Fred Ali is president and CEO of the Southern California-focused Weingart Foundation, where he is drawing on past experience as a nonprofit executive to recast the relationship between a foundation and its grantees and has become a champion of the movement to cover full costs and provide nonprofits with unrestricted flexible funding. In this latest installment in a series of conversations with foundation leaders, Ali and Nonprofit Finance Fund CEO Antony Bugg-Levine discuss money, power, influence, and outcomes.
Antony Bugg-Levine: The Weingart Foundation is known for providing unrestricted support — a rarity in the world of philanthropy. What led you down this path?
Fred Ali: My own experience as a nonprofit executive has always guided my thinking. When the financial crisis hit, I remember the board meeting where I was asked, "What do we do now?" I made the argument for unrestricted support, and it really made sense to the board. We brought in some of our grantees, as well, to help design our approach. Our board has always appreciated when they hear from the field.
A lot of people said that nonprofits would just take the unrestricted money and invest it in programs, because demand was growing exponentially and it is in nonprofits' DNA to put programmatic needs first. And in our first round of unrestricted grantmaking, that's exactly what we saw. Then we started to see a shift. Based on the questions our program officers were asking, what we started to see — and what we continue to see — is that nonprofits recognized that these were very special dollars. We started seeing organizations use these dollars to invest in their infrastructure, to bring back the financial management position that was lost or the development person they needed, and it was heartening.
ABL: How do you balance the philosophy behind giving grantees the autonomy to do what they know how to do best while at the same time meeting your own need — and your board's need — to know the impact of those dollars?
FA: When we made our decision to devote the bulk of our funding — now over 60 percent — to unrestricted funding, it immediately raised the question of impact measurement. After a few years of hard work, we recently announced a new assessment framework for our grantees that evaluates organizations on nine functional areas, including board governance, financial operations, fund development, staff and infrastructure, client and constituent engagement, diversity, cultural competence, organizational strategy and adaptability, and executive leadership. With the assistance of Paul Harder and Company, we co-created the framework with our grantees. We wanted a framework aligned with our core values as a responsive grantmaker. We wanted a process that maintained a commitment to transparency and practical, actionable learning. And we wanted something that would not create undue burdens on grantees or on our own staff but that would provide us with useful information. Our theory of change is that if you give a reasonably managed, well-governed, strategically focused nonprofit organization flexible, unrestricted dollars, good outcomes will follow.
ABL: The framework gives you a way to determine whether an organization is more effective over time, but how do you measure the contribution your grant made to that effectiveness? Many funders are concerned about attribution versus contribution if they were to move to more general support. How do you and your board approach that issue?
FA: The system we have designed understands the complex nature of assessing contribution to impact. We've developed a process to understand the growth in organizational effectiveness over time. And it starts with the questions we ask in the application process. Then, when a program officer makes a funding recommendation, they complete a detailed assessment based on their perception of where the grantee is against the nine functional areas of our framework. That provides a baseline. At the conclusion of the grant period, we ask the grantee to complete an online assessment, which gives them the opportunity to talk about where they are on those nine areas, and about big-picture organizational goals, and whether or not they are able to attribute the use of our unrestricted funds to any movement in those areas. The program officer receives that information, compares it with his or her initial perception, and then has a discussion with the grantee around the growth that has been achieved and areas of continued need. Last but not least, the program officer completes a closeout report that serves as the application for a new grant. Although it’s still early in the process, things seem to be going well for both grantee and program staff.