Maximizing Philanthropic Impact: An Interview with Jim Canales

In this month’s Social Velocity blog interview, I’m talking with Jim Canales. Jim is President and CEO of The James Irvine Foundation, the largest multi-issue foundation focused exclusively on the state of California. Under his leadership, the foundation has adopted a more targeted approach in its grantmaking programs, focusing on three areas — Arts, California Democracy and Youth — of critical significance to the state’s future. Jim also serves on the boards of Stanford University, the Monterey Bay Aquarium and the College Access Foundation of California.

You can read past interviews in the Social Innovation Interview Series here.

Nell: One of the four grantmaking principles of the Irvine Foundation is “Invest in Organizations,” meaning that you are committed to providing grants to build nonprofit organizations (evaluation, operating support, infrastructure). This is a pretty radical idea for most foundations. What do you think holds other foundations back from this kind of investment and what will it take to get more of them to embrace the idea of organization building as opposed to just supporting direct programs?

Jim: This question of general operating support versus project support has been an ongoing debate in the nonprofit sector, and I’d like to suggest that we may be creating for ourselves a false dichotomy that may not be helpful. I’d suggest we focus on the end goal, not the means. Let’s start by asking the question: How can we maximize impact toward the shared goals of a foundation and its grantees? By asking the question in that way, we naturally have to explore whether we are investing sufficient resources, in the right ways, so that our grantee can have the impact we both seek.

That’s how we try to approach our work at Irvine. At times, we may make grants for general operating support; in other cases, our grants would not be characterized that way – and yet we try to ensure we are investing the necessary resources for the organization to achieve its goals. That will, by necessity, require investment in the infrastructure or organizational development needs that are critical to success. Without that support, whatever project or program we’re funding can’t and won’t have the impact we both seek.

Another part of this question presupposes that foundation staff are able to recognize and address organizational needs. Because we believe that’s an important ability, you will notice that each of Irvine’s program directors has held senior positions in nonprofit organizations. Each of them brings an understanding of organizational development, financial management, board development and all that it takes for an organization to succeed and thrive.

Nell: The Irvine Foundation tends to be fairly transparent in its work and even does an annual survey to gauge how the foundation is viewed by grantees, the social sector, other philanthropists, etc. What do you gain from this survey and how do you integrate what you find into your work going forward?

Jim: This goes back to the time we adopted our current strategic directions in Arts, California Democracy and Youth. At that time, a task force of board members and senior staff explored the question: How will we know we are making a difference? Out of that exploration came a framework that we use to assess our performance on an annual basis, and one of the key elements of that framework is constituent feedback.

Feedback is critically important in philanthropy. If you look at foundation initiatives that have failed — and I would include some of our own — one common theme is that feedback loops were not sufficiently robust. Grantees often are reluctant to come forward with bad news or criticism. And our sector doesn’t have a strong track record of consistently gathering candid feedback from our various constituents, whether that’s grantees or other stakeholders.

Phil Buchanan and his colleagues at the Center for Effective Philanthropy have played a catalytic role in improving philanthropy’s feedback loops through CEP’s Grantee Perception Report and other assessment tools. Irvine has commissioned two grantee surveys from CEP over the last seven years. And last year, we commissioned a separate stakeholder survey gathering opinions from leaders in our fields and the nonprofit and philanthropy community in general.

In each of these cases, we have found the data immensely valuable and used it to improve our performance. And we’ve tried to be transparent about it: We posted the results of the grantee perception reports on our website, and, more recently, I described what we had learned from the stakeholder report of 2012. In all instances we have sought to describe how we intended to use these findings to improve our work going forward.

There does remain, however, one area we have not fully explored: So far, we haven’t done very much to gather feedback from the people who benefit from the work that we support, which is obviously a critical constituent for any foundation. But we are following what others are doing in this regard to see what they have learned and how it might apply to us. An example of that is YouthTruth, the national survey of high school students that CEP developed in partnership with the Gates Foundation. I commend the article that Phil and others authored in the recent Stanford Social Innovation Review on this very topic.

Nell: One of the things that came out of your survey was a desire to see the Foundation take more risks. What does taking more risks mean to the Irvine Foundation and how do you think you will go about doing that in the coming years?

Jim: We have to start by defining risk. At Irvine, we’re not interested in risk for risk’s sake. Rather we are trying to understand the relationship between risk and reward and our tolerance for ambiguity and even failure. In the context of philanthropy, I think risk is about trying to balance the need to invest our resources wisely, while also taking advantage of the fact that we have very few restrictions on how we invest those resources.

For those of us in endowed foundations, we have much to learn about risk-taking from our investment colleagues who think about it in the context of managing a foundation’s endowment. And we have benefited from discussions amongst our program and investment teams on this subject. Our investment colleagues are willing to take risks on investments that offer the potential for greater return. But they know that to maximize returns over the long run, you need to have a balanced portfolio. So it’s not just about taking lots of risks; it’s about balance and a portfolio approach.

And ultimately, part of taking risk is about being comfortable with failure and learning from it. As part of our annual report on the foundation’s progress, we have a section that covers what we’re learning from our programmatic work and how those lessons can be used to further improve our strategies.

Nell: The Irvine Foundation is very much focused on evaluation, yet outcomes measurement is still difficult for the majority of nonprofits to achieve, given that most nonprofit funding sources aren’t interested in funding it. How do we get past the catch-22 of not being able to find funding for evaluation, but increasingly needing evaluation to get funding?

Jim: We approach evaluation as a tool that enables us to understand the effectiveness of key programs and initiatives, to learn from the progress and challenges along the way, and to demonstrate the value of approaches that will have an impact. In our experience, it is important to think carefully at the outset about what stage of development the work is in and to align the evaluation accordingly. We cannot evaluate everything, so we need to be selective about when and why we choose to use this tool.

I see evidence of a change underway in how the social sector and philanthropy approach evaluation. There is emerging greater interest in tools for measuring progress and impact. The proliferation of assessment tools available from organizations like CEP and PerformWell suggest that we’re moving beyond talking about the problem to developing real solutions.

As a complement to this, we are broadening our understanding about the purpose of evaluation. More and more foundations view evaluation less as the thumbs-up or thumbs-down audit and more as a tool for learning, strategic refinement and improvement. It’s been interesting to see foundations create senior-level roles like Chief Learning Officer or Director of Strategic Learning, as an indication of the value and importance of this work. I am of the belief that the more we shift toward evaluation as a tool for learning and improvement, the more likely we can have the impact we seek. At the same time, that is not to suggest that we should not be clear-eyed about whether we are achieving what we set out to achieve, which is an important role for evaluation activity.

Nell: In 2010 President Obama appointed you to the White House Council for Community Solutions to come up with recommendations about how to address the large population of Americans aged 16 to 24 who are not in school or work. What do you think the role of the federal government should be in creating innovative solutions to “disconnected youth” in America? And what do you think is the role of government more broadly in social innovation?

Jim: It was a privilege to serve on the White House Council for Community Solutions with a group of committed and dedicated leaders from across the country. The experience underscored yet again the critical importance of building relationships between philanthropy and government. In fact, an interesting study on this topic of cross-sector partnerships was recently published by the University of Southern California’s Center on Philanthropy and Public Policy. One of its conclusions is that in many cities and states, we’re starting to see a concerted effort to develop and institutionalize more of these partnerships.

We know that many of the innovations that foundations are working on need the engagement and partnership of government to increase their impact and to bring those solutions to scale. A good example for Irvine is the ways in which our Youth program is partnering with state and local government to reform high school education in California.

For the past six years, our Youth program has been working to build the field of Linked Learning — an educational approach that integrates rigorous academics with career-based learning. It has demonstrated success at increasing high school graduation and college attendance rates. And after a lot of work, Linked Learning is now available to students in nine school districts in California.

This year, thanks to a pilot program sponsored by the state Education Department, an additional 63 school districts have committed to Linked Learning. When the program is fully implemented, Linked Learning will be available to more than a third of high school students in California. That’s not something that Irvine or the nonprofit sector could ever have done by itself. So for the state to be launching this kind of pilot program underscores the importance of these partnerships.

As for the work of the White House Council and its focus on what we called “opportunity youth,” the fact that the White House raised this up as a critical issue for our country was really important for this often-ignored population. And the Council’s work continues to live on: most recently, FSG issued a report that serves as a framework for how different stakeholders can improve outcomes for this population of youth who are neither in school nor participating in the job market.

For our part, the focus on out-of-school youth complements the work of our Youth program. A little over a year ago, we launched an initiative to extend the Linked Learning approach to this population as a way to help them re-engage with education. Improving outcomes for this population is so critical — it represents an immense opportunity for our economy and society and for the youth and their families who want to create a better future for themselves.

Tags: capacity capital, CEP, foundation grants, foundation risks, Foundations, grantmaking, Irvine Foundation, Jim Canales, nonprofit evaluation, nonprofit fundraising, nonprofit operating support, nonprofit outcomes, nonprofit performance, PerformWell, Phil Buchanan, Philanthropy, White House Council for Community Solutions, YouthTruth

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Tags: 990s data, American charity, Beth Kanter, foundation transparency, Foundations, Jim Canales, Millennials, nonprofit outcomes, nonprofit sector, Social Entrepreneurship, social innovation