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Foundations

Creating Honest Conversations Between Nonprofits and Funders: An Interview With Eric Weinheimer

Eric WeinheimerIn today’s Social Velocity blog interview, I’m talking with Eric Weinheimer, President and CEO of Forefront, the only regional association that represents grantmakers, nonprofits, advisors, and social entrepreneurs. With 1,100 members in Illinois, Forefront provides education, advocacy, and research, and mobilizes its members around issues that are important to the nonprofit sector.

Prior to his current role, Eric was the CEO of The Cara Program, a nonprofit that provides comprehensive training, job placement, and support services to individuals who are homeless and struggling in poverty. Eric was selected as a member of the Emerging Leaders Program for the Chicago Council on Global Affairs and as a Chicago Community Trust Fellow. He was also appointed by Illinois Governor Pat Quinn to the Social Innovation, Entrepreneurship, and Enterprise Task Force. He serves on the Advisory Board for the Social Enterprise Initiative at The University of Chicago Booth School of Business and on the Board of Directors for the Oak Park-River Forest Community Foundation.

Nell: Forefront is the only statewide association that has both nonprofit and funder members. How does Forefront deal with the power dynamic that is so often present between grantors and grantees?

Eric: Forefront talks explicitly about the power dynamic in much of our programming and classes, specifically our annual Grantmakers Institute for new program officers. We have candid conversations with these grantmakers and present actual case studies to give them a better understanding of their power and unique position. We also discuss how others perceive them and their roles, and how those perceptions can impact their effectiveness.

Forefront also has a non-solicitation policy that prevents nonprofits and grantmakers from discussing specific requests or proposals with each other when they gather at Forefront. The spirit of that policy also extends to how we bring grantmakers and nonprofits together. When nonprofits and grantmakers meet at Forefront, there is an explicit goal or purpose related to an issue in their fields or in the sector. While the power dynamic still exists, putting the focus on a larger purpose rather than on money helps our members build trust, leading to more genuine and balanced relationships. We also make sure that grantmakers and nonprofits co-chair some of our affinity groups to ensure balanced perspectives.

Nell: One of Forefront’s biggest initiatives is Real Talk about Real Costs, a series of funder and nonprofit convenings (the first in the nation) to talk about funding the full costs of nonprofit organizations. What have you learned through this series both about how to encourage more effective conversations between nonprofits and funders and about how to better support strong nonprofit organizations?

Eric: In the conversation on Real Costs we’ve learned that it’s not about creating another resource or a toolkit. Its not about what grantmakers or nonprofits should or should not do. Rather, it’s about starting an honest conversation. There are so many grantmakers and nonprofits that haven’t had the opportunity to dig in and engage with this work, either independently or with feedback from their counterparts. Our value-add is to catalyze these conversations. Forefront’s role is to create the space for honest dialogue, mobilize our members around this issue, promote best practices, and curate and share the newest research. It’s a slow and gradual process, but it ultimately leads to change in awareness, understanding and behavior.

Nell: How far do you think the national social sector has come in terms of more effectively supporting strong nonprofits and building more transparent and effective funder/nonprofit relationships?

Eric: We’ve certainly made some progress in the last 15 years, but we have a long way to go. It’s encouraging to see more funders express interest in general operating support and capacity building. However, too often, funders’ still feel the need to be in control and prescribe certain solutions rather than engage communities for their feedback and ideas.

Likewise, nonprofits have become more transparent, but they are still too reluctant to admit to challenges or failures because of possible consequences to their funding. Funders could model this practice for the nonprofits much more than they currently do. Funder transparency is only in its infancy.

Nell: Your national counterpart, Independent Sector — a national membership association of nonprofits and funders — had a recent change in leadership with Dan Cardinali taking the helm. What would you like to see Independent Sector doing to move this work forward on the national stage?

Eric: Dan is terrific – smart, experienced, strategic and passionate. He will do a great job. Under his leadership, Independent Sector (IS) has a real opportunity to be the connective tissue for our sector and elevate the good work that is happening around the country. I would encourage Dan to focus on a few of the critical issues facing our sector, both internal and external. Whether it be real costs, transparency, the power dynamic, or policy and advocacy, IS can highlight and amplify where real progress is being achieved and help to transport those examples to other locations. Once new practices take hold in certain geographic locations, other regions will follow suit. Organizations are eager for strong leadership that informs, inspires and mobilizes them to action.

Photo Credit: Forefront

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10 Great Social Innovation Reads: June & July 2017

Since I was on vacation (and off social media) for a chunk of June, I decided to combine the June and July 10 Great Reads lists into one.

But that proved to be a tricky feat, since there was no shortage of activity in the world of social change during those two months. From the U.S. leaving the Paris Climate Accord and cities stepping up in its wake, to a new book from philanthropy expert David Callahan, to a new approach to the healthcare debate, to ways nonprofits are using artificial intelligence for good, it was a busy couple of months. In my (limited) view, these were the 10 best reads in the world of social change in June and July.

But I am quite sure that I missed some great stuff during those months, so feel free to add to the list in the comments.

And if you want to see past months’ 10 Great Reads lists, go here.

  1. President Trump announced in June that the U.S. would leave the Paris Climate Agreement, making us one of only three countries in the world that are not participating. Lest you think there’s nothing to worry about, check out this interactive map that projects how hot your city could be by 2100. But governors, mayors, and business and nonprofit leaders across the country defiantly stepped up to outline how they would fight climate change without the federal government.  Even on an individual level, there are things you can do to combat climate change, says a new study. And Tate Williams argued that philanthropy must now step up to fund a comprehensive social movement to combat climate change.

  2. Speaking of philanthropy funding social movements, Kate Kroeger from the Urgent Action Fund for Women’s Human Rights explained how funders can support civic action in our current political environment,  and the National Committee for Responsive Philanthropy put out a call to social movement leaders for ideas on how to do just that.

  3. As Republicans in Congress continued to struggle to function as a party, some took a look at what’s going on with the Democratic party. Caroline Levine wondered if the Democratic party can change enough to effectively engage Millennials. And Lee Drutman argued that the Democrats are suffering from an inability to engage organizers at the local level.

  4. The biggest example of our Congressional leaders struggling to lead may be their inability to fix healthcare, but Malcolm Gladwell suggested a new way to reframe the conversation that could move it forward.

  5. As the Internet of Things, the increasing online connectedness of everyday things, continues to grow, Pew Research explored what the implications are. But at the same time, good old fashioned libraries are being increasingly used, particularly by Millennials.

  6. Artificial intelligence can be a scary, new thing, but nonprofits (not Silicon Valley) are actually leading the pack in developing some pretty socially positive things with it. And Beth Kanter offered some ideas for how nonprofits can use bots to advance their missions.

  7. Lucy Bernholz discussed the importance of a new report from Betterplace Labs that describes how Germany has used technology to integrate 1 million+ refugees. For Lucy, this report is a critical read because we all are, or will, face population displacements, and we must learn how to become resilient together: “This prospect – welcoming, receiving, moving forward together – is our collective future. Lessons learned now, about the politics, social challenges, technological realities of building welcoming and resilient diverse communities is information we can all use.”

  8. David Callahan released a new book, The Givers: Wealth, Power, and Philanthropy in a New Gilded Age, which charts the growth over the past two decades in the number and scale of mega philanthropists. He argues they have a new kind of influence on public goods and public policy, perhaps to the detriment of broader, more inclusive civic engagement.  His book found some criticism, which Callahan himself answered.

  9. But at the same time, some like Cathy Cha from the Haas Fund, would argue that we are witnessing a dramatic increase in civic engagement. As she wrote: “At a time when so much is on the line, people are stepping out of their comfort zones and becoming more involved in our democracy. We are marching, participating in spur-of-the-moment protests, volunteering, giving money, and contacting our elected representatives — all in unprecedented numbers, and all in an effort to show we’re paying attention and we care.”

  10. A day before the big announcement that Amazon was taking over grocery giant Wholefoods, Amazon founder Jeff Bezos announced he was getting into the philanthropy game with a Tweet asking for advice about how to make a difference “right now.” His focus on the short-term, irked many (manymany) philanthropic thought leaders who argued that he should focus on long-term social change. But philanthropic historian, Benjamin Soskis argued that direct charity (like cash transfers to the poor) is actually seeing a resurgence and perhaps for good reason.

Photo Credit: perzon seo

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3 Questions To Regularly Ask Your Development Director

Beyond the mistakes nonprofit leaders often make in staffing their fundraising function, the relationship itself between a nonprofit executive director and the development director (or whatever you call the staff person in charge of bringing money in the door) can often be fraught.

In an ideal world, the executive director and development director have a symbiotic relationship: the development director creates the overall annual financial strategy and regularly updates the executive director on where the organization is on achieving that plan, while the executive director works with higher level money prospects and marshals the board to achieve their fundraising responsibilities.

But we don’t always live in an ideal world. And sometimes, as was the case in a recent coaching session I had with a client, an executive director is in the dark about how the organization is progressing on their money raising efforts.

If that is the case in your nonprofit, here are some key questions to ask your head money raiser:

  1. How does the money we’ve brought in to date compare along each revenue line goal? 
    When you create an annual financing plan for your nonprofit (and if you don’t, get on it), you know how much of each type of revenue (individuals, foundations, corporations, government, and/or earned income) you want to come in this year. Then, at any point during the year (and at the very least monthly) you should be asking your chief money raiser, what the organization has actually raised to date for each of those categories. For example, if you are 25% through your fiscal year, but you’ve only raised 5% of your individual revenue goal for the year, that may be a red flag. At the very least it’s cause for conversation with your development director. Perhaps it’s a timing issue (you have a big fundraising campaign closer to the end of the year), and that’s fine. But as the nonprofit leader, you should be able to ask (and get a clear answer to) where the organization’s revenue raising efforts are at any point in time.

  2. How do the numbers and types of gifts we projected compare to what’s actually happening? 
    It’s not enough for a money raiser to have an overall revenue goal for each type of revenue, he also needs to break each of those revenue types down into the number and level of contributed gifts (from individuals), grants (from foundations), or contracts (from government), etc. that will contribute to each revenue line’s overall goal. For example, if your nonprofit has a $250,000 individual donor revenue goal, your development director needs to break that down into the various levels of donors that will make up that $250,000 over the course of the year. You may have both major (one-to-one relationships) and smaller (many-to-one relationships) individual donors. He should project how many donors at each level he will need to hit each part of the individual donor goal. Then he can report to you (again, on at least a monthly basis) how that is progressing. A simple example of such a report (he would fill in the pink areas prior to each update) might look like this:
    And he should create a similar report for the other revenue lines (corporations, government, foundations, etc.) that your nonprofit pursues. The actuals will never completely match what you projected, but this exercise gives you a way to uncover and deal with surprises as they come.

  3. What keeps you up at night?
    Finally, the raw data is not enough. You also want to understand where your development director sees real problems. When you regularly ask this question she may reveal that the board  is not opening enough doors, or her database is inadequate, or the website is not where it needs to be, or her grantwriter needs more help. Then you can strategize together how to overcome those hurdles.

A regular, honest, and data-driven conversation between executive director and development director is the best route to fewer money surprises. And without it, a nonprofit has little hope of achieving financial sustainability .

Photo Credit: Images

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Why Philanthropy Must Speak Out: An Interview with Grant Oliphant

In today’s Social Velocity blog interview, I’m talking with Grant Oliphant, president of The Heinz Endowments (and frequent contributor to their excellent blog).

Prior to running The Heinz Endowments, Grant was president and chief executive officer of The Pittsburgh Foundation for six years. Before that, he served as press secretary to the late U.S. Sen. John Heinz from 1988 until the senator’s death in 1991.

Grant frequently leads community conversations around critical issues such as public school reform, civic design, the ongoing sustainability of anchor institutions, domestic violence, riverfront development and various socio-economic concerns. He also serves extensively on the boards of local nonprofit and national sector organizations, including the Center for Effective Philanthropy, which he chairs. He has also served on the boards of Grantmakers Evaluation Network, Pennsylvania Partnership for Children, and the National Children’s Book and Literacy Alliance.

You can read other conversations with social changemakers in the Social Velocity interview series here.

Nell: You have written on the Heinz blog and elsewhere about the importance of philanthropists speaking out against government policies or decisions that are at odds with their work. However, philanthropy is often hesitant, because of both real and perceived limitations, to become too political. What do you think philanthropists, and the nonprofits they fund, can and should do to speak out against political decisions that are at odds with their missions?

Grant: This question makes my brain hurt. I mean, seriously, we live in a time when everything is labeled as political—affirming the science of climate change, standing up for equity, denouncing racism, defending basic math, you name it. A cultural institution we support recently faced criticism from its own docents for posting an inclusion policy they condemned as “political” because it welcomed all visitors, including immigrants. When your core values are suddenly defined as political, what are you going to do—run from your ideals and hope they somehow survive in the shadows? Or are you going to step into the light and advocate for what you say you believe in?

We have to remember this is about policy and the marketplace of ideas and values, not politics. Philanthropy shouldn’t be about trying to influence who wins an election, and private philanthropy can’t lobby on specific legislation. But foundations of all ideological bents have long understood that on some issues, the only way to bring about meaningful change is to persuade the broader culture that it matters and then translate that into supportive policy. In telling the story of its own impact, philanthropy loves to point at successes like universal vaccinations. But now even vaccines are under attack, along with the science informing them. So what should philanthropy do—stand mutely by and pretend it doesn’t have a point of view on saving lives and preventing suffering, or for that matter on the importance of science as a basic decision-making tool for public policy? You can’t win the battle of ideas by hiding.

We have to speak honestly about the perils of policy rooted in magical thinking and so-called alternative facts. That sort of candor is described as courageous in the foundation world, but really what’s brave about speaking the truth when everything you believe in and work for is under attack? We are witnessing a jaw-dropping assault on fundamental institutions of democracy—the press, the judiciary, free speech, basic notions of civility, even the right of the people to assemble. The American system of philanthropy, which hinges on an engaged civic sector, simply cannot work in the context of dysfunctional or broken democracy. Speaking out against these attacks is basic self-defense for the sector but it’s so much more than that. It’s really a defense of the democratic freedoms and governance that make philanthropy matter in the first place. And if we’re not willing to fight for that, then what in the world do we stand for?

Nell: Some argue that philanthropy is at least partly to blame for the divides currently impacting our country because philanthropy is a result of wealth inequality and sometimes perpetuates inequity. What are your thoughts on that?

Grant: Martin Luther King commented on this far more eloquently than I ever can, and recently Darren Walker at The Ford Foundation has done some excellent writing on it. There’s not much more I can add. No question, the ideal goal for philanthropy should be to help create a society where it is no longer necessary. And it’s fair to ask whether a by-product of massive wealth disparity can really address the social inequity that in some ways helps drive it.

At the same time, to dismiss philanthropy as merely a symptom of inequality is to understate both the enormous value of enterprise creation and the positive social impulse that drives philanthropy at its best. Foundations and other forms of philanthropy may be imperfect expressions of an imperfect system but they also can do tremendous good, especially at a time when government is paralyzed and the private sector has become so removed from social and community concerns.
So much of the social good that philanthropy has helped support—from sensible thinking on climate change to marriage equality—is being unraveled right now, and that’s terrifying. But if nothing else maybe it’s giving those of us who are privileged to work in this field a renewed appreciation for the value philanthropy really can contribute and a heightened sense of responsibility and urgency to actually deliver it.

Nell: What role do facts play? We are arguably living in a “post-truth” world where opposing sides can no longer agree on a common set of facts. How can the social change sector hope to create change when there is no longer agreement about what the current reality is? What do we do about that?

Grant: I’d joke that the Bowling Green massacre changed my thinking on this, but I worry folks might miss the sarcasm. This is a scary time. We have leaders just making stuff up and hiding behind disinformation machines posing as media. It’s bizarre but that’s the landscape now, and I hope the social sector wakes up to it in two critical ways.

First, we need to stop confusing facts with persuasion. Our sector loves to throw data at people and preach from what we assume is our scientific and moral high ground. But neuroscience has taught us that people rely more on their emotions and “gut feelings” to make important decisions than they do on reason. It turns out we are more likely to be persuaded by a good story than by a good fact. I’ve long thought our sector could do better at simply bearing witness, at telling stories that help people see themselves in the lives and suffering of others. That’s the most basic work of philanthropy, this process of sowing compassion. In a time of unprecedented division when humanity’s notions of who we mean by “us” are being challenged as never before, philanthropy needs to get back to that.

But, second, at the same time we need to fight like hell against the normalization of “alternative facts.” Data may be a weak tool to shift closely held beliefs but over time it can move civilizations. Think about how dismissive the medical establishment was initially of the idea that germs cause disease and how conscious our society is today of antibacterial everything. Truth wins in the end, but we need to remember the end can take a long, long time to arrive. Give up on science and suddenly you end up in the Dark Ages for a millennium. For philanthropy that means continuing to invest in science and research, but it also means investing in the institutions and processes that help facts become more broadly known, including journalism. And it means not backing off when propagandists try to peddle their lies as just an alternate reality. We need to have the courage to call that nonsense out.

Nell: For many in the social change sector these are dark days. What gives you hope?

Grant: Oh wow, I could so easily sink sanctimonious piety here, which is not what any of us needs right now. The truth is, there are plenty of days I despair over what’s happening, and it’s important to acknowledge that. If you work in the social sector and these aren’t dark days for you, then you seriously aren’t paying attention.

For me, though, hope is connected with purpose. If we only feel hope when it seems like we’re making progress or winning, then that’s not really hope, is it? It’s expectation. And there is absolutely nothing about the goals we are fighting for that can be taken for granted. Every single step of humanity’s journey toward justice and sustainable community has been marked by hardship and reversals, and often outright losses, so who are we in this era to only feel hope if the circumstances are right?

If it were up to me, Rebecca Solnit’s “Hope in the Dark” would be required reading for us all right now, because the only way any of this gets better is if people of good intent keep pushing, even when we don’t know what the outcome will be, even when it feels like we’ve lost on something irredeemable, like the climate. We have to be humble enough to own that none of us ever really “controls” anything, but over time somehow progress still happens as long as we keep at it.

The other day the President tried to drag my hometown of Pittsburgh into his myopic decision on the Paris climate accords. I loved how local leaders here and all over the country responded with a collective roar of “no way,” which was not just about saying “that isn’t us” but went beyond that to “we’ll do it ourselves.” That’s what gives me hope—all the people I get to work with every day who greet the darkness by bringing the light of their own creativity and unrelenting determination.

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3 Things I Wish Funders Would Ask Nonprofits

I think we can all agree that most philanthropists truly want to be helpful to the nonprofit recipients of their dollars. However, because of the inherent power imbalance, it is often challenging, if not impossible, for a funder and a grantee to have a candid conversation about what it will really take to achieve the social change that they both seek.

I think part of the answer may lie in funders initiating more productive conversations with their grantees about what truly holds a nonprofit back from becoming more sustainable and effective at creating social change.

So here are some questions that funders, who hope to help their most beloved grantees achieve their mission, can employ:

  1. What holds you back?
    Rather than hearing this most critical question asked of them, nonprofit leaders often hear a very different question from their funders: “Why don’t you grow your programs?” In fact in the most recent Nonprofit Finance Fund State of the Sector Survey, 49% of nonprofit leaders said they could have an open dialogue with their funders about expanding programs, but only 17% said they could have a conversation with funders about organizational change or adaptation.  Instead of pressuring nonprofit leaders to grow, funders should ask about the capacity constraints that are holding those nonprofits back. And once a nonprofit leader reveals what those constraints are, funders and nonprofit leaders together should brainstorm how to overcome those hurdles, with capacity capital.

  2. What would it really cost to achieve your long-term goals?
    Nonprofit leaders are rarely asked what their long-term goals are, let alone what it would take to achieve them. For so long the incentives in the nonprofit sector have encouraged nonprofit leaders to hide their full organizational and infrastructure costs and operate on a short-term view. So they rarely give themselves the luxury of planning for the long-term, let alone calculating what the long-term might cost. Instead, funders should encourage the leaders of the nonprofits they fund to take the longview (perhaps starting with a Theory of Change), and to include ALL the costs (program, infrastructure, reserves, staffing and systems) necessary to get there.

  3. What other funders or influencers can we introduce you to?
    Beyond actual money, there is much more that philanthropists could be doing to support their grantees. Whether they realize it or not, funders often are connected to other key people who could help move a nonprofit’s mission forward. That might include other funders in the same issue area, or policymakers with an influence on the nonprofit’s mission, or others with a role in whether or not a nonprofit’s desired outcomes will come to fruition. Instead of being overly protective of their desirable network, funders should actively make connections for those nonprofits that they want to succeed.

I know I’m an optimist. These are hard questions for funders to ask and equally hard questions for nonprofit leaders to candidly answer. But the only way we are going to move beyond the power dynamic and an under-resourced nonprofit sector is if funders and nonprofit leaders have more open and honest conversations about what it will really take to move social change forward. So get talking.

Photo Credit: DuMont Television/Rosen Studios

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Putting Wealth to Work for Social Value Creation: An Interview with Jen Ratay

In this month’s Social Velocity interview, I’m talking with Jen Ratay. Jen is executive director of the Silicon Valley Social Venture Fund – SV2, a community of families and individuals who come together to learn about effective giving and impact investing while pooling their resources and skills to support promising social ventures. Prior to taking the helm of SV2, Jen served as program officer at the William and Flora Hewlett Foundation where she led its Organizational Effectiveness grantmaking program that helps grantees build high-performing organizations.

Nell: SV2 is a strategic partner of the Social Venture Partners network of affiliates across the country that fueled the development of the venture philanthropy model of making large investments of money and expertise to grow proven nonprofits. The venture philanthropy model is almost 20 years old now, where do you think it stands? What have you learned and where do you think venture philanthropy goes from here?

Jen: Twenty years ago in the heart of Silicon Valley, SV2’s founder Laura Arrillaga-Andreessen launched a team sport approach to grantmaking that pooled donor resources for investment in promising nonprofits. Laura and her peers went beyond pooling monetary donations and invested their time and professional skills to help high-potential nonprofits build strong organizations and scale their impact.

From its earliest days, SV2 focused on finding and funding innovative nonprofits poised for dramatic scale, creating a philanthropic version of venture capital. SV2’s giving approach, along with the broader Social Venture Partners network it helped inspire and now partners with, helped catalyze the global movement known as venture philanthropy.

Not unlike venture capitalists, venture philanthropists believe the success of a great idea is contingent on building a leadership team that can effectively execute against a compelling plan. Key elements of the venture philanthropy approach include offering larger and longer-term grants to support nonprofit growth and core operations, tying continued funding to outcomes and measurable results, and providing coaching and management assistance to nonprofit leaders.

As venture philanthropy has evolved over the years, we’ve learned a number of lessons.

First, venture philanthropy’s historical focus on investing in individual organizations, while important, has rarely been sufficient to drive major paradigm shifts or sustained systems-level change. Achieving transformative impact often requires strengthening the capacity of networks and social movements and engaging government and the business sectors in addition to scaling high-performing nonprofit organizations.

Second, we’ve learned how essential it is for nonprofit CEOs to not just be strong organizational managers but also highly-collaborative network leaders and movement builders, a different skillset altogether.

Additionally, venture philanthropy, which resonates with many Silicon Valley professionals, is not a perfect analog for investing in nonprofits. To be effective, donors must understand that nonprofits differ from for-profits in many meaningful ways including governance, funding flows, scaling challenges, organizational culture, and what it means to attain financial sustainability. It takes time to understand these complexities and execute well – whether as an individual donor or as part of a collaborative donor group like SV2.

Looking ahead, I’d be surprised if we don’t see continued rapid growth in venture philanthropy, as wealth transfers from one generation to the next and Millennials and other new philanthropists seek high-impact ways to put their wealth to work for social value creation. As part of this growth, the hands-on venture philanthropy model with its focus on experiential grantmaking and donor learning continues to be an attractive entry point for emerging philanthropists, whether in Silicon Valley, Seattle, Bangalore or Beijing.

Nell: The philosophy behind the venture philanthropy model is that we should scale proven solutions, but significant growth to nonprofit organizations is tricky because often those organizations lack basic capacity. When does scaling make sense and how can funders effectively support it?

Jen: Yes, scaling nonprofits – even those with proven program outcomes – can be tricky.

For early stage nonprofits, there’s often a capacity building Catch 22 – a nonprofit needs basic organizational capacity to be able to step back from the daily treadmill of client needs and service delivery to invest in strengthening the organization and laying a foundation for future growth.

Compounding this, nonprofits don’t currently work within a well-functioning social capital market that supports organizations through each stage of growth. While making a large impact does not necessarily require a large organizational budget, nonprofits do need a reasonable level of revenue to develop certain core capabilities. The majority of nonprofits also face what has been termed the “social capital chasm,” the huge gap between their current budget and the $10 million or more they would need to move toward full scale.

On top of these financing barriers, compensation for nonprofit employees typically lags behind – sometimes far behind — that offered by foundations and for-profits. There’s no equity for nonprofit founders or executives, which, in highly competitive labor markets like Silicon Valley, can make attracting and retaining top talent a challenge.

And don’t get me started on the nonprofit overhead problem – our sector’s wildly unhelpful myth that at least 85 percent of an organization’s income should go toward programs rather than core operations. This myth is not only illogical, but damaging, as it constrains organizational growth and impact that hinges on strategic investments in infrastructure, people, processes and capabilities.

Despite all this, candidates for nonprofit scaling do exist. Common across them, they have promising programs based on early evidence of impact and compelling business models. They have strong, connected boards of directors and leaders who are coachable, collaborative and brave. Perhaps because of these qualities, these organizations also have the ability to attract talent and new sources of funding over time in competitive human and social capital markets.

Funders can help by playing the higher risk role of “Big Bettor”. A funder willing to make a significant multi-year investment in a promising small or mid-sized nonprofit organization can help them prepare to cross that daunting social capital chasm. These funders clear the way for other funders, signaling an investment in the organization is worth the risk. Early Big Bettors who help a nonprofit prove its model make the waters safer for other grantmakers to jump in.

Nell: The SV2 model is a bit different than other Social Venture Partner models, how does geography play into this? Do you think Silicon Valley funders think about philanthropy and the nonprofit sector differently, and if so how?

Jen: I do think Silicon Valley funders tend to think somewhat differently about philanthropy and the nonprofit sector.

In my experience with Silicon Valley’s giving culture, it’s not uncommon for donors, particularly those coming from the technology sector, to prioritize clear, measurable social impact, innovative or disruptive products and services, tech-enabled platforms, and a lean startup management approach to social change efforts.

On the nonprofit side, we have a crisis in Silicon Valley.

Local community organizations are struggling amidst a perfect storm of increased demand for their services, exorbitant operating costs, and competition for staff talent in one of the tightest labor markets in the country.

Silicon Valley is ground zero for income inequality. Skyrocketing wealth, including 76,000 millionaires and billionaires who live in Santa Clara and San Mateo counties alone, is found alongside rapid displacement of vulnerable families. Even with the nearly $5 billion boom in philanthropy from 2008-2013, 30 percent of Silicon Valley residents require some form of private or public assistance to get by. One in three local kids aren’t sure where their next meal will come from.

SV2 Partners, Alexa Cortes Culwell and Heather McLeod Grant, recently authored a report, The Giving Code: Silicon Valley Nonprofits and Philanthropy, that is elevating an important discussion around the region’s prosperity paradox. This data-rich report shines a light on a sobering donor knowledge gap around acute local needs and understanding of the local nonprofit ecosystem. Much of Silicon Valley donors’ philanthropy flows out of the region.

Alexa and Heather’s research also found a two-way empathy gap between donors and nonprofits. The reality is that Silicon Valley donors and nonprofit professionals tend to run in different circles, and they often have very different life experiences.

The Silicon Valley prosperity paradox, knowledge and empathy gaps are adding urgency and ambition to SV2’s work.

Our mission is to unleash the resources and talents of Silicon Valley to support promising social ventures to achieve measurable impact. An increasingly important role for us is to nurture empathy within and across Silicon Valley. As part of this, we’re sparking tough conversations via experiential poverty simulations and workshops with Silicon Valley donors on topics such as redefining power and privilege in the funder-fundee relationship and philanthropy’s role in advancing equity.

SV2 differs from SVP Network affiliates in that SV2 expanded beyond grantmaking to nonprofits to also invest in mission-driven for-profit companies and provide our donors experiential learning in impact investing. I’m seeing emerging Silicon Valley donors using both grants and investment tools to drive social change, following in the footsteps of Silicon Valley philanthropic leaders like Pam and Pierre Omidyar and Jeff Skoll, one of the earliest SV2 Partners.

I’ve also observed a trend of Silicon Valley donors thinking hard and in a more sophisticated way about where exactly their money sleeps at night. Are donors’ financial assets invested in alignment with their core values and social impact priorities? If the answer is no, local donors I work with are increasingly motivated to change this.

Nell: Prior to running SV2 you ran the Hewlett Foundation’s Organizational Effectiveness program investing in the capacity of nonprofit organizations, so building strong nonprofits is obviously near and dear to your heart. What holds nonprofits and their funders back from creating stronger organizations and how do we get beyond that?

Jen: In my view, trust is the critical lubricant between funders and grantees on the path to building strong, sustainable nonprofit organizations.

Yet it can be hard – even scary – for nonprofit leaders and funders to have courageous, authentic dialogue amidst the very real funder-fundee power dynamics.

This was equally true when I was a grantmaker at the Hewlett Foundation as it is now that I’m on the other side of the table as a nonprofit leader responsible for raising SV2’s entire operating budget each year to make payroll and fund SV2’s learning programs and grantmaking.

When striving for authentic relationships, it helps to consider this: Does it feel like we as funders and grantees are accountable to each other? Or is the grantee solely accountable to a funder? When something goes wrong with a grantee organization, does a funder run away or dig in and engage more deeply? Do funders think to ask a grantee “Is this an effective use of your time?” And respect it when the answer is no?

Whether in Silicon Valley or elsewhere, funders can help build strong organizations by making certain to keep their net grant high — that is, the net actual value of the grant to a nonprofit after subtracting out the costs to the nonprofit of applying for and reporting on the grant.

I’d also encourage funders of all stripes to consider doubling down versus abandoning organizations during leadership transitions. Leadership transitions are inevitable milestones that all organizations face, and are a high-stakes and often fragile time for nonprofits. These transitions can also be a time of revitalization and great opportunity for a nonprofit to evolve toward its strongest and highest-impact future.

Photo Credit: SV2

 

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10 Great Social Innovation Reads: March 2017

March offered lots of insight about how philanthropy should respond in the age of Trump. From investing in social movements, to getting involved in advocacy, to strengthening local communities, to giving more than the required 5%, there was much advice. Add to that a growing interest in how to combat “fake news,” steps to creating a digital marketing strategy, and the idea of employing migration as a tactic to combat poverty, March had much to read.

Below is my pick of the 10 best reads in world of social change in March, but feel free to add to the list in the comments. If you want a longer list, follow me on Twitter @nedgington.

And you can see past months’ 10 Great Reads lists here.

  1. Heinz Endowments President Grant Oliphant takes issue with the current administration’s distaste for the media and the arts (as evidenced by Trump’s elimination of the National Endowment for the Arts in his proposed budget). Oliphant argues that journalists and artists play a crucial role in a thriving society: “The right of artists and journalists to tweak the nose of power, to challenge what we believe, to criticize those in high places, to hold accountable people who otherwise might anoint themselves kings, cannot be abridged because we find it at times uncomfortable. It is that very discomfort that tells us they are doing their part in maintaining a healthy society.”

  2. Vocalizing dissent as Oliphant does is only one path available to philanthropy in these challenging times. Many people had other ideas for how philanthropy should respond, including funding social movementsgetting involved in advocacycountering the increase in hate crimes, strengthening local communities, and giving more than the typical 5% of assets. As Grantmakers for Effective Organizations President Kathleen Enright puts it: “We have a choice to make. We can succumb to the swirling and diverting streams of information that wash over us with every passing week. Or we can use this moment as a call to action, first to crystalize our values and determine what matters most to our institutions. And then to act in support of those values in new, bold and creative ways.”

  3. Philanthropic visionary Clara Miller, president of the Heron Foundation, describes what the foundation will do now that they’ve reached their goal of putting 100% of their assets toward mission. As she writes, “It’s becoming increasingly important to think and act holistically with money and influence within and beyond our sector, seeking impact on both Wall Street and Main Street.”

  4. The revelations that Russia used fake news to influence the U.S. presidential election added urgency to attempts to find solutions to the growing misinformation ecosystem. Pew Research offered a comprehensive report about the future of fake news. And writing in Nieman Reports Joshua Benton compares American distrust of journalism with American distrust of banks. And Marina Gorbis compares our current reality to the creation of the printing press in the mid-1400s, which ushered in political, religious and scientific revolutions.

  5. Speaking of what we can learn from history about today’s challenges, Harvard professor Tomiko Brown-Nagin provides 7 lessons from history for today’s social protests.

  6. Never one to shy away from controversy, Phil Buchanan takes to task those who argue that social problems can be solved by nonprofit and for-profit solutions equally well. As he puts it, “The fact is that in many, dare I say most, of the issue areas in which nonprofits are working to make a difference, there isn’t a way to do it that jibes very well with making a profit. And indeed, that is why the nonprofits were formed in the first place — because markets weren’t taking care of the issue!” Amen!

  7. Writing in his Nonprofit Chronicles blog, Marc Gunther argues that few anti-poverty interventions include the effective approach of encouraging the poor to migrate to areas with better opportunities.

  8. Large and aging nonprofit organization Greenpeace underwent a complete shift toward 21st century fundraising and advocacy efforts using technology.  This fascinating case study describes how they did it.

  9. David Mundy from GuideStar kicked off the first of a great multi-part series on how nonprofits can create their digital marketing strategy.

  10. And Nonprofit Tech for Good offered 24 Must-Read Fundraising and Social Media Reports for Nonprofits.

Photo Credit: Beraldo Leal 

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Nonprofit Capacity Building Works: An Interview with Kathy Reich

In this month’s Social Velocity interview, I’m talking with Kathy Reich. Kathy leads the Ford Foundation’s BUILD initiative both in the United States and in 10 global regions. BUILD is an essential part of the foundation’s strategy to reduce inequality, a strategy arising from the conviction that healthy civil society organizations are essential to driving and sustaining just, inclusive societies. To that end, Kathy guides Ford’s efforts to implement sector-leading approaches to supporting the vitality and effectiveness of institutions and networks that serve as pillars of broader social movements.

Before joining Ford in 2016, Kathy was director of organizational effectiveness and philanthropy at the David and Lucile Packard Foundation, where she led a cross-cutting program to help grantees around the world strengthen their strategy, leadership and impact.

Kathy has long been a friend of the Social Velocity blog. You can read my interview with Kathy when she was at the Packard Foundation here and a guest blog post she wrote for the blog here.

You can also read interviews with other social changemakers here.

Nell:  You recently moved from the Packard Foundation to the Ford Foundation in order to launch their BUILD initiative, which is all about strengthening organizations. What are your goals with this new initiative and what successes have you seen so far? And what are you finding in terms of the areas where nonprofits need most help?

Kathy: The Ford Foundation has two big goals in mind for BUILD. First, we want to foster a measurably stronger, more powerful set of civil society organizations and networks working to address inequality around the world. Second, we aim to build understanding within the Ford Foundation, and ultimately throughout the field of philanthropy, about how strengthening key institutions can advance social justice.

The foundation has committed $1 billion over five years to BUILD because we believe that the fight against inequality needs resilient, durable, and fortified civil society institutions. Individuals and ideas also are critical, but the key role of institutions as drivers of sustained social change is a core, and sometimes overlooked, aspect of social justice work.

Each of the BUILD grantee organizations and networks will receive five years of support, at levels higher than what they have historically received from the Ford Foundation. Much of this support will be as flexible as we can legally make it; most grants will include generous general support. The remainder of each BUILD grant will provide support for nonprofit organizations and networks to strengthen their strategies, leadership, management, and finances. Each BUILD grantee will develop and then implement its own institutional strengthening plan. Although Ford Foundation staff will consult on drafts of these plans, the grantee will be “in the driver’s seat” in determining their institutional strengthening priorities and how best to address them.

So far we’ve made about 90 BUILD grants, and honestly it’s a bit early to say how well they are working. We do know where organizations are planning to spend the money. The vast majority of BUILD grantees, 79 percent, are choosing to strengthen their core operations, investing in areas such as financial management, fundraising, communications, evaluation, and HR. About two-thirds also are investing in strengthening capacities critical to social justice work, such as legal, research, network building, and advocacy. Close to half are investing in strengthening their strategic clarity and coherence, 36 percent are investing in leadership development and governance, and 32 percent are choosing to deepen their organizational commitments to diversity, equity, and inclusion.

It’s important to note that BUILD is not the Ford Foundation’s only investment in strengthening nonprofit institutions. BUILD is part of FordForward, the Ford Foundation’s multi-pronged effort to make philanthropy part of the solution to inequality in a deep and lasting sense. In addition to BUILD, two other aspects of FordForward focus on strengthening nonprofits. The foundation is giving more general support grants across all program areas, with a goal of making general support our default type of grant whenever possible. We also are increasing overhead rates on project grants to a minimum of 20 percent, to more adequately address the indirect costs of executing projects and programs.

Nell: This is a pretty innovative approach to capacity building, how do you plan to share what you learn with other funders and with the sector overall?

Kathy: We’re planning a robust evaluation and learning strategy, although we’re really just getting started. Our hope is to share some early findings by year’s end. We’ll be focusing on three sets of key questions throughout the five-year initiative:

  • Do BUILD grants work? Do the organizations and networks that receive this funding become stronger and more durable over time? And if so, what if any impact does that have on the organization’s effectiveness?
  • If the BUILD approach works, what about it works? Is it the general operating support, or a specific kind of organizational strengthening, or something else?
  • Have we changed the way we do business at Ford, moving away from one-year project grants in favor of larger, more flexible grants?

Along with our evaluation and learning plan, we’re also developing a communications strategy to share what we learn with the field and engage in dialogue with others. We’ll be publishing evaluation results, speaking at conferences, and making active use of social media.

Nell: Both the Ford Foundation and the Packard Foundation are rare funders in that they are very committed to creating strong nonprofit organizations through heavy investment in capacity building. Do you think philanthropic and government funders are starting to follow your lead? Or what will it take to make that happen?

Kathy: Well, we certainly hope they are! It’s important to acknowledge that capacity building grantmaking is not new; in launching BUILD, we’ve learned from and appreciate the work of leaders in this field like the David and Lucile Packard Foundation, as well as the William and Flora Hewlett Foundation and the Evelyn and Walter Haas Jr. Foundation.

Over time, we hope that the ranks of capacity building funders will grow. We hope that BUILD will influence other donors by contributing to the evidence base that nonprofit capacity building works—that stronger, more durable, and more resilient organizations and networks are more effective at achieving their missions.

We also hope to contribute to the evidence base about what kinds of capacity building work best for organizations and networks of different types and sizes, working on different issues in diverse geographies. That’s a tall order, but one of the great things about being a global funder and being able to invest significant resources in BUILD is that we’re able to try this grantmaking approach with a broad range of institutions.

Nell: The Ford Foundation made a very public move two years ago to focus their efforts on fighting inequality. But that goal has arguably become harder given the political winds. How does a foundation like Ford navigate achievement of their desired impact in a potentially more difficult external environment?

Kathy: The Ford Foundation has worked in the U.S. and around the world for more than 70 years, and we’ve seen a lot of upheaval during that time. We’re acutely aware of the challenges facing our work, but we’re moving ahead with optimism and with what my boss Darren Walker calls “radical hope.”

BUILD is a big part of that hope. I believe strongly that in uncertain times, a BUILD approach to grantmaking is one of the smartest choices a foundation can make. By giving our grantees multi-year general operating support, we are giving them the resources and the flexibility to pivot their work quickly in the face of new realities. By also giving them thoughtful and flexible institutional strengthening support, we are enabling them to invest in their own leadership, strategy, management and operations at a time when they have to be at the top of their games.

Photo Credit: Ford Foundation

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