PhilanTopic

5 Questions for…Cheryl Dorsey, President, Echoing Green

Social innovation and entrepreneurship are two of the most powerful tools available to those committed to black male achievement. So argued Cheryl Dorsey, president of Echoing Green, a global social venture fund based in New York City, at the Innovation and Impact Forum hosted by the Open Society Foundations' Campaign for Black Male Achievement last October. In part, added Dorsey, that's because they have captured the attention of, and increasingly are being driven by, a millennial generation interested in a networked, technology-enabled model of social change.

In 2012, Echoing Green partnered with OSF to launch the Black Male Achievement Fellowships and announced the first cohort of BMA fellows in June. Earlier this month, the organization announced the 2013 semi-finalists for both the Echoing Green and Black Male Achievement Fellowships.

Recently, PND spoke with Dorsey about the BMA fellowship program, her own experience as a social entrepreneur, and the role of public policy in the field of black male achievement.

Philanthropy News Digest: What did you think of President Obama's State of the Union Address?

Cheryl Dorsey: I think the president's address presented a call for effective collaboration to solve crucial problems in our country. Many people make it their life's work to try to solve tough problems, from engineers working to create microchips that are smaller but carry more information to community bankers seeking to provide greater access to capital and teachers seeking to help more children in the classroom move ahead. President Obama's State of the Union address was a call for those who are on this path of enterprise, service, and innovation to work together.

These are the principles at the heart of the work of our fellows, who strive every day to solve some of the challenges and problems the president laid out in his speech. When the president talks about reducing the cost of solar energy, I think about 2012 Black Male Achievement Fellow Donnel Baird, who is doing important work to make clean energy accessible to all communities, especially low-income communities. When the president talks about expanding service opportunities for young people, I think about Echoing Green alums like Wendy Kopp, Alan Khazei, and Michael Brown, visionary leaders of the national service movement. The State of the Union address made me think about how Echoing Green can continue to support our fellows who are out there on the front lines in communities across the country and around the world.

PND: Last June, you announced the first cohort of Black Male Achievement Fellows. What were your hopes for the initiative? And have you been pleased with the response?

CD: Echoing Green was incredibly honored when we were approached by Shawn Dove and Rashid Shabazz, who head up the Open Society Foundations' Campaign for Black Male Achievement. After many in-depth conversations, it became increasingly clear that our twenty-five-year record of accomplishment in terms of identifying and supporting top early-stage, next-generation social innovators was a terrific complement to the campaign's comprehensive approach to the issue.

While you might say the campaign tapped Echoing Green because of our "process expertise" in social innovation and social angel investing, we were also very much aligned intellectually and emotionally with the goals of the campaign. Quite a few of our global network of five-hundred-plus social entrepreneurs over the years had worked on issues related to black male achievement, so the opportunity to bring into the social innovation pipeline a new generation of talent committed to these issues was appealing.

Needless to say, we are simply thrilled with the early response to the program. In the first two fellowship application cycles alone, we received nine hundred and fifty applications on average from across the country. For a newly minted fellowship program without any accumulated brand equity, that's quite something. And we think the response underscores the important and useful synergy between two social movements -- the deep intensity and focus of those working in the area of black male achievement married with the growing interest in and energy of the global youth social entrepreneurship movement.

PND: Did your own experience as a recipient of an Echoing Green Fellowship shape your vision for the BMA Fellowship initiative?

CD: Very much so! Receiving an Echoing Green Fellowship in 1992 to help start the Family Van, a community-based mobile health unit focused on the issue of black infant mortality in inner-city Boston, quite simply changed my life. The investment by Echoing Green in the Campaign for Black Male Achievement is not simply about funding; it's much more about opening up fledging social entrepreneurs to a network of peers, experienced mentors, and advisors who are deeply committed to the professional and personal growth of social change agents. Echoing Green recognized that we could bring our highly engaged network to bear on the Black Male Achievement Fellowship and leverage all the forms of capital -- social, financial, et cetera -- residing in the network for those committed to issues of black male achievement.

My colleague Decker Ngongang, who runs the Black Male Achievement Fellowship program for Echoing Green, recently wrote a blog post highlighting a few of our BMA Fellows. I think the post does a nice job of illustrating the kind of knowledge and wisdom -- past and present -- that lives within our network and social innovation ecosystem.

PND: While the Echoing Green Fellowships support social entrepreneurs from around the world, the BMA Fellowships are specifically focused on the male African-American population in the U.S. Is this a strategic shift for Echoing Green?

CD: For us, the Black Male Achievement Fellowship is not so much a strategic shift but rather a unique opportunity to focus our strategy where we see an opportunity to have increased impact. One of Echoing Green's mantras has always been that you must strive to scale your impact rather than your growth. We saw in the partnership with Open Society Foundations an opportunity to leverage the resources, brand, and breadth of that institution to smartly scale our own impact.

PND: In addition to being a social entrepreneur, you served as a White House Fellow and in the Labor Department during Bill Clinton's second term and on the transition team for the Innovation and Civil Society subgroup of the Technology, Innovation, and Government Reform Policy Working Group in the first Obama administration. You also continue to serve as vice chair for the President's Commission on White House Fellowships. What do you think the role of public policy should be in the field of black male achievement?

CD: Good public policy can set the stage for new programs that otherwise might not be incubated. Structural barriers to black male achievement in America are not new, but we have struggled to catalyze innovative solutions that could be game changers for black men and youth. A policy environment that brings attention to and keeps the focus on black male achievement, incentivizes the deployment of financial resources and top talent around the issue, and privileges collaboration and the replication of proven concepts is key to moving the needle. I'm excited, for example, about the work that New York City, which recently launched the Young Men's Initiative, is doing to model this kind of public policy behavior. For those who don't know, the city plans to invest more than $43 million a year over the next three years in both public and private funds to find new ways to connect with, and help, marginalized black and Latino young men. And it plans to do it through a comprehensive approach that involves education, health, employment training, and justice systems. If successful and widely replicated, it's a public-private model that has the potential to effect positive change in the lives of men and boys of color all across the country.

-- Kyoko Uchida

Closing the Achievement Gap for African-American Males: An Economic Imperative

(Angela Glover Blackwell is the founder and CEO of PolicyLink, an Oakland-based national research and action institute working to advance economic and social equity. She currently serves on the President's Advisory Council on Faith-Based and Neighborhood Partnerships and is a co-author, with Stewart Kwoh and Manuel Pastor, of Uncommon Common Ground: Race and America's Future.)

In the United States, a black public school student is suspended every four seconds, while every 27 seconds a black high school student drops out of school. Black students are also 3.5 times more likely than white students to be suspended or expelled. Within this group, black male students fare the worst.

At PolicyLink, our mission is to achieve equity by "Lifting Up What Works." We find innovations and strategies that expand opportunity and, working with local partners, get what's working into policy so that effective innovations are more widely disseminated. We are particularly inspired by the strategies being employed by the Oakland Unified School District, where in 2008-09 only 49 percent of black males graduated, compared with 72 percent of white males and 61 percent district-wide, and where 18 percent of African-American males were expelled at least once, compared with 3 percent of white male students and 8 percent of students district-wide.

In response to those disturbing numbers, OUSD opened an Office of African American Male Achievement (AAMA) in 2010. With funding from Atlantic Philanthropies, the Mitchell Kapor Foundation, the Stuart Foundation, the California Endowment, and Kaiser Permanente, AAMA is working to change educational outcomes for young men of color -- and in the district as a whole -- in innovative ways. For instance, many Oakland high schools and middle schools now offer Manhood Development Classes, in which African-American men from the community teach skills designed to help students navigate the conflicting value systems they experience in different areas of their lives. Family and parent summits at each school include "data walks" where parents and kids are provided with charts detailing educational outcomes at the school as well as where the gaps in access and learning occur. And those efforts are bearing fruit: in 2012 the U.S. Department of Education announced a voluntary resolution of the compliance review initiated against OUSD regarding the disproportionate harshness and frequency of disciplinary measures meted out to African-American students. The district has even been cited as a model for other districts across the country due to its intense efforts to improve in this area.

Why is an initiative in one California city important? For starters, the country is undergoing a profound demographic transformation. In 2012, for the first time, more than half of all babies born in the United States were born to people of color. As that trend continues, the very racial and ethnic groups that traditionally have been left behind will account for an ever larger share of the population, so that by 2042 the U.S. will be a "majority minority" nation. On the way to that milestone, demographers expect a majority of U.S. youth to be of color by 2018, and a majority of the young workforce to be of color by 2030.

How will that changing workforce fare in the global economy? Forty-five percent of all U.S. jobs in 2018 are projected to require at least an associate's degree, yet among today's workers only 27 percent of African Americans have achieved that level of education. Closing the wide and persistent racial gap in educational attainment is not only the right thing to do; it is an economic imperative and the key to building the kind of workforce the American economy needs to thrive in the twenty-first century.

Turning today's youth into tomorrow's skilled workers and innovators is critical to restoring America's growth and competitiveness. Given the demographic trends, political, education, business, and community leaders, together with philanthropists, must address the gaping racial disparities in educational outcomes, income, health, and employment that serve as a drag on the economy and diminish its potential. Oakland is unique in that it has acknowledged and is addressing the systemic inequities in its school system, implementing programs that directly target students most at risk.

OUSD has focused on changing the culture of its schools, training teachers to be more aware of their biases and revamping a disciplinary system that in the past has responded to behavioral issues by removing students from the classroom -- and thus from the opportunity to learn. By improving educational outcomes for young men of color, we are better positioned to leverage everyone's talents and creativity to build a twenty-first century economy that works for all.

Oakland has the right idea. It takes a sustained and collaborative effort on the part of government, business, funders, parents, and other members of the community to provide young people with a clear path to a prosperous future. Yet we too often fail to target our resources to those who need them most. Young boys and men of color can and must be co-creators of our collective economic future. We at PolicyLink believe it is imperative that funders and leaders around the country come together now to support similar efforts to address systemic inequities and close the educational attainment gap. Nothing less than our future is at stake.

-- Angela Glover Blackwell

Weekend Link Roundup (February 23-24, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Communications/Marketing

On her Non-Profit Marketing blog, NTEN's Katya Andresen looks at new data from eMarketer.com that confirms what a lot of us already know: Nonprofits have been quick to adopt social media.

Diversity

"It is imperative that women of color invest in young girls through volunteering and mentoring to ensure the success of our younger generation," writes Shae Harris on the Washington Area Women's Foundation blog. "Use this Black History Month to begin or continue 'paying it forward.' Our girls are counting on you."

Impact/Effectiveness

In a post on her blog, Beth Kanter, co-author most recently of Measuring the Networked Nonprofit, considers the difference between being data informed and data driven. "The term 'data-driven' has been used to describe organizations that rely solely on cold hard data to make decisions. Being data-driven sounds great -- in theory. But, because it doesn't acknowledge the importance of basing decisions on multiple information sources, it can doom an organization to epic failures," Kanter writes. Data informed, on the other hand, "describes agile, responsive, and intelligent businesses that are better able to succeed in a rapidly changing environment....Data-informed cultures are not slaves to their data."

On the Center for Effective Philanthropy blog, Sterling Speirn, president and CEO of the W.K. Kellogg Foundation, describes the foundation's efforts over the last five years to boost its impact by allocating $100 million to a program called Mission Driven Investing, giving, as Speirn writes, "equal weight to both social impact and financial returns." The results have been encouraging:

Insisting that financial success and mission impact are not mutually exclusive has enabled our organization to accomplish a great deal -- with more on the horizon. In these first five years, the foundation's investments have yielded high-impact social and financial returns -- ushering in new mobile technologies and innovative tools for educators; providing healthy, affordable school lunches for vulnerable children in New Orleans and other priority places; and expanding access to capital to underserved communities through community banking, to name several.

Yet successful investments such as those above have not only resulted in significant social impact and market returns, they’ve provided a learning return for our entire organization. Much as our grantmaking legacy provided us with guidance for our entrée into impact investing, now we’re using the lessons learned from our investments to inform our ongoing grantmaking efforts....

Philanthropy

On her Philanthropy 2173 blog, Lucy Bernholz wonders whether "3D printing" and/or "privacy" will end up on her list of philanthropy buzzwords for 2013. In a departure from past practice, Bernholz asks readers to offer their take on which of the two "we'll all be talking about, experimenting with, reading about, possibly funding, possibly failing to comprehend in 2013." What do you think? Share your thoughts on Lucy's blog here.

The National Committee for Responsive Philanthropy's Yna Moore shares a video featuring YouTube sensation Kid President to help illustrate how philanthropy can up its "awesomeness" quotient. "It's not enough to set clear goals, utilize evidence-based strategies and solicit feedback," writes Moore. "To be truly effective, strategic philanthropy must turn to practices familiar to social justice philanthropy: understanding who will benefit from your foundation's programs and how, recognizing the need to influence public policy by funding nonprofit advocacy and community organizing, and seeking input from nonprofit grantees and the communities they serve."

In a post on the Huffington Post's Impact blog, Sonal Shah, senior fellow at the Case Foundation, suggests that in order to solve the world's most pressing problems, both the public and private sectors need to put more money into things like the administration's Social Innovation Fund (which she ran for a while) and the Department of Education's i3 Fund, social impact bonds, prize and challenge philanthropy, and interactive technologies.

Social Good

We noted above that Lucy Bernholz is taking steps to crowdsource her next philanthropy buzzword list. She also wrote a really interesting post during the week that pushed back a bit against a Mark Rosenman post that appeared here on PhilanTopic (as well as at the Chronicle of Philanthropy) about the growing movement to quantify the value of higher education (and other traditionally nonprofit goods) through things like "college scorecard" mechanisms. Writes Bernholz:

[T]he most interesting thing about the scorecard -- in my opinion -- is that it puts for-profits on the same footing as nonprofits and allows them to be compared on equivalent data. What could be a clearer acknowledgement that we are in fact operating in a social economy -- in which every type of social good from education to healthcare to eldercare to cultural expression to volunteer mobilization -- is available from either a nonprofit or a commercial enterprise or a hybrid of the two? This is the key "reality check" for nonprofits -- in most cases they no longer are the sole purveyors of the "good" they provide. Rosenman argues that comparing nonprofits to each other on the basis of their individual outcomes is bad for colleges and bad for nonprofits -- but his article misses the bigger picture -- college education is not just a nonprofit "good" anymore (if it ever really was)....

Is she right? Have the lines between the two sectors blurred to such an extent that the differences between them are, if not yet meaningless, less important than their similarities? Or, as Center for Effective Philanthropy president Phil Buchanan argues in a comment on Lucy's blog, is the role that nonprofits play in this country "unique and vital" and not easily replicated by for-profit and hybrid organizations? What do you think? Leave a comment below or hop on over to Lucy's blog and join the conversation already under way there.

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And have a good week!

-- The Editors

[Infographic] Hunger in America

This week's infographic, courtesy of Feeding America and Upworthy, expands on last week's theme, disparities in diet-related diseases in NYC, to illustrate the growing problem of hunger in America.

That so much want exists amidst so much plenty will come as a surprise to many. And yet, as David Nasby, a former vice president of the General Mills Foundation and founder of the nation's first food bank network, noted in a speech a few years ago: "Tonight, thousands of your neighbors will go to bed hungry. It may be your child's schoolmate who is undernourished and has difficulty learning on an empty stomach. Or it could be a co-worker, a working mother whose low-wage job doesn't make ends meet. Perhaps it's an elderly neighbor who has to make a decision whether to delay filling a prescription or buying groceries. The faces of hunger are as broad as the faces of America."

 

 

Is hunger a problem in your community? What, if anything, is your local community foundation doing to address it? And how do we eliminate the stigma that so often attaches to going hungry in a society where eating out is a national pastime and almost everything is super-sized? Share your thoughts in the comments section below....

-- Mitch Nauffts

5 Questions for...Melissa Bradley, Chief Executive Officer, Tides

Created in 1926 by historian Carter G. Woodson, who designated the second week of February as "Negro History Week," Black History Month today serves as a reminder of the challenges and triumphs of the African diaspora in the United States and around the globe.

"Despite [Woodson's] original intentions and the federal expansion of the week into a month, critics rightly argue that African Americans and other people of color are still viewed as the exception to the majority white rule, and that this marginalization continues to be pervasive," argues Tides CEO Melissa Bradley on the organization's What's Possible blog. "We must fully embrace that this 'exception' of race is the rule -- as data shows -- and more justly distribute resources and elevate opportunities to pursue true equity."

Bradley joined the San Francisco-based organization as CEO in 2010 and, over the last few years, has helped boost its capacity to facilitate African-American donor engagement and support of African-American communities through a variety of programs. One such program, 21CF Powered by Tides, engages philanthropists and community leaders to address the opportunities and challenges facing African Americans and "new majority communities" globally.

Recently, PND interviewed Bradley about the program, Tides' work in the impact investing space, and philanthropy's support for human rights/racial justice initiatives.

Philanthropy News Digest: Tell us about the Twenty-First Century Foundation Powered by Tides program. How did it come about? And how does it support Tides' stated goal of "scaling the growth of African American donors and supporting new majority communities that are lacking financial and social capital"?

Melissa Bradley: Before moving back to Washington, D.C., in 2004, I lived in Harlem, where I became very familiar with the Twenty-First Century Foundation, which at the time was working independently to encourage strategic giving for change in the African-American community, as well as many of its grantees in the neighborhood. I even volunteered at one of them. So I was a longstanding supporter of and contributor to the organization before it joined the Tides Network last year.

Like many other intermediary foundations focused on addressing the needs of one group or subset of the general population, 21CF’s business model was contingent on large private foundations giving smaller public foundations money that they would then re-grant. Once 21CF realized there was a disconnect between the availability of funds and its growth prospects, we started talking about how Tides could be of help.

For us, the merger was more about being able to preserve the history and relationships 21CF had forged, both within the African-American community and also beyond California. I think the majority of people assume that most of Tides' work is done in California. But we actually have a national presence, including an office and building that we co-own in New York City, as well as an office in Washington, D.C. So the merger was an opportunity for us to expand our geographic footprint among donors and doers in New York and around the country.

The partnership supports Tides' goal of growing the African-American donor community, in that we now sponsor many of the programs 21CF had started. For instance, 21CF initiated an African-Latino Diaspora initiative with the Baobá Fund for Racial Equality in Brazil, and we have continued that effort, actually accelerating some of the deliverables. 21CF also accomplished a lot in terms of grassroots organizing, and as a result of that work we have been convening, and looking at how to support, many of those organizations. So, while we’re continuing some of the organization's work, we're also expanding on it to engage donors and communities who had not had exposure to 21CF before, and walking the work it had started across the country through our networks.

PND: What other programs and tools has Tides created to assist groups and individuals involved in this kind of work?

MB: We are about to complete work on our three-year business/strategic plan and a couple of things have come out of that process. One, we decided to refine and grow the core aspect of our business by promoting the use of donor-advised funds and collective action funds. With so many organizations competing for resources, we believe we need to be proactive in expanding our fiscal sponsorship work. So that's our number-one priority, in terms of just really pushing, promoting, and growing the programs we currently have.

In terms of new programs, one of the things that will help us meet our long-range strategy is engaging more people in the act of philanthropy and in the work of the social sector. So the second area we’ll be focused on is impact investing, which we have been doing for more than fifteen years, although not as part of the larger conversation.

And the final area we'll be focusing on is employee resource groups at large corporations. These groups contain individuals who haven't yet figured out how to leverage their corporate contributions, and in many cases the groups themselves don’t have a national network they can tap into. Under the leadership of 21CF Powered by Tides vice president Toby Thompkins, we will work to help these groups set up a more formal philanthropy program and connect them to other groups across the country. We see the effort as tying into our goal of democratizing philanthropy, as well as with our belief that regardless of whether you have $5 million or $5, your contribution and willingness to serve is important.

PND: As you mentioned, Tides was an early proponent of impact investing. What have you learned from your work in that field?

MB: In 2010, when I first arrived, we surveyed our clients who had done impact investing and a couple of things became clear. For starters, we learned that it's still a nascent field, and that people are struggling with how to define a "good" investment. Now, as we work with donors, we advise them to learn more about a project before investing by examining trends within the sector, potential outcomes, and so on. Our research shows that "good" investments all involve a significant amount of preparation by donors/investors.

The second thing we learned is to be patient. I think within the philanthropic community, there's an expectation that a donor will exit a program within ten years. But the impact investor is learning that their commitments are not business as usual and that more time may be required to achieve a project's goal.

And the third thing we learned is that while there are a great many new evaluation tools out there, qualitative data counts the most. Many of our clients have told us that it's about finding the right balance between qualitative and quantitative measures.

PND: How would you characterize philanthropy's support for human rights/racial justice initiatives and programs?

MB: I think philanthropy's support for human rights and racial justice is strong but maybe not always self-evident because of how little the public knows about those areas or philanthropy in general. One of the things we have found through our racial justice equity work is that there are tons of people and institutions focused on racial equity and racial justice, but if you were to ask the average person who, beyond the key players -- those featured in national media -- is funding this work, that person would be hard pressed to name more than a few foundations. So while there's a significant amount of support for human rights and racial justice in this country, a lack of public knowledge about the details tends to hold us back a bit.

That said, it won't surprise anyone to hear me say that more needs to be done. If you look at philanthropy in the U.S. alone, there is definitely not enough money flowing to human rights and racial justice initiatives and programs. And as new issues emerge, there will always be needs, unfortunately, that go unmet.

I also think a lot more advocacy work needs to be done, from the community level on up, to really get people to focus on legislation and policies that address systemic issues of race and discrimination in this country. It's one thing to be able to invest in changing a person’s mind, but at the end of the day it's the rule of law that tacitly endorses many of the inequities that exist in America, and so there’s a huge opportunity there, I think, that is being missed.

PND: What would you say to those partners who are nervous about supporting or advocating on behalf of underserved communities?

MB: I would say they should talk to other people doing this work to get a better understanding of what to expect in terms of a community response. If, after they do that, they are still hesitant, they should consider partnering with an organization like Tides. We are ready and willing to be out there, to support and invest in things we think will have a real impact and create lasting change, projects that sometimes make people uneasy. And if they don’t want to be aligned with us or anyone else, then I would say to them to at least consider being part of the solution. Groups don't have to fund this work, but they can help us spread information and knowledge through their networks. The benefits of educating and organizing people are huge. So if they don't want to put their money out there and have their support counted in that way, they certainly can -- and should -- help us organize other people around this important work.

-- Regina Mahone

Board Compensation in Grantmaking Foundations: Reasonable and Necessary?

(Mark Hager is associate professor of nonprofit studies in the School of Community Resources and Development at Arizona State University. This post originally appeared on the Foundation Center's Transparency Talk blog.)

Tradition dictates that board members work for free in most quarters of the nonprofit sector, but that isn't necessarily true for grantmaking foundations, especially independent ones. In a new paper (free access until late March) published in Public Integrity, the ethics journal sponsored by the American Society of Public Administration, Elizabeth Boris and I consider the question of what varieties of grantmaking foundations compensate their board members for governance duties. It reboots and reframes an earlier analysis conducted by the Urban Institute, the Foundation Center, and GuideStar.

In the paper, we point to several interesting examples, including a very large foundation's generous policy of trustee compensation spelled out in its organizing documents, another with seven-figure annual compensation paid to a bank to act as a very part time "institutional trustee," and another that underwent IRS investigation for eye-popping compensation that essentially amounted to trustees looting a charitable trust. These cases aren't typical, but they are part of the big picture of how work gets done in grantmaking foundations and how much insiders get paid to do it. In more typical cases, foundations might have justifiable reasons to compensate board members, including to ensure representation from beneficiary populations or to extend health insurance benefits to family founders. It's the extreme cases, however, that threaten to color all of philanthropy.

Compensation for governance duties is perfectly legal, so long as it falls under the IRS' broad standard of "reasonable and necessary." The practice is pretty rare in community foundations, partly due to the fact that they rely so heavily on public contributions and are therefore subject to public scrutiny. It also appears to be fairly rare in corporate foundations, but that may largely be due to the fact that many corporate foundation trustees get paid as corporate executives, making their compensation invisible on the foundation side. About one in five independent foundations, however, appear to report compensation of their board members for governance duties, as reported on Form 990-PF.

The practice is always concentrated in larger foundations. Of the ten thousand largest U.S. foundations that are the subject of the study, more than half compensate no one, including any staff. Most foundations are small and get their work done by family volunteers. Foundations that compensate staff members are more likely to compensate their board members. However, for the typical foundation, board compensation levels are eminently reasonable. The median individual board member compensation in independent foundations is only about $8,000. That's not an indication of a rampant problem.

However, a few bad apples always threaten to spoil the bunch. The median may be $8,000, but the mean was $15,700 due to a number of well-compensated apples. When a board member's one-year compensation reaches $200,000 (this happens), or a bank trustee is compensated $1,000,000 to spend a few hours a month managing investments (noted above), or aggregate board compensation in a given foundation exceeds its grants in a given year (this happens, too), we might rightly ask whether compensation has exceeded what is "reasonable and necessary." At the same time, $1,000 here and $100,000 there adds up to real money, to the tune of more than $100 million paid out to foundation board members in any given year. People hear that and start asking why that money isn't being allocated to community nonprofits instead.

Who is going to check to see whether board compensation is reasonable and necessary? For many organizations in the nonprofit sector, the general public is the first regulator. Service providers and advocates, especially those that rely on public contributions, reign in compensation and overhead costs due to public pressure. This is not the case with independent foundations, however, since they are not beholden to public contributions. Since the general public has no skin in the private foundation game, the public tends to ignore them.

A second regulator candidate, then, is government. Certainly, the IRS can prosecute private foundations that exceed the vague "reasonable and necessary" standard. Thing is, they don't, at least not very often. For one thing, identification of board member compensation is very difficult on Form 990-PF. For 2008, the IRS revamped Form 990 for public charities so that compensated individuals are identified as board members or employees. No similar revamp happened to Form 990-PF, where administrative and governance duties are conflated. Picking out board members working on governance duties is tricky; board compensation must be inferred from titles or numbers of hours worked, if reported. So, board compensation is not always obvious on the federal form. And even when unreasonable or unnecessary compensation appears evident, the IRS is often unwilling to take on community elites with deep pockets.

The third regulator, maybe, is private foundation executives and board members themselves. That's one of the ideas underlying the Foundation Center's Glasspockets initiative: private foundations will regulate themselves as their practices become more transparent. Private foundations certainly do not need to eradicate the practice of compensating board members for governance duties. However, when outliers cause observers (like me) to raise their eyebrows, the whole field can get painted as out-of-touch with community needs. Maybe Glasspockets can plant a stake in the ground on this issue to encourage foundation leaders themselves to openly disclose this information as a best practice. Voluntary and widespread disclosure of board member compensation, venues for discussion, and bright lights on questionable practices can help stem criticism of compensation that may or may not be "reasonable and necessary" for carrying out the exempt purposes of grantmaking foundations.

Everyone benefits when somebody, somehow, enforces the "reasonable and necessary" standard. Grantmaking foundations will keep better faith with their local communities. Regulators will be able to concentrate on more worthy offenses. And nonprofits will benefit from resources that are otherwise diverted into trustee pockets. Win, win, win.

-- Mark Hager

What We Value

(Mark Rosenman is an emeritus professor at the Union Institute & University and directs Caring to Change, an initiative that seeks to improve how foundations serve the public. In his last post, he wrote about accountability -- or the lack thereof -- in government, business, and the nonprofit sector.)

In his State of the Union address, President Obama called for government-provided student financial aid to somehow be tied to the value of the education which it helps underwrite. While it's an interesting idea, it presents a challenge not only to institutions of higher education, but to every nonprofit organization in the country. Put simply, who gets to measure the value of any charitable program? Who gets to stipulate their purposes and assess their performance and the outcomes they deliver?

Although such data are not readily available, we know that the White House believes that how well a particular college or university's graduates do in the job market after graduation ought to be a part of a "college scorecard." We also know that Sen. Marco Rubio (R-FL), who gave the Republican rebuttal to the president's State of the Union address, feels even more strongly about the idea and has joined with Sen. Ron Wyden (D-OR) to push The Student Right to Know Before You Go Act, which requires colleges and universities to provide detailed information to prospective students about how much one can expect to make in any given field post-graduation.

Given the state of the economy and students' understandable concerns about their futures, that makes a lot of sense, practically and politically. But should that be the principal measure of the value of higher education? When did we decide that the value of an associate's, bachelor's, master's, or doctoral degree should be quantified and measured in vocational education terms? And who decided it?

Most of us can agree that the purpose and function of higher education is to do more than just develop the knowledge and skills needed for graduates to achieve economic success. We look to our colleges and universities to build character and cultivate moral judgment, to teach students about their responsibilities as citizens of our democracy and engage them in community life, to help develop the kind of open-minded and empathetic individuals we all want as neighbors and fellow citizens. In short, higher education is about more than vocational education, even when it's in preparation for an elite profession.

Yes, higher education has a role in making the American Dream a reality, and it is essential to our notions of meritocracy and upward mobility. Most of us take to heart the assertion that a college degree is the surest path out of poverty and into a life better than those of our parents. Yet as the New York Times noted a number of years ago, "At the most selective private universities across the country, more fathers [sic] of freshmen are doctors than are hourly workers, teachers, clergy members, farmers or members of the military -- combined."

As President Obama himself suggested in his 2012 State of the Union address, we know colleges and universities are failing to level the economic playing field for a majority of Americans. Indeed, according to a College Board study, students with high college-entrance exam scores from low-income families are less likely to complete college than those with lower scores from more affluent families. The Education Trust also found that only five of some twelve hundred institutions of higher education in the U.S. were doing a good job of serving low-income students who matriculated.

Does the administration's "college scorecard" even begin to capture what it means to prepare young men and women for productive, meaningful lives? And shouldn't it also reflect whether and how well each college and university is advancing economic equity in society?

Such shortcomings in reflecting organizations' purposes and functions can be seen across the nonprofit sector. In the rush to assess performance, measure outcomes, and be more "accountable" to donors and funders, vital elements of many nonprofits' missions are given short shrift. This despite the fact that charitable groups often seek (and are expected) to provide goods or services in situations -- health care, education, land conservation, and so on -- where the market has failed.

Nonprofits also often work to avert problems before they require remedial intervention and to build individual capacity and community vitality so that fewer government- and charitably-funded services are needed in the long run. They contribute to the strengthening of our democracy and to increased civic and social capital. They inform the development of better policy and public program implementation, resulting in a better quality of life for all of us.

Alas, these kinds of things often are unacknowledged, let alone measured, when assessing the value of services provided by nonprofits. And because of these omissions, they increasingly are ignored by politicians, funders, and others who are keeping score, sometimes even by nonprofits themselves.

This must change. As a society, we tend to make economic calculations in very short timeframes -- daily, quarterly, annually. Maybe it's because we're Americans, always on the move, but we have little patience for long-term investments that favor the common good over narrowly defined short-term payouts. But unless and until the full scope of nonprofits' value to society is included in our assessment and evaluation schemes, all but the most basic functions of the sector will be discounted and marginalized.

From higher education to medical research, daycare and recreational opportunities to culture and the arts, all will be subject to a brutal economic calculus: Is the "commodity" produced by the organization worth the cost? Were we to pursue such a path, broader social benefits and the common good eventually would fade from practice and our collective value system.

Which brings me back to where I started. How do we assess the value of higher education? Do the schemes floating around the White House and Congress even consider what it means to develop good citizens and good neighbors? How do we assign value to the splendid wonder of someone pulling him or herself out of poverty compared to someone who benefits from a stable family structure, unlimited resources, and powerful economic and social networks?

What is the worth to society of a strong, evidence-based belief in the validity and legitimacy of the American Dream? Doesn't that benefit all of us?

If we care about such things -- as foundations, individual donors, and government must -- we need to accord them the value they deserve and make sure that any college or nonprofit scorecard goes beyond individual profit to include measures of broad social benefit. Failure to build that into our calculus will make us all poorer over the long term.

-- Mark Rosenman

Weekend Link Roundup (February 16-17, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Arts and Culture

On the Foundation Center's Transparency Talk blog, James Irvine Foundation president and CEO Jim Canales discusses the foundation's new arts strategy, which has received both positive and negative feedback from the nonprofit community. "I admire those who have stepped forward to criticize aspects of our strategy, whether they believe it is wrong on its merits or they view it as yet another example of 'strategic philanthropy' gone awry, where we are dictating and imposing our solutions upon the field," writes Canales. "That is certainly not out intention.

What is different for us in our new Arts strategy is that rather than continuing with a broad-based approach that funded projects across multiple objectives, we made the strategic decision to direct our finite resources in a way that, in our view, will best position the arts field for future viability and success. In doing so, we are openly expressing a point of view about how we think the field must evolve to ensure its dynamism and relevance. Yet, we are very clear about our willingness to learn with our partners in this effort, to refine our approach accordingly, and to help to advance the field's understanding of the many ways to engage a broader cross-section of Californians (in our case) in the arts....

So, please keep the ideas, observations and critiques coming. It's the best way to ensure we can achieve the end we all agree upon: a vibrant, relevant and successful arts field....

Fundraising

The Mertz Gilmore Foundation and NYU Wagner's Research Center for Leadership in Action have issued a new report, Beyond Foundation Funding: Revenue-Generating Strategies for Sustainable Social Change (84 pages, PDF), that's designed to aid social change organizations, funders, and technical assistance providers in discussing and implementing different fundraising and revenue-generating practices.

Future Fundraising Now blogger Jeff Brooks has a few choice words for fundraising consultants who show up at sector conferences with slick PowerPoint presentations designed to shame attendees into contracting their services, but who never, ever reveal whether the campaigns they are so proud of creating actually worked or not.

Impact/Effectiveness

On her blog, Beth Kanter has a few tips for nonprofits struggling to measure "difficult stuff" like social media results and success. Among other things, Kanter suggests that organizations spend time "brainstorming the 'chain of events' of how your organization's strategic use of social media can be a pathway to your organization's overall definition of success or mission."

The Weakonomist reflects on a recent Wall Street Journal article from Bill & Melinda Gates Foundation co-chair Bill Gates in which Gates described how his foundation is working to improve measurement of the problems it has set out to tackle, which in turn improves its understanding of a problem. An approving Weakonomist notes that while "Measuring a problem is sometimes more difficult than finding the solution...this is where more work should be focused."

On the Center for Effective Philanthropy blog, Mark Russell takes issue with Gates' argument, which Russell says "reinforce[s] the myth that if only nonprofits would follow the business model, the world would be a better place." Russell goes on to point out that there are any number of measurements that businesses don't track, such as the chemicals used in the hydrofracking process and how those chemicals might affect local residents, and/or information that businesses don't share about the things they do track, such as "who pays for [the] data (and who benefits)." And he closes by reminding us why key stakeholders need to be involved in any measurement process:

In short, to be data savvy is to be a bit of a data skeptic. As [MathBabe blogger Cathy] O’Neill says, there's "power behind a data collection process." Part of that power is to choose what to measure, based on values, or biases, or simply limited resources. As Fay Twersky, director of the Effective Philanthropy Group at the William and Flora Hewlett Foundation, puts it:..."We cannot evaluate everything, so we choose strategically...."

And in a long piece over at The Nonprofit Quarterly, Rick Cohen argues that mission-related investing is "worthy of recognition and support not just by nonprofits managing large endowments, but by mainstream nonprofits concerned about maximizing the capital markets' support of socially beneficial investment opportunities."

Journalism/Media

On the Humanosphere blog, Tom Paulson weighs in with a thoughtful consideration of the Bill & Melinda Gates Foundation's "strategic media partnerships and concludes that

as journalists and news organizations come to depend increasingly on philanthropies like the Gates Foundation for financial support, it is even more important than ever that we stay focused on our main job -- arguably, pushing for critical analysis and accountability -- and tread carefully when asked to strategically partner with even the most well-intentioned humanitarian in promoting a cause...or solution.

Philanthropy

On the GrantCraft blog, Lisa Philp, the Foundation Center's vice president for strategic philanthropy, discusses the genesis of Next Gen Donors: Shaping the Future of Philanthropy, a companion piece to the just-released Next Gen Donors: Respecting Legacy, Revolutionizing Philanthropy(80 pages, PDF), which found that high-net-worth Gen X and Geny Y (Millennial) individuals are keenly interested in structuring their philanthropy around personal values, measurable impact, and hands-on engagement. A project of GrantCraft, the Johnson Center for Philanthropy at Grand Valley State University, and 21/64, the companion report highlights the "practical wisdom" and insights of next-gen donors with respect to their interest in engagement, new ways of learning, and making a difference sooner rather than later.

Transparency

On her Philanthropy 2173 blog, Lucy Bernholz reflects on two recent examples of a foundation confronting its critics publicly. In the first, Irvine Foundation CEO Jim Canales (see above) linked directly to bloggers critical of Irvine's new arts strategy. And in the second, the Knight Foundation said it regretted paying Jonah Lehrer, a journalist who was caught plagiarizing by his employer, The New Yorker, and subsequently fired, $20,000 to speak at a recent Knight-sponsored media seminar. Bernholz said she found herself

considering these two events from a few steps further back. We criticize foundations for being opaque, and mostly they are. Steps toward transparency aren't going to be easy (sounds real good if you say it real fast). Both of these examples involve foundations actually in conversation with publics they could (easily, legally, and rather comfortably) ignore. The more important question for all us may be -- why is that the case?

Water/Sanitation/Hygiene (WASH)

Over at the WASHfunders.org blog, our FC colleagues Nina and Seema share a three-minute video in which Water.org co-founder and award-winning actor Matt Damon pledges to stop using the toilet until more people take the issue of water scarcity seriously. "Aside from publicizing WASH issues, the video aims to inspire people to action," they write, "[and] directs viewers to a new web site, strikewithme.org, where they can learn more about the crisis, and donate their money and social media accounts to the campaign."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And enjoy the long weekend!

-- The Editors

[Infographic] Healthy Food and Community Change in NYC

On Thursday, the New York City-based Laurie M. Tisch Illumination Fund launched its Healthy Food & Community Change initiative with a commitment of $15 million over five years for healthy food programs across the city.

As the fund-created infographic below illustrates, there are vast disparities in diet-related diseases across New York City. The initiative aims to address these disparities by supporting strategies designed to increase the availability, affordability, and knowledge of healthy foods while promoting healthy food choices in high-need neighborhoods.

In everything it does, the fund tries to leverage its impact through partnerships with nonprofits and other foundations, public-sector agencies, businesses, colleges and universities, and individuals. Do you know of any efforts that have made headway against the food-desert problem and or diet-related diseases? Share them with us -- and the folks at the Illumination Fund -- in the comments section below....

-- Mitch Nauffts

Steve Goldberg: 'SIBs Are Here to Stay'

I don't always agree with Steve Goldberg, but I admire his ability to say what he means and to say it well. Earlier this week, Goldberg, the author of Billions of Drops in Millions of Buckets: Why Philanthropy Doesn't Advance Social Progress and a vocal proponent of social impact bonds (also known as pay-for-success bonds), posted a long rebuttal to a post by Jon Pratt, executive director of the Minnesota Council of Nonprofits, in which Pratt suggested that the two main claims for SIBs, more resources and better results, are "admirable but dreamy."

I'm not going to get into the details of Pratt's argument or Goldberg's counter-argument (you should definitely take the time to read both). I was struck, however, by Goldberg's assertion that the "real reason" SIBs are here to stay is because "Government is out of money and out of breath" (a phrase he credits to Sir Ronald Cohen, a "founding father of social investing"). Goldberg continues:

We are enmeshed in a long-term fiscal and economic crisis that will increase the need, but decrease the funding, for effective social services long after unemployment returns to normal levels. This is a "new normal" of government retrenchment, rising inequality and decreasing social mobility to which we have not yet adjusted. The safety net ain't what it used to be, plus we can’t afford it.

While there are many encouraging trends in social sector innovation, as well as room for improvement, beleaguered nonprofits are in no position to take up the slack left by an eroding public sector. They don't just, as Mr. Pratt puts it, "frequently feel under-compensated, need more resources, and blame their limited success on lack of funding," they are under-compensated, in need of more resources and held back by a chronic and worsening lack of funding. Nonprofits are fighting a holding action that they can't win over the long term. They, too, haven't figured out how to cope with the new normal....

Now, Steve Goldberg isn't the first person to make this argument, and he won't be the last. But if denial is a river in Egypt, then many nonprofits are ill prepared for what's coming.

What do you think? Was the Great Recession merely a prelude to a "new normal" characterized by government retrenchment, reduced funding, and lowered expectations? Are most nonprofits prepared for such a reality? Will SIBs gain traction as more traditional funding sources dry up? And what do you think the sector will look like a decade from now? Use the comments section to share your thoughts....

Interested in learning more about the pay-for-success model? As part of its social innovation work, McKinsey has put together a nice package of resources, including the 2012 report From Potential to Action: Bringing Social Impact Bonds to the U.S., an animated video that introduces the topic of SIBs, and an introductory article that describes the SIBs landscape. Well worth checking out...

-- Mitch Nauffts

Survey: The State of Social Sector Leadership

Anyone in a position of leadership these days understands that organizations have a choice: disrupt or be disrupted. That's as true for nonprofits, foundations, public private partnerships, and social enterprises as it is for profit-seeking businesses.

To better understand how social sector leadership is changing, McKinsey & Company is inviting social sector leaders to participate in an online survey.

Among other things, the management consulting firm is interested in learning more about the attributes of high-performing social sector leaders -- what do they, and the peers they admire, excel in -- and how do they think their job descriptions will change over the next five to ten years. The firm also is interested in learning whether the sector is walking the talk when it comes to collaboration -- are social sector leaders committing their organizations to multi-stakeholder partnerships where the whole is greater than the sum of the parts and attribution and credit are shared -- or is their primary focus still on fundraising and media coverage for their organizations.

As Laura Callanan, who leads McKinsey’s Learning for Social Impact (LSI) initiative, notes: "There are a number of key trends affecting the social sector environment today which require successful leaders to have different strengths from what was important in the past. The social sector is a dynamic environment and a lot happens over a ten-year period." We couldn't agree more.

McKinsey will be sharing the results of the survey -- in the context of a broader "landscaping" it has developed on the state of funding, resources, and research on social sector leadership -- with all who participate later in the year.

To take the survey, click here.

Rules to Communicate By

As former foundation CEO Martin Teitel reminds us in The Ultimate Insider’s Guide to Winning Foundation Grants, success in grantseeking boils down to two things: great organizations doing great work; and effective communications.

What does the latter entail? Teitel offers these three easy-to-follow rules:

Be Clear

• Eliminate jargon
• Write for your real (as opposed to imagined) audience -- i.e., funders who don't know your organization that well
• Leave out the math and formulas

Be Concise

• Not one word more than the length specified in the funder's guidelines
• Use a spear, not a club -- i.e., make your point and move on
• Revise, revise, revise

Be Compelling

• Share your enthusiasm for the work you and your colleagues are doing
• Base your request for funding on facts, not hopes or wishes
• Put your organization's story at the center of your appeal

Sound advice. What would you add to the list? Use the comments section to share your thoughts....

-- Mitch Nauffts

Weekend Link Roundup (February 9-10, 2013)

Our weekly roundup of new and noteworthy posts from and about the nonprofit sector....

Fundraising

Guest blogging on the GuideStar blog, Big Duck founder Sarah Durham shares three fundraising trends that gained traction in 2012 -- more sophisticated data collection and analysis, greater use of social media by nonprofit executives to engage with constituents, and more effective use of online technologies -- and suggests three things that nonprofits should add to their to-do lists in 2013: collect AND analyze data, "open up," and act fast when a crisis strikes.

Impact/Effectiveness

On the Center for Effective Philanthropy blog, Ellie Buteau discusses the organization's new Room for Improvement report, which found that funders often request performance information that is more useful for them than it is for their grantees. "More than half the nonprofit leaders we surveyed agreed that funders care more about performance information that is useful to the foundations than information that is useful to the grantees. Only 28 percent of nonprofit leaders disagree with this sentiment," writes Buteau. "Not surprisingly, the more strongly nonprofits believe funders are prioritizing their own data needs over nonprofits', the less helpful they find their funders to be to their organizations’ ability to assess its progress."

Steve Lohr has an interesting post on the New York Times' Bits blog about the etymological origins of the term "big data."

And in an article in Wired, Nassim Taleb, the former derivatives trader who popularized the concept of "black swan" events, offers a few cautions designed to temper our current enthusiasm for data of the big variety. "Big-data researchers," he writes,

have the option to stop doing their research once they have the right result. In options language: The researcher gets the "upside" and truth gets the "downside." It makes him antifragile, that is, capable of benefiting from complexity and uncertainty -- and at the expense of others.

But beyond that, big data means anyone can find fake statistical relationships, since the spurious rises to the surface. This is because in large data sets, large deviations are vastly more attributable to variance (or noise) than to information (or signal). It's a property of sampling: In real life there is no cherry-picking, but on the researcher's computer, there is. Large deviations are likely to be bogus....

The Bridgespan Group's Daniel Stid has nice things to say about a just-released working paper from the William and Flora Hewlett Foundation titled "Evaluation Principles and Practices." "The first two principles articulated in the paper," writes Stid, "are especially noteworthy":

1. We lead with purpose. We design evaluation with actions and decisions in mind. We ask, "How and when will we use the information that comes from this evaluation?"
2. Evaluation is fundamentally a learning process. As we engage in evaluation planning, implementation, and use of results, we actively learn and adapt.

"These two principles are reciprocal," writes Stid. "The first emphasizes that information gleaned from evaluations will be used for decisions and actions; the second that the point of evaluation is learning, adaptation, and course correction." What would you add to the list. use the comments section below to share your thoughts.

Journalism/Media

On the Knight Foundation blog, Eric Newton lists ten digital tools that Michael Maness, the foundation's vice president for journalism and media innovation, think journalists should be familiar with. To that end, the foundation, in partnership with the Poynter Institute and the American Press Institute, has launched a series of tutorial webinars to help media people learn new tools as fast as they're coming out. Eventually, tutorials will be available for all the tools in Newton's post, including DocumentCloud, Panda, Poderpedia, Timeline.js, Scraper Wiki, TileMile/Map Box, Frontline SMS, Zeega, Amara, and Ushahidi. Newton also likes video notebook and Storify. "News [changes] constantly," he writes. "So [do] the tools. Journalists [need to] be as creative and enterprising about how they do the news as they [are] about the news itself."

Philanthropy

If there's one thing we should take away from the uptick in charitable giving at the end of 2012, it's that professional and legal advisors counseled their high-net-worth clients to take advantage of existing tax laws, writes Ellen Remmer on the TPI blog. "So, hurray for uncertainty in the tax laws! If it drives charitable giving then I'm all for it; but let's take note that the drivers of this 'river of money' were the advisors to the affluent."

Writing on the White Courtesy Telephone blog, Albert Ruesga reflects on "an extraordinary thing [that] happened some three years ago at the Council on Foundations annual meeting in Denver: philanthropy was put on trial." The session, which featured Gara Lamarche, then-CEO of Atlantic Philanthropies, as the prosecuting attorney and Ralph Smith, senior vice president at the Annie E. Casey Foundation, for the defense, was extraordinary for a number of reasons, writes Ruesga, but most of all because nothing was done after the conference was over "to explore what it meant for the grantmaking profession that five out of six of its practitioners, chosen at random, voted to condemn it." Writes Ruesga:

While philanthropy may have gone on trial three years ago, we're not past the moment when we can fruitfully ask those five out of six why they voted as they did. If, as I suspect, their judgment represents the general sentiment of the field, what, in their view...are the primary reasons why grantmakers tend to underperform? Is it because foundations generally fail to identify and address the root causes of our problems, treating only their symptoms? Is it because foundations are too top down, woefully in the habit of doing "to" rather than "with"? Do they fail to deliver social change because their work is little governed by metrics or business principles? or is it because there's such an attenuated sense of accountability at many of these institutions?...

Writing on the Huffington Post's Impact blog, Josh Baron, co-founder and partner at Banyan Family Business Advisors, has a different take on why philanthropy so often fails to take advantage of "unprecedented opportunities" to make a difference in society -- and what can be done to change the existing calculus of social good.

On the Foundation Center's Transparency Talk blog, Bella Vista Foundation executive director Mary Gregory explains why her organization decided to develop a theory of change and how that process was used to help other groups interested in creating their own theory of change.

Social Media

On the Minnesota Council on Foundation's Philanthropy Potluck blog, Megan Sullivan shares highlights from the Chronicle of Philanthropy's most recent Social Good podcast, in which Allison Fine and Kivi Leroux Miller, president of Nonprofit Marketing Guide.com, discussed how nonprofits can use social media to achieve social good.

And that's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. Enjoy the snow and have a great week!

-- The Editors

From Global to Local: Partnerships Are Critical to Success

(Nancy E. Roman is president and CEO of the Capital Area Food Bank, which she joined in January 2013 after serving as director of public/private partnerships and communications at the United Nations' World Food Programme. Prior to joining WFP, Roman was vice president of the Council on Foreign Relations in Washington, D.C.)

Moving from a job with the World Food Programme -- the world's largest humanitarian agency -- to the Capital Area Food Bank, a local NGO, has afforded me a bright-line look at the advantages and challenges of global versus local. The global humanitarian arena allows for scale but little flexibility or agility. The local environment allows for just the reverse: we move swiftly, like a speedboat, toward the problem but must depend on others to scale up our best solutions and practices. But one common theme emerges for both: the importance of partnerships.

Whether tackling hunger or clean water, disease eradication, literacy, or social justice, solutions to the great humanitarian and social problems of our day have eluded us. Both global and local hunger persist, despite the heroic efforts of many. And from both global and local vantage points, it becomes ever clearer that we urgently need to collaborate more effectively with our partners to meet the challenges we face.

For millennia, the human race has been finding ways to help others in need. But addressing social problems through agencies designed and built to tackle particular problems is a relatively new phenomenon. The International Committee of the Red Cross, founded in 1863, is one of the earliest. United Nations organizations such as UNICEF and the WFP are but fifty years old. Many of the largest and best-known NGOs are even more recent players. Founded in 1980, the Capital Area Food Bank was created to end hunger in the Washington, D.C., metro area. Unfortunately, over the last thirty-three years, the need has not diminished. Poverty is on the rise, in our region and nationally. Indeed, we have witnessed a 25 percent increase in hunger since the beginning of the economic downturn in 2008. Today, more than 680,000 individuals, including 200,000 children, in the District of Columbia, northern Virginia, and Montgomery and Prince George's counties in Maryland look to us for help. And while the ranks of the working poor are growing, the middle class is also under stress, as many people who have never needed emergency food services find themselves at the doors of our neighborhood partner agencies and food pantries, which depend on CAFB for food and household items.

There was a time when many of us looked forward to ending the scourge of hunger, poverty, and homelessness. But as days become months and months become years, these stubborn social problems have outlasted our commitment, our resources, and sometimes even our compassion. So we ask: Given that these problems are overwhelming and persistent, might not we fight them more effectively in partnership rather than alone? If that's the case, how can we maximize impact through collaboration? And how should we think about these critical relationships?

At WFP, it became abundantly clear that our work, once deemed the purview of "donor governments," required a broader set of players. Back then, I was focused on engaging the private sector, in particular, to join with government and civil society to more effectively reach hungry people around the world. During my five years with the UN, our unconventional thinking about public-private partnerships became conventional wisdom, as governments began to embrace the idea that they, too, needed partners -- not just for additional funding but for the expertise that private-sector partners often are uniquely positioned to provide. As the UN partnered with Fortune 500 companies and governments to take on child malnutrition, the process of coordinating the work was always harder than we'd initially thought -- yet always turned out to be more worthwhile than we'd expected.

At CAFB, our partners include not only private companies such as Marriott and philanthropic entities like the Philip L. Graham Fund, but also hundreds of nonprofits, from local churches to area YMCAs to Martha's Table, Bread for the City, and other community groups. In working with these partners, however, we have come to realize that it is not enough to address immediate needs in our communities; we must also find ways to create a long-term plan to collaboratively and systematically tackle the problems we face.

To that end, I have just completed a round of conversations with forty or fifty agencies that are working with us to combat hunger in the region. CAFB's role is to provide our partners with leadership, expertise, training, and food resources to meet the needs of children, seniors, and families in their areas of service. But as we think through the challenges of how to do this effectively, we are also mapping the food insecurity needs and the reach of our and our many partners' efforts. When that effort is completed, we will be better positioned to empower and support the community agencies best suited to address these challenges.

Just like leaders in the humanitarian aid field, we grapple with how best to work with our partners. Collaboration and information sharing is critical if we are to repair and weave stronger social safety nets that contribute to sustainable reductions in hunger, preventable diseases, and a host of other pressing problems.

We realize that collaboration, to be effective, will require an understanding of the comparative advantages of our various partners. It may also require bringing them together more often -- not just to share best practices, but to plan better. Finally, it may require demanding answers to tough questions from all of us. Questions like: Which solutions are most effective? Which should be scaled first? Which should be phased out?

In the end, the best solutions are likely to be implemented street by street, block by block, one community at a time. At CAFB, we're convinced that working with our partners to understand what works best and then to share best practices and scale solutions as we work toward our collective goals will make it more likely we achieve them.

-- Nancy Roman

Investing for Impact: Conservation and Environmental Restoration Through Mitigation Banking

(Ashley M. Allen is a founder and managing partner of i2 Capital Group, a merchant banking firm focused on impact investments in the energy and natural resource, education, and health sectors.)

In industrial and post-industrial economies around the world, economic development has often come at the expense of the natural environment. Over the coming decades, the United States will experience significant negative impacts to ecosystems and watersheds from energy development, infrastructure build out, and urbanization. Growing demand for low-carbon electricity and biofuel production is likely to involve large amounts of publicly and privately owned land, while energy developers anticipate drilling tens of thousands of oil and gas wells across more than two million acres of leased land. Against this backdrop, the implementation and expansion of effective habitat conservation and mitigation practices and policies has the potential to dramatically reduce and offset many of the less desirable impacts associated with this kind of development, thereby helping to create a sustainable economy in which economic development and conservation are valued and promoted.

Habitat Mitigation

Habitat mitigation is the practice of avoiding, minimizing, or offsetting negative impacts on natural habitats and wildlife from energy and other development activities. In the U.S., the Clean Water Act (1972), the Endangered Species Act (1973), and the National Environmental Policy Act (1969) together form the policy underpinnings for environmental mitigation activities. As defined by the Council on Environmental Quality, mitigation includes: (a) avoiding negative impacts altogether by not taking a certain action or parts of an action; (b) minimizing impacts by limiting the degree or magnitude of the action and its implementation; (c) rectifying negative impacts by repairing, rehabilitating, or restoring the affected environment; (d) reducing or eliminating impacts over time by maintaining mitigation activities over the life of the action; and (e) compensating for negative impacts by replacing or providing substitute resources/habitats (compensatory mitigation).

Habitat "Banking"

Historically, compensatory mitigation activities took place on a one-off basis. Projects likely to cause negative impacts to habitats and species would include minimally required compensatory activities as part of an overall project plan. Over time, this approach morphed into the creation of advanced mitigation efforts led by third-party experts and "credits" that could be "banked" and/or sold on an arm's-length basis to developers in need of offsets. Wetlands mitigation banking, for instance, makes it possible for wetland mitigation efforts to be aggregated across larger sites in ways that drive ecological, operational, and financial efficiencies. Importantly, habitat banking has created opportunities for private landowners to generate profits by investing in a variety of mitigation and conservation activities, thus creating a compelling market-based incentive for them to support conservation and restoration activities. The Environmental Law Institute estimates that private and public expenditures on compensatory mitigation activities has risen to more than $3.8 billion annually. This large and growing segment of the market presents a dynamic and compelling opportunity for impact investors interested in supporting key environmental and conservation goals.

Opportunities for Impact Investors

As the regulatory framework has been clarified, the number of such banks in the U.S. has exploded. According to Ecosystem Marketplace, a leading source of news, data, and analytics on markets and payments for ecosystem services, there are presently 440 active mitigation banks and 77 active conservation banks in the U.S., with several hundred more seeking approval. These banks fall into three main categories: (i) private, entrepreneurial banks established by land owners seeking financial returns from the sale of credits; (ii) public banks set up by federal, state, or local governments; and (iii) nonprofit banks established by environmental organizations such as the Nature Conservancy and the Conservation Fund. Private banks, which account for more than 70 percent of the habitat banks in the U.S., typically are established by landowners or mitigation asset origination firms. The following examples provide models for impact investors to consider:

Wildlands, Inc. in Rocklin, California, is a privately held mitigation and conservation banking company that is working to "create a legacy of thriving and protected natural habitat through ecologic and economic cooperation." The company is the largest mitigation banker in California and manages over seventy-five projects on more than 31,000 acres in California, Oregon, and Washington State. Wildlands has partnered with Parthenon Capital Partners to grow its offerings of economically sound solutions to existing environmental challenges.

Headquartered in Richmond, Virginia, Falling Springs, LLC develops, owns, and partners on a variety of environmental credit trading projects, with a focus on mitigation banking opportunities where preservation, enhancement, and restoration of natural systems meets environmental and economic expectations. The company deploys capital from its parent company, Tredegar Corporation, to restore degraded wetland and stream systems, largely in Virginia, Georgia and Florida.

Timbervest, LLC manages timberland and other conservation-related investments across the United States, with an eye to capitalizing on what it describes as "often undervalued and overlooked environmental resources." Headquartered in Atlanta, the company, which is growing, currently manages two investment portfolios with approximately $270 million dedicated to conservation assets. Investors include public and corporate pension plans, corporations, foundation, endowments, and high-net-worth individuals.

According to the Timbervest site, "Mitigation banking is estimated to be a $3 billion industry that is expanding rapidly due to the growing scarcity of our nation's natural resources, as well as the political and regulatory environment in the U.S., which has increasingly recognized the instrinsic value of our nation's environmental infrastructure."

As the drive to exploit the region's carbon-based and renewable energy sources accelerates, the West, in particular, offers abundant opportunities to expand mitigation banking activities. Indeed, several projects in the early stages of development promise to bring scale and growing awareness to the mitigation banking field. As impact investors around the globe seek new asset classes in which to deploy capital, mitigation banking represents an increasingly important and exciting opportunity. For more information, visit the National Mitigation Banking Association Web site.

-- Ashley Allen