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

The View from an “Old” Social Enterprise: An Interview with Jim Gibbons

In this month’s Social Velocity blog interview, we’re talking with Jim Gibbons, president and CEO of Goodwill Industries International. Goodwill is such an interesting case because the organization has been practicing social entrepreneurship since long before it became cool, which I’ve talked about before. Goodwill started in 1902 in Boston and in 2010 provided jobs and job training to 2.4 million people with a budget of $4 billion. Gibbons earned his B.S. in industrial engineering from Purdue University, and a M.B.A. from the Harvard Graduate School of Business Administration, where he was the first blind person to graduate with a master’s in business administration.

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

Nell: Goodwill has employed a social enterprise model for over a century, long before social entrepreneurship was a buzzword. What made Goodwill so forward-thinking?

Jim: Goodwill is often referred to as “the original social enterprise” particularly by leading social entrepreneurs in the field such as Jim Fruchterman. Goodwill’s roots are deeply established in the belief of the human potential of dignity and self-sufficiency, and in an early learning that the people we serve want a “hand up, not a hand out.” Our founder, Reverend Edgar J. Helms, engrained in our culture his strongly held belief that we must challenge the status quo and be “dissatisfied until every person with a disability or disadvantage has an opportunity to develop to their fullest potential.” This drives the entrepreneurial spirit that exists at every independent, community-based Goodwill agency, allowing them to continually adapt and reinvent themselves in order to meet the needs of local communities.

Nell: How do you think an “old-fashioned” nonprofit like Goodwill fits into this growing social innovation movement? How do you make sure Goodwill is part of that movement and doesn’t get left behind?

Jim: The Goodwill brand is a household name and fortunately still leads efforts in social entrepreneurism, community collaborations and innovation. By staying ahead of the curve, we don’t fall behind. Goodwills are relentless in their desire to understand and meet the needs of the diverse local communities in which they operate. Goodwills challenge themselves to remain relevant and meaningful to the three million people we collectively serve each year. Goodwills across the United States and Canada have found the sweet spot of uniting enterprise with caring, ensuring that our social enterprise model is optimized in a way that empowers people and builds communities that work.

Nell: Goodwill has many more competitors these days than it did 10 years ago, particularly from for-profit competitors. How do you manage the competitive landscape and is it having a negative effect on your model?

Jim: As a market leader in this space, Goodwill always keeps its eye on external forces. We use our social enterprise model to advance millions of people who might not otherwise have the tools or help to succeed in life. We admire legitimate and credible nonprofits that leverage similar models to achieve their mission. While we do not condone the practices of those who market themselves to the public as something they are not, we welcome fair and honest competition, as we have earned the trust and support of more than 66 million customers as well as the people we serve every day. Goodwill earns the trust of shoppers by providing excellent value for their hard earned money. In addition, we earn the trust of donors through the assurance that we maximize the value of their donations in order to return the most benefit to the people we serve in local communities. At Goodwill, your donations generate opportunities for people to achieve economic stability, and build strong families and vibrant communities by offering job training, employment placement services and other community-based programs, such as financial education and youth mentoring. In addition, 84 percent of Goodwill’s revenues go directly into these programs, so members of the public can be sure that their donation(s) will have a direct impact on the people in your community. Last year, Goodwill’s retail enterprise revenues grew more than 12.5 percent, indicating that the public, even with increased for-profit competition, still values and trusts Goodwill.

In addition, we plan to remain a market leader through responsible community leadership. Across the United States and in Canada, we are working with municipalities and local governments to ensure that misleading donation bins are clearly marked so that the public is aware of whether or not their donations go to help someone in need, or if they simply add to a company’s profits. We also teach donors to check out a charity’s legitimacy and revenue information about overhead and administrative costs by contacting their attorney general or secretary of state’s office, a charity rating agency such as Charity Navigator or GuideStar, or online resources such as GreatNonprofits or Philanthropedia.

Nell: What do you do at Goodwill to continually innovate and reinvent the model? How is it possible to continue to innovate at a 100+ year old organization?

Jim: It’s not only possible to innovate, it’s necessary if we want to remain a leader in our market. At Goodwill, we don’t think of innovation as the creation of the next iPhone, but rather as the next idea that allows us to serve the communities we’re a part of in the most meaningful and impactful way. For example, at the Goodwill Industries of South Florida (Miami), they innovate every day and put thousands of people with disabilities back to work. People with disabilities enrolled in their programs learn apparel manufacturing, flag manufacturing, document destruction, and janitorial services. The Goodwill offers a broad range of flexible business solutions to private and public companies, while helping their employees achieve their independence. And it doesn’t stop there. We are committed to customizing the assistance workers need to achieve their peak performance, and we encourage them to continue to advance in their careers.

In Winston-Salem, NC, and Eugene, OR, (Goodwill Industries of Lane and South Coast Counties), we deploy ’Prosperity Centers’ that optimize community resources and drive community collaboration for the benefit of the people. Prosperity Centers are dedicated to assisting people in the community to succeed financially. That doesn’t just mean helping workers find jobs; it means giving them all the tools they need to build financial security and independence once they have a job, including resume-writing assistance, skills assessment, career counseling, access to computer and high-speed internet, and help with interviewing skills and financial counseling. At each of these centers, financial professionals talk to participants about their financial goals, and help them come up with a personal plan to meet those goals, whether that’s regularly paying their bills on time, reducing personal debt, starting savings to go to school, or investing in a big purchase like a car or home. With like-minded agencies partnering together, they are able to harness their resources, eliminate redundancies, strengthen their impact, focus the delivery of their services to meet the needs of local communities, and have a meaningful impact on their citizens.

At the San Francisco Goodwill, we’ve deployed the “Back On Track” program. A partnership with the San Francisco District Attorney’s Office and the Family Services Agency, “Back On Track” provides intensive case management to individuals who have been arrested for a non-violent, first-time drug sale felony. Goodwill provides job readiness workshops, case management, career advising, life skills workshops and job training and education placement. For every individual we train, we save the government an estimated $20,000 in jail/prison costs. This program has a less than 10 percent recidivism rate – compared to a 75 percent rate with other programs.

In Cincinnati, the Ohio Valley Goodwill Industries, paves an example for other service organizations that provide services to veterans. One hundred percent of the veterans they serve are homeless, and many have physical disabilities or mental health issues such as PTSD and TBI. Each veteran has a case manager who works with him or her to develop an individualized program plan. The Goodwill provides transitional housing for these veterans and strives to provide services to them in a holistic manner in order to achiever lasting success, a return to family, community and self-sufficient living. All of these innovative examples are shared across the Goodwill network, and modified and adapted to best meet the needs of local communities.

Nell: Goodwill is pretty active in the social media space and in fact you do a fair bit of Tweeting yourself (@jdgibbons). How have you integrated social media into your mission? What does it allow you to do?

Jim: Goodwill is a networked enterprise where the local Goodwills make up the heart and soul of the brand, and they participate in social media with aligned brand messages that communicate their local activities and impact. We’ve integrated social media into our global and national communication strategies in a powerful way because it’s an awesome tool for educating people about our brand. And we’re giving attention to having real conversations at the level that is important to our stakeholders and builds relationships with them.

Nell: You were recently appointed by President Obama to the White House Council for Community Solutions, which is a pretty interesting group working on bringing the public, private and nonprofit sectors together to solve problems. What is that group working on and what results are you seeing so far?

Jim: It’s exciting to work with a group of leaders from a variety of sectors to raise awareness on how collaborations solve problems in a profound way. Recently, the Council announced its commitment to expand job opportunities for youth through the White House Summer Jobs+ initiative. The initiative is a call-to-action for businesses, nonprofits and the government to provide opportunities for youth to obtain life skills, education, training, and social supports that are relevant for long-term employment, and to work together to provide pathways to employment for youth ages 16-24 (referred to as ‘opportunity youth’) who are low-income or face disadvantages to finding employment and related opportunities.

Goodwill will be supporting the Summer Jobs+ program by hiring 1,200 youth ages 16 to 24. Goodwills across the country will also provide more than 3,200 youth with life skills services, including communications, time management and teamwork; more than 2,300 youth will receive work skills services. In addition, 2,000 youth will be provided learn and earn opportunities, where they will gain the ability to acquire their first paid employment position, either through the form of paid internships or permanent positions that provide on-the-job training at Goodwill locations. Thousands of additional youth will also be provided with virtual career mentoring and exploration services.

The Summer Jobs+ initiative was created in response to research that shows that at least one in six young people ages 16-24 are disconnected from the two systems that offer the greatest hope for their future: school and work.

Tags: Charity Navigator, Goodwill, GreatNonprofits, GuideStar, Jim Gibbons, PHilanthropedia, Social Entrepreneurship, social innovation, White House Council for Community Solutions