PhilanTopic

After the Giving Pledge: Strategic Philanthropy Is More than Money

(Mary Glanville is Managing Director, Institute for Philanthropy UK. The London-based institute works to increase effective philanthropy in the United Kingdom and internationally by providing donor education, building donor networks, and raising the awareness and understanding of philanthropy.)

In February, the Gates Foundation announced that the Giving Pledge, founded by Warren Buffett and Bill and Melinda Gates in 2010, would for the first time extend its invitation to philanthropists outside the United States. The pledge, whose signatories propose to give at least half their wealth to charitable causes, welcomed twelve more people to its ranks, bringing the total number of those who have signed the pledge to a hundred and five.

It's a commitment that does not tally with the traditional media-held view of wealthy individuals and their families, a view that portrays the preservation of assets as the primary if not sole consideration. In order to understand what has prompted the apparent urgency and scale of this charitable giving, we asked twenty-two donors in our networks about the rate at which they intend to deploy their philanthropic capital. Their responses were revealing in several respects.

The donors came from many countries and regions -- from the UK, the U.S., Brazil, Canada, Lebanon, and Mexico -- and they or their foundations had philanthropic assets on average of $79,081,250, from which they gave an average of $2,168,050 each year. Half said they would give at least 25 percent of their wealth to charity.

Despite the regional differences, it was possible to discern a common theme in their areas of giving: none of the respondents gave money to the arts, as might be expected, but instead gave to address social issues that they considered among the world's most pressing problems. One donor was particularly forthright on this point, stating that "I generally believe in addressing the needs of underserved poor in the neediest parts of the world, where I have worked for much of my professional life, not the arts or environmental needs so popular among donors here at home, or SOBs (symphony, opera, ballet) -- as much as I love them personally."

Among this group of twenty-two, the four leading charitable causes, by frequency, were education, children and youth, community re-generation, and the environment. Impact investing and technology also were fairly high in the rankings. In addition, there was a notable emphasis on the part of respondents on being proactive and fully engaged in their grantmaking. One donor remarked that "I strongly believe that philanthropy can be more effective when driven by the wishes and strategy of a living donor. Long-lasting philanthropic institutions can become sclerotic and bureaucratic, not always but often. Family foundations may end up with their hands tied by a legacy directed at tackling a social problem that no longer exists." Another highlighted the need to avoid "safe" causes, saying: "I focus on leadership and because my funds are limited support smallish charities with dynamic leadership in unattractive and unpopular fields where it is difficult to raise funds."

Perhaps the most promising theme was the focus on collaborating effectively with other individuals and organizations toward a common goal. One donor put it best, identifying the key elements of such collaboration: partnership, engagement, and empowerment. As he put it:

Partnership: the more we -- civil society, philanthropists, NGOs and activists -- can work together toward a cause, the faster we can move the needle.

Engagement: not only personal engagement, but moral and legal and financial engagement. Empower the organization so they do the best they can to move the needle. Help the executive team to excel in their strategy and operations to achieve their mission and reach goals they have set with their trustees and other constituencies.

What is clear is that making well thought-out, intentional decisions about the rate and timeframe over which assets are deployed can often assist in making one's philanthropy more strategic. It is encouraging to see these issues being raised more frequently between philanthropists across the globe, and it will be particularly exciting to see how donors in emerging markets inform this new vitality in charitable giving. We look forward to seeing and reporting on how the space develops.

-- Mary Glanville

Foundations and Climate Change: 5 Questions for…Robert Searle, Partner, Bridgespan Group

In recent years, the debate over climate change has centered on greenhouse gas emissions, which have been linked by scientists to rising global temperatures. But after Superstorm Sandy wreaked havoc on coastal areas of New York and New Jersey, underscoring the importance -- and vulnerability -- of critical infrastructure systems, many policy makers and environmentalists began to shift their attention to climate change adaptation strategies.

To help advance the debate, the Bridgespan Group has released a report, How Philanthropy Can Help Communities Advance Climate Change Adaptation (12 pages, PDF), that examines the funding environment for these strategies and offers a number of suggestions for foundations looking to support adaptation efforts in a post-Sandy context. Recently, PND spoke with Bob Searle, a partner in Bridgespan's Boston office and co-author of the report, about the impact of Sandy on the climate change debate, the tradeoffs between mitigation and adaptation, and some of the things foundations can do to advance the debate.

Philanthropy News Digest: The climate effects of a warming planet had been predicted long before An Inconvenient Truth was released in 2006. Why has it taken so long for the discussion about climate change to get serious?

Robert Searle: I think there are two primary reasons, and they are interconnected. The first is that all science involves an element of uncertainty, and climate science is no exception. There are elements of the climate situation that are quite certain. For example, greenhouse gas concentrations in the atmosphere are increasing, and that increase has led to a general warming of the planet. There are other aspects that are less certain and open to interpretation and judgment; for example, whether human activity is the major cause of these changes, and what the environmental and social impact of climate change will be.

And this is where the second reason comes in: The biggest source of greenhouse gases is the burning of fossil fuel, and the global economy is based on fossil fuels. In other words, there are incredibly strong vested interests in not making the explicit connection between man-made greenhouse gases and the potentially devastating effects of climate change. Those vested interests will naturally seize on any element of uncertainty to argue against change that will threaten economic development, especially when the economy is already shaky.

One mistake that the environmental community has made is to allow itself to be painted as anti-people and anti-economic development on the climate issue. There was a great article in the Fall 2012 issue of the Stanford Social Innovation Review titled "Climate Science as Culture War," by Andrew Hoffman, that speaks to some of these points.

PND: Has Hurricane Sandy changed the way shore communities in New York, New Jersey, and Connecticut plan for and invest in infrastructure projects?

RS: It seems like it's starting to. Just this week, Mayor Bloomberg announced a $19.5 billion plan to invest in infrastructure to protect New York City from future storms and sea-level rise. However, he didn't identify any funding streams for the initiatives, and infrastructure investments happen over a long period of time, so it's unclear how much things will really change, especially in the short term. So while the mindset of people seems to have changed, it's not clear how much action that will translate into.

PND: In terms of their response to climate change, should foundations be pushing an agenda of adaptation, an agenda of mitigation, or both?

RS: The answer for an individual foundation probably depends on its particular strategy, but there's clearly a need to work on both mitigation and adaptation. If you believe the majority of climate scientists, increased concentrations of carbon in the atmosphere could lead to devastating consequences, particularly for the most vulnerable populations on the planet, human and otherwise. So it doesn't make sense to abandon efforts to curb emissions of greenhouse gases.

However, there is plenty of evidence that the effects of climate change are already being felt. And a lot of these effects are happening faster than climate models predicted a decade ago, so ignoring those impacts doesn't make much sense. As we mention in our paper, low-income and other disadvantaged populations are less able to cope with the consequences of climate change, so foundations that care about these populations certainly have a role to play in adaptation.

We also think there are a couple of aspects to the adaptation issue relative to mitigation that make it attractive for foundations. The first is the opportunity to leverage public dollars. If foundations can help influence how public money that is already budgeted gets spent so that the investments take into account the effects of climate change, that's a lot of leverage for the foundation and a big win for society.

The second aspect is the nature of adaptation investments relative to mitigation. In general, adaptation is incremental and doesn't require massive changes to things like the global economy. So it's likely to be an easier lift than making headway on mitigation, at least in the near term.

PND: In the report, a number of foundations leaders were quoted as saying that pursuing an adaptation agenda felt like giving up on mitigation. Is it too late for mitigation?

RS: We hope not. But just in case, we aren't investing in any beachfront property.

PND: What can small, grassroots environmental organizations and foundations that traditionally don't fund public policy or advocacy do to make a difference?

RS: Based on our research, we think there are important roles for grassroots organizations to play, and they don't necessarily require hard-core advocacy or public policy work. One example in our paper is UPROSE, which is a community-based organization in Brooklyn. UPROSE has been engaged with climate change adaptation with local officials and nonprofit and business leaders. It has participated in several local planning processes, such as working with the New York City Department of Transportation on adaptation measures such as permeable pavement and bio swales -- landscape elements designed to remove silt and pollution from surface runoff water.

Similarly, there are important roles for foundations at the local and national levels that don't come close to the public policy or advocacy arena. Advocacy, at least in the form of public pressure, is important, but there are many other levers that need pulling. Our paper outlines five agenda items for philanthropy: One, support local science by local scientists; two, invest in neutral conveners; three, support community advocacy for change; four, build the field to share adaptation strategies; and five, reframe the dialogue around people and social benefits.

The first three strategies lend themselves to local or place-based funders, while the last two are more appropriate for national funders. So on the topic of climate adaptation, there are opportunities for all kinds of foundations to make a difference.

-- Matt Sinclair

Foundations and the 'New Normal': A Q&A With Bradford K. Smith, President, Foundation Center

(The following Q&A with Foundation Center president Bradford Smith appears as part of a special feature on "Philanthropy in a changing world economy" in the June 2013 issue of Alliance magazine. It is reprinted here, with minor revisions, courtesy of Caroline and her team.)

Caroline Hartnell: To what extent are U.S. foundations changing in response to austerity?

Bradford K. Smith: I started this job two weeks after Lehman collapsed. On my first day in the office, we had a press call about what foundations were doing about the economic crisis. I put down the phone and walked down the hall to our research department and said, "Quick, I need a statistic," and they came up with a really good one. Foundation giving for the previous year, 2007, was around $45 billion -- about 6 per cent of the first stimulus package announced by the federal government. So one thing the crisis really showed up was the scale of foundation resources. When the economy gets into serious trouble, it takes government to try to keep it from collapsing. Foundation dollars alone aren't enough to solve problems. That made foundations think more about how they can leverage money from each other, how they can collaborate with other sectors rather than trying to do it themselves.

A second interesting thing is that foundation giving held up quite well during the recession. One reason is that U.S. foundations calculate their mandatory payout on a rolling three-year average of the value of their assets, which cushions them from big market swings. It also held up well because foundations actually went beyond the federally mandated payout rate of 5 percent.

CH: The recession has changed things for the foreseeable future. Do you think U.S. foundations see this as a "new normal" and are rethinking their role?

BKS: I think most of them are adjusting to the idea that long-term expectations for returns on investment need to be reduced. 2012 was a good year in the financial markets, but nobody really expects that it will go back to the boom years when, as one foundation investment manager put it, for a number of years "all we had to do was get out of bed in the morning and we could make a 20 percent return on our endowment."

CH: What will that mean for foundations? Spending down part of their assets? Trying to get the mandatory 5 per cent figure changed?

BKS: I don’t think foundations will try to get that changed. They've fought hard, during strong years in the stock market, to maintain the 5 percent level.

But with declining assets, going above 5 percent in the years following the crisis means that they've been spending their assets. In order to maintain the value of those assets, they'll have to give less or do better on their investments in the future. We did some research on whether or not more foundations have made the decision to spend down, and the answer is not really.

The decision to spend down or exist in perpetuity is less a strategic one than a question of donor attitude. Sixty percent of U.S. foundations are family foundations, so many decisions are about expectations of family involvement in the future. We found that the largest group was those who have left it open for future generations to make that decision. Does this mean that families in the "open" group are also open to the possibility that they might not exist forever? At the very darkest point of the recession, there was some soul searching among foundations about the fact that if their assets declined enough and they maintained their grantmaking at the same level, the result would be either to spend themselves out of existence or to resign themselves to being smaller foundations. But we haven't seen evidence of a conscious decision to adopt a spend-down approach because of the recession.

Some of these foundations have been around a long time: Rockefeller and Carnegie are celebrating a hundred years, Ford is celebrating seventy-five years, and they've seen a lot of bad markets. The Ford Foundation suffered such a decline in the value of its assets in the 1970s that it took until the mid-1990s to recover. But that didn’t change Ford's view of perpetuity. What it changed was the amount of resources it had available to achieve its mission.

CH: You mentioned that foundations have adjusted the way they work. Can you give an example?

BKS: Approaches to grantmaking have changed. There is more interest in providing general operating support. The Weingart Foundation, for instance, a large foundation that funds primarily in Southern California, responded to the recession by adopting the provision of general operating support as a strategy. When the crisis was at its worst, the best thing it could do to help nonprofits was to make sure they could pay the bills, pay their staff, and do the work they're supposed to do.

The other thing we saw was greater willingness by foundations to make program-related investments -- PRIs -- where they make subsidized loans to nonprofits for activities that produce income, which might in turn provide a monetary return for the foundation. During the recession, a number of foundations joked that their best returning assets were those PRIs. There was something like a 2 percent interest rate on some of those loans and the nonprofits were paying that back, whereas foundations were losing 17, 25, sometimes 30 percent on their stock market investments.

That was one reason why interest in PRIs increased. The other was that, in a situation where endowments were declining, it was a way to extend the use of foundation resources beyond their grantmaking, because PRIs come out of foundations' equity.

Related to that, the recession gave a push to mission-related investing, which some people call impact investing, which also uses the equity part of a foundation portfolio. This is different from socially conscious investing, which is basically trying to make sure there is nothing toxic in your portfolio. Omidyar Network provides a good example of this. As part of their work on mobile technology, they made an equity investment in a Mexican telecommunications services provider, Micel (formerly Finestrella), to enable access to smartphones and affordable mobile Internet for those without bank accounts or credit cards.  Mobile phones are increasingly seen as a means to deliver essential services and empower low-income consumers to make informed decisions. But if you don’t have mobile access, you can't have mobile delivery of anything, and you probably wouldn't fund a nonprofit to expand cellphone access. So, although it's still a minority, I think more foundations are looking seriously at how they can use their endowment to do this kind of thing.

CH: What about renegotiation of relationships with different sectors, for example between foundations and the state.

BKS: There is a lot more interest in public-private partnership at all levels, though it is tempered a bit by foundations' wariness about being stuck with the bill. In the U.S. and Europe, there has been a tendency among governments, local and national, as their revenues have declined, to say, "We'll stop funding, for example, the arts and we'll get foundations to do it." There was even a case in California where foundations were written into a state budget. They were cutting back their spending, and they put a plug on the revenue side called "foundations."

Still, there is more interest in partnership. In cities like Detroit and parts of Ohio and Pennsylvania, the old Rust Belt region where steel and automotive manufacturing used to dominate, you see foundations stepping in and trying to work with government. Again there is a certain reluctance, because foundations don't feel they could ever be a substitute for a viable public education system, for example.

But some foundations have taken the lead on re-envisioning certain cities. Detroit, for example, is never going to be the city it was -- the epicenter of automobile manufacturing and the birthplace of organized labor -- so the Kresge Foundation, the Skillman Foundation, and others in the region have tried to re-envision it. I think it's a good use of foundation resources because they can work without electoral or market pressure. It also brings into play another strength of foundations, which is their ability to convene. In Detroit, there is now public-private collaboration called Detroit Future City involving corporations, community groups, state officials, and foundations.

CH: Are foundations also collaborating more with each other and with the corporate sector?

BKS: There has always been some collaboration with companies, particularly on economic development and job issues. But you're also seeing more collaboration around technological innovation, especially with companies like Google that see themselves in some way as contributors to the public good. There's more of an appetite for foundations to collaborate with each other. It's not an easy thing to do: the costs are high, partly because of the individual nature of foundations, which means that each has a unique information system. They might not even see the possibility of collaboration, because it's difficult for them to see that they’re working for the same thing.

CH: Do you think these changes are a stopgap until the crisis passes, or are they being consciously adopted as a long-term strategy?

BKS: I think they are likely to continue because the economic crisis altered the resource base available to the private sector, the public sector, and philanthropy. But there are other factors. Technology is making it much easier to get information and collaborate. Impact investing is taking off because there are more vehicles for foundations that want to do it. The typical argument against impact investing used to be that there weren't enough investments for foundations to put money into. Now there are special investment funds, a whole body of literature, groups working on this. I think it's fair to say that although the recession induced some rethinking of the philanthropy industry, these changes are not just a result of the bottom falling out of the economy.

CH: So you don't agree with some of our editorial board members who have said that foundations have put their heads in the sand rather than rethink their strategy?

BKS: Obviously, the foundation world is varied, with a small number of richly endowed foundations and a sea of very small ones. What's more, there's a sort of demographic replacement as some wind up and new ones are founded. So there are new ideas coming in all the time, and I believe there is more thinking going on in philanthropy than people give it credit for.

CH: Do you see the rethinking and changes that have come out of the recession as by and large positive?

BKS: I think so. You're not going to see a radical transformation of philanthropy -- it's not the kind of field that radically transforms itself -- but we are seeing change that's important. Growing inequality is a phenomenon in the U.S. as well as everywhere else.

CH: What are foundations doing about that?

BKS: From the end of 2008 to 2010 we were able to track about $550 million worth of grants made by U.S. foundations to address the recession. A lot of it was service provision for emergency situations, like people losing their homes. What we didn't see much is grantmaking focused on the nature of the financial and economic system itself, looking at why the crisis happened and what we can do to try to make sure it doesn't happen again -- though there are one or two exceptions. The Sloan Foundation in New York has done work in this area and is now supporting a project to create a unique identifying system for all parties to financial transactions. When Lehman Brothers collapsed and the regulators had to liquidate it, it turned out to be seven thousand different corporations, all over the world. So this would create a fast way to uniquely identify all parties to financial transactions and then link them back say to Lehman or Goldman Sachs. I think the MacArthur Foundation and the Hewlett Foundation are interested in working on the challenges posed to democracy by inequality, but it's a relatively small amount of work.

Philanthropy of the kind we're talking about -- and that Alliance tends to write about -- comes from big money, from accumulated wealth. At some point, the person or family or company that owns that wealth decides to put it toward public benefit. So it would be surprising if philanthropy came up with a new economic system all on its own.

What is interesting is the growing support for social entrepreneurship, which in some ways is a challenge to the structure of the economy. There are social problems that all these years of foundation funding and aid programs have not been able to solve, and maybe we can solve them through social entrepreneurship. A lot of it is technology-driven and there is a lot of energy and creativity in that space. For instance, there are interesting things happening around payment systems that allow people in remote parts of the world to work and get paid through their mobile devices, so people who were outside the economy can become part of it. Whether this will fundamentally address inequality is another matter, and no amount of innovation will allow us to duck the big question of what kind of world we want to create.

I was talking earlier to the president of a foundation that funds universities, and the whole notion of residential education is being challenged, first because it's expensive to house students on a campus, and second, because more and more people want to take classes online. A lot of what we assume about institutions is being reinvented. This is happening partly because of the economic crisis but also because of changes in information and technology.

-- Caroline Hartnell

To Innovate…Collaborate

(Paul Grogan is president and CEO of the Boston Foundation. His blog, City of Ideas, appears regularly on the Boston Foundation Web site.)

"If we put our heads together, we might be able to figure this out."

It's a bit of folk wisdom that often rings true -- and for a number of years, the Boston Foundation has highlighted the opportunity for collaborations and mergers to tackle otherwise intractable problems.

In 2010, we co-founded the Catalyst Fund for Nonprofits, a five-year, $1.925 million fund in partnership with local funders Boston LISC, the Hyams Foundation, the United Way of Massachusetts Bay and Merrimack Valley, and the national Kresge Foundation. The idea behind nonprofit mergers isn't cost savings -- in a high-touch world like ours, there is only so much excess you might be able to trim in a merger. Rather, it's all about service. Organizations that merge and/or collaborate build capacity to do more of what they do best, and do it even better.

In Boston, the much-publicized merger of the Pine Street Inn for the homeless and hopeFound, a job training nonprofit serving the same client base, has proven a success, as demonstrated in a recent assessment of the Catalyst Fund's work and in a profile in the Boston Globe. The merger has allowed the two organizations to connect their respective job training programs and opportunities in a way they likely never would have as separate entities, and the results have been remarkable.

But to succeed, we also need to see the power of a more grassroots-level of collaboration. In that vein, we launched our first-ever Collaborate Boston competition this winter. The premise was simple: We'd pose a problem and then open the floodgates to proposed solutions, with one important restriction -- all the proposals had to bring together organizations in collaborative efforts to address the issue.

What we hoped to achieve was slightly more than that. We wanted to inspire organizations that didn't normally talk, or talk as much as they should, to work together toward a specific outcome.

For the initial competition, we put up $100,000 in prizes for collaborations that focused on "improving the lives and futures of black & brown boys and young men, ages 9-15, living in Roxbury, Dorchester and Mattapan." Seventy different collaborations applied and had their applications reviewed by a remarkable advisory committee comprised of business, government, nonprofit, and philanthropic leaders. Twelve made the finals and made an in-person pitch for their projects, and in the end two were selected.

Black and Latino Boys at the STEM of Success partners a Boston Public Schools office, a university STEM center, a Latino STEM group, and one of the state's largest construction firms in a collaboration to create neighborhood-based robotics teams and provide academic and social support. The other, the Codman Square Brotherhood Project, brings together neighborhood arts, business, ministerial, and men's groups with neighborhood police to create a supportive infrastructure, a brotherhood, for boys age 10-14 in Dorchester's Codman Square section.

Last week, the two winners presented their plans to about one hundred and fifty funders, donors, and civic and community leaders. (You can watch their presentations on the Boston Foundation YouTube channel.) All twelve finalists were invited to attend the celebration and take the opportunity to network, share ideas, and maybe even find funding for their efforts. The conversation was lively, the mood was celebratory, and ideas and connections were abundant.

It's a conversation we in philanthropy need to encourage, because the power of effective collaboration and mergers can only serve to amplify the best of our creativity, innovation, and ideas.

We’ll be working to ensure that the conversation continues, and that organizations looking for broader partnerships and collaborations to enhance their work continue to have the support they need.

Because if we put our heads together, we might be able to figure some things out.

-- Paul Grogan

Scaling Social Innovation

(Paul L. Carttar is a partner at the Bridgespan Group and former director of the Social Innovation Fund, a federal initiative that enlists private intermediaries to help expand innovative programs proven to promote economic opportunity, healthy lives, and youth development.)

In much the same way a parent feels extraordinary awe and wonder in watching his or her child grow up and succeed, I recently experienced a powerful sense of pride at a conference in Washington, D.C., devoted to the subject of bringing to scale innovative nonprofit programs, particularly those serving low-income communities.

The conference was sponsored by the Local Initiatives Support Corporation (LISC), the country's largest community development organization, and focused on LISC's successful scaling of Financial Opportunity Centers (FOCs) -- an initiative to help low-income people take control of their family finances. Working off a model developed by the Annie E. Casey Foundation, in just three years LISC has expanded the program from four centers in Chicago to seventy-one locations in thirty cities across the country. Much of the funding for this growth came from an innovative federal program called the Social Innovation Fund when I was the fund's director. As I said, I couldn't be prouder.

The FOC approach is simple but sound. It recognizes that getting a job is just the first step toward achieving long-term financial stability. So FOCs focus on improving the actual net cash a family has each month, taking account of what a family spends as well as what it earns, and helping low-income and unemployed individuals by providing an integrated set of services that are typically siloed. These services include not only job training and help getting and keeping a job, but also hands-on financial coaching related to budgeting and building credit, as well as assistance in identifying and applying for public benefits.

While we still have much to learn about the full impact of FOCs, there are clear indications the approach works. Over the past two years, nearly 75 percent of FOC clients improved their monthly cash flow and net income, while 43 percent raised their credit scores. In addition to improved cash flow and credit scores, clients receiving this integrated set of services showed dramatic gains in employment and net assets compared to those who received such help piecemeal.

At the Bridgespan Group, we often work with funders to determine how they can most effectively invest their resources to advance their missions. And while there are many valid approaches to generating social impact, one of the most compelling is to identify promising programs that are producing strong results in low-income communities and help those programs scale their impact.

But just because an approach is compelling doesn't mean it's easy to implement. So what has enabled LISC to make such dramatic progress in scaling the FOC program? We see three major factors.

First, the FOC model represents an intuitive, evidence-based means of addressing a widespread, persistent challenge facing low-income individuals. Job training and placement are critical, but true financial security comes from the totality of how individuals manage their financial affairs -- and that is what FOCs aim to affect on an individual client basis.

Second, because FOCs are not independent organizations but rather programs based on a model, they can readily be expanded to new communities by aligning with existing service-providing agencies that already have the clients, presence, funding, and governance needed for success. The model offers the potential for the host agency to significantly increase its own impact by providing a more complete and better integrated set of services aimed at achieving clear benchmarks.

Third, FOCs have the benefit of LISC's network of offices in dozens of urban and rural communities nationwide, as well as partners such as the United Way, which co-sponsored the conference. Working through these networks enables LISC to more rapidly and effectively attract funding and support, develop on-the-ground relationships, and engage staff while still preserving the integrity of the FOC model.

Our country needs more stories of successful social innovation and scaling. Simply put, we are not getting the biggest bang out of our investment in the public sector, where marginally effective programs often hang on well past their sell-by date and innovative, potentially high-impact ones face enormous challenges getting off the ground, much less achieving significant scale.

Fortunately, the federal government is beginning to recognize the problem. As Jonathan Greenblatt, director of the White House Office of Social Innovation and Civic Participation, noted at the conference, the government is looking to do more to support promising programs like Financial Opportunity Centers, innovations that have the potential to generate real impact and change lives. Not only will such an approach help government be a more effective funder and partner, it will also greatly increase America's ability to effectively address its most critical problems.

That's something we can all be proud of.

-- Paul Carttar

Partnering With State Governments to Strengthen Families: Early Lessons From the Work Support Strategies Initiative

(Luis A. Ubiñas is president of the Ford Foundation. This commentary is adapted from a forthcoming Urban Institute report, available online starting June 4, that includes an array of perspectives from leaders about practical lessons emerging from the Work Supports Strategies initiative.)

Over the past half-decade, as the country has suffered through a deep, persistent economic downturn, America's work support programs have served as an essential backstop for millions of working families struggling to keep a toehold in the labor market. For many families, supports such as child care subsidies, health insurance and unemployment assistance, and food stamps have been the difference between staying together and dissolution.

Yet in dozens of states, lean budgets and antiquated, underresourced work support systems are failing to meet the needs of America's working poor. Problems that were evident in better times have become more intractable, even as caseloads have expanded. How can states improve the health and well-being of low-income families, stabilize their work lives, and make it possible for family breadwinners to get and keep a job if they are unable to get basic work supports to those who are eligible?

Solving such a challenge goes to the heart of what all of us in the philanthropic community do on a daily basis: tackling major problems at a scale that results in real and enduring change -- in this case, creating opportunity for low-income populations and keeping low-income workers in the workforce.

That's why the Ford Foundation, along with the Annie E. Casey, Kresge, and Open Society foundations, is proud to support the Work Supports Strategies (WSS) initiative, a multiyear demonstration project directed by the Urban Institute, with technical assistance from the Center on Budget and Policy Priorities. WSS is partnering with nine states -- led by governors from across the political spectrum -- to design, test, and implement easy-to-navigate quick-to-deliver operating changes to public work support systems that keep employees in the work force and families together. Many of these changes have the further benefit of reducing the cost of running the programs.

More than a year after we launched the initiative, the progress in fixing what was described in one state as a "completely dysfunctional, broken system" has been greater than any of us could have imagined. In some cases, the changes spurred by WSS had an impact on pilot offices or counties; in others, statewide changes affected tens of thousands of families. For example, in Colorado, state and county staff trimmed their work support application from twenty-six pages to eight; in Rhode Island, the Providence office implemented same-day service to Supplemental Nutrition Assistance Program (SNAP) applicants, enabling clients to obtain work support after just one visit; and in South Carolina, the Express Lane Redetermination program preserved health coverage for tens of thousands of children -- and is projected to save the state $1 million a year in operating costs -- by using data in families' SNAP records to certify eligibility.

Taking advantage of new technologies, streamlined bureaucracies, and operating processes borrowed from the private sector, many states are strengthening the customer experience and reducing the burdens on state workers. Beyond our nine partners, these efforts are already serving as models for other states.

For those of us in the philanthropic community, the work of WSS offers three important lessons for future partnerships between foundations and state governments.

First, as any philanthropic funder will tell you, the idea of working directly with the public sector often meets with resistance. Foundations fear being placed in the middle of ideological disputes or paying for services that are the government's responsibility to deliver. But such trepidation, though hardly unjustified, shouldn't be an excuse for inaction; the opportunities are too great. After all, where else can funders meet their goals of supporting initiatives that scale, create impact, and are sustainable? Federal and state governments remain the largest source of resources targeted at the issues that drive our work. As the progress of the initiative so far demonstrates, when a project has clear goals and strategies, funders can successfully partner with public agencies.

Second, one of the by-products of the budget crisis has been the elimination of state resources for and attention to "research and development." Despite the fact that many agencies running work support programs have budgets of hundreds of millions or even billions of dollars at their disposal, the flexible funding to promote ongoing innovation, modernize operating processes, and use data to improve operational effectiveness has all but vanished. While it shouldn't be a surprise that state leaders increasingly are compelled to devote dwindling resources to direct benefits rather than innovation, the result often is greater inefficiency and poorer distribution of services. By providing the kind of technical assistance and peer learning that leaders and staff of public systems need as they embark on the task of modernizing large bureaucracies, that's exactly where foundations can be most helpful. Quite simply, without foundation engagement these work support systems would continue to underserve their recipients and burden taxpayers with unnecessary operating costs.

Finally, tough budget times are a reason to engage, not disengage. With work support offices stretched thin and the current squeeze on state budgets, one might imagine that helping those in need -- rather than making investments in improving the efficiency of state government -- would take priority. But if you look at the early response from twenty-seven states to the initial request for proposals and the dedicated work of the nine states chosen to participate in the first year of the WSS project, the desire for ideas and resources to modernize the safety net -- in both red states and blue -- is overwhelming. With states aspiring to do better, this is a great opportunity for foundations to step in and ensure that this current crisis becomes an opportunity to make lasting changes in how we deliver work support benefits across the country.

Philanthropy has a proud history of convening disparate groups and seeking common ground based on practical solutions. The result has been an impressive mix of programs that make a real difference in the lives of individual Americans -- and often bring people together. The WSS initiative aspires to that tradition, and we hope the lessons it is yielding inspires even more partnerships for the betterment of the most vulnerable in our society.

-- Luis Ubiñas

Protecting Nature Is the Smartest Investment We Can Make

(Mark Tercek is president and CEO of the Nature Conservancy and co-author of the book Nature's Fortune: How Business and Society Thrive by Investing in Nature).

In my work for the Nature Conservancy, I think a lot about how we can do more. How can we unlock new sources of capital, enlist more people to support our cause, and develop new alliances that will enable us to conserve nature at a scale never before achieved?

In my view, the answer is in putting ourselves in others' shoes -- whether those of a sugarcane grower in Colombia, a trawl fisher in California, or the executive of a global manufacturing company -- and focusing on why nature is important and valuable to them.

A simple but elegant solution to an environmental challenge in Colombia demonstrates this approach -- an approach that is leading to exciting new ways of structuring, funding, and discussing environmental nonprofit interventions.

The Project

In October 2011 I met with a group of sugarcane growers in Bogota, Colombia. They were warm and gracious hosts, affable dinner companions, and extremely proud of their beautiful lands and their booming business. They didn't see the world exactly the same way I do and they certainly didn't think of themselves as environmentalists. But they did agree with me on a simple point -- it makes great sense to invest in nature to protect water supplies.

Over the past decade, Colombia's sugarcane growers have become increasingly concerned about water supply in the Cauca Valley, situated near the country's Pacific coast and one of the richest cane-growing regions in the world. The farmers there need abundant water to irrigate their enormous fields.

The solution we arrived at together: protect the water supply by protecting the forested watersheds that feed the Cauca River.

Through an investment strategy called a water fund, cane growers, mill owners, and other water users in the region voluntarily pay into a fund reserved for forest conservation upstream. The idea is simple. Farmers, mill operators, and other businesses save money by preempting the need for more costly water treatment activities. Water resources are kept healthy and flowing for local communities. And healthy natural systems provide habitat for wildlife.

The Takeaways

As we are learning in places like Colombia, investments in "green infrastructure" or "natural capital" can produce very attractive returns. But the benefits of the approach go far beyond individual project sites.

Conservationists have long been dependent on and grateful for the help of generous philanthropists, foundations, and individual supporters. The support of such donors remains vital -- we would be nowhere without their generosity and passion. But we need even more people and resources on our side. If we can persuade government and business leaders that investing in nature will secure important benefits, we should be able to provide a powerful new source of capital for conservation.

Second, many people today are disconnected from nature and don't understand why they should care about protecting it. But these same people do care about what they need to survive and thrive -- clean water and air, fertile soil, timber to build homes, protection from floods and other natural hazards. Natural capital can be a powerful concept for spreading the word on why everyone should care about saving nature.

Third, environmentalists -- however well-intentioned -- often lecture society on what it "should" or "shouldn't" do. As a result, we have alienated potential allies. By focusing on the value of nature, we can shift the dialogue from hectoring lecture to win-win discussion. For example, instead of telling businesses not to pollute, isn't it more effective to demonstrate a lower-cost way of obtaining the clean water that sustains their bottom line?

Finally, as we are seeing in places like Colombia, relatively small philanthropic investments in natural capital can catalyze much larger investments by the beneficiaries of a project -- in some cases, even leading to a self-sustaining flow of conservation funding. For philanthropists seeking to maximize the impact of their funding, investing in natural capital makes compelling sense.

By making the connection between nature and basic human and business needs, conservation becomes more meaningful to millions of people around the globe. Natural capital investment won't solve all our environmental challenges. But when it does, the benefits will be many -- from new sources of capital, to more widespread support and constructive dialogue, to higher returns on philanthropic donations and gifts.

-- Mark Tercek

Introducing the 'Open Places' Initiative

(Kenneth H. Zimmerman is director of U.S. programs for the Open Society Foundations. The post originally appeared on the OSF's Voices blog.)

Across the United States, local communities face an ever more challenging environment: dramatic shifts in federal and state funding, advances in technology, and large-scale demographic change. Each of these affects how low-income communities and communities of color are able to access political, economic, and civic opportunities. In response to these shifts, the Open Society Foundations is launching a new effort, the Open Places Initiative, to advance the ability of local communities to achieve equal opportunity and promote vibrant democratic practices.

As part of the initiative, planning grants of roughly $100,000 each have been awarded to eight sites. The awards will enable an assortment of nonprofits in each of these places to plan how to create sustainable change in areas such as effective and accountable government, civic engagement, criminal justice reform, and equal educational opportunity.

In late 2013, OSF will award up to five of these sites long-term implementation grants of up to $1 million a year, for a minimum of three years -- and, potentially, a full decade.

The eight sites selected to receive grants are Albuquerque, New Mexico; Buffalo, New York; Denver, Colorado; Jackson, Mississippi; Louisville, Kentucky; Milwaukee, Wisconsin; San Diego, California; and Puerto Rico. We are pleased with the geographic diversity of these sites as well as the diversity of communities represented.

The Open Places Initiative begins with the premise that local knowledge and assets are fundamental to the creation of inclusive and open places. Yet, local conditions are changing significantly. Local governments face unprecedented demands due to budget constraints, and the nonprofit sector is facing significant funding challenges. At the same time, increased access to information is transforming community engagement on pressing issues. Nonprofit organizations, government agencies, and civic groups need to adapt to the new circumstances. One of the primary goals of the initiative is to increase the ability of each place to extend beyond current agendas, strategies, and capabilities.

The initiative draws on our experience with our urban social justice laboratory, OSI-Baltimore, which tests the effectiveness of various place-based strategies to address some of the biggest challenges facing Baltimore and other urban centers in the U.S. We are also drawing on the experience of other foundations and public-sector efforts, and look forward to collaborating with them going forward.

During the next few months, each site will select its specific areas of focus in response to pressing local priorities -- and, in each case, will incorporate multiple issues and tools into its planning.

While the sites are just now beginning the planning process, they have already noted some areas of focus. In addition to increasing local civic capacity to bring about long-term change, the preliminary goals of the different projects include advancing fair and inclusive economic development and fiscal policy, integrating immigrants into the larger community, reducing rates of incarceration, helping high school students graduate in greater numbers, addressing the enduring impact of residential segregation, and creating pathways to the middle class for low-wage workers.

We anticipate the initiative will enable the collaborations to identify and address needed skills and capacities, effectively access national and local resources, and further develop the approaches needed to address complex issues. In doing so, the Open Places sites will successfully develop more innovative and coordinated approaches to these and other challenges over the long term. While local equity and justice issues are likely to vary over time, what will remain constant is the need to bring together different groups -- residents, business leaders, state and local officials, nonprofits -- to mobilize and advance needed reform.

We are committed to supporting the Open Places sites as they develop and refine their approaches to making lasting and positive change. In addition to financial resources, we will be providing technical assistance as well as facilitating connections among sites and introductions with leading national organizations and institutions.

We heartily congratulate the groups that won planning grants. We look forward to gleaning lessons from the work that comes out of the initiative for replication in other cities, regions, and states, and believe that work has tremendous potential to help all of us chart a new course for our cities and regions.

-- Kenneth Zimmerman

Expanding Our View of Pathways to Grow Impact

(Kathleen P. Enright is president and CEO of Grantmakers for Effective Organizations, a community of more than four hundred funders committed to improving their own practices in ways that are critical to nonprofit success. GEO does this by facilitating connections between its members so that they can learn from each other and make more progress more quickly.)

Only a few short decades ago, smoking was both widespread and socially acceptable. To those who grew up in the 1990s, a show like Mad Men, where characters smoke in every imaginable context, might seem more like fantasy than a portrayal of a time gone by. It's a visible reminder of how effective advocates have been in challenging social norms and changing the public’s perception of smoking.

The Campaign for Tobacco-Free Kids is one of those advocates. Recognizing that 90 percent of adult smokers picked up the habit as teenagers, the Robert Wood Johnson Foundation set out to counter the harmful impact of the tobacco industry's promotion of its products to teens. In 1996, RWJF launched the campaign to educate teens and the public about the health risks and social downsides of tobacco and promote policies designed to keep kids from smoking.

The campaign employed a variety of strategies, and its online resource center quickly became a hub for sharing information and ideas, including news about tobacco-related policies and reports and opportunities to get involved. Through its work, the campaign connected with other organizations that shared the same mission in order to spread the idea that smoking wasn't cool and supported policy reforms that reduced the appeal of smoking and made it harder for teens to pick up the habit.

Although traditional notions of scale in the nonprofit sector tend to focus on program replication and organizational growth, a closer look reveals that, like the Campaign for Tobacco-Free Kids, most successful nonprofits pursue multiple strategies. After all, the results an organization achieves are far more important than its size.

To gain a deeper understanding of the various pathways to greater impact and the grantmaker practices that best support it, Grantmakers for Effective Organizations engaged in a collaborative project with Ashoka, Social Impact Exchange, the Taproot Foundation, and the TCC Group to answer the question: What is the grantmaker's role in supporting high-performing nonprofits looking to grow their impact? The resulting report, Pathways to Grow Impact (40 pages, PDF), includes a framework that details four distinct pathways adapted from one developed by Julia Coffman for a publication of the Harvard Family Research Project. They include:

• Increasing the reach of a program that has demonstrated reliable results for a specific population over a period of time.
• Spreading a new idea or innovative way of doing something among individuals or organizations within a system.
• Increasing the number of people or places that use a technology or apply a specific skill, practice, or approach.
• Advocating for policy change as a means of transforming behavior.

The report offers recommendations for grantmakers seeking better ways to support nonprofits as they look to grow their impact. Indeed, our work identified four grantmaker practices that are critical to amplifying grantee impact:

• Providing flexible funding in appropriate amounts over the long term enables high-performing nonprofits to invest in the infrastructure and human capital that will keep them strong.
• Supporting an organization's ability to collect and use data and develop an approach to performance management enables it to continuously learn, grow, and concentrate its resources where it is having the greatest impact.
• Providing capacity building and leadership development that is responsive to a nonprofit's context enables an organization to build critical skills and shift gears when appropriate.
• Supporting movements in addition to individual organizations can nurture relationships and help build the momentum required to achieve broad-scale change.

To access the full Pathways to Grow Impact report and read more stories about pioneering organizations and initiatives that have found creative ways to achieve big results, visit www.geofunders.org.

-- Kathleen Enright

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

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

Bill Gates' 2013 Annual Letter

Bill Gates released his annual letter -- the fifth since his first in 2009 -- earlier this week, and like the others, it's worth reading.

From its theme, "The Power of Measurement," to its assertion that "You can achieve amazing progress if you set a clear goal and find a measure that will drive progress toward that goal," the letter is a testimonial to and endorsement of the approach known as strategic philanthropy. It's also a story about progress and the power of technology to change people's lives for the better. And it's a nice example of how Web and social media technologies can be used to transform an essentially static document into an engaging online experience.

But don't take our word for it; listen and watch what Bill himself has to say.

And after you've had a chance to read the letter, be sure to hop over to Tom Paulson's Humanosphere blog to watch data visualization whiz Hans Rosling illustrate, in beautiful and dramatic terms, the point of Gates' letter.

-- Mitch Nauffts

 

The Benefits of Multiyear Grantmaking: A Funder's Perspective

(Sandy Edwards is associate director of the Jim Joseph Foundation, which seeks to foster compelling, effective Jewish learning experiences for young Jews in the United States.)

Cultivating a collaborative funder-grantee relationship built on trust, transparency, and shared knowledge requires a concerted effort on the part of both parties. In twenty-five years of grantmaking, I've also seen how multiyear grantmaking serves as a catalyst in cultivating this type of relationship, which in turn can be a key element in helping a funder achieve its strategic priorities and in helping grantees achieve success.

When it was founded in 2006, the Jim Joseph Foundation made a deliberate decision to focus on multiyear grants. Now, there is no right or wrong way to do grantmaking, but for the foundation multiyear grantmaking seemed like the most effective way to achieve our strategic goals. It encourages a relational approach to philanthropy that defines our foundation and, we believe, is critical to our ability to leverage our financial and human capital. Today, as the foundation approaches its seventh anniversary, we can begin to assess the effectiveness of that strategy beyond anecdotal outcomes.

First, a few statistics: 92 percent of the $270 million in grants awarded by the Jim Joseph Foundation since its creation have been multiyear grants; 84 percent were awarded for a period of three years or more. Moreover, our own experience with the positive outcomes of this approach has been supported by the Center for Effective Philanthropy, which in 2006 conducted a survey that documented the impact of such a strategy. Among other things, the report based on the survey suggested

that foundations ought to provide operating support grants that are larger and longer term than the vast majority of foundation grants today. Moreover, these grants must be provided by foundations -- and individual program officers -- [so as to align with] the dimensions most valued by grantees: high-quality interactions; clear communications of goals and strategy; and demonstrated expertise and external orientation.

Despite CEP's compelling analysis, multiyear grantmaking appears to be declining as a foundation strategy. A 2012 analysis by the National Committee for Responsive Philanthropy of Foundation Center data found that multiyear grantmaking declined some 21 percent in 2009, to $5.5 billion from its $6.9 billion peak in 2008. When the nation's largest grantmaker, the Bill and Melinda Gates Foundation, is excluded from the analysis, reported multiyear grantmaking declined by more than a third. The June 2012 Foundation Center report Foundation Growth and Giving Estimates likewise found that approximately 20 percent of the more than one thousand foundations that responded to a center survey indicated they planned to give less in multiyear grants in 2012 than in 2011.

We believe it is important to reverse this trend. At the Jim Joseph Foundation, we believe multiyear grantmaking is a critical component of grantee sustainability and is vital to achieving the ultimate objective of a grant. Indeed, we have seen the tangible benefits of this strategy:

Regular communication between funder and grantee improves implementation and performance. Cultivating a relationship between foundation program professionals and grantees that includes regularly scheduled phone calls, site visits, and communication via e-mail helps to build trust, which leads to improved project implementation and performance by all involved. If nothing else, the foundation program officer gains a deeper understanding of the project and, when a problem arises, is better positioned to recommend strategies to address the problem and/or a reallocation of resources.

The grantee's organizational capacity is bolstered by a longer grant period. JJF awarded $15 million over a five-to-six-year period to Hebrew Union College – Jewish Institute of Religion, the Jewish Theological Seminary, and Yeshiva University to boost the number of highly qualified educators who work with Jewish youth and young adults. At the inception of the grant period, we invited the Parthenon Group to work with us to ensure efficient implementation of the grant and help strengthen the foundation-grantee relationship over the course of the grant period. Three years into the grant period, our grantees continue to acknowledge that the ongoing relationship with the foundation's board and staff has enabled them to work more effectively.

Ongoing grant review improves grant management by both the grantee and the foundation. Our grant awards are approved as "up to" amounts. What may seem like a detail actually is an important qualifier regarding how the grant budget and expenses are managed to achieve outcomes. As part of the review process, both the grantee and the foundation can make changes based on actual events and the learning that inevitably occurs over the course of a multiyear grant period.

Formative evaluation supports grantee success and summative evaluation of longer-term initiatives adds to learning in the field. Not only do multiyear grants allow for longer-term evaluations, they are important to our efforts to learn in that they enable ongoing conversations with evaluators and grantees. For example, the initial evaluation of a five-year grant to the Foundation for Jewish Camp to provide financial incentives for three thousand children to attend Jewish summer camp provided data on why the initiative was not achieving its enrollment benchmarks. Among other things, the evaluation found that the program only provided incentives to families willing to enroll their kids in a three-week session, whereas the targeted families were more likely to enroll their children in two-week sessions. As a result, the following summer the program extended incentives to families opting for a two-week session and exceeded its enrollment targets. This learning and its application to other FJC programs simply could not have occurred in the context of a single-year grant.

Longer grant durations provide opportunities to work with other funders to support the long-term sustainability of proven initiatives. One of our key strategies is to support our grantees' ability to secure sufficient financial resources to sustain an initiative/project, as well as to scale and/or replicate the initiative/project when appropriate. This requires identifying and cultivating other funders, which can be impractical, at a minimum, if the grant term is just a year or two. For example, the foundation awarded a five-year grant to another Foundation for Jewish Camp initiative to launch five new Jewish residential specialty camps -- camps that are well on their way to achieving financial sustainability. Because the term of the grant gave us and our grantee plenty of opportunity to inform the field of the program's emerging success, FJC was able to secure additional funding from the AVI CHAI Foundation to help fund a second cohort of specialty camps.

For the Jim Joseph Foundation, the decision to focus on multiyear grantmaking has been crucial to the evolution of our grantmaking strategy. And our grantees report that our approach enables them to respond to and overcome challenges with the assurance that they will have the time, resources, and support needed to do so. We have also learned significant lessons from our partners and have shared those lessons with the field. As we look forward to many more years of grantmaking, this knowledge will continue to inform our efforts to create effective and meaningful Jewish learning experiences that shape the lives of Jewish youth on their journey through life.

-- Sandy Edwards

Better Ways to Bring Social Programs to Scale

(Chris Walker is director of research and assessment for the Local Initiative Support Corporation. A longer version of this post was published online in the Stanford Social Innovation Review in December.)

Increased demand for social programs that are simultaneously threatened with budget cuts creates a need to not only ramp up proven innovations, but also to be smarter and more effective in doing so. In 2011, the Local Initiatives Support Corporation (LISC), a national community development intermediary dedicated to the comprehensive revitalization of low-income neighborhoods, leveraged an investment from the Social Innovation Fund to further expand its Financial Opportunity Center (FOC) program. LISC recently undertook a thorough study of its expansion of the FOC model to identify which elements and strategies made it work, and how they might help similar organizations.

Financial Opportunity Centers help low-income families by offering a suite of counseling services, including financial coaching to support basic budgeting and credit repair; advice about how to get and keep a good job; and assistance in identifying and applying for public benefits. Early results have been promising -- the program has gone from four original sites in Chicago to sixty-six centers nationwide.

The study revealed some important takeaways.

First, successful scaling of the program requires a certain amount of standardization. While granting some flexibility, LISC works hard to maintain the integrity of the core FOC model.

Second, infrastructure is critical and requires conscious investment and development. LISC has continued to invest in program-delivery processes, protocols, and standards; performance measurement; direct technical assistance and peer-to-peer learning approaches; and resource generation.

Third, scaling can only happen through a deliberate and strategic rollout. The SIF funding enabled LISC to formalize its program expansion and build the national structure needed to ensure a disciplined process.

That said, certain aspects of our scaling process are unique. The FOC model demands client participation and changes in behavior, meaning some customization is necessary. It also varies from community to community, and thus entails constant monitoring and adjustment. Few organizations can go this alone, which is why LISC's local and national infrastructure is so critical.

Successful scaling ultimately requires sustainability; the current fiscal crisis underscores that need. As the FOC model will always rely on some subsidies, we also measure success in how well the legal and administrative structure of the mainstream workforce system incorporates our approach. Only when our model becomes part of the policy mainstream can we claim to have fully gone to scale.

-- Chris Walker

 

Off the Shelf: 'The Last Hunger Season: A Year in an African Farm Community on the Brink of Change'

(Emily Keller is an editorial associate in the Corporate Philanthropy department at the Foundation Center. In October, she reviewed Changing Business From the Inside Out: A Treehugger's Guide to Working in Corporations, by Timothy J. Mohin.)

Leonida Wanyama sat at her living room table in her mud-and-sticks house at the base of the Lugulu Hills in western Kenya contemplating her assets. Her fifteen-year-old son Gideon had been sent home from boarding school because she couldn't pay the latest tuition bill. Her four-year-old daughter Dorcas was begging for more food, even though the cupboard was bare. Her husband Peter, weak from malaria, a condition worsened by malnutrition, did what he could to feed his family, but the planting season was just beginning and the maize crop wouldn't be ready to harvest for months. Leonida decided to sell her last goat for a thousand shillings -- enough to convince Gideon's principal to take him back as she struggled to come up with the remaining tuition. Food would have to wait.

Welcome to the wanjala, the word for famine in Leonida's Lutacho Valley farming community and one of the most common surnames for boys in a culture where parents name their children for the season in which they were born. Girls who are born during the long months between the last of the prior harvest's food has been consumed and the new harvest is brought in are named Nanjala. Leonida's village is called Malaria; so is the stream that provides the family with water for drinking and washing -- and serves as a breeding ground for the mosquito-borne illness that always grows worse in the wafula, or rainy season.

As he makes clear in his new book, The Last Hunger Season: A Year in an African Farm Community on the Brink of Change, Roger Thurow believes the one to eight months each year that the people of western Kenya live with "chronic, gnawing emptiness in their bellies" is both morally unacceptable and avoidable. And to make the point, he focuses much of his book on the One Acre Fund, a young nongovernmental organization that works with smallholder farmers -- those with less than two acres of arable land -- in East Africa to double and triple their yields. For a forty-five hundred shilling credit (about $50) that is paid back over the course of the year, the organization, which operates out of Bungoma, a town in Kenya's Western Province, provides fertilizer, modern seeds, and weekly trainings to smallholder farmers in Kenya, Rwanda, and Burundi.

The demand for One Acre's services is clearly evident in Thurow's narrative, which depicts the relentless cycle of relative feast and famine in the region and how it dramatically affects the quality of life for the smallholder farmers who comprise the bulk of the food-producing population in Kenya's agriculture-dependent economy. Indeed, the country's Public Health and Sanitation ministry reported that during the wanjala which is the subject of Thurow's book, malnutrition was the underlying cause of more than half the deaths of children under the age of five. In the community of Malaria, unconnected electrical wires hang from the church ceiling because the congregation cannot afford to pay for electricity. Children study at home by the light of kerosene lamps that emit noxious fumes and are a constant fire hazard, and the fee-based high school Gideon attends lacks basic chemistry supplies, audio-visual equipment, even blackboards. The local health practitioner, Janet, has no blood pressure gauge or microscope to help confirm her diagnoses. Villagers get around by foot and bicycle, and families often live for a decade or more in homes that were intended to be temporary structures.

One Acre works to lift these farm families, which are often headed by women, out of the grinding poverty that is their lot and into lives in which they have enough to eat year-round, children are able to attend the area's top schools, and excess profits from agricultural work are reinvested back into the farm or livestock.

As Thurow tells it, Andrew Youn, One Acre's co-founder and executive director, believes East Africa's food insecurity problem is primarily economic rather than agricultural, and he has come up with an innovative business model to address the high rates of malnutrition, depleted soils, lack of access to information, and crop price fluctuations that are characteristic of the region. To start, One Acre arranges the bulk purchase of items for distribution at churches near its clients' modest homes, saving them the effort of having to navigate treacherous roads and lack of quality control at local shops. The organization's field directors then teach local farmers how to rotate and diversify their crops to improve the nutrition and health of the soil, and to measure the distance between seeds while planting, ensuring that each one has access to adequate light and air (methods in use in the United States since the Dust Bowl disaster of the 1930s). One Acre recently added crop insurance and de-worming medication for children to its portfolio of services. Establishing better storage systems that reduce crop mold and losses caused by weevil depredation, thus enabling farmers to keep their crops off the market until prices are high, is another primary goal.

One beneficiary of the program is Zipporah Biketi, who lives with her husband, Sanet, and four children in a hut with a leaky thatched roof. Her youngest child, David, has a protruding belly and a persistent cough — both symptoms of malnutrition. The older children sleep on unpadded wooden couches. Sanet is a livestock trader who also makes and sells clay bricks. The family's only other source of income is milk sales from two skinny cows.

Rasoa Wasike, a mother of three, leads One Acre's Kabuchai Women Self-Help group. She tells Thurow that farming is like gambling, the difference being that the smallholder Kenyan farmer rolls the dice on whether it will rain or not. Her husband, Cyrus, works at a cell phone store collecting payments from farmers who, ironically, have acquired modern communication devices but don't have access to modern seed technology. Cyrus hopes to one day save enough money to purchase a pair of bulls and start a ploughing business.

Life on a small farm, or shamba, in Kenya is, as Thurow shows, labor intensive throughout the year. The annual cycle begins with the soil being ploughed by oxen or with small hand shovels known as jembes; use of the latter forces farmers to remain stooped for hours on end. Once the ploughing is completed, villagers gather and pray for rain. If it comes, they dig and fertilize hundreds of holes for seed. This is followed by strenuous daily weeding of the plot, even as last year's food supply runs low, reducing their strength. Once the crops have matured, farmers gather with machetes and jembes to chop them down. During harvest season, or wekesa, the farmers face the additional daily task of spreading maize in the sun to dry, keeping an eye out for rain and thieves, and returning the crops to storage at night. This is followed by shelling, which takes over living room floors and involves the whole family. Many farm families also raise goats, hens, chickens, or cows, primarily for milk sales or for trading rather than for food; incomes are too erratic to sacrifice their most valuable asset for a meal or two.

As the harvest nears, the market price of maize per single-serving bag, or goro-goro, increases to five or six times the previous year's post-harvest price. Many farmers, out of desperation, sell their surplus when the price is low and struggle to purchase maize when the price is high. Family finances are further compromised by the academic calendar, which starts in January, meaning tuition fees are due before the harvest.

Thurow, who worked for thirty years as a Wall Street Journal reporter before joining the Chicago Council on Global Affairs as a senior fellow for Global Agriculture and Food Policy, vividly portrays the farmers' plight while drawing attention to the region's natural beauty -- the caves, mountains, and lush greenery of the wafala -- and showing the community's generosity and joy as well as suffering. One student earns a government scholarship. The farmers reap more than ever before and celebrate with a Christmas feast. Janet gives malaria medication to Leonida's family on credit, even during the wanjala. There is something to hope for throughout the year.

Yet climbing out of such deep poverty is dependent on several years of good harvests, Youn says. And the gradual nature of that transition is the most difficult part of the story to convey. Thurow, who is also the co-author (with Scott Kilman) of Enough: Why the World's Poorest Starve in an Age of Plenty, uses the One Acre story to argue that international food aid is fleeting, expensive, and disruptive to market prices, and that increasing crop production through education and agricultural development is the only long-term solution to hunger in developing countries like Kenya. But as Leonida goes without food and Zipporah sells a cow to re-pay the family's loan, the less positive realities of the One Acre approach surface as well.