, you also need to create a strategy for bringing those goals to fruition. You must involve your full board in your nonprofit’s overall strategy. They must buy in at the ground level to the goals of your strategic plan. And then the board must be in charge, as is their true leadership role, in  monitoring in their ongoing board meetings whether those goals are actually being realized. Give your board the opportunity to create and then drive the overall organizational strategy, and then see how they start to come alive.

Do We Have Clear Board Responsibilities?
And they will truly come to life when they understand how each of them individually can and must contribute to bringing that larger strategy to fruition. You simply cannot expect a board to engage when they don’t understand how and where they can be helpful. Give the overall board specific goals and responsibilities and then talk one-on-one with each individual board member to determine together where their unique skills and experience can be brought to bear on the larger strategy. With a clear roadmap for how they can help, you will see your board start to pick up the pace.  

Do We Have the Wrong Board Members?
However, you may find that some of your board members are simply taking up space. It may be that some are disengaged because they simply don’t have the skills, experience and networks necessary to achieve your goals. That’s why you have to do the analysis and look at every single board member against the skills, experience and networks you need to deliver on your strategic plan. Please, please, please don’t fall for the temptation of filling your board with warm bodies. Make sure that you are recruiting the type of board members that you truly need to deliver on your organization’s strategy.

Are We Afraid of Asking For What We Really Need?
Nonprofit leaders sometimes fear their board members as much as they fear their donors. Rather than insisting their board members step up to the plate and effectively contribute their time, energy, and resources, nonprofit leaders may be overly grateful for ineffective board members. But when you operate under that dysfunctional power imbalance, you are setting the bar incredibly low for your board. And when a person is confronted with a low bar, there is nothing compelling him to get engaged and get working. So be very clear with your board members about what you want from them, and then be equally clear when they aren’t delivering. There is a nice way to tell a board member that you need more from her. And if she isn’t willing, then it is probably best that she walk away and leave room for more effective board members.

If you are fed up with your board, use frustration as an opportunity to dig deeper to figure out what is really causing their uselessness. And if you need some help to get there, check out the nonprofit leader coaching I provide.

Photo Credit: Peter Alfred Hess

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Where Does Your Nonprofit Fit In the Market?

nonprofit puzzleAs much as we might like to deny it, nonprofits exist in a market economy, which means that nonprofits, like everything else, must compete for customers and resources. Therefore it is critical that you understand where your nonprofit fits in the market.

While a business has one customer, a nonprofit has at least two distinct customer groups:

  1. Those who benefit from a nonprofit’s work (clients), and

  2. Those who fund that work (donors, government contractors, etc).

So it is absolutely critical that nonprofit leaders understand what unique value their work brings to these customers. This can be done through a Marketplace Map, which is one of the first exercises (along with a Theory of Change) that I help nonprofit leaders create during a strategic planning process.

A nonprofit organization is best positioned to create social change in a sustainable way when their core competencies (what the organization does better than anyone else) intersects with a community need (or set of social problems) apart from their competitors or collaborators, like this:

Marketplace Map

 

But don’t get me wrong. I am not saying that a nonprofit shouldn’t collaborate.

On the contrary, nonprofit leaders must forge strategic alliances that help move the social change they envision forward. However, when they create those alliances, they must be crystal clear about what their organization brings to the table, versus what a potential ally brings to the table. Thus, a marketplace mapping exercise is absolutely critical to charting a way forward.

In order to create their marketplace map, a nonprofit’s board and staff must answer these three key questions:

  1. Core Competencies: What superior assets (expertise, relationships, etc.) do we possess as an organization that are not easily replicable?

  2. Community Needs: What community needs/social problems are we attempting to address?

  3. Competitors/Collaborators: What other entities are working on some/all of those same problems?

The social change sector has become increasingly competitive in recent years. Now more than ever, nonprofits need to understand this external marketplace of competitors/collaborators against their own core competencies in order to understand the unique value that their nonprofit can contribute.

From this marketplace mapping exercise, some key strategic questions will emerge for the nonprofit, such as:

  • Where do our core competencies and activities end, and where do others’ begin?
  • Is our nonprofit better positioned than other entities to conduct all of the activities (from our Theory of Change) that we currently do? Should some activities be left to those who do it better?
  • Are there core competencies that we must develop in order to better address the community needs we’ve identified?
  • Are there collaborators/competitors that we should be more strategic about aligning with?

Creating a Marketplace Map, much like creating a Theory of Change, is an incredibly useful exercise that gets your board and staff thinking in bigger, more strategic ways about your work. And those more strategic conversations can help lead to a more effective and sustainable path forward.

If you want to learn more about how I work with clients to develop their strategic plan, download the Strategic Plan benefit sheet.

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A Summer To Do List for Nonprofit Leaders

nonprofit summerMemorial Day is almost here, and in my mind that means so is the beginning of summer. While work surely carries on over the summer months, for many of us there tends to be more space to reflect, recharge, and reconnect with your core.

But you have to make time for it.

Sometimes nonprofit leaders will tell me that they love the slower pace of summer because it means they can catch up on their to do list, move paperwork off their desk, make progress on their filing, get more organized.

Ugh!

Let me tell you right now that your to do list will never be complete, so instead, make better use of the space summer provides by taking a big step back and getting inspired for the work ahead.

Here are some tasks I suggest you put at the top of your to do list this summer:

Get Quiet
Before you can do anything else, you need to step out of the rat race for a bit and listen to the silence. There you can reconnect with your core, ponder some bigger questions, figure out what you are meant to do. Maybe you need to take a trip away from your normal routine and the many demands on your time. Maybe you need to find a space to just be. Maybe you need to find activities that are outside of your job, because remember that you are so much more than the leader of a nonprofit organization. However and wherever you do it, you have to make some time to journey inside.

Find Inspiration Again
I know as a nonprofit leader you are (or at least once were) inspired by the work you do. Passion and commitment to mission are often what define a social change leader. But that source of inspiration is not endless. And the day-to-day drudgery of trying to move mountains can wear you down and make that light grow dim. When that happens you have to seek inspiration elsewhere. The world we live in is endlessly inspiring, so when you are feeling that your vision is impossibly narrow, get outside your walls. We must give ourselves permission to reconnect with what makes us human, not machine. But if you simply cannot figure out what will inspire you, go back to the first item and get quiet enough, long enough to figure it out.

Ask Some Big Questions
Once you have found quiet and inspiration you will then have the capacity to figure out what’s next. Nonprofit leaders are so busy with the day-to-day that they often find themselves disconnected from the big picture. Why are you doing this work? What are your ultimate goals? Who is your target audience? Take advantage of the mental space summer provides to ask yourself and your board some of the big questions that can help you recommit to the work and more easily attract the other people and resources necessary for the next chapter.

Figure Out What’s In Your Way
If you are like most nonprofit leaders, you are so accustomed to scraping by without the necessary tools, staff, systems to do your job that you rarely take a big step back and ask, “What do we really need to accomplish our goals?” Take some time to figure out the things that drive you and your staff crazy. What are the hurdles standing in your way of doing more? An ineffective board? A lack of strategy? Not enough money? The wrong technology? Not enough staff? Create a list of what you really need to do the work, put it in front of your board and ask them to help put together a capacity building plan.

Forgive Yourself
Man, are social change leaders hard on themselves. Apparently it’s not enough to work on saving the world, but you have to continually berate yourself for not doing it quickly enough, or well enough. So get over it. You are doing the best you can with what you have. Give yourself a break and you will find that without a bully constantly breathing down your neck you can accomplish much more. Take that knowledge with you into the fall, and you may just be transformed.

This summer, step outside the routine and commit to a real break that allows you the physical, mental and spiritual space that you as a social change leader so desperately need. Happy Summer!

Photo Credit: Unsplash 

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Performance Management for Every Nonprofit: An Interview With Isaac Castillo

Castillo_IsaacIn today’s Social Velocity interview, I’m talking with Isaac Castillo, Director of Outcomes, Assessment, and Learning at Venture Philanthropy Partners, where he leads VPP’s approach to data collection, data reporting, and outcome measurement.

Prior to coming to VPP, Isaac served as the Deputy Director for the DC Promise Neighborhood Initiative (DCPNI).  At DCPNI, Isaac led efforts to improve outcomes in the Kenilworth-Parkside community in Ward 7 of the District of Columbia through the strategic coordination of programmatic solutions and research-based strategies. Prior to his time at DCPNI, Isaac served as a Senior Research Scientist at Child Trends where he worked with nonprofits throughout the United States on the development and modification of performance management systems and evaluation designs. In addition, Isaac was also the Director of Learning and Evaluation for the Latin American Youth Center (LAYC) where he led the organization’s evaluation and performance management work.

You can read interviews with other social change leaders here.

Nell: You have spent your career using data to improve the performance of the nonprofits for which you worked. Why do you think performance management is so important for nonprofits? Do you think all nonprofits should pursue performance management? When does it make sense and when doesn’t it?

Isaac: I believe that every nonprofit should pursue some form of performance management because they owe it to the clients they serve. Most nonprofits will assume that they are making a positive difference in people’s lives, but in the vast majority of cases they are just guessing. Using some form of performance management will allow every nonprofit organization to confirm this thinking and to identify areas that can and should be improved so that the next cohort of participants can get better services than the last.

Unfortunately, one of the greatest challenges preventing a nonprofit from implementing some form of performance management isn’t a lack of resources, expertise, or time. It is fear. The fear that they will find out that their work isn’t having a positive effect. This fear is what nonprofit leaders need to overcome, not for the benefit of themselves or their organization, but because they owe it to the clients they serve today and the clients they will serve in the future. I believe that every nonprofit should strive to serve tomorrow’s clients better than today’s clients, and one of the only ways to ensure that this happens is the sustained use of performance management.

The type of performance management that each nonprofit should pursue should vary by the size and scope of their work. At a minimum, small nonprofits should be tracking basic demographic and attendance information on their participants, and hopefully at least one meaningful output or outcome. Whether this occurs in a computerized system or in a spiral paper notebook is up to the nonprofit. But it doesn’t have to be costly, and it doesn’t take expertise. It only takes the will and desire to improve as a nonprofit.

Nell: In the nonprofits in which you’ve worked how have you been able to secure resources to fund performance management? What is the case you and your colleagues have made to funders and what do you think it will take to get more funders investing in performance management?

Isaac: Raising funding for performance management work usually takes a mix of several different strategies and approaches for potential and existing funders.

First, I strongly encourage nonprofits to include some percentage (1 to 5 percent – possibly more) of funding in each grant submission or proposal dedicated to supporting performance management and outcome measurement work. By placing this small percentage into each proposal, a nonprofit can begin to raise funds for internal evaluation and performance management activities. It may not seem like a lot, but it can add up, and eventually generate enough funds for a half-time or full-time position to support in-house performance management work.

Second, I also strongly encourage nonprofits to engage in regular ‘funder education’ – where a nonprofit proactively meets with their funders to have ongoing conversations about outcome measurement and evaluation. This allows both the funder and the nonprofit to come to agreement on measurement expectations and to ensure that both groups are focused on the same concepts. I often suggest that the first of these types of meetings focuses on each group’s definitions of three commonly misunderstood terms: outputs, outcomes, and impact.

Finally, I would recommend that the nonprofit and funder have an honest discussion regarding expectations of results and the funding necessary to support the related evaluation work. If a funder is expecting an random control trial (RCT) to be completed to determine ‘impact,’ then the nonprofit should be willing to push the funder to support a large investment to pay for a high quality evaluation. If the funder is only willing to support a small amount for outcome measurement, then the nonprofit should clearly articulate what is possible.

Nell: Ken Berger and Caroline Fiennes recently argued that we may have gone too far by asking nonprofits to produce research about their own outcomes. What’s your response to that argument?

Isaac: I fully support Ken and Caroline in their argument that most nonprofits should stay away from trying to produce impact research. The desire for ‘impact’ is something that has been (and continues to be) pushed unfairly (and without financial support) by the funding community.

I honestly think a lot of confusion in this space comes from inconsistent use and understanding of the term ‘impact’. The term ‘impact’ has a precise definition among researchers but is often used in a much broader context among funders, nonprofits, and the general public. In the research and evaluation world, impact is used to describe the effectiveness of a program while eliminating as many potential confounding factors as possible. That is why the use of random control trials (RCTs) is usually the cornerstone of impact research – RCTs are the easiest way to control for and eliminate confounding factors.

When most non-researchers use the term ‘impact’ however, they are usually just asking if the program or organization works and if it is making a difference for its intended service population. That is a much lower bar to set, and yet it is a critical distinction in this discussion. If you are thinking about ‘impact’ as a researcher, you will need a large amount of resources and expertise to determine ‘impact,’ which usually means completing one or more formal evaluations. If you are thinking about ‘impact’ in the more general sense and less strict way, then pursuing some form of performance management system will allow a nonprofit to determine if their efforts have been successful.

I do think every nonprofit should pursue some form of performance management to ensure that their work is having a positive effect as a complement to existing research that others have done. Relying only on the use of others’ research does not guarantee that a nonprofit will provide effective services and achieve positive outcomes. This type of research is a like a recipe – it shows what has worked in the past and provides a guide for the nonprofit – but a recipe can still be ruined with poor implementation or planning.

Every nonprofit has an obligation to the people they serve (and not to their funders) to ensure that their programming is having a positive effect (or at the very least not causing harm). Without some form of performance management system in place (even one that just uses paper and pencil), a nonprofit will never know if they have strayed too far from the recipe provided by previous research.

I also think there are a growing number of very sophisticated nonprofits that should be using AND producing research on effective programs. Every year, I see more and more nonprofits that hire talented and unbiased researchers dedicated to internal evaluation and outcome measurement work. These individuals are just as talented and unbiased as their colleagues working in traditional research and evaluation organizations. They can, and should, produce original research that can help inform the nonprofit field. The real challenge comes in nonprofit organizations finding the resources to support the hiring and retention of these individuals. Not every nonprofit will have the resources or capacity to hire one or more of these individuals – but those that do should absolutely be trying to produce original outcome and impact research to provide ‘recipes’ for effective programming that nonprofits with fewer resources can use in the future.

Nell: Your former organization, DC Promise Neighborhoods, is part of the national Promise Neighborhoods Initiative launched by the US Department of Education in 2010 and modeled after the famous Harlem Children’s Zone. How successful has this national replication of a successful local model been? Have you been able to replicate outcomes? And what hurdles, if any, have you and other replication sites found?

Isaac: I think that there has been some initial success among the Promise Neighborhoods. Part of the challenge that all the Promise Neighborhoods face is that the Harlem Children’s Zone did not achieve their success overnight. They have been working in Harlem for decades, so it would be unrealistic to believe that the Promise Neighborhoods would be able to create large scale change in a matter of a few years.

However, there are signs of progress across all of the Promise Neighborhoods. Each of the Promise Neighborhoods started to address a few outcomes with the initial round of funding, and these outcomes varied. Some focused on math and reading proficiency for students, some focused on obtaining medical homes for young children, and others sought to increase the amount of healthy food consumed by residents. In DC, we focused on improving school attendance.

I do think that most of the 12 Promise Neighborhood Implementation grantees were able to make progress on the outcomes they identified as initial focus areas. However, the very nature of the work (creating community level change) doesn’t lend itself to the rapid accomplishment of multiple outcomes in a short period of time. Each of the Promise Neighborhoods had to prioritize certain outcomes for their respective communities, and only several years later are they able to claim success and begin to identify the next set of outcomes to be addressed. So while certain outcomes haven’t necessarily been replicated across all the Promise Neighborhoods, that is due to the differences in priorities and community conditions rather than any problem with the model itself.

Photo Credit: Venture Philanthropy Partners

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What Will Be Philanthropy’s Next Chapter?

antique-typewriter-keysI am often asked by nonprofit leaders, “Where are the funders who understand what nonprofits really need?” Well, they were at the Grantmakers for Effective Organizations conference (#2016GEO) last week in Minneapolis.

After attending the conference and curating a great group of bloggers who recapped each day (you can read Phil Buchanan’s Day 1 post here, Trista Harris’ Day 2 post here, and Mae Hong’s Day 3 post here), I have lots of my own thoughts percolating and wanted to share my takeaways from a great conference.

GEO is made up of 500+ member foundations that strive to be better philanthropists. They are a thoughtful bunch who seek to invest better in the nonprofits leading social change. As Linda Baker from the David and Lucile Packard Foundation said in her session on Real Costs for Real Outcomes, “We want to have authentic, trusting relationships with our grantees. We want them to have the impact they want to have in the world because that’s the only way we will have impact. It’s critical to our success.”

And that, in essence, is what GEO and its member foundations are all about. They view themselves and their money in service to those nonprofits creating social change. It is a different model than the traditional philanthropic model of nonprofits in supplication to those who hold the purse strings.

And because GEO is on the cutting edge of where philanthropy is and should be going, the conference this week encouraged philanthropists to push their work in some exciting new directions.

Here is what I saw emerging at the conference:

 

GEO panelPhilanthropy Must Embrace the National Call for Equity
From the #BlackLivesMatter movement, to student protests on college campuses, there is a growing demand across the country for equity — a level playing field — for all. And philanthropy has to get better at responding to this in the moment. As Alicia Garza founder of the #BlackLivesMatter movement said in her session, “Philanthropy is missing the opportunity to support the very change they are set up to resource.”

And the plenary panelists Peggy Flanagan, Michael McAfee, Doug Stamm and Starsky Wilson would perhaps agree and take it even further, encouraging philanthropist to re-examine the institutional racism inherent in the system. As Michael McAfee said, “I am deeply frustrated at our leadership. At the moment where consciousness about equity is elevated, we shift our priorities, our initiative, we do something to avoid the real work for this moment. We could do something if we could be more courageous.” In this moment where our country is grappling with issues of equity, philanthropy must step up and invest in the hard work of change.

 

grantmaking

Philanthropy Must Invest in Stronger Organizations

GEO members have always been on the forefront of understanding that it takes strong organizations to create real outcomes, but this conference took that to another level. From a session on unrestricted operating support, to one on supporting fundraising capacity, to one on funding nonprofits’ real costs, GEO was pushing its members, and philanthropy as a whole, to recognize that real change will only come when we support organizations, not just programs.

As one attendee put it, “The project funding paradigm ignores the health of the nonprofit organization in which the project lives.” Yes, absolutely. GEO members are recognizing–and perhaps leading the rest of philanthropy to begin recognizing–that you cannot have effective programs, strong outcomes, and ultimately social change without strong, effective organizations behind them.

And that means that philanthropy can and should lead the way in funding the full costs, including program AND operating costs, along with working capital, fixed assets, reserves, and debt. And at the same time, philanthropy must be a partner with nonprofits in figuring out how to overcome their capacity constraints, like lack of fundraising expertise, lack of management knowledge, and lack of adequate systems and infrastructure.

 

Vu Lee

Philanthropy Must Humble Itself 

There is no doubt that GEO members are a humble bunch; they view their role as supportive to the real work of social change, which is different than traditional philanthropy that viewed itself as all knowing. But, perhaps there is still work to be done.

Vu Lee, blogger from Nonprofit With Balls and Executive Director of Rainier Valley Corps, spoke eloquently of philanthropy’s “trickle down” approach to working with communities of color and encouraged philanthropists to take a better approach: “We have to start changing philanthropy’s perception of what communities of color are. Instead of infantalizing communities of color, recognize that communities have the solution, they are the solution, they are the light.”

And Deepak Bhargava from Center for Community Change spoke of the typical grantor/grantee relationship being similar to a feudal relationship, where the philanthropist is the Lord and the nonprofit is the serf. Instead, he encouraged the social sector to move to a place of “public friendship” between grantor/grantee where both sides are:

  • United by a vision of big change
  • Accountable to each other
  • Thinking of themselves as custodians of organizations leading to a better place
  • Engaging in creative, generative conflict

He spoke of this ideal as something that we must “persuade a new generation of philanthropists is possible.”

And perhaps this new philanthropy is possible. GEO certainly seems to think so. So let’s hope that this new vision for philanthropy is embraced by the growing GEO membership and that that membership in turn leads philanthropy as a whole to a more effective way of investing in social change.

As Alicia Garza put it, “Effective grantmaking is moving resources to change agents AS change is happening and getting out of the way.” Amen!

Photo Credits: publicdomainpictures.net, #2016GEO

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Blogging the Grantmakers for Effective Organizations Conference

GEO conferenceI’m really excited to announce that I will be doing something a little different on the blog next week. I am attending the Grantmakers for Effective Organizations (GEO) conference in Minneapolis May 2nd – 4th, and GEO has asked me to curate a set of bloggers to report on the conference.

I have rounded up a rockstar group of bloggers who will be sharing their insights from the conference with you here on the blog. And the blog series will be reposted to the Minnesota Council on Foundations blog, which is a co-host of the conference.

GEO is made up of 500 member grantmakers who are working to reshape the way philanthropy operates and promote strategies and practices that contribute to grantee success.

The GEO conference is held every other year and brings together philanthropic leaders from across the country who all share a common vision for advancing smarter grantmaking practices that enable nonprofits to grow stronger and more effective.

Some of the sessions in this year’s conference that I am particularly excited about include: “Can Foundations Help Grantees Build Fundraising Capacity?,” “Real Costs, Real Outcomes. What Funders Need to Know,” and “Supporting Leadership Development in Social Justice Organizations.” In addition, there will be some really interesting plenary sessions about things like culture in philanthropy and philanthropy’s role in overcoming inequity.

It promises to be a fascinating conference.

So, starting next Tuesday, May 3rd you’ll be hearing from this great group of guest bloggers:

 

phil buchananPhil Buchanan, President of The Center for Effective Philanthropy 
Phil is a passionate advocate for the importance of philanthropy and the nonprofit sector and deeply committed to the cause of helping foundations to maximize their impact. Hired in 2001 as CEP’s first chief executive, Phil has led the growth of CEP into the leading provider of data and insight on foundation effectiveness. CEP has been widely credited with bringing the voice of grantees and other stakeholders into the foundation boardroom and with contributing to an increased emphasis on clear goals, coherent strategies, disciplined implementation, and relevant performance indicators as the necessary ingredients to maximize foundation effectiveness and impact. Phil is no stranger to the Social Velocity blog — I interviewed him here, and he guest blogged last summer here.

 

trista harrisTrista Harris, President of The Minnesota Council on Foundations
In her role at MCF, Trista helps award more than $1 billion annually. Prior to joining MCF in August 2013, she was executive director of the Headwaters Foundation for Justice in Minneapolis, and she previously served as program officer at Minnesota Philanthropy Partners. Trista earned her master’s of public policy degree from the Humphrey Institute of Public Affairs, University of Minnesota, and her bachelor of arts from Howard University, Washington, D.C. She is a passionate national advocate for the social sector using the tools of futurism to solve our communities’ most pressing challenges and is a member of the trends in family philanthropy task force for the National Committee for Family Philanthropy.

 

mae hongMae Hong, Vice President of Rockefeller Philanthropy Advisors
Mae is responsible for building RPA’s presence in serving individual donors, foundations and corporations throughout the Midwest. Bringing 18 years of nonprofit and philanthropy experience to RPA, she previously served as Program Director at the Field Foundation of Illinois. Mae actively participates in local and national philanthropic associations and networks, serving in leadership roles on committees, engaging in public speaking opportunities, and facilitating planning and execution of philanthropic initiatives. She currently serves on the boards of GEO, the Illinois Humanities Council and the Daystar Center. She is a past chair of the board of Chicago Foundation for Women.

 

And once the conference is over, I will plan to do a wrap-up blog post on my thoughts and insights from the conference.

If you plan to be at the conference, please let me know, I’d love to see you there! And if you can’t make the conference but want to follow the content from afar, follow the Twitter feed at #2016GEO.

Photo Credits: GEO, CEP, MCF, and RPA

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