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Philanthropy

How Open to Change Is Your Nonprofit, Really?

nonprofit changeBecause I talk about change in the nonprofit sector a lot, I sometimes get inquiries from nonprofit leaders who think they want change at their organization, but actually don’t.

A nonprofit leader might be excited by the idea of dramatically improved fundraising results, or a board who is engaged and invested in the work, or funders who want to step up, but she isn’t willing to do the hard work to realize that change.

I recently talked with a nonprofit leader who was interested in a Financial Model Assessment because he was intrigued by the idea of potential revenue increases. But when I explained that realizing those changes might necessitate other changes — like how he structures his staff, how involved in decision-making he allows the board to be, even how he crafted their long-term strategy — he began to balk.

But the fact is that you simply cannot expect a different result if you continue to operate in the exact same ways.

When I work with a nonprofit organization, my role is to lead a change process so that when I leave, the organization is more sustainable, more engaged and engaging, more strategic and integrated, and ultimately more effective at creating social change.

But significant change is not easy. And for it to truly come to fruition it requires that the nonprofit leader must fully commit — and get her board and staff to fully commit — to creating real, lasting change.

The nonprofit sector is sometimes criticized for being too stuck in its ways. And indeed it can be hard to create change amid a sector that is so consensus-based. Sometimes even the smallest decisions must involve discussion among staff, the board, even funders and other stakeholders.

So if you really want the reality that your nonprofit faces to be different, if you want to find greater financial sustainability, if you want to achieve more program results, if you want to attract more and bigger funders, if you want a stronger, more effective board, you have to commit to real change. And then you have to get others at your organization to commit to real change as well.

I can often tell the difference between a nonprofit leader who is just playing at change, and one who is actually committed to doing the hard work. Ask these questions to determine if your nonprofit is truly ready for meaningful change:

  • Are we willing (at every level of the organization) to take a hard look at how we operate and make changes where behaviors or systems no longer make sense?
  • Are we willing to have difficult conversations, perhaps on formerly taboo topics, in order to find a better way forward?
  • Are we excited enough by the potential rewards of change to work hard to convince skeptics (on the board and/or staff) to come along?
  • Are we as an organization willing to invest the time (and patience) in a change process that could take months or years to fully realize?
  • Are we willing to open everything we do as an organization to discussion and analysis?

If you can find a critical mass of board and staff members who can answer yes to these questions, then your nonprofit is a candidate for true change and a more effective and sustainable path forward.

Because change is really hard. But with effective, meaningful change can come great reward.

To learn more about the Financial Model Assessment I use with clients, download the Financial Model Assessment benefit sheet.

Photo Credit: Pat Ronan

 

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Nonprofit Leaders, You Are Not Alone

nonprofit leaderOne of my favorite parts of my job is the time I spend working one-on-one to coach nonprofit leaders. One of my clients jokingly refers to our coaching sessions as “nonprofit therapy.”

While we certainly don’t delve into psychology when we meet, it is, I think often cathartic for nonprofit leaders to have an impartial third party who can listen to their frustrations with a disengaged board, understand the loneliness of leadership, appreciate their dismay with funders who are pulling them in too many directions, empathize with their fear that fundraising goals won’t be met.

We all — every single one of us — need someone in our lives who understands the challenges we are facing and can offer some guidance, new ideas, insights that can move us from a rut to a more productive path.

When I start a coaching session with a nonprofit leader, I often ask some key questions to get us moving forward:

What is the biggest thing bothering you right now?
Sometimes nonprofit leaders are so stuck in the weeds, so overwhelmed, so exhausted, or so alone that they cannot pinpoint one issue, let alone figure out a way forward. So I start by encouraging them to just unpack everything. This will often result in a venting session, and that’s completely fine. Letting off steam is absolutely crucial. And nonprofit leaders have very few confidants with whom they can share those struggles. Since a nonprofit leader always needs to put on a brave face to her staff, her board and her funders, she has very few people she can tell the bitter truth, so that’s a big part of my role.

How can we prioritize these challenges?
While it might be tempting, we cannot stop with venting. Once we’ve made a list of the challenges, frustrations and concerns a nonprofit leader is facing, I help her to prioritize those challenges in terms of the biggest threats and their dependence on other things to be resolved. So for example, a nonprofit leader who is struggling to meet her fundraising goals, is frustrated by an ineffective board, and lacks enough staff must analyze how large a threat each of those issues is related to the others, and which are dependent on the others to solve. It may be that kicking the board into gear might help alleviate the other two problems because if the board can start helping bring money in the door, she can better address her fundraising goals which leads to her ability to add additional staff.

Where can we tap into your existing assets?
But how do you do that? As I’ve said, nonprofit leaders are often very isolated and think it is all up to them. But if a nonprofit leader can think strategically about who might be able to help, he can move forward more effectively. A nonprofit leader who is struggling without enough staff and is challenged by his ineffective board could potentially find an ally or two among his board and/or funders. I help a nonprofit leader to think through potential allies who can help overcome a hurdle. A one-on-one conversation with a quiet, but well-respected board member about the specific challenge a nonprofit leader faces may yield that board member’s support and voice toward bringing the rest of the board around. Similarly, identifying one or two funders who could be convinced of the need to invest in capacity-building could yield additional staff and infrastructure to overcome those challenges.

I firmly believe that there is a solution to every challenge a nonprofit leader faces. But in order to get to that solution, a nonprofit leader must be willing to analyze the problem and think strategically and creatively about how she can solve it.

If you want to learn more about the nonprofit leader coaching I provide, download my Coaching benefit sheet. And if you want to learn more about being a strong nonprofit leader, download the Reinventing the Nonprofit Leader book.

Photo Credit: Vinoth Chandar

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The Role of the Independent Sector: An Interview with Dan Cardinali

Dan CardinaliIn this month’s Social Velocity interview I’m talking with Dan Cardinali, the new president and CEO of Independent Sector, a national membership organization that brings together nonprofits, foundations, and corporations to advance the common good.

Prior to leading Independent Sector, Dan was the president of Communities In Schools, the nation’s largest dropout prevention organization, with operations in 26 states and the District of Columbia. While there he led efforts to develop and advance an evidence-based model of integrated student service provision and launched a national growth strategy to increase the organization’s impact on improving public education. He is a 2007 Annie E. Casey Children and Families Fellow, serves as a trustee for America’s Promise, and is on the board of Child Trends. In May 2011 he was appointed by President Barack Obama to the Presidential Advisory Commission on Educational Excellence for Hispanics. He is also a member of the Leap Ambassador Community of nonprofit and philanthropic leaders.

You can read interviews with other social change leaders in the Social Velocity interview series here.

Nell: You have just become the new head of Independent Sector (IS). In a diverse and growing nonprofit sector that includes many ecosystem organizations like Independent Sector, what do you think the value proposition is for IS? What is the unique role that IS can and should be playing?

Dan: We were founded by John Gardner who was of the sector and believed deeply in the importance of the sector. It was distinct from government and the for-profit sector and uniquely positioned to support the American project. It played a unique and critical role to sustain American democracy and was also a source of profound community co-creation, rising up to provide really good solutions where there were problems and innovating to help communities evolve and grow, and supporting culture and defending the environment. At a time when civil society is shrinking around the world, the independent sector has an even more important role to play.

As for our capital I, capital S organization’s value proposition, we are unique in the country in spanning the sector. We hold the entirety of the grant seeking and grant making organizations and that purview we want to steward very carefully and thoughtfully. We want to be hyper disciplined in a world where there are a number of infrastructure organizations doing really good work, not to duplicate but align and leverage through collaboration. But there are still holes in our estimation in the landscape of what the sector needs. So we are going to remain disciplined in our role as an organization that is sector spanning and national in scope, grounded deeply in community, to determine what we do to add value to the original vision for a more robust social sector.

Nell: Independent Sector can potentially play a unique role because it stands at the intersection between nonprofits and those who fund nonprofits. Is there a bigger role for IS to play in bringing those two sides closer together, breaking down the power dynamic and helping more money to flow to effective organizations? If so what does that look like?

Dan: We are playing a role and part of it is modeling that these are two sides of the same coin – grant seekers can’t exist without grant makers and grant makers can’t get along without grant seekers. It would be naïve to pretend that those with financial resources don’t have an advantage, yet I equally think in the social sector that grant seekers at times abdicate the power that comes with knowing what they know to be effective and owning that. The opportunity exists to partner with grant makers, not just in the transactional sense, but in the co-creation of solutions to ensure that culture flourishes and that the environment is protected and flourishes, and that problems are solved.

In the Threads conversations IS convened with more than 80 partners across the U.S., concerns about the power dynamic were voiced at every stop. In response, IS and member organizations and experts are cooperating to model the best strategies for working together. We need to refocus the relationship on bringing the needed human, financial, and intellectual resources to bear, calling all people of good will to a higher purpose, rather than organizational sustainability.

Nell: Recently 22 nonprofit infrastructure organizations (like GuideStar, Grantmakers for Effective Organizations, etc.) wrote a public letter urging foundations to invest more in infrastructure organizations. Independent Sector was not one of the 22 organizations, but what are your thoughts on their argument and how does, or should, Independent Sector fit in?

Dan: What was encouraging about that letter from very reputable organizations is that it opened up a conversation. The philanthropic community has a role, an obligation, to support effective infrastructure organizations, and we have a responsibility to be effective. But IS will not be in a position to request that support without a discussion of what needs doing, how well we all are doing it, and how can we better leverage each other’s work. I am passionate about this topic, and I appreciate that this letter advanced the conversation. I expect IS will partner closely in the future conversations.

Nell: You come to IS after many years at the helm of Communities In Schools, which moved during your tenure to a very evidence-based approach. Do you see IS moving itself and/or helping the sector as a whole to move toward a more evidenced-based approach?

Dan: What we did at CIS was to create a virtuous circle between our programs and practice and our data and research to continually generate insights, make course corrections as needed, and build on success. This is how we roll. IS has been applying this approach for a long time. In the Threads conversations, we engaged practitioners using a credible analytic process. We listened to them, without presupposing what they would say, and we applied social science to produce a document, the Threads report. We then co-created a strategic framework that engages members and develops our partnership, just as we do with the IS conference coming up in November.

So the evidence-based approach is alive and well. Going forward we can look for ways to accelerate its use across the organization, through a thoughtful integration of technology and 21st century methods of engagement.

Photo Credit: Independent Sector

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The Importance of Taking Time Off

hammockThere was a very disturbing report last week. An NPR poll found that half of Americans who work 50-plus hours a week don’t take all or most of the vacation they’ve earned. And among those who do take vacations, 30% say they do “a significant amount” of work while on vacation.

Ugh!

I cannot stress enough how important it is to the critical social change work we are all doing to take a break every once in awhile. And I mean really take a break and reconnect with those things that make us human, not machine. I don’t care what your job is and how critically important the work you do is, you will do it more effectively if you are a whole person. And you become and stay a whole person when you take time away from that job.

And because I believe in practicing what I preach, I’m about to take my own advice and disconnect from the world of social change (and social media) for the next few weeks. Instead I will be relaxing, playing with my kids, reading, hiking, and just being.

But in case you’ve already taken your time off (good for you!) and you want some things to read while I’m out, here are a few things to explore:

I’ll be back to writing the blog in mid-August. In the meantime, I hope you all find some space to breathe, to think, and to reconnect with what you are meant to do. Because believe me, we need you back in the Fall inspired and ready for the hard work ahead.

Photo Credit: Five Furlongs

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Nonprofit Financial Health and Sustainability: Pillar 4

FLYToday I am continuing my on-going blog series on the 7 Pillars of the Performance Imperative. The Performance Imperative was released last year as a north star for the nonprofit sector by the Leap Ambassadors, of which I am a member. Pillar 4, about sustainable financing, is obviously my favorite since I am arguably obsessed with nonprofit financial sustainability.

You can also read about Pillar 1: Courageous, Adaptive Leadership, and Pillar 2: Disciplined, People-Focused Nonprofit Management, and Pillar 3: Well-Designed and Implemented Programs.

I believe it is absolutely critical that a high-performing nonprofit organization have a smart strategy for attracting and employing money effectively. Because without a sustainable financial model there is nothing else — no mission, no performance, no social change.

You can download the detailed Performance Imperative here, but here are the highlights of Pillar 4: Financial Health and Sustainability. In a nonprofit that exhibits financial health and sustainability, the board and staff:

  • Take charge of their organization’s financial destiny. They articulate the value they deliver and develop overall financing strategies, tightly aligned with their mission, to support and sustain it.
  • Establish strong systems for financial stewardship and accountability throughout their organization.
  • Build and participate in budget processes that are oriented toward achieving results.
  • Share their financial results transparently with key stakeholders regularly.
  • Treat fund development as a strategic function that requires focus, management, capital, and specialized skill sets.
  • Operate with margins that allow them to build their balance sheet.
  • Understand their organization’s cost structure.
  • Use financial models to make clear and transparent the organization’s financial condition and predict how it will end the year.

In other words, high performing nonprofit leaders understand, embrace and use money as a tool to achieve social change. They create a robust financial model that articulates true costs and creates a strategy to attract enough and the right kinds of money, engage board and staff in making that model a reality, is transparent with outsiders about the model, and above all uses money strategically. In short, a high-performing nonprofit finances, instead of fundraises for, the social change they want to create.

I want to be very clear, however, that financial sustainability does not mean, as some people sometimes confuse it, that a nonprofit moves away from philanthropy and toward earned income, which is somehow more sustainable. This is a fallacy in thinking that nonprofits can somehow be market-driven. Because nonprofits exist to remedy a disequilibrium in the market economy they will always have to be at least somewhat subsidized, by government, philanthropy, or both. Therefore, financial sustainability in the nonprofit world means creating and executing on an overall financial strategy that allows a nonprofit to effectively deliver on outcomes.

FLY (Fresh Lifelines for Youth), a nonprofit that works with teens in the juvenile justice system to break the cycle of violence, crime, and incarceration, is an example of Pillar 4.

Here is their story, as Christa Gannon, FLY’s Chief Executive Officer & Founder explained it to me:

 

Three years ago we were extremely fortunate to be a grantee of Edna McConnell Clark Foundation’s PropelNext initiative to help organizations prepare for growth and scale. At the same time as a grantee of our local and sophisticated foundation funder Tipping Point we participated in a comprehensive training on ensuring that our financial and development practices were aligned and consistent with best practices.

Through these two initiatives we had the privilege of learning a great deal and working with outstanding consultants who created the space for us to step back and productively ask ourselves what was working and what could work better for us as we grew. We brought these findings to our board, worked with the consultants to update and refine our practices, created new dashboards, and brought consultants to board meetings and committee meetings to help us elevate our line of sight and institute new ways of being.

We began these efforts with the help of a long-time employee who helped lead our financial efforts for over 7 years (now going on 10 years!). We elevated his role (creating a position for a Director of Finance and Operations), had our consultants provide some coaching and guidance and invested in his capacity to learn, grow, and lead. Additionally, during this time we brought on a new COO with a great deal of financial acumen who helped this process a great deal. It allowed me to take a critical step back from finance to allow new approaches to take hold and grow.

We revamped our monthly financials, our CEO dashboard, and our dashboard for the board. Additionally we created a new budget-building process which includes a multi-year budget (expense and revenue) forecast and straw budgets. We also changed our internal practices for how we managed temporarily restricted net assets. In previous years when we received grants/gifts off fiscal year cycle (and many are) we would hold those funds and spend them down in the latter half of their cycle, which often meant the grants spanned two fiscal years. This created a great deal of extra work and challenges for our team. We modified this process, which has resulted in an increase in net unrestricted assets available to us as we grow and scale.

One challenge we’ve realized in this process is that we have been so extremely cost conscious and frugal that we have unintentionally built a financial model that relies on staffing structures that cannot be maintained as we grow and scale while ensuring the highest quality services that our clients and community deserve.

As these challenges became apparent to us, we have taken critical steps such as reducing case-load ratios for line staff, adding critical positions to support talent recruitment and development, finance, fundraising, evaluation and learning, etc.. To support this capacity building we are investing in our fundraising ability, engaging our board even more in their role to help garner financial resources, and allocating more of my time to strategy, fundraising, and board development.

We have always felt incredibly grateful for the opportunity to help steward the generosity and strategic thinking of our investors, foundation and corporate supporters, and government partners into the world. As our systems for how we tackle financial management have changed and improved that attitude of gratitude has remained.

What has changed for us, however, is a desire and intention to simplify how we think about and manage our funds such that our processes are clear, straight forward, and understandable by all involved without undue explanation or re-education in meeting after meeting (both board and staff). Our efforts to be cost-conscious, thoughtful, and prudent inadvertently led to systems and processes that made our work more complicated and time consuming than it needed to be. In part this reflected my mindset and efforts as founder. It required me to let go and not white-knuckle our financial approach; trust the team, systems, and consultants; and realize that the approach that got us to this point in the organization’s history would not be the best approach to get us to the next milestone.

We are very mindful that the work we do and the population of young people we serve is not a top priority for many philanthropists. As a result, we take every investment very seriously and are very clear that it means a kid gets a chance to become so much more than their past mistakes.

For us, financial investments are life changing for our clients. We may be the only chance they get, so we want to ensure we deploy each resource to its highest and best use.

Photo Credit: FLY

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Why Nonprofit Boards and Fundraising Must Mix

mixing board and fundraisingI recently received a note from a blog reader who disagreed with my argument that a nonprofit’s board of directors should be charged with raising 10% of their nonprofit’s budget. Not only did this reader disagree with the idea of setting a 10% board fundraising goal, but he disagreed with linking board governance and fundraising at all.

As he wrote:

“I recently resigned from a board of a nonprofit, after a 5-year stint. I was honored to be asked to join the board, until at my first meeting pledge cards were passed around, and I realized it was my money, not my leadership skills, that qualified me for board membership. I have given on numerous occasions, but I refused to pay a “bill” I received for my share of employee Christmas bonuses last year. There have been many instances where the board was expected to give money. Only a tiny fraction of the budget would be raised through these measures, so it seemed like it was a membership test. Governance should be totally separate from fundraising.”

While I appreciate this reader’s frustration as a board member, I would argue that his unfortunate experience had more to do with poor management of a board, and less to do with fundraising being part of a board member’s charge.

I don’t believe board members should ever be “billed” for a contribution. Rather, the board chair and the executive director should sit down with each board member individually on an annual basis and have an open conversation about that board member’s role on the board. This should be a much larger conversation than just what she wants her annual financial commitment to be, but that still must be part of the conversation. So while you absolutely should discuss why the board member has chosen to serve on your board and what she would like her role to be, you also can (and should) discuss how she wants to contribute to the financial model of the organization.

And if you define a board member’s “contribution” much more broadly than just a check she writes, the sum total of all of the contributions each board member makes can be much more significant than “a tiny fraction of the budget.” Every single board member, if truly right for the post, has many ways to contribute to the financial model of a nonprofit (here is just a beginning list of ways). If you ask board members to think strategically about how they can contribute, and if they are well versed in the financial model of the organization they serve, it should be fairly easy to get them involved in a significant way.

And getting each board member engaged and involved in the organization should be the aim. While I agree that the idea of a “membership test” is certainly unappealing, there should be a bar to being a member of the board of a nonprofit organization. If some members are allowed to be members in name only, but not required to have any skin in the game, then what compels any member to invest their time and resources in a significant way? If there is no bar that a board member must clear to be a board member, then what separates a board member from just an interested member of the public?

A board of directors must be a nonprofit’s staunchest supporters, most vocal advocates, and most committed allies. If a nonprofit cannot depend on its board to work tirelessly, not only to ensure achievement of the mission, but also to ensure financial sustainability, how can a nonprofit possibly expect those outside the organization to care? So, yes, being a member of a board must come with some level of commitment, both of time and of resources.

Because at the end of the day, there is no mission without money. By allowing any individual board member, let alone your entire board, to make programmatic and organizational decisions without fully understanding and contributing to the financial model of the organization you are creating an enormous disconnect between mission and money. A person cannot hope to understand something unless they have actually worked within it. So each board member must somehow contribute to the financial model of the nonprofit on which they serve.

Just because nonprofit leaders sometimes do a poor job of engaging their board in the financial model does not mean that we should separate the governance of a nonprofit from its financial model. All board members must understand, embrace, and actively work toward the financial sustainability of the nonprofit they govern.

Photo Credit: Susana Fernandez

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10 Great Social Innovation Reads: June 2016

social changeWhat is it about June and social change? Last June was the landmark ruling by the Supreme Court legalizing gay marriage, a huge victory after decades of social change work. This June, while perhaps not as pivotal, offered some clear glimpses of impending social change.

The horrible tragedy in Orlando stirred Democrats in the U.S. House and Senate to stage protests calling for votes on gun legislation. And the United Kingdom’s vote to leave the European Union sent shockwaves around the world. Add to that some fascinating data (about civil rights and education, charitable giving, and the refugee crisis), some strong words about tech philanthropists, and a distaste for the term “nonprofit,” and it made for an interesting month in the world of social change.

Below are my picks of the 10 best reads, but if you want a longer list, follow me on Twitter @nedgington.

And if you want to see past months’ great reads lists go here.

  1. In the wake of the brutal killing of 49 people at the Pulse nightclub in Orlando, the U.S. Congress temporarily ground to a halt with a Democratic filibuster in the Senate and then a Democratic sit-in in the House, all in the name of forcing Republicans to take a vote on gun control legislation. While neither effort was successful in passing gun legislation, change may be coming, due in part to a new and growing gun control group.

  2. June also saw the shocking vote by the United Kingdom to leave the European Union (“Brexit”), a move that many argue will have a huge impact on the global economy. Much was written about the implications of the vote, but most interesting (and most related to social change) were Spencer Wells’ fascinating look at the fundamental economic, demographic and political shifts behind the vote, and Jake Hayman’s view on what philanthropy can learn from it. As he put it: “The future of philanthropy and the future of politics have to lie in something beyond the economic. Indeed it will be the ones that invite those they wish to serve into the heart of decision-making and dedicate themselves to reforming systems – rather than propping them up – that will come to thrive.”

  3. One of the reasons some in the United Kingdom voted for Brexit may be fear about the refugee crisis. Ever relevant to the issues of the day, Pew Research offers some key facts about the world’s refugees.

  4. And speaking of votes, in the November U.S. presidential election Millennials (because of their sheer numbers) stand to have a real impact. Derrick Feldmann from Achieve discusses some new research about Millennials’ particular approaches to civic engagement and how they might play out in the presidential election.

  5. Writing in The New York Review of Books, Lewis B. Cullman and Ray Madoff express “grave concern” about a fundamental shift they see in the funding of the nonprofit sector due to the increasing popularity of donor advised funds (DAFs). Donors receive an immediate tax benefit when setting up a DAF, but the donation may not find its way to the nonprofit sector for years to come. As they put it, “Donor-advised funds have been a bad deal for American society. They have produced too many private benefits for the financial services industry, at too great a cost to the taxpaying public, and they have provided too few benefits for society at large. When we consider their overall effect, we see that rather than supporting working charities and the beneficiaries they serve, they have undermined them.”

  6. One of the smartest philanthropic thinkers, by far, is Clara Miller president of the F.B. Heron Foundation. She offers a two part treatise (part 1 and part 2) on what the foundation of the 21st century should look like. She writes that foundations must learn to adapt their approach and business model: “While permanence may be a key mission requirement for some…fossilized thinking cannot be. We simply can’t succeed in a vacuum, especially when the pace and nature of the gaps we are called upon to fill have become larger and more frequent, the problems more intertwined and the needs more urgent.” Amen!

  7. Never one to pull punches, blogger Vu Le has some strong words for a particular type of philanthropist, those coming from tech companies thinking they know how to fix nonprofits. As he tells them, “Don’t think for a moment that just because you’re great at one thing, it means you have the legitimacy to give advice in an area that you have little experience and training in. I don’t go around telling you how to design apps or wifi-enabled smart light switches. If you want to truly partner to solve entrenched issues our community members are facing, then great. But first, get rid of your assumptions and ego. Otherwise, let’s agree to swipe left.”

  8. Another favorite truth teller, Phil Buchanan from the Center for Effective Philanthropy clearly articulates why the term “nonprofit” is critical and necessary: “Sometimes, nonprofits need to be the voice of opposition to those whose motivation is profit.” Yep.

  9. Giving USA released their annual data on giving in the nonprofit sector. And if you are hungry for even more data about the nonprofit sector, thanks to a a federal court order the IRS is now providing machine-readable nonprofit Form 990s from 2011 to the present.

  10. And speaking of fascinating data, the Department of Education released their annual civil rights data, which has been gathered every year since 1968 in order to assess enforcement of civil rights laws. NPR highlights some jaw-dropping findings.

Photo Credit: Kyle Pearce

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Improving Philanthropy: An Interview with Melinda Tuan

Melinda TuanIn today’s Social Velocity interview, I’m talking with Melinda Tuan, project manager for Fund for Shared Insight (Shared Insight), a collaborative effort among funders to make grants that improve philanthropy. In that capacity, Melinda plays a key role in guiding and facilitating Shared Insight’s activities including operations, communication, grantmaking, and evaluation.

Melinda is an independent consultant who works with the senior leadership of philanthropic organizations to develop strategies for effective philanthropy. Prior to starting her consulting practice in 2003, Melinda was managing director of REDF (formerly The Roberts Enterprise Development Fund) – a social venture capital fund she co-founded.

You can read interviews with other social change leaders here.

Nell: One of the reasons the Fund for Shared Insight was established was to encourage more foundation transparency. Recent research from the Center for Effective Philanthropy (CEP) demonstrated that there is still much work to do to make foundations more transparent, particularly about their strategies and impact. How do you think we get more foundations to be more open about these things?

Melinda: We would offer an amendment to the question, as we at the Fund for Shared Insight don’t use the word “transparency” in reference to our overall work. Rather, we prefer to talk about increasing foundation “openness.” Here’s why.

To us, transparency, while important, describes a one-way sharing out of information. As indicated in the CEP research, foundations need to be more open to sharing information – particularly about how they assess their own work, and what they’ve learned about what is and is not successful. However, in addition to sharing more information out, we believe foundations need to be more open to listening and taking in information from grantees and the people we all seek to help, and acting on what we learn to inform our own practices to be more effective.

This very question of how to encourage foundation openness and increase the two-way exchange of information is what we are trying to address throughout our work. The good news is, based on the CEP research which we had the privilege of funding in our first year, foundation CEOs believe being more transparent – sharing more information out – will help them be more effective. Additionally, both foundations and nonprofits agree on the definition of and importance of transparency. This is welcomed news because transparency is an important part of increasing openness.

Building on that, our next phase of work will focus on enabling and inspiring foundations to adopt a variety of approaches to be more open in service of effectiveness. We issued an open request for proposals in May for increasing foundation openness and are currently reviewing 31 proposals for various initiatives such as building networks, providing training, and creating technology platforms among others. We are excited to announce which projects we’ll be funding by the end of July.

Nell: One of the hurdles to more openness among both nonprofits and foundations is the power imbalance between nonprofits and their funders. How do you think we work to overcome that imbalance, or can we? And how do you deal with these power dynamics in the work of the Fund for Shared Insight?

Melinda: While there is no quick fix solution, we believe building trust between foundations and nonprofit partners is a key way to diffuse this power dynamic. There are so many ways we can build – and break – trust, and much of this comes down to how we relate to each other as people. We build trust when we follow-through with what we say we will do in a timely manner, offer support in times of challenge and crisis, listen before speaking, ask good questions, and are curious learners. We break trust when we do the opposite – when we don’t follow through on our commitments, dole out punishment when we hear bad news, talk first and too often, and don’t enter into this work with a spirit of inquiry and wanting to learn for improvement. If foundations are as open with nonprofits as they would like their grantees to be with them, we believe we can work together and make great progress towards building the trusting relationships that can lead to greater overall effectiveness.

At Shared Insight we try to be mindful of the power dynamics in our own interactions and communications with the nonprofits we fund in both formal and informal ways. On the formal side, we have commissioned the Grantee Perception Report (GPR) and are looking forward to sharing what we’ve learned from our nonprofit partners who provided feedback via the GPR in the fall of 2016. On the informal side, we find simply making time to check in with individuals at the beginning of every meeting or call helps to build our personal relationships and establish a baseline of genuine interest in each other’s lives in addition to the work we are doing together. We also try to uphold a high standard of responsiveness and clarity about how we make and communicate our funding decisions – we have to walk our own talk.

As a funder collaborative now 35 foundations strong, we are in the unique position of being both a grantor and a grantee. It’s been fascinating to on one hand have conversations with our nonprofit partners and try to minimize the power imbalance in our interactions, and on the other hand experience the supplicant perspective as we seek funds from our core funders, additional funders and Listen for Good co-funders. We think this dual role helps us be extra-aware of the power dynamic and informs our understanding of helpful practices as the giver and receiver of grant dollars. We’ve learned a lot of useful lessons about these dynamics and relationships since our launch. Chris Cardona from the Ford Foundation, one of our eight core funders, highlighted many of these important lessons in a blog post for Transparency Talk. We know that we’ll continue to learn and grow as we move forward and these relationships progress.

Nell: Your approach somewhat assumes a desire among philanthropists to move to a more evidence-based approach to giving. But some research, like the Money for Good reports, has found that donors as a whole are not that interested in results and impact. Do you believe that much of philanthropy can move toward an evidence-based approach? And if so, how do we get there?

Melinda: The Money for Good research you reference was focused on individual donor decision-making, and found that individual donors are less interested in results and impact. In contrast, our work at the Fund for Shared Insight focuses on staffed foundations in the U.S. Research, at least on the larger foundations, has shown that many foundations are interested in results and impact. For example, the number of foundations belonging to Grantmakers for Effective Organizations (GEO) reporting that they conducted evaluations of their work went from around 20% in 2008 to more than 70% in 2011, and has only continued to grow.

One of our primary research questions regarding feedback loops is whether perceptual feedback from program participants today can serve as leading indicators of future outcomes for those same participants. In education, for example, students who answer in the affirmative to the question “I feel there is a teacher at school who cares about me” have been shown to achieve more positive educational outcomes. We are hoping our grant to Innovations for Poverty Action will help us analyze the relationship, if any, between perceptual feedback and outcomes in randomized controlled trials of programs in developing countries, and we hope to fund a similar project here in the U.S. If we are able to find these linkages between perceptual feedback and ultimate outcomes, this information will go a long way toward helping nonprofits and foundations improve programs in real-time without having to wait 2-3 years for the evidence of outcomes to be demonstrated.

We at Shared Insight are committed to measuring the results of our own work and sharing what we learn, and have devoted an entire section of our website to sharing how we are evaluating our progress toward improving philanthropy. All of our work is focused on learning for improvement, whether through evidence-based approaches to giving, feedback loops, or other ways to understanding the effectiveness of philanthropic investments.

Nell: Recently 22 philanthropic infrastructure organizations (like Guidestar, Nonprofit Finance Fund, Grantmakers for Effective Organizations) signed a letter asking foundations to commit 1% of their grantmaking budgets to supporting the infrastructure of the nonprofit sector as a whole. The Fund for Shared Insight is arguably a piece of this infrastructure, so what do you make of their argument and can you see foundations agreeing to this goal?

Melinda: The Fund for Shared Insight emerged out of a desire among a number of funders to improve the philanthropic sector, especially by strengthening infrastructure and the process of collecting and sharing feedback.

One of the great things about the Fund for Shared Insight is that we are a collaborative. Each of the foundations involved with Shared Insight supports infrastructure in different ways. For instance, Fay Twersky and Lindsay Louie of the William and Flora Hewlett Foundation (a core funder) recently co-wrote an op-ed in the Stanford Social Innovation Review in support of this letter, noting:

“Funders who believe in learning to improve have some obligation to invest at least a small portion of their grantmaking to infrastructure support. Supporting infrastructure doesn’t take away from other giving; it amplifies it. It unites all of us as funders—whether you fund in your local community, focus on a particular issue or multiple issues, or take a policy or research approach. Givers of all stripes can use and benefit from the infrastructure that supports us all.”

Photo Credit: Fund for Shared Insight

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