"The convential view serves to protect us from the painful job of thinking...."
— John Kenneth Galbraith
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(Marie Deatherage has directed communications at the Meyer Memorial Trust since 1996. She also has worked as a program officer, college professor, researcher, disability rights advocate, journalist, editor, and publisher and has never met a disruptive technology she didn't like. A verison of this post appeared on our sister blog, Transparency Talk, where in a previous post Deatherage reflected on the trust's embrace of transparency.)
In 1998, I had a singular point/counterpoint experience that changed the way I see the world and directly affects the way I view foundation transparency today.
Point
A few years earlier, I had been appointed by Oregon's governor to the Oregon Health Services Commission (OHSC), the public body that created the prioritized list of medical conditions and treatments for the Oregon Health Plan (and earned national notoriety as "rationing health care"). At the time I was appointed, the plan had just been turned down for a Medicaid waiver by the federal government because the Department of Human Services said the process that created the list violated the Americans with Disabilities Act. I was working in disability rights and was added to the commission to ensure that the views of people with disabilities were represented.
OHSC was and is subject to Oregon's rigorous public-meetings law, which requires that all decision-making be conducted in public. We were forbidden to even talk about matters as a group in private. Meetings were all open to the public, including, of course, the press.
On this life-changing day, the commission was considering whether and where to place in the prioritized list the recently voter-approved "Death with Dignity" legislation that had become law in Oregon. (In a nutshell, if you have a terminal illness with less than six months to live and meet other eligibility requirements, you can get medication to self-administer to end your life on your own terms and time.) Oregon was first in the nation to pass this legislation, as it had been the first state to legislate a prioritized list. Not long after vigorous and sometimes acrimonious debate, our hearing took place before a standing-room-only crowd that included very vocal protesters. Print and broadcast media were out in force.
After listening to testimony and discussing and debating the issue, each of us had to declare our position and give reasons for voting the way we did. Explaining our views was awkward, even gut-wrenching. It was one of the hardest things I've ever had to do in public -- and not only because I was the only dissenting vote (for reasons that are hard to explain). Our votes were reported in the media, and I subsequently got a number calls at home from people I didn't even know.
Counterpoint
When that meeting ended, I literally walked two blocks to the foundation office where I had begun working. Another meeting was under way there, with trustees deciding whether or not to fund grant proposals that were up for review that month. But this meeting was being held behind closed doors. Often there were no specific reasons given about why some proposals were funded and others not.
The contrast stunned me. The philanthropy decisions weren't more important. They weren't more difficult. They weren't more uncomfortable. In fact, they seemed much less so on each count than what I had just experienced.
So why this difference? At one time, of course, public bodies made decisions behind closed doors. But at some point, the Oregon public demanded accountability and transparency, in the belief that sunlight is the best disinfectant. But foundation decisions were and are, for the most part, still happening in the dark.
Taxpayer-Enabled Resources
Foundation assets are, of course, IRS-approved resources. For the special treatment of not paying taxes, people are permitted to direct money for the public benefit. Who decides what constitutes "public good" and/or whether resources are actually benefiting the public? Well, in the past it's pretty much been the people with the money.
The move toward greater accountability and transparency that we've seen in government settings has greatly quickened with the Internet, not least because the Net shifts the balance of power by eliminating gatekeepers and obstacles that have restricted information exchange. More and more, people assume they have a right to look inside institutions and organizations. Take, for example, the recent moves toward more accountability for the nonprofit sector through legislation and questions about exemptions from property taxes. Lately we've also seen that the public expects foundations to exercise fairness and to be able to provide rational reasons for their grantmaking decisions. (See: Komen Foundation, Susan G.)
The emergence of Glasspockets in 2010 has been a crucial part of this shift, and much openness (e.g., making public-user surveys, third-party evaluations, governing and tax documents, etc.) has been instituted at the Meyer Memorial Trust and other Glasspockets-participating foundations since the meeting I described above in 1998. But I believe a whole lot more transparency -- and the disruption that inevitably will follow in its wake -- is coming.
One reason I've heard for foundation secrecy is the same reported by Sean Stannard-Stockton in a Tactical Philanthropy blog post: "Foundations tell me that they are not transparent about their grantee analysis because they do not want to risk hurting the nonprofit."
Sean went on to show what happened when the nonprofit FORGE opened itself entirely to public scrutiny in the face of a fiscal crisis, resulting in financial solutions and pro-bono donations that made the organization stronger.
Sean held the organization's executive director up as an example of leadership because she recognized that "criticism can only make her stronger. She wants to learn and get better because she cares about her cause more than she cares about her organization....Even if that means publicly taking advice from people who might tell her she should do some things differently."
Here's the thing: no matter the reasons we give to justify it, secrecy itself invites the public to wonder whether the real secret is that foundations can't defend their internal processes? Or that it's just easier and more comfortable for us to keep things under wraps. Are these the kind of suspicions we want to invite?
Democracy Needs Transparency
In addition to discouraging corruption, one of the most valuable rewards to come out of the adoption of public-meetings laws is that we have learned we are courageous enough, tough enough, and collectively wise enough to go through a process that is awkward, clumsy, and even painful -- and emerge stronger than ever. Even though that public health plan discussion and vote was one of the most tortured things I've ever gone through, I came out of the experience with a much greater appreciation for democracy and the democratic process. It made me a better person. It made Oregon a better place. It gave me more trust in humanity.
We the People can handle messiness, clumsiness, embarrassment, complications, mistakes, and some chaos now and then. Seeing inside institutions builds trust. Trust is directly and immutably linked to transparency. Foundations can look forward to a more secure future if they earn the People's trust.
Imagining the transparent future that is now possible reminds me of the scene in Back to the Future when Marty McFly, on stage after an epic guitar solo, tells the audience: "You might not be ready for this, but your kids are gonna love it." If you doubt me, read We, the Web Kids manifesto.
Foundations can resist the changes coming our way or we can welcome them. I can't wait to discover which foundation will embrace the future and be the first to livestreamed trustee meetings. In my next Transparency Talk post, I'll share a few more dreams about how open and trustworthy foundations might become.
A foundation director once told me that grantmaking and sausage-making were two processes I didn't want to witness. Prior to hearing it from him, I had heard it from others as law-making and sausage-making.
Government down, foundations next? I'm pretty sure it's no longer safe to bet the farm on sausage, either.
-- Marie Deatherage
(J McCray is chief operating officer at Grantmakers for Effective Organizations, a coalition of more than three hundred and seventy grantmaking organizations committed to building strong and effective nonprofit organizations. McCray is responsible for overseeing GEO's strategic planning, financial management, internal learning, and field research on grantmaker practice.)
Recognizing that flexible funding was particularly important during tough economic times, the Seattle-based Medina Foundation, which funds social service organizations in the Puget Sound region, increased its level of general operating support to an all-time high of more than 80 percent during the depths of the recession. One longtime grantee, a large multi-service organization that historically had applied for programmatic funding, used its unrestricted grant to expand a home foreclosure program to meet overwhelming demand -- something it would not have been able to do with restricted public-sector funds.
Because most grantmakers still designate the vast majority of their grant dollars for discrete projects rather than organizations, these kinds of situations are not common. Yet we know that nonprofit resilience is based on an organization's ability to adapt to a changing environment and that fewer restrictions on grant dollars typically means more working capital to innovate and rainy day funds to cope with the unexpected.
In an uncertain economy, what is the difference between a nonprofit organization that's able to adapt and thrive and one that struggles to survive? Through our research with funders and nonprofits alike, and supported by the research of many other influential groups, we have learned that the former tend to receive the right kind of support from their funders -- support that is flexible, sustainable, and enables organizations to invest in themselves. It is precisely these kinds of nonprofits that have the greatest chance of making a difference at times of great need.
So how has philanthropy responded to the challenges nonprofits have faced over the last three years? Part of the answer comes from a national survey conducted by Grantmakers for Effective Organizations of more than seven hundred and fifty staffed grantmaking foundations in the United States. We conduct this survey every three years to examine trends in the key funding practices that help bolster nonprofit performance and also to answer the question, Is grantmaking getting smarter? It turns out the answer is yes and no.
When faced with tough decisions about what to do with their limited funds, grantmakers over the last several years worked to speed up their decision-making process and reduce the burden on nonprofits by streamlining reporting requirements and cutting the red tape to get money out the door faster. Indeed, grantmakers responding to our survey managed to shave the median turnaround time from receipt of a full proposal to approving a grant from ninety days in 2008 to sixty days in 2011, and they reduced the turnaround time required to make an initial grant payment from twenty-one to fifteen days. Faster turnaround in terms of grant processing and payout enables nonprofits to plan ahead with more certainty and to work smarter to minimize cash-flow issues.
At the same time, our survey found that grantmakers did not change their approach in some critical areas. The study reveals that many grantmakers chose to preserve some of the kinds of funding we know are connected with long-term nonprofit success, including general operating and capacity-building support; a significant number even increased these types of support. Most grantmakers that increased these types of support said their reasons for doing so were unrelated to the economy, which suggests to us that unrestricted and capacity-building support are becoming core elements of foundation grantmaking strategy. The Hartford Foundation for Public Giving, which funds comprehensive capacity building through its Nonprofit Support Program, is one example of a grantmaker that has learned that long-term capacity-building support is essential to helping grantees improve their organizational performance.
But while the vast majority of grantmakers provide some level of general operating support, the median percentage of annual grantmaking budgets devoted to general operating support remained level at 20 percent -- a number that, according to the Foundation Center, has not changed in almost a decade.
We also asked about evaluation, which can be a powerful tool when used to foster organizational learning. While about 70 percent of respondents said they evaluate their work, they were less likely in 2011 to identify strengthening future grantmaking as a very important reason for conducting evaluations. Indeed, it appears that funders still view evaluation predominantly as an exercise in accountability rather than to foster learning both inside and outside their organizations.
Likewise, multiyear support can be a stabilizing force for nonprofits during volatile times, enabling them to concentrate their efforts on advancing their mission. Unfortunately, multiyear support did not fare well over the past several years, with only half as many funders reporting that they awarded grants over two years or more on a regular basis. One of the more hopeful pieces of news from the survey, however, was that over half of those who reduced their multiyear commitments said the cutbacks were due to the economy and were temporary.
Ultimately, both the resilience we need to see in the nonprofit sector and the recipe for future success rely heavily on the relationship between grantmakers and their grantees. We have seen in our work that feedback channels and other mechanisms to boost communication are vital in cultivating empathy and fostering smarter decision-making. And we've seen many grantmaking organizations embrace feedback mechanisms to track progress and strengthen relationships with their grantees and community organizations. For example, the Los Angeles-based Durfee Foundation gathered feedback from its grantees to create the Springboard Fund, which provides multiyear grants and assigns seasoned leaders to mentor newer nonprofits.
It turns out that when grantmakers have strategies in place for listening to and learning along with grantees, they are more likely to provide the types of support that both grantmakers and grantees agree are essential to boosting nonprofit success. Indeed, funders who always use grant reports to foster learning between the foundation and its grantees were three times more likely to increase multiyear grantmaking than those who never did. Similarly, those who always sought external input on foundation strategy from recipient communities and grantees were nearly three times more likely to increase general operating support than those who never did. And funders that always sought advice from grantees or external input from community stakeholders with respect to their strategy were about twice as likely to increase capacity-building support.
These are lessons nonprofits and their supporters can learn from and build on. Ultimately, the decisions that foundation leaders make today will have critical implications down the road for the effectiveness and sustainability of the nonprofits we support and the communities we serve.
-- J McCray
(Founded in 1931, the Clark Foundation focuses on helping individuals lead independent and productive lives and supports nonprofits and programs in New York City and Cooperstown, New York. In addition to his duties running the foundation, Doug Bauer is board chair of Philanthropy New York and an adjunct faculty member in the Social Enterprise Program at Columbia Business School and the Urban Studies Program at the University of Pennsylvania. Laura Cronin is a regular contributor to PhilanTopic.)
Philanthropy News Digest: How tough is it out there for nonprofits? And what can the foundation community do to inform itself about the financial challenges confronting the sector?
Doug Bauer: We're entering what is now the fourth year of reduced funding for nonprofits, with continued cuts at the federal, state and city levels, and it is taking a toll on the sector, especially in human services and the arts. If there's any good news, it's that the state of New York is looking at a $2 billion gap in the coming fiscal year, not the $10 billion previously forecast. That's a better situation to be in than predicted, but it still means cuts are coming.
Another concern is that some of the performance-based contracts that are being issued, like the ones New York State has put in place, mean that, for example, a senior daycare program that was expecting $1 million for a certain number of slots will not be getting all its funding. They might get 93 percent and then the last 7 percent is a "private match." What we are seeing, in other words, is the emergence of an expectation -- implicit or explicit -- that private philanthropy is going to start filling some of these gaps. We all know, however, that the resources available to private philanthropy pale in comparison to what the public sector is able to do and it's not philanthropy's job to try to fill these gaps.
Also, If you are working on issues related to poverty, especially in the human services area, some of the change around contracts with private matches and no overhead are going to have a major impact on the financial condition of nonprofits that are working to address those issues. The financial condition of a good chunk of the nonprofits we work with continues to deteriorate. And, by the way, these are not low-performing nonprofits. All of which is to say, funders really have to pay attention.
PND: How can funders support nonprofit leaders -- especially leaders of mid-sized organizations -- as they deal with a "new normal" characterized by reduced revenue and growing need?
DB: Mid-sized groups are especially vulnerable in the current environment. If you're a high six- or low- to mid-seven-figure organization, it's really tough. For example, we supported a mid-sized organization in Brooklyn that had very good programs but ran into some financial difficulties. The board and staff could have tried to make it work, but a better solution for them was to be absorbed into a much larger organization. All the back-office administrative work was brought into the "mother ship," while the frontline programming at the neighborhood level remained the responsibility of staff at the smaller organization. Let's face it, a merger like this, where there's good alignment between organizations' respective missions and programs, is going to be a solution for some mid-sized groups, while other groups, if they want to remain independent, are going to have to be more nimble, efficient, and effective than they've ever been.
Of course, smaller groups tend to be at a fundraising disadvantage simply because they don't have the development capacity of larger institutions. As you track where public funding is going, and you think about how the social safety net is being restructured, I have to believe that larger nonprofits are going to be in a much better position to figure out what that restructuring ultimately looks like and how they fit in. I have great admiration for leaders of smaller nonprofits who are trying to make a go of it, and there are a lot out there. But it's going to be interesting to see whether we end up with a nonprofit sector version of -– the analogy isn't perfect -- "battleships" and "motorboats." Are we going to end up with two types of nonprofits -- large eight- and nine-figure organizations doing most of the work and a bunch of social entrepreneurs and social enterprises that focus on innovation and figuring out new ways to deliver services? And if that's our future, where does the mid-sized nonprofit that's kind of in between the start-up and the behemoth fit in? I'm honestly not sure.
PND: What should private foundations be doing to help their grantees in a time of growing need?
DB: The best dollars a foundation or corporate giving program can be providing right now to nonprofits, especially nonprofits in the human services and poverty-alleviation area, are general operating support dollars. Most of these groups are 80 percent to 90 percent government funded. And given what's been going on with government funding and the uncertain political environment, general operating support is the best way to ensure that nonprofits have the flexibility to adapt. The Clark Foundation has provided general operating support to its grantees for almost two decades now, and our board understands how important and necessary it is in this kind of environment. In fact, 80 percent of our grantmaking is awarded as general operating support. And the reason goes back to this question of government support. Those dollars are restricted to the programs that nonprofits are contracted to operate on behalf of government. Not only are the dollars restricted, but the payment cycles associated with government contracts, especially over the last three years, have been all over the map. What used to be a thirty-sixty-ninety-day cycle can now be a hundred-and-twenty-to-two-hundred-and-forty-day cycle, which of course wreaks havoc on your cash flow. So again, general operating support is critical, because those dollars are not allocated to anything but the ultimate success and sustainability of the organization.
PND: What else are you doing to help grantees survive and thrive in this uncertain environment?
DB: Based on some 2011 research conducted by Philanthropy New York, we learned that the Clark Foundation is one of the largest funders of nonprofit management training in New York City, at just over $2 million a year, and it's proven to be immensely beneficial to our grantees. We fund a number of organizations that are dedicated to helping nonprofits perform better, including the Support Center for Nonprofit Management, the Nonprofit Finance Fund, and the Rensselaerville Institute.
That said, we don't go in and say to a grantee "You need this." Instead, we try to pay close attention to the organization's existing needs and whether the advice, counsel, or consulting offered is practical, outcome-oriented, and will actually help them in the near term as well as in the long term.
Of course, when foundations suggest, or worse, force mergers or other changes on an organization, it can be problematic. A new initiative, the New York City Merger, Acquisition and Collaboration Fund, or NYMAC, has been launched by SeaChange Capital Partners and a group of foundations to advance management transitions while avoiding the whole problem of funders acting as unwelcome matchmakers on nonprofit mergers. Several foundations and, interestingly, several individual donors, pooled over $1 million to create the fund, and those funds will be used to help pay for and facilitate mergers, acquisitions, and collaborations in the nonprofit sector.
As you can tell, I don't necessarily believe that mergers are a panacea for the sector. We're all familiar with examples from the corporate world where mergers have not worked out or created additional value. That said, given the environment we're in, we have to look at the question of encouraging more mergers, acquisitions, and collaborations. And I'm excited about NYMAC because it puts money in place to, one, have that conversation on a case-by-case basis; two, to pay for legal, financial, programmatic due diligence if the conversation goes well; and, three, if the conversation goes really well, to eliminate any roadblocks or deal breakers that might derail a merger or collaboration. For example, an organization might say, "We can't do this deal unless we break our lease." If that organization needs to come up with, say, $50,000 to legally break the lease so that a merger can go through, NYMAC is in a position to provide those funds.
We're very excited about it, and I hope, if it proves to be a success, that we'll be able to replenish and maybe even grow the fund.
PND: The Clark Foundation is known for its collegial relationship with its grantees and its commitment to regular site visits. Have you been inviting conversations with your grantees about their financial health and sustainability? And what would you recommend to other funders about managing those kinds of conversations?
DB: First of all, a good look at an organization's grant proposal, Form 990, three years' worth of audits, and management letter will give you a pretty good sense of how it is doing. The importance of advance preparation cannot be overstated. We also make a real effort to talk to other funders. A lot of our grantees are receiving support from other funders, and so we try to get their perspectives as well. Again, we try to go into meetings with our grantees with as much information as possible.
But you know that we tend to provide consistent support to our grantees over long periods of time; we even have a few we've been funding since the 1960s. And we would hope that, over time, with all our grantees, especially these last three years, that finances and financial health are going to be part of the discussion. Not asking about an organization's finances in any kind of detail is poor due diligence on the part of a funder. It's a "must have" conversation. And it's a conversation that grantees should welcome.
That said, we hope, and usually request, that a board member or officer is present during our site visit. It makes for a far richer conversation. And I have to say, as I look at the hundred-plus grantees we work with, I've been impressed with how attuned board leadership is to these issues. They understand that it's a difficult environment and that one of their key responsibilities is fiduciary oversight of the organization. I know of board chairs of well-run nonprofits that, because government funding and payment cycles have become so erratic, are looking at cash flows on a weekly basis; it's the only way they can stay on top of what's going on.
Of course, the funder/grantee dynamic is always a factor. And we try to mitigate that power imbalance by being responsive, being attentive, and listening. Funders need to listen more than they do. And, you know, your parents were right: manners matter. You have to be present. You have to be open. And you have to be nice. If you take the time to really analyze what grantees are doing; if you make an effort to see them on their turf; and if you listen a lot, you are demonstrating, via your actions, that you care about the organization and its work and are a conscientious partner.
I'm always pleased when a grantee, at the end of site visit, says, "You came prepared." I've never had an executive director not enjoy a robust conversation about what their organization is doing. They're always eager and willing to defend, debate, or support their programs. I always enjoy, for example, my conversations with a particular ED. He's not a wallflower, and more importantly, he really does want to have a good discussion about what his organization is doing because he's interested in continuous improvement and he sees us as a partner in that process. Yes, there are some longtime EDs -- and I get that the ED role is tough -- who are a little cynical about funders and funder behavior. Believe me, I know there's a lot that funders do to encourage that kind of cynicism. But I think, especially in this environment, that the funder-grantee relationship has to be a partnership, and a free flow of information is critical if the partnership is to be successful.
-- Laura Cronin
Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....
Impact/Effectiveness
On the Center for American Progress site, Jitinder Kohli, Douglas J. Besharov, and Kristina Costa take a closer look at the potential of -- and some of the challenges associated with -- social impact bonds.
International Affairs/Development
Is the animating spirit behind last year's Arab Spring uprisings spreading to other parts of the world? That would seem to be the case in Russia, where the months leading up to Vladimir Putin's re-election to the presidency were marked by an upsurge in civic activism. Remarkably, writes CAF Russia's Inga Pagava, "[s]treet protests were not suppressed, and that proves there is an opportunity in the country. [But to] translate that opportunity into real action, some serious and careful organizing jobs need to be done to make sure the unique spirit is not lost or stifled." For more on the "Russian Spring," take a look at the excellent article by Ellen Barry and Michael Schwirtz in today's New York Times.
Nonprofit Management
On his Inside Philanthropy blog, Todd Cohen reminds us why it's important for nonprofits and their staff to have time to think. Writes Cohen:
The warped logic of funders and donors seems to be that the nonprofits they support should stretch every dollar they receive to make an impact on clients, rather than making any investment in thinking or planning, even though that kind of investment can lead to improvements that will better serve clients. And the sad logic of boards and CEOs seems to be to pander to their donors and funders for fear that questioning their unrealistic expectations or speaking honestly about organizational problems will risk the loss of their funding....
Philanthropy
Philanthrocapitalism co-authors Matthew Bishop and Michael Green share some good news from last week's Indian Philanthropy Forum in Mumbai, which included the release of the third annual survey of Indian philanthropy by Bain & and Co. According to the survey, giving by the wealthiest Indians is on the rise, with "69 percent of the philanthropic families surveyed [reporting that] they had a [family member under the age of 30] spearheading or shaping the family's charity decisions." And that, write Bishop and Green, "certainly bodes well for the future."
In the final post of a series on the four stages of becoming a more strategic donor, Ellen Remmer, president and CEO of the Philanthropic Initiative, looks at a few of the "road blocks" keeping many donors from achieving a "higher level of strategic thinking and giving," including challenging family dynamics, isolation and privacy concerns, arrogance and cynicism, and inadequate or imbalanced information about impact and results.
Social Media
Guest blogging on Beth's Blog, MomsRising.org social media specialist Elisa Batista explains how her organization used Twitter to test a strategy to reach Latinos with information about the Affordable Care Act.
In a guest post on the Communications Network's blog, PhilanthroMedia president Susan Herr writes about the "widespread commitment to harnessing emerging communications technologies in the service of transparency, accountability and engagement for the public good" at this year's SXSW Interactive conference. But getting your message to be heard in an increasingly noisy information marketplace requires a laser-like focus on strategy, adds Herr, who then shares a few tips for doing just that. "Forget viral content. Pursue the anti-viral" -- that is, produce videos for small but strategic audiences rather than for broad consumption; and think about your storytelling in terms of "multiple platforms," for example by combining live video feeds with copy.
Chris Oien, Web communications associate at the Minnesota Council on Foundations, summarizes a recent presentation on social media analytics and metrics that he gave at the Nonprofit Technology & Communications Conference with his colleague Jamie Millard. Among other things, Oien reminds all of us who create social media content to connect that content to our organization's mission, keep tabs on what works and what doesn't, and communicate the results of our efforts to upper management and board members to show "what [these activities] mean for the bottom line."
Transparency
On her Philanthropy 2173 blog, Lucy Bernholz commends the Omidyar Network's David Sasaki, who last week tweeted and blogged about his goal "to be [the] most transparent grant-maker in philanthropy." In his post, Sasaki commits to publishing a blog post within fifteen days of the signing of a grant agreement that contains the following information:
What do you think? Is it something every program officer at a major foundation should commit to? And if not, why not?
And over at our sister Glasspockets site, we've launched a real-time RSS feed that displays raw data reported by foundations using the innovative Grantsfire "hGrant" format. At the moment, the feed includes grants reported by five foundations -- the Energy Foundation, the William and Flora Hewlett Foundation, the W.K. Kellogg Foundation, the Charles Stewart Mott Foundation, and the Rockefeller Foundation -- but we hope to be adding more soon. To learn how your grants data can be pulled directly from your Web site through the hGrant format, click here.
That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!
-- The Editors
(Kyoko Uchida manages PubHub, the Foundation Center's online catalog of foundation-sponsored publications. In her previous post, she looked at four reports that examine racial/ethnic disparities in higher education.)
To help mark World Water Day, we searched PubHub for reports that discuss efforts to improve access to clean water, sanitation, and hygiene (WASH) in the developing world -- efforts that in turn are linked to progress in the areas of health, education, and economic growth.
While the 2015 Millennium Development Goal target for halving the proportion of people who do not have access to safe drinking water has been met, according to a recent report from UNICEF and the World Health Organization, the target for halving the proportion of those without access to basic sanitation has not. Moreover, the aggregate figures mask significant regional variations in the progress achieved to date. The two reports highlighted below explore the complex challenges of implementing and sustaining effective WASH-related interventions.
Off-Track, Off-Target: Why Investment in Water, Sanitation and Hygiene Is Not Reaching Those Who Need It Most (68 pages, PDF), a report from WaterAid, notes that in sub-Saharan Africa the target for access to sanitation is so off-track that at current rates it will not be met for two centuries: "In developing countries, spending on water, sanitation and hygiene services is minimal compared to health and education, and the share of aid flows going to water and sanitation has fallen over the last 15 years." Not only does inadequate investment in WASH initiatives undermine progress in the areas of health and education, it also exacerbates already stark inequities in access to services between rich and poor, rural and urban areas, and for women-led households and other marginalized groups.
What are the reasons behind the slow progress toward WASH-related goals in the region? The report's authors lay the blame at the feet of multiple actors and causes:
Political priorities lead governments to favour other sectors, improve places already served, or exclude poor and marginalised groups. Inadequate information hampers policy-making and planning, and lack of transparency is an obstacle to good monitoring and scrutiny. Aid is not well coordinated, is only loosely targeted according to need, and its effectiveness is constrained by red tape and lack of alignment with government systems. The sustainability of services rarely receives the attention it requires. These factors in turn undermine weak capability to capture, absorb and spend funds effectively, and lead to a vicious cycle of low investment and poor performance....
The report calls on national governments, donors, and civil society to break the WASH-related "cycle of low investment and poor performance" by:
And what can we in the United States do to help improve access to clean water and basic sanitation in the developing world? U.S. WASH Advocacy: Landscape Report (18 pages, PDF), a report from FSG, notes that while the U.S. government contributed more than $800 million to WASH-related initiatives in 2009, many past interventions have fallen short of their promise. In order to promote efficient, targeted use of funds, more effective advocacy efforts, and improved practice in the field, the authors recommend focusing on five interdependent goals:
According to the report's authors, a successful advocacy campaign targeting USAID, the State Department, Congress, the executive branch, multilateral agencies, foundations, and corporations would require a robust evidence base and experienced high-profile leadership. The report also recommends different approaches for each donor group:
Foundations -- Many foundations that fund in related areas (e.g., global health, environment, women's rights) do not prioritize WASH issues. There may be opportunities for high-level conversations and awareness-raising to increase the number of U.S. foundations that see WASH funding as a priority investment.
Corporations -- As more corporations come to see the alignment between WASH issues and their core business, WASH advocates should be proactive in engaging corporations as partners in WASH-related advocacy and interventions. The Global Water Challenge has done some work in this area, but with deeper cross-sector collaboration, corporations can become exponentially larger contributors to WASH issues in terms of their financial resources, as well as their products, services, and global reach.
Multilaterals -- While multilaterals likewise face funding constraints in today's slow-growth environment, even modest increases in development bank aid have the potential to create large impacts in the WASH field and should be pursued as a critical element of an overall WASH strategy.
The Public -- While awareness of WASH issues among the public is low and the infrastructure for raising funds inadequate, "clean water" is a highly resonant message when paired with effective marketing. The field should encourage and build on the efforts of organizations like charity: water and water.org to build public awareness of and support for WASH issues.
Funded by the Bill & Melinda Gates, Conrad N. Hilton, and Howard G. Buffett foundations, the report's recommendations include strengthening leadership in the field, building and engaging broad coalitions, greater support for advocacy efforts, and improving data collection and dissemination.
If we are to meet the MDG target for access to basic sanitation and continue making progress on other WASH-related issues, governments, NGOs, donors, and local communities need to work together to target resources to regions with the highest need. This won’t happen overnight, but the steady increase in WASH-related support by U.S. foundations would suggest that we are moving in the right direction.
If you're interested in WASH-related issues and would like to learn more, take a look at these reports:
And don't forget to visit PubHub, where you can browse more than 170 reports related to water, sanitation, hygiene, and other global health issues.
-- Kyoko Uchida
(Seema Shah is director of research for special projects at the Foundation Center. She can be reached at sms@foundationcenter.org.)
It's World Water Day. And for those of us lucky enough to be able to take clean drinking water for granted, the numbers can be difficult to wrap our heads around. Nearly one billion people globally do not have access to safe water and more than two billion do not have access to adequate sanitation. The implications for the physical, economic, and educational well-being of communities, particularly those in sub-Saharan Africa and Asia, are far-reaching. As Secretary of State Hillary Clinton asserted during last year's World Water Day events, "The water crisis is a health crisis, it's a farming crisis, it's an economic crisis, it's a climate crisis, and increasingly, it is a political crisis."
Given the scope and scale of the crisis, what are foundations doing to address the situation?
A year ago, the Conrad N. Hilton Foundation, which has a twenty-year history of supporting safe water initiatives, awarded a grant to the Foundation Center to create a Web portal that would serve as a data and information hub for grantmakers working on water, sanitation, and hygiene (WASH) issues.
Launched in October, the portal, WASHfunders.org, seeks to promote greater coordination among established WASH funders, while also serving as a resource for new funders in the sector. The centerpiece of the site is a robust mapping tool that helps funders minimize duplication of effort by identifying other foundations that are working on similar issue areas or in the same geographic region. Funders visiting the site also are able to share lessons learned through case studies that highlight both challenges and successes in the WASH arena. And they can access the latest WASH-related research, aggregated in one place. All these resources are designed to help funders work more efficiently and effectively, allowing them to maximize the impact of their grant dollars. (In fact, the portal has become a model for funders working in other issue areas, as they seek to become more strategic and use data-driven decision making and peer-to-peer insights to strengthen their grantmaking.)
In conjunction with its work on WASHfunders.org and this week's World Water Day events, the Foundation Center has released a new research brief that summarizes foundation investments in water, sanitation, and hygiene. Among other things, our findings show that support for WASH issues has been on the rise since 2003. Between 2003 and 2010, the number of funders making WASH-related grants jumped from 24 to 78, and that growth was accompanied by a nearly five-fold increase in the number of organizations receiving grants. In 2009-2010, U.S. foundation funding for WASH issues totaled $144 million, up from $11 million in 2003-2004. At the same time, WASH funding, having grown from 0.2 percent in 2003 to 1.7 percent in 2010, remains a very modest portion of international giving by U.S. foundations overall.
The research brief also highlights the top funders of WASH initiatives. Among private foundations, the Bill & Melinda Gates Foundation continues to be the largest funder of WASH programs, with the foundation's grantmaking comprising half of all WASH funding in 2009-2010. Among corporate foundations, the PepsiCo Foundation leads the way, awarding grants of more than $12 million in 2009-2010.
Philanthropic investments to address safe water, adequate sanitation, and hygiene education are poised to increase in the coming years, with several foundations, including the Margaret Cargill Foundation, the Rockefeller Foundation, and the Skoll Global Threats Fund, beginning to develop strategic initiatives focused on WASH issues.
Indeed, although the number of people lacking access to safe water and adequate sanitation is far too high, we are beginning to see evidence that the collective efforts of foundations, governments, and NGOs are making a difference. In fact, just last week UNICEF and WHO announced that the Millennium Development Goal for water had been met, the first of the MDG targets to be achieved.
For more data on foundation support for WASH issues, see the full research brief here. And feel free to use the comments section below to share how your organization is observing World Water Day.
-- Seema Shah
(Lisa Philp is vice president for strategic philanthropy and director of GrantCraft at the Foundation Center. A version of this post appeared on Philanthropy New York's Smart Assets blog.)
Funder collaboration. Like Mom and apple pie, it's something we can all rally around. But anyone who has worked as a grantmaker knows that it's harder than it sounds. We all work within different contexts and constraints. In a diverse and decentralized field, it's hard to stay on top of who is doing what. We all have our own ideas about what strategies have the most impact and which groups are most worthy. And true collaboration is so much more than convincing others to support your initiatives.
From my former vantage point as a program officer for a variety of foundations and a donor advisor to ultra-high net worth individuals, I think it all begins with learning networks. Through regional associations like Philanthropy New York and affinity groups like Grantmakers for Children, Youth & Families, funders come together to build relationships of trust, compare notes, and discover co-funding opportunities. Dedicated donor advisors scan the field on behalf of their clients, connect the dots, and serve as vital bridges between "emerging" and "organized" philanthropy.
But if we are to accelerate the pace of funder collaboration, our field needs "how-to" frameworks, case studies, and time-saving technology tools that foster, deepen, and connect these learning networks.
Frameworks: First, we need to define what we mean by collaboration. Several frameworks have been created to help grantmakers match collaborative approaches with needs. One typology -- articulated in Moving Ideas and Money (28 pages, PDF), a report from the Funders' Network -- includes information exchange, co-learning, strategic alignment (informal and formal), pooled funds, and joint ventures. The framework included as part of a recent GrantCraft guide on funder collaboratives is meant to spark ideas, stimulate discussion, and suggest possibilities.
Case studies: When I was at J.P. Morgan Private Bank, we created a pooled fund that raised over $5 million from individual donors and family foundations to leverage innovative models of public education reform supported by the U.S. Department of Education and national and local foundations. A detailed case study on this Education Collaboration Fund (ECF) was recently published by The Foundation Review. Case studies like this one illuminate the roles that can be played by donor advisors, provide a blueprint for replication, and offer up an honest assessment of opportunities and challenges.
Technology tools: Key to the success of the ECF was the creation of an online funder collaboration tool by the Bill & Melinda Gates Foundation. The Foundation Registry i3 provided a hub for nonprofits to post their applications and a password-protected area for funders to quickly and easily compare notes on proposals under consideration for matching funds.
In a related development, the Foundation Center increasingly is being asked to mine its data on foundation giving, philanthropy news, and foundation-supported research to create technology tools that advance funder learning and collaboration. For example, WASHfunders.org -- commissioned by the Conrad N. Hilton Foundation on behalf of a group of foundations and corporations that fund water access, sanitation, and hygiene issues globally -- creates a dashboard for WASH funders with interactive maps of their grants featuring overlays of international aid, case studies, outcome tools, recommended readings, news streams, and social media feeds.
Several other custom Web portals across an array of issues and geographies are in the works at the Foundation Center, but what unifies these projects is a desire to leverage technology to understand the state of funding in a field, enable more coordination among funders, and provide easy entry points for new donors. These online tools are "fed" a steady stream of content -- frameworks, case studies, timely data -- that enable learning networks to stay informed of the work of their peers and make the most of their face-to-face time together.
To work at scale in their communities and on their issues, funders must work through networks to collaborate with other foundations, donors, government, the private sector, and nonprofits. Creative frameworks, case studies of successes and failures, and knowledge management tools can go a long way toward accelerating that process.
-- Lisa Philp
(Thaler Pekar is a regular contributor to PhilanTopic. In her last post, she wrote about your "T-shape" and how paying attention to it can help you collaborate.)
I just returned from the South by Southwest Interactive conference (SXSW), where I participated in a panel on applying story and narrative in organizations. I went to SXSW looking to explore my contention that, in an increasingly loud, complex, and data-saturated world, a smart leader's role is not to add more information but to communicate meaning. That certainly was the subtext of a fascinating discussion I sat in on titled "Maps of Time: Data as Narrative."
During the discussion, Burt Herman, co-founder of Storify, the popular social media curation tool, argued that because "every story is not perfectly understood in the moment," the use of algorithms to mine user data is a perfectly legitimate way to help people decide what's important. Pushing back a bit on Herman's point, Jenn Thom, a research scientist at IBM's Visual Communication Lab, noted that "the algorithms we create to sift through data are not apolitical." And Drew Harry, Ph.D. candidate at the MIT Media Lab, presented a program he is developing that helps people decide in real time what is and isn't important.
But it was panelist Nicola Hughes, a Knight-Mozilla Fellow, who said something that really electrified me, perfectly capturing what in my opinion was the real theme of this year's SXSW Interactive conference: that true social and technological innovation requires the marriage of offline and online activities, the combination of the digital and the human. Hughes noted that when people are trying to make sense of news in the moment -- think of trending stories on Twitter -- "untruths can travel far." Is sense-making then, true to what actually happened or why it happened? And, she added by way of warning, because all of us are producing and being exposed to a lot more of "It" (data, news, and information in narrative form), "we're going to be getting 'It' wrong more often."
In a conversation after the panel discussion, Hughes told me that "journalists will be the archeologists of the future. They will have to sift through big data to try to make sense of it all." I then shared with her my belief that there are always four stories: the story you tell; the story you hear; the story that is the truth; and the story you are not hearing. Nicola explained that, in the technological realm, the fourth story is referred to as "unknown knowledge."
The exchange was indicative of the undercurrent of "meaning-making" that ran through this year's conference. In addition to many panels on the use of technology for social good, there was a focus on what "Buddhist Geek" Vincent Horn calls the "collectivization of intent." Indeed, during a panel discussion titled "Closer to One: Buddhism and the Internet of Things," Matt Rolandson, of the design company Ammunition Group, asked the important question: "Now that anything is possible, what is worth making possible? What is meaningful?"
David Womack, creative director of interactive design at R/GA and a professor at the School of Visual and Performing Arts, led an equally compelling session titled "Does Your Product Have a Plot?" During the session, Womack stressed the importance of adding emotional complexity to product design so as to foster deeper customer engagement. I understood him in part to be saying that we all must demonstrate a deep regard for our customers and partners, that people are highly complex and emotional, and that it is a sign of respect to offer them content that emphathetically reflects this complexity.
The goal, said Womack, is emotional rather than product complexity, and he provided several examples to illustrate his point:
In closing, Womack delivered two statements with relevance for the nonprofit sector: "Products that provide a platform for stories will be the ones that stick around." And, "We are lucky enough to live in complicated and interesting times for storytelling."
I also caught a terrifically funny and compassionate workshop by veteran character actor Jeffrey Tambor (The Larry Sanders Show, Arrested Development). In it, Tambor, while coaching a young acting student, managed to perfectly capture the importance of fully embracing emotional complexity and offering meaning to one's audience:
Tambor: "Have you ever been so mad that you jumped up and down?"
Student: "Probably."
Tambor: "What the f*ck?! Don't think. Just say, 'Yes!'"
Exactly! We are all more effective as communicators when we honestly embrace emotion and offer meaning to our audiences.
-- Thaler Pekar
Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....
Advocacy
See3 Communications chief executive Michael Hoffman offers three reasons why the Kony 2012 video went viral in a post on the Chronicle of Philanthropy's Social Philanthropy blog: the organization behind the video, Invisible Children, got its story out first; it simplified a complex set of issues by making the story about a single individual; and it made you, the person watching the video, the hero of the story.
On her blog, social media expert Allison Fine has a few suggestions for Invisible Children on what it could have done better.
And Future Fundraising Now blogger Jeff Brooks, while generally complimentary about the video, says there's one thing wrong with it: "The noise it creates in our industry." Adds Brooks: "Whenever a nonprofit pulls off something freakishly successful like this, there's a groundswell: Development directors everywhere are saying 'Get me some o' that Kony 2012'. Before jumping on that bandwagon, Brooks suggests that fundraisers take a few things into consideration -- including the fact that the success of the Kony video will be hard, if not impossible, to replicate.
Communications/Marketing
Last week, the marketing folks at BBH Labs were roundly criticized for their decision to help homeless people in Austin earn a few dollars during the South by Southwest conference by having them serving as mobile "hotspots" for conference-goers on a pay-as-you-wish basis. Not everyone piled on the company for its tone-deafness, however. InvisiblePeople.tv creator Mark Horvath, for one, applauded the company for its innovative approach. Said Horvath:
What BBH Labs did with Homeless Hotspots is a harmless and fun idea that provides a positive interaction between homeless people and the rest of you. Plus, our homeless friends made a few bucks. And even more important -- they were given self-worth. Unless you [have been] on the streets, you have no idea how low one's self-esteem gets. The number-one thing you can give another person is your attention, and the Homeless Hotspot vendors at SXSW got lots of that. Every one I met was smiling ear to ear....
Diversity
When it comes to diversity training, writes consultant and author (18 Minutes: Find Your Focus, Master Distraction, and Get the Right Things Done) Peter Bregman, organizations should "stop training people to be more accepting of diversity. It's too conceptual, and it doesn't work." Instead, says Bregman, organizations should "train [employees] to do their work with a diverse set of individuals. Not categories of people. People."
Impact/Effectiveness
In a guest post on Beth's Blog, Greater New Orleans Foundation president and CEO Albert Ruesga, who was in Seattle last week attending the 2012 Grantmakers for Effective Organizations conference, takes a closer look at a report, Is Grantmaking Getting Smarter? (20 pages, PDF), based on a recent GEO survey. According to the report, not much has changed in the field of grantmaking since the last time GEO conducted the survey, in 2008. Indeed, "while the survey holds some interest as a mirror held up to the nature of US grantmaking," writes Ruesga, "foundation staff might use it most effectively to reflect on their own practices." For example, "The survey
can help convince trustees who...still object to the idea of making grants for general operating support. When so many grantmakers have adopted the practice, and for so many good reasons, there's strong motivation for their reexamining the basis of their resistance....
And speaking of Beth's Blog, Beth rounded up more than forty guest bloggers for the GEO conference, including David Colby, vice president for research and evluation at the Robert Wood Johnson Foundation; Annie Hernandez, program officer at the Lumpkin family Foundation; David Greco, vice president at the Nonprofit Finance Fund; and Gail Berkowitz, director of evaluation at the Mastercard Foundation. Beth will be sharing more guest posts in the next few days, so be sure to check back.
Social Media
In a post on her Nonprofit Tech 2.0 blog, Social Media for Social Good author Heather Mansfield explains why every nonprofit organization needs a mobile Web site.
Wealth
And on the New York Times' DealBook blog, Kevin Roose compares the latest "rich list" -- the new Bloomberg Billionaires Index -- to Forbes magazine's own long-running list of the world's billionaires. While some have criticized the lists, writes Roose, "on the grounds that they glamorize the ultra-rich, treating them like show horses in an era when income disparity has come into the political cross hairs," he believes there's a different question that warrants our attention: "namely, are [the lists] accurate?..."
That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!
-- The Editors
(Erin Kelly is social media manager at the Robert Wood Johnson Foundation. You can follow her on Twitter. A version of this post appeared on Transparency Talk, the Glasspockets blog.)
As my colleague Steve Downs noted in a January post on Transparency Talk, the Robert Wood Johnson Foundation is "a couple of years into our [social media] journey and we reap the benefits of being more open and engaged every day." How serendipitous that as I started to draft an outline for this post, I stumbled on "The Promise of Social Media" on the Forbes site, where the authors conclude, "Based on our extensive field research -- we believe social media is likely to be one of the most significant forces reshaping management and business over the next decade and more." Here's my perspective on how one philanthropy is navigating this vast ocean and a few early observations from these efforts in the pursuit of making new things possible.
Roll Up Your Sleeves and Participate
Many of us (staff at RWJF) are engaged on social media platforms sharing research and insights into the areas we work, revealing the results of grantmaking and evaluations, and touting the efforts of our grantees and partners. Steve affirmed this last month, writing: "a fundamental part of any RWJF staff member's job [is] to remain up to date with the latest developments in the field." Web 2.0, the introduction of social tools, has offered us greater opportunity for two-way lines of communication and engagement. When I want to gather intel, I share an update on my LinkedIn wall, or post a status update on Google+ or Facebook, soliciting input on my half-baked idea or venting about the latest dilemma to stump me. When the vice president of research and evaluation wants to learn what research really resonated with the public, he invites "the people formerly known as the audience" to RWJF's Web site to vote and comment (words in quotation taken from @chiefmaven's visit to the foundation in October 2011).
What have we learned? Set aside time for staff to practice on different platforms to demonstrate the value of such efforts first-hand. "It sounds really simple," Steve says, "but it's very hard to know what social media really means until you do it. Conducting small, focused online experiments allow staff to learn about the potential for social media within their work." Staff members are encouraged to tweet during "learning sessions." These sessions have been part of our DNA for a long time: outside experts are invited to speak at the foundation to share a dialogue with staff about a subject matter related to our mission. Our physical walls no longer keep out wisdom, and at the same time these sessions help all of us, particularly new staff, build more confidence in our use of these tools.
Be Vocal, Encourage Others to Join In
The Vulnerable Populations Portfolio was just beginning to investigate the area of trauma. Instead of approaching the work through more traditional avenues, such as commissioning a scan, Program Officer Kristin Schubert hosted an online discussion to gain a better understanding of how different stakeholders viewed chronic trauma, particularly its impact on healthy development among adolescents. The program work is still being developed, but the discussion affirmed for Schubert that various audiences were thinking about and approaching trauma very differently and that no one at present is approaching trauma in a holistic way. While the effort provided an opportunity for RWJF staff and current grantees that work within adolescent systems to uncover real-time research, models and practice in the field, it also facilitated a network-weaving opportunity for anyone involved in the issue to connect with peer experts in youth neuroscience research.
What have we learned? To do our work better -- e.g., develop strong, impactful programs -- we need to be honest about what we know and what we don't know about a new area of interest. And when soliciting the input of others, it is critically important to be as specific as possible in your requests for engagement. Be clear about the information you are seeking and what you want others to contribute, so everyone involved walks away with more knowledge and you achieve the goal you set out to accomplish.
Don't Reinvent the Wheel
Senior program officer Mike Painter wondered: Could we provide a social networking site (SNS) for a group of thought leaders working to improve health care across the country -- patients, consumers, physicians, policy makers, employers, health plan leaders, anyone with a genuine interest in improving the quality of care -- to have open, honest discussions on a range of quality-related topics? In the past, Painter has relied on being a member of an existing listserv, which may seem limiting and constrictive given the 24/7 environment we engage in today with seemingly limitless platforms that offer farther-reaching networking tools. But from an original invite to leaders within the Aligning Forces for Quality initiative, the group has welcomed more and more people with similar goals and interests. The collective now has access to new perspectives and ideas, a treasure trove of experts and expertise to learn from, and a means to collaborate with one another. Almost one year in, Transformation Has Begun is still going strong, with more than six hundred members on Facebook.
What have we learned? First, find ways to meaningfully engage in existing communities or networks. And accept the fact that the right platform may not be the one you build. We tried this when the group launched -- we built the platform -- but the level of interaction was not what we had hoped for. Once the space moved to an SNS people were already familiar with (Facebook), membership and engagement exploded. Second, be sure you have clear terms of use, including general etiquette guidelines, in place from the beginning. According to a recent Pew Internet report, 85 percent of SNS-using adults say people are mostly kind, but nearly 50 percent have witnessed mean or cruel behavior by others on occasion. Concrete etiquette guidelines go a long way to ensuring that the SNS experience is pleasant and supportive for everyone.
Be Ready and Willing to Learn
Before letting go of the notion that the platform had to be ours, the foundation had enabled comments on every piece of content posted, including press releases, issue briefs, evaluations, and videos, at RWJF.org. Getting ready for this required significant internal coordination to ensure we had representation from all areas of our operations and a robust framework for moderation. But while we were ready (and eager) for a sizable number of comments, it seems that the opportunity to comment may not be as popular, on our site at any rate, as it is on widely read blogs.
What have we learned? Do not assume that a new behavior or means of interaction --e.g., allowing the public to comment on your content -- will be embraced by your audience.
Bundle Your ROI Stories
As thought leader Lucy Bernholz and James Irvine Foundation president Jim Canales point out in this insightful post, knowing what constituents are focused on or discussing at a given moment is vital to our work. We are no longer limited to having a discussion with those in the room; anyone with a tablet or smartphone can be part of the conversation. And we are looking forward to the next big breakthrough, whatever it might be, as multi-discipline thought leaders with unconventional perspectives begin to mingle and compare notes in large online communities.
If you ask staff who lived the activities discussed above, they would say that social networking has had an overall positive impact on the way we work, enabling us to surface a variety of ideas, gain valuable input with respect to team strategies, and disseminate knowledge more quickly and conveniently. Most importantly, these experiences have reinforced the notion that institutional philanthropy can embrace network technologies and work collectively toward achieving shared goals. Yes, as a learning organization forever focused on assessing impact, we still have a ways to go and are tinkering with how to evaluate our investments in social networking. But we are committed to getting there.
How about you? Do any of these lessons ring true for your organization? Is social media reshaping your work or the way you work? Share your comments and experiences in the comments below.
-- Erin Kelly
Craig Reigel left the for-profit world in 2006 to join NFF Capital Partners, a subsidiary of the Nonprofit Finance Fund that works to advance the collective thinking around -- and secure -- growth capital for nonprofits. In the years since, Reigel has focused much of his time and energy on structuring philanthropic equity investments -- high-stakes investments of philanthropic dollars with the potential to dramatically improve social outcomes and help nonprofits achieve sustainability. The results to date of the sixteen equity campaigns mounted by Reigel and his colleagues are detailed in the recently released report Nonprofit Capital Partners 2010 Portfolio Performance Report (24 pages, PDF). Philanthropy News Digest spoke with Reigel in February about the report.
Philanthropy News Digest: Do your philanthropic equity investments always result in a return of capital to the investor?
Craig Reigel: There are lots of types of growth capital out there that promise a financial return for investors, and for some organizations that's exactly right. On the other hand, we believe there are a lot of situations where that doesn't make economic sense, where returning capital will undermine the social mission of the organization, and the philanthropic equity work we do falls into that category. So, not only do not all of our philanthropic equity investments provide a return to investors, none of them provides a financial return on the capital invested.
PND: Can you be more specific about the kinds of returns you and your colleagues are looking to achieve? And how do you measure those returns?
CR: We're looking to do two things with the investments we facilitate. One is to create powerful social impact; that's the real goal. And the second is to ensure that that happens consistently and reliably over time; that's about sustainability. So the measure of success of an equity investment involves two things. One, does the organization create social value in its community -- is it teaching more kids how to read, providing more poor people in India with reading glasses, creating meaningful opportunities for volunteers? And two, is the organization able to generate recurring revenue streams to pay for the program year after year. That revenue can be earned, contributed, or a combination of the two, but the important metric is that by the time the investment has been fully paid out, the organization's business model is sustainable without additional infusions of philanthropic equity. It's only by accomplishing both of those things that we deem an investment to have been successful.
PND: What would you do in a situation in which an investment was helping to create significant social impact but not advancing the sustainability of the organization?
CR: That's a good question. First, remember, these investments are made without any plan to recoup them. This is about placing a bet on an organization's ability to succeed, and the possibility that some will not fully pan out is to be expected. One hopes, however, that if you do this with a lot of organizations, enough of them will succeed so that as a portfolio you'll see strong outcomes. But if, over the course of an equity investment, an organization has delivered on the social dimension but failed to achieve sustainability, the question, for those who have invested in it, then becomes, "Do I believe this organization can never achieve sustainability, or does it just need to course correct?" That's a subjective evaluation. You have to look at facts and draw your own conclusions. If it looks like they're making progress but still have a ways to go, then the right answer might be that it's worth doubling down on the investment, in which case either the same or a different set of investors could do that. If, on the other hand, the original investors decide the organization is unlikely to achieve sustainability, or that the management team isn't up to the task, or whatever the reason is that causes investors to view sustainability as unattainable, then the right answer is to say, "That's it, we're done, we'll cut our losses here."
PND: Why haven't we seen wider adoption of the equity investment approach?
CR: In part, it's a timing issue. We happen to have been pushing our approach and methodology at a time of economic stress. A lot of these types of investments come -- and should come -- from foundations, and foundation payouts over the last few years have not been what they were before the financial crisis of 2008. But that's not the whole story. There's also an awful lot of conflicting advice out there about how one should think about equity investments, what mechanism to use, and so on. My sense is that the more success stories we can point to, the more foundations will be drawn to this approach; we're starting to see that. The conversations I've had with folks who are managing philanthropic dollars have shifted from passing curiosity to genuine interest. We haven't hit the sweet spot yet, but we're beginning to see a lot of dollars flow into these types of investments. And that leaves me optimistic that, as the success stories become more compelling and are shared more widely -- and as the economy and foundation endowments continue to recover -- things are going to get a lot bigger.
PND: As an asset allocation strategy, what percentage of a foundation's annual payout should be allocated to equity investments?
CR: That's a great question. One of the things about philanthropic equity being successful is that it entirely depends on the nonprofits you invest in being able to fund their programs on a sustainable level. So the recurring dollars need to be bigger than the investment you start with. But it's not as though I'm looking for all foundations to make investments like this. I'd be delighted with something on the order of 5 percent to 10 percent of grant dollars; that would be transformative for the field. The question is, if you think 5 percent is the magic number, would it be better if 5 percent of foundations allocated 100 percent of their payout this way, or if 100 percent of foundations allocated 5 percent of their payout? My guess is that the correct answer is somewhere in between, with a bias toward it being more concentrated toward fewer foundations allocating more. If we had a reasonable number of major foundations putting a significant portion of their grant dollars to work in this way, it would have a very powerful effect.
-- Mitch Nauffts
(Paul Shoemaker is executive director of Social Venture Partners Seattle and recently was named one of the "Top 50 Most Influential People in the Non-Profit Sector" by The NonProfit Times. In his last post, he wrote about non-financial capital as a driver of social change.)
Most of us have heard or seen the name "Joseph Kony" over the last week. Indeed, as of Monday morning, 74 million people had watched the Kony 2012 video on YouTube. Most of us also are aware that the video has generated a wide range of reactions. I'm not here to argue for or against the video, the Kony 2012 campaign, or Invisible Children, the nonprofit organization behind the campaign. What makes me kinda nuts, however, is the criticism that Invisible Children doesn't spend enough money on "programs." An article in the Seattle Times on Friday, for example, noted that "The burst of attention [for Invisible Children]...has brought other criticism, including the ratio of the group's spending on direct aid and its Charity Navigator rating." (Charity Navigator, the country's best-known charity evaluator, is changing, but it was one of the worst things to ever happen to the sector, in my opinion.)
I've addressed this issue hundreds of times in my job over the last fourteen years, and I've come to realize I'll probably have to do it hundreds more. So I'll keep it simple: Invisible Children is an advocacy organization; that's what they do. They spend money on media (i.e., "non-direct aid") because that's their strategy. The criticism that they spend too much on "overhead" is like telling Heinz it spends too much on tomatoes. If you want to buy Heinz ketchup, buy it. If you don't, don't. But don't tell Heinz it doesn't know how to make ketchup.
Invisible Children's core "product" is advocacy and heightened awareness. And that requires a fundamentally different financial model than, for example, delivering food to starving people. Heinz and Intel have different business models because they make different products. The same is true in the social sector. Unfortunately, too many of us treat all nonprofits as if they operate in the same product category and use a one-size-fits-all set of metrics to measure their effectiveness -- including often-misleading metrics like percentage of spending on program vs. overhead. Doesn't work, never will, and it often leads to real distortions in charitable giving.
The Kony 2012 video may be incredibly effective advocacy or soft bigotry -- I don't know. But now that it has been released to the public, we should be arguing about the merits of the product, not about whether Invisible Children spent too much to create it.
-- Paul Shoemaker
Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....
Education
Social media guru Seth Godin has released "Stop Stealing Dreams: What Is School For?", a free 30,000-word manifesto and experiment in what Godin calls "firestarting." As he writes on his blog,
I'm hoping that removing friction from the sharing of this idea will help it spread. If you're interested in the topic (and I hope you are), please tweet or like the project page, download the files, post mirror copies on your own blog and if you can, email them to every teacher, parent and citizen who should be part of the discussion about what we do with our kids all day (and why). If just a fraction of this blog's readers shared it with their address book, we'd reach a lot of people....
Governance
Based on his organization's research and his own observations, Center for Effective Philanthropy president Phil Buchanan offers a sharp take on the 7 Habits of Highly Ineffective Foundation Boards.
Human/Civil Rights
In a guest post on the Open Society Foundations blog, filmmaker Doug Liman calls on ordinary Americans to fight torture by participating in his current project, Reckoning With Torture: Memos and Testimonies from the “War on Terror". "What I'm asking people to do is both simple and profound," writes Liman. "[T]o film themselves reading one of the eleven documents that make up the script of the movie and send me the footage." The documents in question were among the 140,000 the ACLU uncovered through a Freedom of Information Act request, and to date actors, writers, a former CIA officer, a former interrogator, and the chief prosecutor of the military commissions at Guantanamo have been among those who participated in the project.
Impact/Effectiveness
In a new post on the GiveWell blog, Holden Karnofsky considers the case of mothers2mothers, a nongovernmental organization based in South Africa that has been criticized for publishing what Karnofsky calls erroneous figures about the number of women it serves. Writes Karnofsky:
We certainly don't think the anomalies we've found show that m2m isn't doing great work, or that its support and awards are undeserved (and we are still considering the possibility of further investigating m2m as a potential GiveWell-recommended group). Still, seeing this sort of problem from an organization that gets as much attention as m2m seems significant. It's another piece of evidence that the philanthropic world -- including many of the largest and best-resourced funders -- is not asking all of the critical questions that it could be asking....
On his Harvard Business Review blog, Uncharitable author Dan Pallotta offers a "unified theory of social change" for nonprofits and institutions seeking to "change the world." The plan, in three parts, looks like this: 1) set big, hairy, audacious goals and deadlines for each problem you want to tackle; 2) collaborate and communicate like there's no tomorrow; and 3) invest in fundraising to dramatically increase the capital available to solve those problems. "It's not rocket science," adds Pallotta. "So let's get on with it."
Philanthropy
Philanthropy 2173 blogger Lucy Bernholz has released a new toolkit for foundations and nonprofit organizations based on Philanthropy and Social Investing Blueprint 2012, her annual look at the trends shaping the philanthropic and social change landscape.
Social Media
Beth Kanter looks at the role of transparency in the incredibly viral response to -- and debate over -- the KONY 2012 video, which was posted to YouTube on Monday and quickly racked up fifty million views. Although the video quickly galvanized tens of thousands of young people to pledge to "stop" Lord’s Resistance Army leader Joseph Kony, whose guerrilla army filled with child soldiers terrorized Ugandan villagers for the better part of two decades, the video also generated a backlash among African journalists and others who question its accuracy and the intentions of Invisible Children, the U.S.-based NGO that produced and released it.
Women
Allison Fine celebrated International Women's Day on Thursday by reflecting on a recent development in the human rights arena: the fact that in most cases "protests were started by individuals [on social media channels], not organizations." And while there may be no "Nelson Mandalas or Lech Walesas speaking on behalf of protestors," writes Fine, "social networks aren't leaderless, as critics say, but leaderfull with individuals defining their own roles, uploading videos, [and] posting news without being asked or tasked or targeted...."
That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a great week!
-- The Editors
(Gillian Yeoh, the principal author of this post, has been in charge of grantmaking for Give2Asia's disaster response in the Asia-Pacific region since 2006. In September 2011, Yeoh authored a report on disaster philanthropy that outlines lessons and best practices for disaster giving compiled by Give2Asia over the course of the last decade. (Click here to download the full report.) She can be reached at gyeoh@give2asia.org. A version of this post appears on the Philanthropy Front and Center-San Francisco blog.)
As I reflect on recovery efforts in Japan over the past year and what I have learned from the site visits I conducted, I am inspired by the resilience of the many people I met whose lives were forever changed by the Tohoku earthquake and tsunami. As Give2Asia continues to analyze and assess the situation and the ongoing needs of affected communities in the Tohoku region, one particular story of survival -- and of leadership --resonates.
When I first met Mr. Sato (Sato-san), a 70-year old Tohoku fisherman, in November, we were at a temporary housing area in Kitakamicho-jusanhama. With our board chair, his guests, and a local advisor, we were welcomed warmly into Sato-san's small temporary house. The small living room was filled with photos of his wife and grandson. We sat around a kotatsu (a low wooden frame covered by a futon or heavy blanket) as Sato-san began to share his story.
"My wife and grandson are still missing," he said. "The tsunami was estimated at six meters, but was actually twenty meters high. Beacuse of the early reports, my wife, my three brothers, and I ran to a place that was fifteen meters high. All I remember is holding on as the waves washed over me again and again. When I came to, my wife was missing. That night, I walked through ten centimeters of snow to my wife's hometown, but I could not find her."
Give2Asia Response
It is accounts like this that continue to motivate our work. In the immediate wake of the disaster, Give2Asia established the Japan Earthquake & Tsunami Fund to support affected communities. Thanks to U.S.-based partners such as the Japan Society of Northern California, the Keizai Society, Artists Help Japan, Japan Policy Research Institute at the University of San Francisco, and many, many corporations, Give2Asia raised $5.64 million. In the past year, we have supported fifteen relief and recovery projects in Tohoku with $2.55 million in grants. Along with our donors, we plan to continue working with capable local organizations to make targeted, strategic impact in the region over the next few years.
Give2Asia has responded to more than thirty disasters in Asia since its founding in 2001, mobilizing over $34.7 million in support. Based on our experience and prior work in Japan, we designed a disaster-response strategy specifically in response to the needs in Tohoku. To ensure the best use of the our donors' contributions, Give2Asia is supporting innovative ideas that require funding to demonstrate proof of concept, to scale, or to transition to public or corporate funding. We also are working to encourage our local partners to empower and involve survivors in the recovery process and to share information and networking initiatives so as to strengthen and amplify recovery efforts. In addition, we are working closely with local partners on finding creative solutions to problems of coordination and information gaps.
Unmet Needs
Due to the scope and nature of the disaster, there are many needs still unmet. Philanthropy has an opportunity to fill these gaps. On my visits to Japan, I have learned a lot from our partners on the ground. And from my encounters with beneficiaries of our assistance such as Sato-san, I have been educated about opportunities for philanthropy to meet the ongoing needs of survivors.
As a general rule, disasters leave vulnerable populations more vulnerable and tend to exacerbate social and economic issues. Prior to the earthquake and tsunami, for example, the Tohoku region was challenged by an aging population. In many cases, 30 percent to 40 percent of the people in affected coastal villages and towns were 65 or older, and many organizations working in the region identified the elderly as one of the most vulnerable populations. But Japan -- let alone rural Tohoku -- does not have enough gerontologists and other elder-care providers, and despite the clear need there has been a dearth of funding support for services for the elderly, as well as for persons with disabilities. The funding opportunities are many, from on-demand community bus programs for seniors living in temporary housing, to training for home-care providers, to community-building programs.
Employment and job programs are also important if the region's recovery is to be sustainable. In the first few months after the disaster, Sato-san and his fellow fishermen and -women (in Tohoku, approximately 20 percent of the people who make a living from fishing are women) were unable to work due to the destruction of their boats and the region's aquaculture farms, port facilities, and fishery-related factories. But thanks to the Pacific Asian Resource Center Interpeople's Cooperative (PARCIC), a local Give2Asia partner, Sato-san now leads his community's new fishing cooperative and has helped the community rebuild its wakame seaweed farms and bring in its first post-tsunami harvest.
Philanthropy can also step up by supporting organizations that are working to revitalize the local economy. For instance, Eat and Energize the East (EEE) is connecting local food producers with direct-to-market retailers, companies, and food producers. EEE also is testing locally grown and harvested products to counter the fear of radiation contamination. Elsewhere, the Peace Boat Disaster Volunteer Center is mobilizing volunteers to help affected communities recover their tools, desalinate their farms, and reopen ice factories. There are also dozens of young social entrepreneurs in Tohoku working to launch innovative projects with the potential to revitalize the local economy, and many of them are receiving support from an organization called Entrepreneurial Training for Innovative Communities (ETIC).
Mental health care is another unmet need, with many survivors suffering from or falling victim to neglect, self-abuse, post-traumatic stress disorder (PTSD), depression, and even suicide. Due to the stigma associated with mental health issues in Japan, mental health professionals worry that many who are suffering are choosing not to come forward. It's important, therefore, to acknowledge the problem and support organizations like the Miyagi Mental Health Welfare Association (MMHWA), an affiliate of Tohoku University, that are working to educate victims about diagnosis and treatment. Among other things, MMHWA provides free mental health services for survivors and works to raise awareness about mental health problems and care. It is also providing training for doctors, community organizations, and healthcare workers with respect to a range of mental health problems, including alcohol abuse, PTSD, and depression.
The effects of mental illness are not limited to those who suffer from it. The increase in stress, PTSD, and depression may also lead to an increase in gender-based violence and additional burdens on women, who typically shoulder the responsibility for caring for children and the elderly while managing their family's meals and daily chores. Unfortunately, the disaster's impact on childcare services, elderly care services, and household income as added to the stress on women. Several organizations have recognized this need and are focusing on programs for women. Two such organizations, Madre Bonita and "Tokyo Satogaeri" (an effort of the Nippon Foundation), are providing programs for expectant and nursing mothers to combat the increased risk of miscarriage and labor complications as well as post-birth problems.
The Road Ahead
A lot has been accomplished in the year since the disaster struck. Still, most of the local groups I have met with estimate that full recovery in Tohoku will take at least a decade. Because it is unrealistic to expect international philanthropy to provide the same kind of support to the region over the next decade that it has over the last year, it is crucial that we involve local communities in the programs we continue to support. In doing so, we will ensure that affected communities gain ownership of the various programs and will feel empowered to rebuild their own lives, one step at a time. At the end of our meeting, Sato-san said he was much more motivated to help rebuild his community and livelihood as a result of the meeting and that he better understood and appreciated the compassion and support he and other survivors are receiving from donors around the globe.
I strongly believe that philanthropy and the social sector have a crucial role in the long-term recovery of Tohoku. It is the risk capital of philanthropy and the innovation of the social sector that will provide the flexibility and expertise to test new ideas, pilot new initiatives, and build the capacity of local leaders as catalysts for change. It is also philanthropy that can ensure that unmet needs are addressed and survivors are neither forgotten nor ignored.
You can learn more about current needs and philanthropic opportunities in support of the long-term recovery of the Tohoku region at our Web site.
-- Gillian Yeoh
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