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159 posts categorized "Strategies"

A Conversation With Fred Ali, President/CEO, Weingart Foundation

March 18, 2016

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?

Headshot_fred_aliFred 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.

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Expanding the Social Impact Toolbox

March 15, 2016

Hammer-and-nailsIn 1964, the Beatles famously sang, "Money can't buy me love." In philanthropy, the refrain frequently goes: "Money can't buy me impact." Like love, impact — the tangible (and sometimes intangible) outcomes we seek as philanthropists — isn't something that can be bought; it's created. And while money can buy a lot of things, it actually does very little. As such, money isn't the solution that grantmakers often imagine it to be. At Open Road Alliance, we are learning to think about money not as the solution to problems but as a fungible resource that can be shaped into tools and used to help solve problems.

It's easy to see how philanthropists have (mistakenly) come to view money as the solution to most problems. Let's try a little thought experiment. Ask yourself: What would it take to vaccinate every child in a rural area of a developing country? Your answer might be $10 million. Or ask: What would it take to scale a successful afterschool program to three adjacent counties? Your answer might be $750,000. Neither is the correct answer. The correct answers are fifty thousand doses of the vaccine, and fifty trained nurses employed for twelve months (plus a long list of supplies and other inputs required to secure the success of the effort). Yes, all that costs money, but money is just the middleman. It can buy, but it can't do.

If we accept that premise, then it is incumbent on us to fashion different financial instruments — tools — to accomplish different tasks. Unlike the examples above, successfully deploying money to create impact rarely is a one-dimensional transaction. Take, for example, a donor who wants to boost access to high-quality education by paying for a new charter school. The simplistic calculation puts the cost of the building at X dollars, so X dollars donated will lead to Y outcome, with Y being the new school building. The reality is a little messier. Funds need to be allocated for permits and raw materials, for labor, and, eventually, for faculty, supplies, and other administrative costs. Even within this simplified example, the types of capital needed fall into multiple categories: permits and raw materials are a one-time cost, labor is a contractual cost (and subject to change as construction progresses), and hiring staff, purchasing supplies, and administrative expenses are recurring expenses. Understanding the nature and duration of each of these costs is essential to the success of the project. When money is viewed as a tool, you start with the ultimate objective — a new charter school building — and work backward to see what type of funding will work best for each cost category.

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The Three Sources of Foundation Influence

March 09, 2016

Infleunce_magnetMoney, convening power, and knowledge give philanthropic foundations enormous influence and underlie their unique position in our socioeconomic ecosystem. Endowed by a wealthy family or individual, foundations are blissfully free from the kinds of pressures that drive short-term behavior in other sectors. They don't have to raise money from venture capitalists, the financial markets, or other foundations. They never awake to the terrifying news that that their business is threatened by a new competitor. And they don't have to kiss babies in order to garner votes.

Like grizzly bears, lions and tigers, foundations have no natural predators.

Despite this enormous freedom, many foundations traditionally have professed humility and maintained a low profile — either because of their donor's wishes, a belief that it's their grantees that do the real work, or because of the personality of their leader. Increasingly, however, foundations are waking to the enormous potential they have to wield influence in their home cities, countries, and around the world. And encouraging others to adopt their causes, strategies, and ways of working is coming to be seen as the way foundations can increase their impact many-fold.

Let's look more closely at the three sources of foundation influence.

Flexible money

First and foremost is money. Foundations have an abundance of what nonprofit organizations, social entrepreneurs, and the social sector writ large chronically lack. Nonetheless, they tend to be conflicted about their wealth: foundations will tell you without much prompting how many millions or billions in assets they have, only to claim in the next sentence that their resources are small in relation to the world's problems. Collectively, the nearly $800 billion held by American foundations pales in significance to the hundreds of trillions coursing through the international capital markets. But that misses the point.

Foundation money is one of the last remaining sources of capital on earth without a significant claim on it. As a result, the dollars granted, loaned, or invested in social and environmental causes have tremendous potential for leverage. Public institutions may have large budgets, but in most cases those funds are so thoroughly earmarked that they are left with virtually no "risk capital." Talk to any foundation professional who has answered a call to form a partnership with a government agency, the World Bank, or any other large multilateral institution and she inevitably will express surprise about being asked for a grant. Indeed, many of the private-public partnerships that are viewed as the key to impact and bringing an initiative to scale began with a small foundation grant that served to lever more significant public funding.

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Fairfield County’s Community Foundation’s New Paradigm for Community Philanthropy

February 18, 2016

Fairfield_county_cf_for_PhilanTopicHistorically, community foundations have worked to create change by making grants to local nonprofits, advocacy groups, and other organizations.

But a new breed of funders is showing how, by serving in a different role, community foundations can foster change that is more comprehensive, more responsive to residents' needs, and, hopefully, more enduring. This new role involves reaching into the very roots of the community and engaging and empowering the people who call it home.

That's the approach Fairfield County's Community Foundation (FCCF), based in southwestern Connecticut, is taking with its PT Partners initiative. Our goal is nothing less than to create a national model for engaging and training public housing residents to lead change in their neighborhoods.

Jointly funded by the Citi Foundation, the Low Income Investment Fund, and FCCF, PT Partners is housed at PT Barnum Apartments, a 360-unit public housing development in Bridgeport situated next to a notorious brownfield and, incongruously, not far from a yacht club. Long known for unacceptable levels of crime and poverty, PT Barnum is home to more than eleven hundred children and adults. The goal of the initiative is to make the complex a safer, healthier, and overall better place for its residents — or, as we like to say, to transform it into a community of equity and opportunity. And as part of that process, we are working to turn PT Barnum residents into majority stakeholders of the effort and hold them responsible for driving change; after all, they're the experts on the needs and hopes of their community.

But in order to have a chance to succeed, PT Barnum residents first needed two things: to understand their own power — and to learn how to use it.

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5 Questions for...Laurie Garduque, Director, Justice Reform, John D. and Catherine T. MacArthur Foundation

February 04, 2016

Recent opinions handed down by the U.S. Supreme Court which hold that imposing harsh sentences on juvenile offenders violate the Eighth Amendment prohibition against cruel and unusual punishment have transformed the landscape of juvenile sentencing. In December, the John D. and Catherine T. MacArthur Foundation, which earlier in the year had announced it would be winding down its significant support for juvenile justice reform efforts as part of a refocusing of its grantmaking strategy on  a handful of "big bets," including the over-use of jails and incarceration in America, released Juvenile Justice in a Developmental Framework: A Status Report (48 pages, PDF), its summation, based on twenty years of work, of developmentally appropriate best practices in nine key juvenile justice policy areas.

Last month, PND spoke with Laurie Garduque, director of justice reform at the foundation, about the genesis of its work in the juvenile justice field, the report's findings, and the prospects for further reform as MacArthur exits the field.

Philanthropy News Digest: MacArthur entered the juvenile justice field in 1996, a decision motivated by a belief inside the foundation that juveniles are not adults and should be treated differently by the criminal justice system. What was it about the environment in the mid-1990s that brought the issue to a head for you and your colleagues?

Headshot_laurie_garduqueLaurie Garduque: We'd been investing in research on child and adolescent development before 1996, and that research made it clear that children and adolescents were different, cognitively and emotionally, than adults. But the legal implications of those findings had not been considered. In the 1980s, violent crime among youths increased sharply, and fears of a generation of "super predators," a fear fanned by politicians and the press, led states across the country to move to treat young offenders as if they weren't young. States began to focus on the offense, not the offender, and moved toward harsh, punitive laws that included making it easier to try adolescents as adults. The report notes that, in the years leading up to MacArthur's decision to enter the field, forty-five states had changed their laws to try adolescents and children, some as young as ten years of age, as adults. States had also removed the kinds of due process protections you would like to see for young people – for example, determining whether or not they're competent to stand trial. And within the system itself, the emphasis was less on rehabilitation and treatment, and more on punishment. It wasn't about helping young people learn from their mistakes and getting them back on course; it was about punishing them harshly.

Knowing all that, knowing the harm that can result when you treat young people as adults, and seeing the toll these new laws were taking, dispropor­tion­ately, on young people of color and on low-income communities, the foundation started to look at ways we could use research, scientific evidence, and best practices to stem the tide and reform the system. In effect, we were looking for ways to reverse the rush toward draconian reforms and policies that was sweeping the country.

PND: One of the first things you and your col­leagues did was to create a re­search network focused on some of the important aspects of adolescent development and juvenile justice. Can you share with us some of the key findings surfaced by that initiative.

LG: You have to go back to the origins of juvenile court in the early part of the twentieth century, which was based on the recognition that children were deserving of a separate justice system from adults because they weren't as competent as adults, weren't as culp­able for their actions, and should be given the benefit of the doubt when it comes to their capacity to change. Those ideas were challenged in the '80s as crime rates in the United States rose. To get society to once again accept the idea that a young person is less culpable for his actions than an adult, is less compe­tent to stand trial, and has more of a capacity to change than an adult, we knew we would have to map the adolescent development research that was being done to specific legal concepts. How, for example, do you determine whether someone is competent to stand trial? Are adolescents fully responsible for and truly understand the consequences of their actions? Are they more susceptible to peer pressure? More impulsive? Given their developmental immatur­ity, both with respect to their behavior and their brain development, should the criminal justice system treat them differently? The same is true of sentencing. We tend to punish adults harshly because we don't believe they have the capacity to change, or they're not as amenable to treatment and rehabilitation, whereas young people, who haven't yet matured, either emotionally and, in many cases, psychologically, are more likely to respond to rehabilitation.

So, as I said, it became important to map what all that looked like in terms of adolescents' social, emo­tional, and cognitive develop­ment, and to try to identify what the differences between children, adolescents, and adults in those areas were. We were confident that if we could pro­vide scientific evidence which demonstrated, in effect, how the immaturity of young people argues against them being treated as adults by the justice system, it could be the basis for a new way of thinking about how to hold juvenile offenders accountable for their behavior.

As things turned out, that body of research also became important in terms of recent Supreme Court decisions and was a valuable source of guidance for state and local agencies with respect to their juvenile justice practices.

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Most Popular PhilanTopic Posts (January 2016)

February 02, 2016

Not even an epic mid-month nor'easter could keep January from flying by. Not to worry. For those who blinked and missed all the great content posted here during the month just passed, we've got you covered....

What did you read/watch/listen to last month that made you think, got you riled up, or restored your faith in humanity? Share with the rest of us in the comments section below, or drop us a line at mfn@foundationcenter.org.

A 'Big Bet' Strategy: Large Grants for the Long-Term

January 05, 2016

The long runThe Jim Joseph Foundation is about to complete its tenth year of grantmaking and continues to be a work in progress. Striving for continuous improvement involves concentrated time and effort among foundation directors and professionals. The foundation has intensified its focus on strategy in its grantmaking, governance practices, and financial and staff capacities. All this activity has created a change-management agenda, but our commitment to a founding strategic principle has not wavered: careful consideration of invited grant proposals for significant amounts of funding over four- and five-year periods.

We are often queried why the foundation makes such "big bets," enriching relatively fewer organizations with philanthropic capital when many others might benefit from foundation grant funding. This question tends especially to surface when the foundation decides to renew funding to one of its major grantees, often doing so at significant levels of funding support. Two examples of this type of funder/grantee partnership from earlier this year — Hillel International and Moishe House — offer insights regarding how and why the Jim Joseph Foundation chooses to strategically fund well-aligned grantees with large grants and long-term funding.

First, it bears noting that much of the social sector struggles incessantly to achieve organizational stability. Mario Morino posited years ago that:

Nonprofit organizations exist in a culture of dysfunction — limited capacity and modest outcomes pervade critical organizational elements such as strategic planning, staffing, training, management, financing and performance measurement. This dysfunction makes success highly improbable and calls into question the sustainability of organizations unable to adequately capitalize future growth.... (Community Wealth Ventures, Inc., "Venture Philosophy: Landscape and Expectations," Reston, VA: Morino Institute, 2000)

In this regard, the Jim Joseph Foundation spends a great deal of time conducting due diligence on potential grantees. For organizations that are mission aligned, potentially scalable with their reach, and critically positioned within the foundation's focus on education of Jewish teens, youth, young adults and young families, deep investment is inviting.

Recognizing, for example, that Hillel reaches and engages 400,000 college-age students annually, the foundation determined early in its existence to explore effective partnership with the organization. We learned quickly that Hillel would require repeated infusions of funding to build capacity in order to most effectively engage as many college students and communities as possible. Our grants for the Senior Jewish Educator/Campus Entrepreneur Initiative; evaluation of the initiative; funding for the Heather McLeod Grant and Lindsay Bellows study about Hillel's effective strategy to leverage social networks for student engagement; resources for business planning; and seed capital for Hillel projects deemed to be of high priority to a new CEO speak of our commitment to long-term investment in high-performing grantees. And the $16 million, five-year grant the foundation awarded to support Hillel in accelerating its ambitious Drive to Excellence campaign affirms this deep commitment.

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Most Popular PhilanTopic Posts (2015)

January 02, 2016

Here they are -- the PhilanTopic posts you selected, by virtue of your clicks, as your favorite from the year just passed. Stay tuned in 2016 for more great content from our contributors. To join the lineup, drop us a line at mfn@foundationcenter.org. And from all of us here at PND and the Foundation Center, have a Happy and Healthy New Year!

Tips for Working With a Recruiter

December 31, 2015

Dream-job-next-exitAs a recruiter focused on the nonprofit sector, I've interacted with thousands of candidates over the years. And I've often wished that more people understood how to fully leverage the recruiter-job candidate relationship. To that end, here are some tips for working with a recruiter that will help you land your dream job in the new year.

Return our calls! A recruiter could be reaching out to you to tap your network or to see whether you're interested in a particular position. While you might not be looking for a job today, taking five minutes to return the recruiter's email or call will help you establish a relationship that could lead to your next professional opportunity. It's worth the time and effort.

Be honest and open about your compensation requirements, whether you are willing to relocate, and other potentially sticky issues, including whether you have been contacted by or are working with other recruiters. A good recruiter will be able to guide you through those issues to a satisfactory outcome – but only if you're honest and up front with her.

Leverage your recruiter's experience to help you navigate the hiring process. When working with a recruiter, be sure to ask questions about what you should emphasize, what you should downplay, and how to manage questions about gaps in your experience. It's in a recruiter's best interests to help his or her candidates shine, and you might be surprised at how effectively we can help you do that.

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How Foundations Are Supporting Voting Rights

November 24, 2015

The last five years have seen a tug-of-war over the future of our democracy. At odds are forces that want to restrict access to political participation and others who seek to open it in hopes of increasing the number of Americans who cast ballots. After the 2010 election, the war on voting rights intensified with the adoption of laws that curbed participation through voter ID laws in a number of states and cutbacks on early voting opportunities in others. The Supreme Court further complicated the picture by putting money over people in its Citizens United decision and dealing a blow to the Voting Rights Act in Shelby County v. Holder, which made it easier for states to engage in voter suppression tactics impacting voters of color. At the same time, while some states were rolling back the clock on voting rights and democracy, others were pushing through reforms such as online and same-day voter registration aimed at modernizing their voting systems.

As the battle rages on, nonprofits, think tanks, and universities have received substantial funding from foundations in support of their efforts to advance democracy in America. Foundation Center's new tool, Foundation Funding for U.S. Democracy, indicates that foundations made grants of almost $299 million between 2011 and 2014 in the campaigns, elections, and voting category, which includes support for implementation, research, reform, and/or mobilizations efforts related to campaign finance, election administration, redistricting, voting access, as well as voter registration, education, and turnout. More than half those grant dollars went for voter registration, education, and turnout initiatives, and, as one might expect, the annual total spiked in 2012, a presidential election year, as did funding for voting rights efforts.

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Taking Civic Engagement to the Next Level

November 17, 2015

Several years ago, a colleague applied for a position at a large foundation that had just launched a democracy program. Ten minutes into the interview, he was told that because of his lack of experience in campaign finance reform and voter participation, he wasn't qualified. Mystified, he replied that he had more than two decades of democracy experience that was about as direct you could get: working with thousands of people in communities to address the same kinds of issues being debated in the halls of Congress.

Luckily he got the job. Still, it underscores how the millions of dollars many foundations have poured into get-out-the vote and electoral reform efforts are often seen as a proxy for democracy. Today, this work is still a top priority for foundations, with almost $300 million going to 738 organizations over the last few years that fall under the “campaigns, elections, and voting” category in Foundation Center's new Foundation Funding for U.S. Democracy tool.

That makes sense. Voting is the cornerstone of American democracy. It's a concrete action that people can take to civically engage, and it's measurable.

But what happens after the votes are counted? There's mountains of evidence showing that Americans continue to opt out of the political system; in 2014 alone, voter turnout for the midterm elections was the lowest it has been in any election cycle since World War II.

It's easy to wag a finger at the disengaged and call them "cynical." What's harder is accepting the idea that this "cynicism" represents legitimate frustration over what many Americans see as a broken system that hasn't invited them to participate in meaningful ways. And even when they do engage, many people feel their voice counts for little. As a result, more and more Americans are turning away from traditional political systems and embracing activities where they think they can make at least a small difference such as volunteering, "clicktivism," and charitable giving.

The good news is that foundations appear to be increasing their support for broader civic participation, seeing it as important as elections and voting in defining what constitutes a robust democracy. Indeed, according to the center's database, civic participation receives the majority of democracy-related funding, with more than $853 million in grants made since 2011.

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Raising the Next Generation of Givers

November 02, 2015

This is the second post in a three-part series. Click here for part one, "Going Long: Building a Legacy of Family Philanthropy."

Sapling-1In my experience, accumulated over the course of a professional career working with and observing philanthropy and philanthropists, I believe there is a strong argument to be made for multi-generational philanthropy based on the notion that wealth accumulated over multiple generations or through the extraordinary success of one generation ideally should be used to build social capital with long-term, recurring benefits.

Paraphrasing Warren Buffett, a philanthropist-friend once told me that he intended to leave enough for his children and grandchildren so that they could do anything, but not so much that they could do nothing.

Creating a legacy of shared family giving is one of the best available ways of preparing future generations for leadership roles in their communities, based on an understanding that inherited wealth is not only a means for personal gratification but carries with it a responsibility for advancing the public good.

There are of course legitimate first-generation concerns about whether their children's values and charitable priorities might well diverge from their own. And the jury is certainly out as to whether members of the "entitled generation" now coming into their own will share their postwar, baby boomer parents' commitment to collective responsibility and sacrificial giving.

There is reassuring news, though, for those concerned about passing on charitable assets for their children to steward. Not only is there much that can be done to train the next generation in the art of philanthropy and social responsibility, but the process can produce enormous psychic benefits for both generations and bring families together around a core of shared values while respecting diverse generational interests and priorities.

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Going Long: Building a Legacy of Family Philanthropy

October 29, 2015

For a substantial number of wealthy Americans, establishing charitable foundations and family funds has become an attractive and tax-effective way of channeling their philanthropy, and as a result the proliferation of such vehicles has reached unprecedented levels.

Hourglass-moneyIn the United States alone, roughly 100,000 private foundations and 250,000 donor-advised funds today hold some $1 trillion in assets. (For perspective, that's more than $2,500 for every man, woman, and child in America.)

The bulk of these assets typically are set aside in long-term portfolios whose income underwrites charitable grants in — their founders hope — perpetuity. Let's call this the going long strategy. Increasingly, however, spending down of charitable assets during one's lifetime — going big — has become an attractive option for growing numbers of philanthropists.

"Like Bill and Melinda Gates, some believe they can make deep investments to address today's biggest problems," says Elliot Berger, managing director at Arabella Advisors in New York City, "and that other donors will emerge in the future to tackle the problems of tomorrow." Or so the argument goes.

Hundreds of Google citations on the subject testify to the increasing frequency with which family and public foundations, large and small, are deciding to "go big" and spend down their charitable assets rather than entrust future generations with the keys to the "philanthropic safe."

"Going Long" or "Going Big"?

As reported by the Bridgespan Group, only about 5 percent of the total assets of America's largest foundations historically has been held by entities in the process of spending themselves out of existence. By 2010, that number had climbed to 24 percent — and, presumably, has grown since.

What are the implications of this shift? What might it mean for the long-term well-being of society if some of the great philanthropic fortunes of our day were to spend themselves out of existence? Is there evidence that accelerated spending today can solve social problems to a degree that will reduce future funding needs?

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[Review] 'Systems Thinking for Social Change: A Practical Guide to Solving Complex Problems, Avoiding Unintended Consequences, and Achieving Lasting Results'

October 19, 2015

What makes a good old-fashioned mystery so much fun? In part, the enjoyment lies in the opportunity to gather clues along the way and figure out who committed the crime and why. In his book Systems Thinking for Social Change: A Practical Guide to Solving Complex Problems, Avoiding Unintended Consequences, and Achieving Lasting Results, systems thinking pioneer David Peter Stroh, a founding partner of Bridgeway Partners and director of www.appliedsystemsthinking.com, draws a parallel between efforts to solve seemingly intractable social problems and the mystery stories many of us love. Instead of asking "Who done it?" however, Stroh suggests that those working to bring about social change should ask, "Why have we not been able to solve the complex social problems that plague us in spite of our best intentions and efforts?"

Cover_systems_thinking_for_social_changeQuestioning the unhelpful modes of thinking that perpetuate chronic social problems is at the heart of Stroh's book — none more so than "linear" thinking, which involves breaking problems into their individual components "under the assumption that we can best address the whole by focusing on and optimizing the parts." For Stroh, this is the opposite of systems thinking. Not only is it myopic, but its failure to recognize and account for the many forces that feed into a problem often leads to unintended consequences. This kind of "conventional" thinking also fails to account for "time delay" — the time required for a series of actions to work themselves out, or, alternatively, for unintended consequences to unfold. As Stroh says, "today's problems were most likely yesterday's solutions."

A prime example of linear thinking is the idea that providing temporary shelter for the chronically homeless will end homelessness. But while shelters would seem to be the most humane and timely response to homelessness, writes Stroh, they're actually an ineffectual "quick fix" that divert time, effort, and resources away from a more lasting, systemic solution such as providing permanent housing. A more systemic solution to homelessness also would improve relationships among all stakeholders, including the people who provide support services to the homeless as well as homeless people themselves. As Stroh notes, the people who are supposed to benefit from social change are "too often excluded" from the actual planning process intended to drive that change. Thinking systemically, he adds, forces changemakers to focus on the people who have the most at stake.

Another example of conventional linear thinking cited by Stroh is America's reliance on mandatory "get-tough" prison sentences. As a growing number of studies have shown, the policy often backfires, in that it distracts the justice system, policy makers, and other stakeholders from addressing the root causes of many crimes while doing nothing to prevent a large percentage of ex-offenders from ending up back in prison. As Stroh writes, "[P]olicy makers who want to protect society from addicts (homeless people suffering from substance abuse or drug addicts who commit crimes) can ironically become addicted to solutions that exacerbate these social problems in the long run."

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Latino Entrepreneurs: How Philanthropy Can Fuel Small Business

October 15, 2015

Hand-with-FlagsAs National Hispanic Heritage Month comes to a close, it's a good time to recognize and celebrate the critical role that Latino-owned businesses play in the U.S. economy. Consider, for starters, that between 1990 and 2012, the number of Hispanic entrepreneurs in the United States more than tripled, from 577,000 to 2 million (Source: Partnership for a New American Economy).

While significant, however, those gains are modest compared to the growth of white-owned businesses over the same period. What's more, Latino-owned businesses generate less annual revenue than non-Latino small businesses and grow at a slower rate. And, like many small businesses and entrepreneurs, Latino-owned businesses report that access to capital is a major barrier to growth.

That should not come as a surprise. A recent Harvard Business School study (66 pages, PDF) reports that small business loans as a share of total bank loans in 1995 was about 50 percent, compared to only 30 percent in 2012. And a report on minority entrepreneurship by researchers at UC-Berkeley and Wayne State University finds that minority-owned businesses typically encounter higher borrowing costs, receive smaller loan amounts, and see their loan applications rejected more often.

The reasons for such disparities are many, but one thing seems abundantly clear: resolving them is not just a question of social justice; it goes to the heart of American competitiveness in a fast-moving global economy.

On the plus side, there are no shortage of examples of dynamic businesses started — and nurtured — by Latino entrepreneurs who have secured access to affordable loans from lenders who understand their dreams, their businesses, and their challenges.

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