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10 Great Social Innovation Reads: April 2017

April saw a debate about whether or not crowdfunding is transforming philanthropy, critiques of Harvard Business School, a report on the lack of philanthropy in the Deep South, a first-person account of the effects of founder’s syndrome, and tools to help more funders engage in advocacy. Add to that a new Supreme Court Justice, some new data about fundraising, and two fascinating new books, and April was a very interesting month in the world of social change.

Below are my 10 favorite reads about nonprofits and philanthropy in April, but feel free to add to the list in the comments. And, as always, for a longer list, follow me on Twitter @nedgington.

You can also see past months’ 10 Great Reads lists here.

  1. The dramatic growth of person-to-person crowdfunding efforts may be fundamentally transforming philanthropy argued Ben Paynter in an interesting long read in FastCompany. As he puts it: “[This] vast pool of money [is] fundamentally shifting who is funding charitable work and how that work gets done.” But Eduardo Andino would seem to disagree. Writing in Philanthropy Daily he argues that crowdfunding is not all that different or disruptive: “As has always been the case, Americans give money when they see an organization with a mission they believe in or a person whose need moves them. GoFundMe simply allows more Americans to encounter more people in need of immediate assistance than ever before.”

  2. A new report on the state of philanthropy in the Deep South showed the dramatic discrepancy in per capita funding there versus other areas of the country. As Ruth McCambridge from The Nonprofit Quarterly described the findings of the report: “Funders do not invest in homegrown power-building efforts in the Black Belt because they are not drawn in the image of the more-built-up grantees they know well and favor.”

  3. Now is definitely the time for more philanthropists to engage in advocacy, and to help in that effort The Foundation Center released a suite of tools for funders interested in advocacy collaborations.

  4. Two new (and diametrically opposed) books came out in April. First, Duff McDonald’s The Golden Passport (reviewed by Andrew Ross Sorkin of The New York Times) took a hard look at Harvard Business School, which McDonald argued bred a greedy generation of corporate leaders. And for a completely opposite worldview, check out the new edition of The Power of Kindness: The Unexpected Benefits of Leading a Compassionate Life by Piero Ferrucci (reviewed by Mirielle Clifford on the PhilanTopic blog), which could be a balm for our divisive times.

  5. Linda Wood, Senior Director of Leadership Initiatives at the Haas Jr. Fund, encouraged other foundations to invest in the capacity not just of individual organizations, but also larger social movements. As she put it: “We need to be more attentive to the interplay between the strength and agility of leaders and organizations and the dynamics of their broader movements.” And Patrick Guerriero discussed the evolution of the social movement that resulted in marriage equality.

  6. I think I could probably very happily spend hours digging into Pew Research data. It is fascinating stuff, especially their recent 10 demographic trends shaping the U.S. and the world in 2017.

  7. Speaking of data, there was new fundraising data on donor retention and how more effective an in-person (versus email) solicitation is.

  8. An anonymous nonprofit staff member in the United Kingdom wrote a scathing critique in The Guardian of their nonprofit’s founder who has stayed at the organization too long.

  9. April saw the nomination, confirmation, and swearing in of a new Justice on the Supreme Court, and Michael Wyland provided an analysis of what the implications of a court with Justice Gorsuch could mean for the nonprofit sector.

  10. And finally, if you are feeling a bit overwhelmed by these challenging times, look no further than Steven Pressfield who wrote: “You were born for adversity. It’s in your DNA as much as it’s in the DNA of a shark or an eagle or a lion…Our stubby little ancestors left us not just the ability to endure adversity, but the capacity to thrive under conditions of adversity.” Yes!

Photo Credit: Andy Roberts

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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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How Funders Can Help Overcome the Overhead Myth

Note: In April I will be moderating a panel at the Center for Effective Philanthropy Conference about what funders can do to support nonprofit sustainability. To promote that panel and the conference, the Center for Effective Philanthropy asked me to write a post for their blog, which is reprinted below. You can see the original post at the CEP blog here.

 

Among the many myths that pervade the nonprofit sector, the Overhead Myth is perhaps the most destructive. It is the erroneous idea that nonprofits must keep their fundraising and administrative costs cripplingly low, which leads to anemic organizations that are not as effective as they could be.

In fact, the disparity between the nonprofit and for-profit sector in investment in strong organizations is striking. As just one example, research from the Foundation Center found that in 2011, the business sector spent $12 billion on leadership development, whereas the nonprofit sector spent $400 million. Or, viewed another way, businesses spent $120 per employee on leadership development, whereas the nonprofit sector spent $29 per employee.

But the reality is that nonprofit organizations are no different than for-profit organizations in terms of overhead. Last summer a Bridgespan study analyzed the indirect costs of 20 different nonprofit organizations and found, not surprisingly, that overhead rates vary greatly depending on the business model and industry of a given organization (just as it does in the for-profit sector).

Some nonprofit, philanthropic, and government leaders are recognizing that we must move beyond the Overhead Myth and start building stronger nonprofit organizations. This is partly due to the Overhead Myth campaign, launched in 2014 by GuideStar, CharityNavigator, and BBB Wise Giving Alliance with their famous “Letter to the Donors of America” and follow up “Letter to the Nonprofits of America,” which argue that nonprofit leaders and funders must stop judging nonprofits by their overhead rate — and instead focus on a nonprofit’s results. So the idea is that instead of evaluating the effectiveness of a nonprofit organization based on how it spends money, funders would move to evaluate the effectiveness of a nonprofit based on the results it achieves.

This campaign has gained some traction. The federal government and some local governments have moved to increase the indirect costs paid to nonprofits, which means more money for things beyond direct program costs.

But unfortunately, we are far from overcoming the Overhead Myth. An article just this month in Philanthropy Daily extoled the virtues of the Salvation Army because “the most effective nonprofits are those with lean management. The Salvation Army is a constructive example of an effective charity with very low overhead.” And a recent article in Forbes profiled five nonprofit leaders advising other nonprofit leaders about how to keep overhead costs low.

There is still much work to be done in recognizing the need for and investing in strong, effective nonprofit organizations.

Which is where progressive funders, like those who will be attending the 2017 CEP Conference in Boston in April, come in. If a critical mass of funders could start supporting nonprofits to create strong and effective organizations, we could perhaps overcome the Overhead Myth once and for all.

But what does that look like? In my mind, funders can lead the effort to eradicate the Overhead Myth by:

  • Working with their nonprofit grantees to uncover the full costs of their work. Instead of hiding or severely limiting non-program costs, nonprofit leaders must fully analyze, report on, and fund ALL of the expenses necessary to achieve results.
  • Uncovering the capacity constraints that impact their grantees. Funders must actively work with their grantees to determine what is standing in the way of building stronger, more effective organizations — and then fund the solutions to those hurdles.
  • Moving from program-specific funding to unrestricted, general operating support of the organization.
  • Investing in the revenue-generating functions of their grantees. It takes money to create mission, so we need more investments in sustainable financial models, which includes (among other things) smart plan development, recruitment of effective revenue-generating staff, and training of board members on their role in the financial model.

The good news is that there are already funders who are doing these things. For example, there is the collaboration of California grantmakers who lead the Real Cost Project aimed at helping grantmakers understand “what it would take to fund the real costs of the organizations they support — that is all of the necessary investments for a nonprofit organization to deliver on mission and to be sustainable over the long term.”

So to help move this conversation and work further, I will be moderating a breakout session at the 2017 CEP Conference titled “Supporting Nonprofit Sustainability,” where Jacob Harold, president and CEO of GuideStar, Vu Le, nonprofit blogger and executive director of Rainier Valley Corps, and Pia Infante, co-executive director of The Whitman Institute, will be discussing how foundations can start advocating for and investing in stronger, more effective nonprofit organizations.

If nonprofits and those who fund them could overcome the Overhead Myth once and for all, it could be a watershed moment for social change.  It would be the point at which we move from a nonprofit sector that is just trying to get by to a nonprofit sector that is armed with the people, infrastructure, and systems necessary to deliver on lasting social change.

I hope you’ll join us for what promises to be an exciting conversation.

Photo Credit: Mike Baird

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10 Great Social Innovation Reads: Sept 2016

social changeA lot of the conversation in September centered around inequality, philanthropy and data. When do data and philanthropy address inequality and when do they actually reinforce it? And if you add to that discussion about whether donors really care about impact; concern about the distracting, addicting influence of social media; and a call for philanthropists to be more supportive of nonprofit organizations, September was a very interesting month in the world of social change.

Below are my picks of the 10 best reads in September. For a longer list, follow me on Twitter @nedgington. And for previous months’ 10 Great Reads lists go here.

  1. Equity has certainly become the new buzzword in philanthropy. But some are skeptical that philanthropy, as it currently operates, can actually impact it. Writing in The Guardian, Courtney Martin argues that in order to truly achieve equity, philanthropy must fundamentally change: “If we really want to reinvent philanthropy then we are going to have to look at the underlying historic and structural causes of poverty and work to dismantle them and put new systems in their place. It’s also about culture – intentionally creating boundary-bashing friendships, learning to ask better, more generous questions, taking up less space. It’s about what we are willing to acknowledge about the origins of our own wealth and privilege. It’s about reclaiming values that privilege often robs us of: first and foremost, humility. But also trust in the ingenuity and goodness of other people, particularly those without financial wealth.”

  2. Marjorie Kelly argues that the key to addressing wealth inequality is to return to the old model of worker ownership.

  3. And speaking of wealth inequality, The New York Times slices and dices U.S. income data over the last couple of decades to understand how inequality varies by state over time.

  4. According to Cathy O’Neil’s new book, Weapons of Math Destruction, the increased availability of data may actually be worsening wealth inequality.  Journalist Aimee Rawlins reviews O’Neil’s book, which paints a very unsettling picture of how data is being used to lengthen prison sentences for people with a family history of crime, raise interest rates on a loan because of the borrower’s zip code, and otherwise reinforce our broken system. But perhaps data can also help address wealth inequality. The Salvation Army and Indiana University’s Lilly Family School of Philanthropy have released a new tool for mapping poverty in the U.S. The Human Needs Index (HNI) uses Salvation Army service data from communities across the country to track human need across seven areas. The idea is that with an improved ability to map need, philanthropy can more effectively address that need.

  5. One of the biggest uses of data in philanthropy is to prove the impact an intervention has, but Matthew Gerken argues that donors aren’t actually interested in impact. New research from Penelope Burk’s Cygnus Applied Research might disagree.

  6. Andrew Sullivan, the formerly prolific blogger, has had an epiphany about our addiction to social media and writes an amazing long-form piece about our “distraction sickness.” If you worry that our always on culture is leaving something to be desired, read this.

  7. Last month many were bemoaning philanthropy’s slow and weak response to the devastating summer flooding in Lousiana. Well, it looks like crowdfunding has come to the rescue.

  8. Long-time funder Elspeth Revere, retired from the MacArthur Foundation, writes a scathing critique of philanthropy’s unwillingness to fund nonprofits effectively and sustainably. As she puts it, “The challenges facing America and, indeed, the world require philanthropy to be as effective as possible. Nonprofit organizations are philanthropy’s partners in addressing these challenges. They have unusual flexibility to take risks and pursue solutions to our most pressing problems. As grant makers, we need to focus our attention and philanthropic resources on building strong leadership and solid, sustainable, and diverse institutions that address the problems and opportunities we care most about.” Amen!

  9. Jyoti Sharma, president of the Indian water and sanitation nonprofit FORCE, worries that a current focus on social entrepreneurship as the solution to world ills leaves much behind. As she argues, “Do we need to see social entrepreneurship as a “non”-nonprofit? Should we instead promote hybrid models that plan the social change effort with both charity and revenue streams? Should we encourage community entrepreneur networks where charity funds are used to support entrepreneurial efforts from within a beneficiary community that help solve their social problem? Should we advocate for governments and corporates to join hands with nonprofits in planning, delivering, and monitoring welfare services? Equally, should we set ethical and social responsibility standards for entrepreneurships and applaud them for their contribution to society?”

  10. And finally, the Nonprofit Tech for Good blog pulls back the curtain on social media with their “12 Not-So-Great Realities About Nonprofits and Social Media.”

Photo Credit: Ixtlilto

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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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10 Great Social Innovation Reads: May 2016

social change

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

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

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

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

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

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

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

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

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

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

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

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

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

Photo Credit: Omarfaruquepro

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A Summer To Do List for Nonprofit Leaders

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

But you have to make time for it.

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

Ugh!

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

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

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

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

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

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

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

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

Photo Credit: Unsplash 

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