Something pretty exciting is going on. Perhaps I’m an eternal optimist, or I’m suffering from confirmation bias, but it seems to me that more funders are starting to talk about investing in the capacity of nonprofits, particularly around nonprofit leadership development.
The Stanford Social Innovation Review kicked off a new blog series this month focused on the topic. Over the next three months, six foundation leaders will blog about why they have made investments in the leadership development of their nonprofit grantees and what the return on investment has been.
This is phenomenal because the more we talk about and demonstrate the return on investment of nonprofit leadership development, and really of any capacity investments, the more likely we will be to see other funders follow suit.
As Ira Hirschfield, president of the Evelyn and Walter Haas, Jr. Fund, points out in the inaugural post in the new SSIR series, less than 1 percent of overall foundation giving went to leadership development between 1992 and 2011, while the private sector allocates billions of dollars to it.
Why are we not investing in our nonprofit leaders? If we truly want to create change to some of our most pressing social issues don’t we need the strongest, most effective leaders possible?
As Hirschfield puts it so well:
Foundations ask a great deal of the organizations we support…in short, we hope grantees will deliver transformational results for the people and places they serve. So it’s striking how seldom we back that up with funds to help organizations develop and strengthen the ability of their leaders to meet those high expectations. People are not born with everything it takes to manage and motivate a team, build coalitions, and lead change…Leaders who have the opportunity to reflect on their strategies and hone their skills make better choices, develop innovative solutions and forge stronger collaborations. This is what leadership development is about—and to the extent that foundations decide it is important and fund it, then we and our grantees will be better positioned to achieve our goals for impact.
In other words, foundation funding will go further if funders also invest in the leaders of those organizations they fund.
It seems like a no-brainer. And it is a no-brainer in the for-profit world. But as we so often do in the nonprofit sector, we are selling the sector, and its leaders short.
But it is not enough (nor are we anywhere near it anyway) for funders to understand the need for investing in nonprofit leaders. Nonprofit leaders themselves need to stop apologizing and start demanding (in a nice way!) investment in their own capacity. And leadership development is only one of the many areas in which nonprofits need capacity investment. Nonprofits also require fundraising expertise and staffing, program evaluation, technology and systems, and the list goes on.
So if we are to have any hope of moving this topic beyond the blogroll, nonprofit leaders and funders need to start having better conversations about what it will really take to accomplish their joint impact goals. Because if, at the end of the day, we are all looking to achieve more impact, then capacity to deliver on that impact must be part of the conversation.
If you want to learn more about capacity investments from both the nonprofit and funder sides, download the Power of Capacity Capital book, and if you want to learn more about nonprofit leadership, download the Reinventing the Nonprofit Leader book.
Photo Credit: Clinton and Charles Robertson
In this month’s Social Velocity interview, I’m talking with Rick Moyers, vice president for programs and communications at the Meyer Foundation in Washington DC – a regional grantmaker that is nationally recognized for its capacity-building programs. Rick is a co-author of the Daring to Lead 2006 and Daring to Lead 2011 national studies of nonprofit executive directors, and has written and spoken extensively on executive and board leadership. He currently serves on the boards of BoardSource, the Alliance for Nonprofit Management, and the Community Connections Fund of the World Bank Group.
You can read other interviews in the Social Velocity Interview Series here.
Nell: You write a lot about nonprofit boards of directors. As a general rule, because they are volunteers, nonprofit boards tend to be pretty ineffective and disengaged from truly leading their organizations. Can the current structure of nonprofit leadership be made more effective? Or is there a better structure, and if so, how would we undertake such a fundamental shift in the sector?
Rick: We can’t give up on boards just because many boards are ineffective, any more than we can give up on public schools just because so many are struggling. And the fact that board members are volunteers doesn’t necessarily account for their disengagement—some of the most passionate and productive contributors to the nonprofit sector are volunteers.
But just because I’m not ready to give up doesn’t mean we can just keep doing the things we’ve been doing to improve boards, hoping our efforts will produce better results, and wringing our hands when they don’t. We’ve heaped so many expectations and roles onto the backs of boards that I’m not sure it’s possible for any board to fulfill all of them all the time. A good place to start improving things would be to become much more focused and pragmatic about what we expect from boards. A clear set of expectations – one that’s not simply a laundry list of everything we wish boards would do – would be a start. Along with the recognition that organizations need different things from their boards depending on their circumstances.
We need to recruit board members with at least as much thought and effort as we put into recruiting employees, if not even more given that board service is a multi-year and often multi-term commitment. I know board members who have been invited to join the boards of organizations with which they were completely unfamiliar after a 15-minute conversation with the chair of the nominating committee—or a casual lunch with the executive director. And then we wonder why they have a hard time engaging. If we recruited board members as if the job mattered and their selection was an important decision, perhaps they would start taking the job more seriously. We can’t give up on boards without doing a better job of trying to help them function better.
At the same time, there would be enormous value in trying out alternative structures and talking openly about whether they worked any better than the current model. My hunch is that alternatives are being tried out quietly, but we don’t talk about them much. I’d be interested in learning more about very small boards (four or five carefully chosen people), the impact of compensation on board member performance, boards with greater staff representation, and boards that are more democratic and representative of the constituencies and communities being served. I’m not confident in suggesting any of these as an alternative to current practice because I don’t think we know enough. But we don’t know enough because most organizations don’t believe they have permission to experiment (and maybe they don’t). There’s enormous pressure for “normative” behavior in governance, even though we know that normative behavior often produces mediocre results.
I don’t have a good answer for how we break this cycle, but I think we need a “learning lab” for governance practices. We need to be bolder in our experiments, and more open in sharing the results, even when they are unsuccessful.
Nell: The Daring to Lead studies that you co-authored with CompassPoint demonstrate a deep leadership crisis in the nonprofit sector – nonprofit leaders are burned out, planning to leave, and lack support for leadership development. Is more money for leadership development the answer, and if so, how do we get funders to understand the need and fund it?
Rick: More money is the answer, but not necessarily more money for leadership development. My take-away from this body of work is that chronic under-capitalization is at the root of executive director burnout and dissatisfaction. The problem is not just that organizations don’t have enough money for leadership development. They don’t have enough money for anything.
While I applaud funders that invest in leadership development—and the Meyer Foundation is among them—there’s also a danger that funder-driven leadership development programs become simply another demand on already overextended executive directors. Funders need to recognize the importance of leadership development, but also need a keen understanding of the financial and organizational constraints that have a profound impact on executive directors who may already be accomplished leaders. One of the lessons from my foundation’s experience is that large grants for leadership development can be hard to use when executives are facing so many other challenges and distractions, many of which are related to finances and fundraising.
Nell: Why is leadership development taken as a given in the for-profit sector, but taboo in the nonprofit sector? Why do we assume that nonprofit leaders should be able to go it alone? And how do we change that attitude?
Rick: In the for-profit sector, there are more vehicles for ensuring adequate capitalization and leaders have greater discretion over how they can use that capital, with the mandate of producing the greatest return for owners, investors, and shareholders. That said, it’s very telling that so many large companies spend freely on leadership development without questioning the return on investment, while nonprofit leaders are conditioned to question every penny spent on anything other than program delivery. Boards can be especially shortsighted in this regard, under-investing in current executive directors without considering the costs—in money, organizational reputation, and lost momentum—of an untimely transition. We need more evidence, both anecdotal and quantitative, of the ROI for leadership development in the nonprofit sector. Producing that evidence and telling that story will require resources, but I’m concerned that without that investment we’ll never be able to make a convincing case to boards and funders that are increasingly focused on evidence-based approaches.
Nell: Do you think as Millennials age into leadership positions in the nonprofit and philanthropic sectors they will fundamentally change nonprofit leadership? And if so, how?
Rick: While not wanting to sound cranky, I object on principle to making generalizations about a group of 80 million people as if they were a single thing. And as a member of Generation X, I also must point out that we’re the ones who are currently aging into leadership positions. What about us, damn it?
Crankiness aside, as someone who works with younger leaders every day, I have noticed some differences that hold promise for the future. Many in the rising generation are much more socially aware, passionate about social change, and optimistic that they can make a difference than I was at their age. They are choosing careers in the nonprofit sector with more thought and intention than previous generations. The dramatic increase in the number of academic centers and degree programs focused on the nonprofit sector and philanthropy over the past 20 years is producing accomplished young leaders with broad skill sets and considerable insight into nonprofit work.
I do notice a more conscious commitment to work-life balance, and more intentionality around achieving it, which I hope will help reduce burnout and abrupt departures of nonprofit executives. Just within the last six months, I’ve watched three younger executive directors transition out of their jobs because they were seeking greater work-life balance. The difference from what I’ve seen in the past is that these executives decided to leave after successful tenures of more than five years, and after working intentionally to develop a strong board and staff leadership team that could handle the transition. These leaders stepped down before they burned out, and handed off strong organizations that were prepared for the change. That’s very encouraging, and I hope it’s a trend.
A committed and talented cadre of younger leaders is already in the nonprofit leadership pipeline – not by accident, but because they want to be here. Daring to Lead and many other studies have highlighted the challenges inherent in being an executive director, so these younger leaders know what the role entails. And they still want to do it. I think that bodes well for the future, and I’m optimistic.
Photo Credit: Meyer Foundation
Between my own time away from social media in August, the general end of summer quiet, and of course, the glut of posts about the Ice Bucket challenge (of which I have already said my piece), my list of great reads in August is admittedly slim.
But there was some interesting debate, most notably about “strategic philanthropy” and about ratings agency Philanthropedia. Also, calls for more nonprofit leadership development and for nonprofit leaders to get out of their own way by taking the Overhead Pledge. Throw in a little Mark Twain, some sharing economy, and a dash of Millennial analysis and you have a pretty good month in the world of social change.
So below is my pick of the 10 best reads in the world of social innovation in August. For an expanded list you can follow me on Twitter, Facebook, LinkedIn or Google+. And you can see past months’ 10 Great Reads lists here.
- Leadership development is a woefully underfunded need in the nonprofit sector. Indeed from 1992-2011 only $3.5 billion of the nearly $287 billion dollars granted by foundations went to support leadership. In order to get more foundations investing in leadership development, Rusty Stahl offers case studies of 9 foundations who already do.
- In the summer issue of Stanford Social Innovation Review, the lead article “Strategic Philanthropy for a Complex World” caused quite a stir in the philanthropy world with many arguing that there is not much new there. In August, Alliance Magazine ran a series of editorials by philanthropy leaders as counterpoints. Most interesting among them was Avila Kilmurray’s, former director of the Community Foundation of Northern Ireland, response, in which she said “Can we not just recognize that when any funder sets her/himself the task of addressing complex issues…there needs to be provision for continuous consultation, practice, reflection and change?”
- An interesting article in the New York Times paints the Millennial generation as a very communal-minded one, where “the highest value isn’t self-promotion, but its opposite, empathy — an open-minded and -hearted connection to others.” From working, to eating, to shopping it seems Millennials bake social into everything they do. How will the world be different if that holds true as they age?
- Writing in Forbes, Tom Watson asks whether nonprofits should participate in GivingTuesday. As he puts it, “Is #GivingTuesday a well-meaning marketing promotion – or is it a real, organic movement for change?…[Does it] seek to increase U.S. giving from 2% of GDP (where it’s been stuck for two generations) to some higher point?” Amen to that!
- Rating nonprofit effectiveness is such a tricky challenge. Philanthropedia, one rating system that is driven by crowdsourced feedback from experts, comes under fire from the clean water space for being just “a popularity contest.” But others claim it’s an improvement over previous evaluations.
- Writing in the Chronicle of Philanthropy Nicole Wallace shows the value of sharing data by profiling Crisis Text Line, which gives other nonprofits, researchers and government agencies access to their data of 60,000 counseling sessions with teens in crisis to use in their own programs. It begs the question whether other social change data could be shared and how we make that easier to do.
- Sue Dorsey from Water for People was among a group of nonprofit leaders at the InsideNGO conference who took the Overhead Pledge in August, vowing to fully disclose the true costs of their nonprofits. And she encourages other nonprofit leaders to follow suit. This is exciting because it is not enough for funders to get over the overhead myth, nonprofit leaders must as well.
- I am always a sucker for connecting literature and/or history to social change, and even better both, so David Bonbright’s post about how Mark Twain would have viewed recent trends in business is fascinating. Bonbright argues that Twain wanted American business to fully integrate profit and community. And we are beginning to witness this trend again where companies are “embracing the full implications of what they are – what they mean for the environment, for communities, for the most marginalized people affected by their supply chains…[because] this is best way to remain competitive and successful over time.” Let’s hope!
- The new “sharing” economy is not all good, but not all bad either, as Daniel Ben-Horin argues that “there are enormous opportunities for the social sector to engage with the values-driven segment of the sharing economy.”
- Finally, some guidance on making your nonprofit email marketing more mobile friendly and your website better able to connect people to your cause. It’s all about responsive, engaging design.
Photo Credit: Seth Anderson
Note: Fourth in my list of guest bloggers this summer is Jessamyn Lau. Jessamyn is Executive Director of the Peery Foundation, a family foundation that invests in and serves social entrepreneurs. Here is her guest post:
At the Peery Foundation, we’re hungry for insight into what a truly grantee-centric approach to philanthropy looks like. About five months ago we had an idea. What if we could hear regular, brief, unfiltered feedback from our grantees on what we do and how we do it?
We occasionally solicit input from our grantees on delicate questions, like “how should we give feedback to a grant-seeker when we have major concerns about leadership?”. Our grantees have incredible ideas, often helping us solve problems and ensure we incorporate their experience into solutions. But what about capturing their untapped insights into our everyday grant making approach?
This doesn’t generally happen because 1) grantees are rarely asked for their opinions on funder practices, 2) when they are asked, grantee opinions are heavily filtered to prevent potential risk to future funding. We think the Peery Foundation team, and a large proportion of philanthropic professionals, could benefit from regular open feedback from grantees. In a February 2014 Stanford Social Innovation Review article entitled “Assessing Funders’ Performance” Caroline Fiennes suggested listening to grantees as a core part of funder performance assessment. This resonated with our idea of what it means to be truly grantee-centric. So we thought about how we might do that – without reinventing the wheel.
We landed on a very simple anonymous rating tool, similar to the rating systems used by Amazon, Uber, and other service providers. The good folks at Advocate Creative built us a prototype site – which we named, imaginatively, Funder Feedback. It’s a very simple, concise survey that solicits anonymous information from our grantees (or anyone else I interact with), at any time they choose. They rate me out of five stars on three aspects (currently Respectfulness, Consistency, Value), and then leave any feedback for me in a text box. It takes 30 seconds to fill out – 90 seconds if you ponder on what to write in the text box for a minute! Each person on our team has their own survey link, so the results can be used for individual professional development. You can see my survey here.
Over three months the Peery Foundation team and the Tipping Point team piloted the tool, inviting people to give us feedback on our recent interactions. At the end of the pilot our results were delivered to us on a dashboard in aggregate (see below), with no time or date stamps – so unless someone mentioned their organization they are anonymous.
So did it work?
Our team’s response rate ranged from 10 to 40 completed surveys for the pilot. The star rating system yielded average results from 4.7 to 5 stars. Given this clustering it’s clear that the rating system is not a proactive way for us to find out where we need to improve, but could serve as a warning system that will alert us if something needs attention. We could also potentially change the three starred rating topics from values to processes, e.g. “Please rate us out of 5 stars on our due diligence, reporting, and grant making exit processes”. Something to consider down the road.
Over 50% of respondents left us written feedback. The overwhelming majority of feedback was positive and reaffirming. It served as personal affirmation of the aspects of each individual’s approach appreciated by grantees (transparency was mentioned consistently for one team member, another received specific feedback around the value of their preparation for meetings with grantees).
There was also feedback letting us know what we should keep doing as a foundation. For instance, we had several people comment on how valuable warm introductions to other funders had been. This was great to hear because in the past year we’ve allocated significant time to building and maintaining our funder network. We knew this time was useful for us – as we shared pipeline and recommendations with other funders – but knowing that this provides real value to our grantees makes it an even higher priority for us to continue and improve.
What didn’t work?
We would like to receive even more specific and critical feedback. We believe the tool will become truly useful when grantees and others we interact with are clearly invited to give us more constructive opinions. We want to ensure they are comfortable in doing that, which will probably involve tweaking the way we frame the tool, and also building trust that we will truly listen to and implement advice as often as we can.
To solicit distinct feedback, we’ll change the descriptor text on the text box each quarter to give people permission to be specific and critical. For example, next quarter it might say “Please compare the Peery Foundation’s reporting process to that of other foundations you’ve worked with. What can we learn from other processes?”, and the following quarter it might be, “What’s one thing we should keep doing and one thing we should change about the Peery Foundation’s philanthropic approach?”.
Continuing the experiment
At the Peery Foundation we’re accustomed to the process of iteration and, when appropriate, dropping a project that simply isn’t working. We like to experiment. For now, we think we’ve seen enough promise to continue developing the Funder Feedback tool. On an individual level it can help us as philanthropy professionals see where we have room for growth. As a foundation, we know we need insights from our grantees to become truly efficient and effective.
And philanthropy as a field might do well to turn the tables a little, listen regularly to grantees’ insights, and reign in the power imbalance inherent in our work.
So, for now we’ll keep experimenting with the Funder Feedback tool and articulating the changes we’ll make with it to help us become a genuinely grantee-centric foundation.
Photo Credit: Imperial War Museum
A couple of fascinating debates – one about the role of philanthropy in democracy, and one about the value of nonprofit evaluation – were fascinating reads. And I always love a good controversy, so July gladly provided at least two. The much heralded “sharing economy” came under fire and the hype around social impact bonds was called out.
Below are my 10 favorite reads from last month. If you want to see a longer list of great reads, follow me on Twitter, Facebook, LinkedIn or Google+. And you can see past months’ 10 Great Reads lists here.
- There was a really interesting debate on the Markets for Good blog (always a place for thoughtful conversation) between Andrew Means and Patrick Germain about the value of program evaluation and performance measurement in the nonprofit world. Andrew Means kicked it off here and here and Patrick responded here.
- I absolutely love it when someone makes you think about something that you took for granted in a whole new way. Conventional wisdom is that the sharing economy is a democratizing development. But Max Holleran, writing on the OpenDemocracy blog, argues that perhaps it is the complete opposite. As he says, “Our concept of what sharing means has gone from The Gift to the paid-for lift…How we assess public goods has also changed dramatically: urban commons have been ceded to private-public management initiatives.”
- The Hewlett foundation announced a new $50 million initiative to “strengthen representative democracy in the U.S.” And that announcement inspired a thought-provoking back and forth about the role of philanthropy in democracy among Daniel Stid and Larry Kramer (both from Hewlett) and Maribel Morey (assistant professor of history at Clemson University), via a Stanford Social Innovation Review blog post and the subsequent comments to the post. No matter your politics or your views on philanthropy, it is refreshing to see such an open discussion about a foundation’s efforts.
- On a somewhat related note, Amy Schiller argues that we cannot allow philanthropy to be a “workaround” to the “friction of democracy, ” which is necessary for truly solving social problems.
- To get more funders to invest in nonprofit organization building we need more data and case studies on the return on investment. Building the case for funder investment in nonprofit technology capacities, Berta Colón, Cynthia Gibson, Michele Lord, and Geraldine Mannion examine recent data on building nonprofits’ digital reach, and the Knight Foundation provides a case study on how National Public Radio (NPR) built their digital skills.
- I love New York Times food columnist Mark Bittman for his fabulous recipes and views on food, but recently he’s become somewhat of a food activist, and his article on the the true (social) costs of a burger is eye-opening.
- Is there hope for the famously dysfunctional nonprofit board? A new report from Urban Institute suggests we need to raise our expectations of nonprofit boards. Let’s hope!
- I know I’ve been including Steven Pressfield in my round ups lately, but this man really knows how to inspire people to fight the demons that face them in order to create whatever they were put on this earth to create. His recent blog series entitled “Why” does just that. I think social changemakers, more than anyone, need this kind of inspiration.
- Curt Klotz from the Nonprofits Assistance Fund argues that nonprofits must price their services according to value because “there is no virtue in self-imposed austerity that leads to mediocrity in our programs, and constant turmoil in our finances.” Amen to that!
- Writing on the PhilanTopic blog, Laura Callanan pulls back the curtain on some of the hype around social impact bonds and social innovation in general. Instead of falling victim to shiny object syndrom she asks that “we all bring our critical minds – as well as our open hearts – to the job of social change. Let’s celebrate the potential in the new approaches but also integrate them with prior experience and test them with our constituents…Let’s remember that a tool is just a tool.”
What thought-provoking or controversy-inspiring read caught your eye last month?
Photo Credit: Josue Goge
Note: Third in my list of guest bloggers this summer is David Henderson. David’s professional focus is on improving the way social sector organizations use information to address poverty. Here is his guest post:
I was recently turned down for a position at a startup-up big-data company focused on the philanthropic sector because I’m “too pessimistic”. This company initially sought me out since they don’t have any social sector expertise on staff, a likely requisite to make successful nonprofit software. Our courtship turned sour when I expressed my view that we have a lot more social sector initiatives than evidence that those interventions actually work.
My skepticism that social sector initiatives by and large work was wrongly misconstrued as pessimism that social progress is possible. Skepticism is a critical driver of intellectual curiosity. I spent a pretty penny on two degrees that essentially taught me how to critically assess the divide between rhetoric and results. Indeed, the null hypothesis in a statistical model assumes the intended effect is not present. I guess statisticians are just a bunch of pessimists.
Fundamentally, I believe the company I interviewed with was mirroring the widespread lack of intellectual curiosity that plagues the social sector and impedes real progress. Too many nonprofits are terrified of having their claims of social impact investigated, lest their effects are discovered to be more modest than claimed. And I don’t blame them. The funding community’s emphasis on investing in “what works” has resulted in a proliferation of noise as every nonprofit steadfastly argues their interventions cure everything. It’s no wonder evaluators are seen as Angels of Death.
I generally don’t favor taking cues from the for-profit world, but venture capital and angel investors’ practice of investing in people and teams over ideas is far more conducive to intellectual honesty in product (and social intervention) development. The basic premise of this investment strategy is that initial product ideas are generally wrong, but smart people will investigate, iterate, and innovate.
Compare that philosophy to the social sector, where the expectation is that nonprofits already have the answers, they just need money to scale them up. This assumption is largely incorrect, but by making funding contingent on the perception of effectiveness, the nonprofit sector is incentivized to not question the efficacy of its own work. In this model, continued funding depends on a lack of intellectual curiosity at best, and intellectual dishonesty at worst.
A better alternative is for nonprofits to embrace intellectual curiosity, and to be the first to question their own results. Under this model, nonprofits would invest in their capacity to intelligently probe the effectiveness of their own interventions, by staffing those with the capacity to sift through outcomes data and investing in the growing list of tools that are democratizing evaluation. Of course, this would require a shift in the funding community away from “investing in what works” to more humbly “investigating what works”.
A shift toward intellectual curiosity would create more space for the sector to solicit beneficiary feedback in the design of social interventions, as organizations would no longer be incentivized to defensively “prove” existing approaches work, and instead would be rewarded for proactively evolving practices to achieve better results. It is this very intellectual curiosity that led organizations like GiveDirectly and the Family Independence Initiative to invest in the poor directly, a departure from long-standing anti-poverty practices that the evidence suggests might actually work. It’s a shame that organizations imbued with a mission of experimentation deviate so far from the norm.
I don’t consider it pessimistic to question whether the sector is achieving its intended social impact. To the contrary, it’s rather cynical to set aside what should be the critical question for any nonprofit organization in the name of self-preservation. In order to achieve social progress, the sector needs to expel anti-intellectual policies and actors in favor of a healthy skepticism that questions everything, and is willing to try anything.
Photo Credit: NASA
In today’s Social Velocity interview, I’m talking with Kathy Reich, Director of Organizational Effectiveness Grantmaking at the David and Lucile Packard Foundation. Kathy leads a cross-cutting program to help grantees around the world improve their strategy, leadership, and impact. Her team makes grants on a broad range of organizational development issues, from business planning to social media strategy to network effectiveness.
She also manages the Packard Foundation’s grantmaking to support the philanthropic sector. She has been with the Foundation since 2001, and previously held positions in the Organizational Effectiveness and Children, Families, and Communities programs. Prior to joining the Foundation, she worked in a non-profit, on Capitol Hill, and in state and local government in California.
You can read other interviews in the Social Velocity Interview Series here.
Nell: There is often a chicken or the egg scenario in the nonprofit sector where nonprofit leaders are hesitant to tell funders their real struggles and needs for fear of appearing unworthy of investment, and philanthropists are hesitant to stick their noses in the business of the nonprofits they fund, so organizational capacity needs are not openly discussed or addressed. How does the Packard Foundation uncover the organizational needs of your grantees and what would you advise other funders to do in order to have more open and transformative discussions with their grantees?
Kathy: Well, I try not to tell other people—funders or nonprofit leaders—what to do! But I can tell you what works for us at the Packard Foundation. First, we encourage each of our program officers to learn about the organizational strengths and challenges of their grantees, and to weave capacity building into grantmaking strategies. That’s a big part of the work of the Organizational Effectiveness team here at the Packard Foundation.
But we also have a separate Organizational Effectiveness (OE) program, staffed by its own program officers and with its own budget, to help grantee partners strengthen their fundamentals so they can focus on achieving their missions. Once a non-profit gets a grant from any Packard Foundation program, they’re also eligible to apply for an OE grant. We support a wide range of projects to promote individual and team leadership, organizational planning and development, and the development of healthy networks.
The application process is pretty simple and straightforward. It starts with a letter of inquiry where our grantee partners have to answer just a handful of questions: What are the objectives of your project and what do you expect to accomplish? How will this project support your organization in meeting its goals, and over the long term, enhancing its effectiveness? What special challenges or changes have caused your organization or network to focus on management and organizational issues at this time? How do you propose to use Foundation funds? Who from your organization’s staff and board has made the commitment to lead the project?
Here’s the most important part of our approach: We work very hard to be responsive to the needs of our partners. We never say, “We think you need a strategic plan, and that’s the only thing we’re going to fund.” We listen to the grantee’s assessment of their strengths and challenges, and serve in a coaching role to help them develop the OE project that best meets their needs.
Nell: Leadership development is something that is fairly prevalent in the for-profit sector – it’s understood that good leaders need coaching and support along the way – but leadership development is rarely supported in the nonprofit sector. Why do you think there is that disparity and what do we do to change it?
Kathy: I think you’re right — the lack of investment in leadership development and talent management in the nonprofit sector is a significant issue. We don’t have any shortage of talented, passionate people entering this sector. But I believe that we lose too many of them before they rise to senior-level leadership positions.
Some of that brain drain happens for financial reasons: people are staggering under the weight of educational debt, or they’re lured away by more lucrative career prospects in the private sector. But much of the loss of talent is preventable. People leave because they feel burnt out and undervalued. They can’t forge career pathways and can’t access meaningful professional development. They sometimes have lousy managers. Their jobs don’t offer opportunities for promotion, or sufficient work/life/family balance.
That is all stuff that the nonprofit sector can fix. As a sector, we can even tackle some of the thornier issues around compensation and educational debt. And funders can lead the way. But philanthropy is not doing that. Rusty Stahl at the Talent Philanthropy Project, a Packard Foundation grantee partner, points out that between 1992 and 2011 foundations spent, on average, about 1% of grant dollars on nonprofit talent development. I’m not sure why there’s been a lack of investment in leadership development in the nonprofit sector over time — especially when virtually everyone seems to agree that effective leadership is one of the keys to lasting social change.
I do see some glimmers of hope. In the OE program last year, 21 of the 86 grants we awarded focused on leadership development, including projects that invested in interventions like executive coaching, board development, succession planning, and executive transition at key grantee organizations. And a number of efforts are underway throughout the Foundation to support existing and/or emerging leaders in the issue areas where we work. Clearly, though, much more is needed.
Nell: There has been a concerted effort in the past year to overcome the “Overhead Myth,” the idea that nonprofits should spend as little as possible on “overhead” (administrative and fundraising) expenses. But there is still much work to do before that idea becomes mainstream in the philanthropic sector. How do we change funder (and nonprofit leader) thinking about overhead?
Kathy: I’m a fan of so many leaders and organizations who have spoken out on this issue, including Packard Foundation grantee partners like Guidestar, California Association of Nonprofits, and Grantmakers for Effective Organizations. They’ve done a great job of making a research-based case that arbitrary, low overhead rates don’t capture the true cost of delivering non-profit programs and services. I think that there are a couple of common-sense things that funders and nonprofit leaders can do to keep this debate at the forefront of people’s minds.
First, prepare real budgets. If the funder tells you, “You can only have $25,000 for this project,” that’s fine. That’s their budget. But submit a budget for the full cost of the project, including your personnel, facilities, and other costs of doing business. Let them see what their funding covers, and what it does not. Be honest if you do not know where the rest of the money will come from. At least it will spark a good conversation with your funder about the gap, and about your real costs. Most funders do not penalize honesty. If the funder does penalize honesty, their money probably is not worth your trouble.
Second, define what goes into your overhead rate, and stick with it. Many funders have a “rule” about acceptable overhead; 15 percent, 10 percent, even 5 percent. But most do not have a standard definition for what’s included in that rate. You should have one. Define it, calculate it, and then defend it.
Nell: Philanthropy is a very personal and values-driven thing, but at the same time we need to funnel more philanthropic money towards the most effective solutions. Do you think it’s possible to get more philanthropists to give based on results rather than interests and values, or can we somehow better combine the two drives?
Kathy: I think combining values and a focus on results is not just desirable — it’s essential. None of us goes into social change work with a completely cool, dispassionate lens. We go in with passion. We want to make a difference. We bring our whole selves to this work. That’s what makes it wonderful, and that’s why we stay in it.
At the same time, resources are limited — money, people, time — and we have to be sure they’re being well-spent. Ideally, we want to make sure those resources are being better-spent than they could be on other endeavors.
At the Packard Foundation, we try to craft a balance. Our mission—to improve the lives of children, families, and communities, and to restore and protect our planet—derives directly from the values and beliefs of our founders. The way we go about that work is deeply rooted in five core values, which also come from our founding family — integrity, respect for all people, belief in individual leadership, commitment to effectiveness, and the capacity to think big. But we also are committed to scientific rigor, evaluation, and most importantly, learning. We care not only about what grant funds accomplish, but also about how we do that grantmaking, engage with grantees and improve over time. You can read about some of what we’ve accomplished over the years on our new digital timeline.
Photo Credit: Packard Foundation
Note: Fellow nonprofit consultant Cindy Gibson and I were asked to write an opinion piece for Alliance Magazine this month answering the question, “Should Consultants Be Thought Leaders?” There is no doubt that there is a preponderance of consultants in the social sector, some who help move the sector forward, and some who don’t. Cindy and I offer some thoughts about how to distinguish what has value and what does not. Text from the piece is below, and you can also read the piece in the June issue of Alliance.
From strategic and business planning to marketing and fundraising, there seems to be no shortage of consultants ready to help nonprofits meet all kinds of needs. But should they be thought leaders too? Because they are removed from the day-to-day experience of the average non-proﬁt or foundation and have a breadth of perspective that comes from working with different types of organization, consultants can provide important insights to the larger sector.
But when is that thought leadership adding value to the sector and when is it just a means for hawking a consultant’s wares?
At a recent conference, a consulting ﬁrm president suggested his shop’s model was the only way to achieve social change, which caused some participants to shift in their seats. As one participant put it, ‘It’s because they’re consultants. If there’s only one solution and that’s the one they offer consulting on, that’s the approach they promote.’ There is, after all, a difference between introducing ideas to spark new thinking and marketing particular frameworks to build a consultant’s brand. At the end of the day, it all comes down to value.
Is a consultant adding value by introducing new approaches, raising hard questions, highlighting important trends, or suggesting necessary changes to systems and structure, the hallmarks of thought leadership? Or are they using ideas to package what they’re selling? Here are some key questions that might help us to make that distinction:
- Is what the consultant is presenting really new or just something old with new packaging?
We’ve all fallen victim to shiny object syndrome. The next new thing can seem so appealing that it’s easy to believe the hype, but it isn’t necessarily applicable for many organizations. Before embracing a new approach, it’s important to determine whether it actually applies to the specific situation at hand.
- Has the consultant’s new framework been tested?
If the new idea is really worthy of broad adoption, there should be evidence of its value. Consultants need to be transparent about whether they have this evidence and, if so, how it was collected. Was it a randomly sampled population or a few focus groups of satisﬁed clients? Consultants, like other thought leaders, sometimes ignore the fact that the big ideas they’ve envisioned may not work on the ground.
- Does what the consultant is proposing embrace the complexity of the situation?
Social challenges are inherently difficult to resolve because change takes time and requires grappling with the messiness of ‘wicked problems’, which don’t usually respond to one best practice or even a set of discrete interventions. Wicked problems don’t come from somewhere; they come from somewheres. And so do the solutions. True thought leadership emerges from understanding and integrating a problem’s inherent complexity into a potential resolution.
- Is the consultant willing to engage in thoughtful debate about their ideas with those who may disagree?
Thought leaders who are genuinely interested in moving a ﬁeld invite feedback, including criticism, because they know open and honest discussion can strengthen the original idea. They’re also eager to make their ideas broadly accessible so that they become part of the larger ﬁeld.
- Are influential people hailing the new idea as definitive when there may be little hard evidence to suggest that it is?
While it’s nice to have the endorsement of influential people, this can sometimes be a shield against real critique. It can also suggest an echo chamber at work, where the hype around the idea is bigger than the actual value of the idea itself.
There’s no question that it’s difficult, if not impossible, to separate good marketing – which every consultant must do to survive financially – from real thought leadership. We think that consultants can and should have opportunities to stand away from their business and share what they’re learning and observing. Like other thought leaders, they can lift us out of our individual circumstances and move us to see a bigger picture.
That isn’t always easy, especially when consultants’ thought leadership is controversial. But good thinking that has the potential to transform minds and entire fields, even when it may be inimical to a brand, can sometimes lead to impact that may not be easily achieved by focusing only on clients’ individual needs. The key is knowing when and where that kind of thought leadership will add value.
Photo Credit: Eugene Atget
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