Leveraging a Budget to Build a Foundation-Grantee Partnership

(Steven Green is the director of grants management and administration for the Jim Joseph Foundation, which seeks to foster compelling, effective Jewish learning experiences for young Jews in the United States.)

In many ways, a grantmaking relationship begins with a shared understanding of a budget. This is not to say that grant financials supersede programmatic goals; rather, they are essentially complementary: comprehensive financial reporting, accompanied by a detailed budget narrative, sets a roadmap for an organization's programmatic priorities.

When a funder and a grantee come together for budget reviews, it is an opportunity for them to explore how grantee management of the funding can support efficient implementation of the grant. They can think more strategically about how to achieve their shared goals. For the Jim Joseph Foundation, conversations about timing of grant payments and reporting on grant implementation are part of a relational funder-grantee dynamic. Four key factors, all related to financial practices, can provide the framework for a substantive foundation-grantee partnership:

Pay prospectively. By the time we award a grant to an organization, we have undertaken an extensive review of its mission alignment, fiscal health, leadership, strategy, and prior accomplishments. In addition, the grantee has already invested significant resources in advancing beyond the application process.

As grantees will attest, we request thorough documentation on the projects to be funded. From this information, we gain an understanding of the stages of a grantee's initiative and can anticipate when payments will be needed. We often agree to a payment schedule that provides part of the funding in advance of when expenditures are expected to occur. This practice supports an initiative's growth and progression, and it provides a sense of security for the grantee. Moreover, making selected grant payments in advance allows both parties to focus more on the actual initiative and less on the dollars. (Incidentally, we have a similar relationship with researchers, consultants, and independent evaluators. While we reserve a small payment to be made at the end of each contract, a majority of the contract awarded is paid prospectively. Reconciliation based on wages and expenses occurs at the end of the contract, when a final payment is calculated.)

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.

Managing Up: The Grantwriter’s Dilemma

(Allison Shirk is a freelance grantwriter based in the Puget Sound region. In her last post, she wrote about the art of the phone call.)

Good grantwriters have a unique perspective with respect to nonprofit organizations: We know what grantmakers want to hear and we know what we'd like to be able to put into grant proposals. But when conspicuous gaps begin to show up in proposals, what should you -- the grantwriter -- do? Here are six elements of a good proposal that often are missing or inadequate, and some resources to help you and your employer/client address the problems they might be hiding.

1. Mission Statement: Does the organization's mission statement cause you to scratch your head? I've seen mission statements that fill an entire page and mission statements that no longer reflect the priorities and/or activities of an organization. Unfortunately, like an old quilt, board members tend to become attached to the mission statement they know, so proceed gently. Here are a few good resources about the art of the mission statement you can share with the board when the time is right: 1) how to create an effective mission statement; 2) the one-sentence mission statement; 3) eight words can be effective, too.

2. Board of Director Affiliations: When funders look at a board roster, they typically are assessing both the size and quality of the board. When they ask for "affiliations," they want to know the name of the company or organization where a board member works, or, if retired, most recently worked. For bonus points, feel free to describe the particular competencies (e.g., financial expertise, knowledge of IT systems, fundraising experience) that individual board members bring to the table. When a board member balks at providing information for this part of the proposal, explain why the funder wants to know and be sure to let the hesitant board member know that personal contact information is not part of the deal.

(Long) Weekend Link Roundup (May 25-26, 2013)

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

Advocacy

Change.org founder and CEO Ben Rattray proudly announces that the organization, a certified B-corp, recently raised $15 million in investment capital through its first outside financing round, with the bulk of the funds provided by Omidyar Network. Rattray, who has said the organization will never go public, plans to use the investment to build tools that "more effectively empower hundreds of millions of people around the world;...enable people to build long-term movements on our platform; [and] personalize each user’s experience to better connect people to the issues and organizations they care most about....'

Communications/Marketing

On her Getting Attention blog, Nancy Schwartz shares a few tips from Amy Sample Ward and Allyson Kapin's new book Social Change Anytime Everywhere for nonprofits looking to improve their next multichannel campaign.

Community Improvement/Development

Ed Skloot, director of the Center for Strategic Philanthropy and Civil Society at Duke University, announces the publication of a new installment in a series of "occasional essays" written by thought leaders in the sector. In Changing the Game (48 pages, PDF), Boston Foundation president/CEO Paul Grogan reflects on the state of philanthropy and "the compelling strengths of community foundations as seen from his perch." Among other things, Grogan, who has served as president of the Boston Foundation for more than a decade, explains how "contemporary community foundations can become more agile, energized, relevant, and not least, consequential in their communities."

And on the CNN site, John Bare, vice president of the Arthur M. Blank Family Foundation and executive-in-residence at Georgia Tech's Institute for Leadership and Entrepreneurship, looks at how foundations, the Hudson-Webber Foundation among them, are rethinking their giving in Detroit to achieve maximum impact.

[Review] 'Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being'

The basic premise of Zoltan Acs' new book Why Philanthropy Matters: How the Wealthy Give, and What It Means for Our Economic Well-Being is that many people — including some very wealthy people — need to understand that philanthropy is both a moral and economic good. Acs' Exhibit A is Mexican telecom tycoon Carlos Slim Helú, who, when asked whether he planned to join the Giving Pledge — a campaign launched by Warren Buffett and Bill and Melinda Gates to convince the world's billionaires to dedicate a majority of their wealth to philanthropy — said: "Charity doesn't solve anything."

While Slim, one of the world's richest men, believes the wealthy do have an obligation to address endemic poverty, his preferred solution isn't charity; it's to use his personal wealth to create more jobs. Acs, who directs the Center for Entrepreneurship and Public Policy at George Mason University, doesn't fault that approach, although he is careful to distinguish between charity and philanthropy. The latter, writes Acs, involves "a reciprocal relationship between the philanthropist and the beneficiary" in which the beneficiary must invest its own time, energy, and resources in order to create a positive outcome(s). "In short," writes Acs, "philanthropy is an investment that stimulates other investments."

Indeed, according to Acs, philanthropy is an underappreciated economic force that strengthens American capitalism in two ways: by supporting entrepreneurship through investments in universities, basic research, and innovation; and by redistributing accumulated wealth into opportunity-creating investments. A former Kauffman Foundation fellow, Acs acknowledges that while the creatively destructive nature of American-style capitalism has served to foster an entrepreneurial spirit among Americans, it has also enabled a significant concentration of wealth in the hands of a relative few. And, he writes, it is only "through philanthropic investments — in particular through the organized, large-scale networks of what I call philanthropic entrepreneurialism — [that] the imbalance inherent in capitalist growth [can] be corrected to create a self-sustaining process in which wealth creation is supported alongside social innovation and opportunity."

The State of Philanthropic Giving in 2011

(Niki Jagpal is research and policy director and Kevin Laskowski is senior research and policy associate at the National Committee for Responsive Philanthropy. Both frequently blog about the role of philanthropy in society. You can follow NCRP on Twitter @ncrp.)

Anyone working in the nonprofit sector knows the value of measurement. If something is important -- whether it's your own impact and outcomes or a field-wide trend -- you measure it. Somehow, some way, you track it.

NCRP recently completed an analysis of 2011 foundation giving based on our own Criteria for Philanthropy at Its Best: Benchmarks to Assess and Enhance Grantmaker Impact guidelines. In the past, we examined average giving over three years to monitor trends in giving to underserved communities and for social justice, as well as general operating support and multiyear funding.

This year, we've moved to analyzing data annually in the hopes of providing the sector with real-time information on emerging trends and associations. The figures are based on the Foundation Center's grants sample database, which comprises grants of at least $10,000 awarded by more than one thousand of the nation’s largest grantmakers, representing approximately half of the grant dollars awarded by U.S. foundations in 2011. Grantmakers can use the information to see how they are performing compared to their peers, as well as as a guide for future strategy. Grantees can see which funders are providing vital types of funding in support of transformative change.

The Philanthropic Landscape 2011 reveals important changes in the philanthropic ecosystem:

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.

Weekend Link Roundup (May 18-19, 2013)

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

Data

We're big fans of data visualization whiz Hans Rosling, and so is Humanosphere blogger Tom Paulson. But, writes Paulson, Rosling "is strikingly upfront about the limitations of data. Sometimes, the problem is that different countries measure things -- like unemployment -- in different ways....In other cases, there are real uncertainties in the data that must be assessed: child mortality statistics are quite precise, whereas maternal mortality figures are not; global poverty measurements are infrequent and uncertain." And so on. Still, when it comes to telling stories with numbers, few can rival Rosling, as the video Paulson embeds in his short post well illustrates.

Education

In a post on the Huffington Post Impact blog, Chris Gabrieli, co-chair of the Time to Succeed Coalition and founder and chair of the National Center on Time & Learning, and Ford Foundation president Luis Ubiñas discuss the progress the coalition, which works to ensure that children in high-poverty neighborhoods have access to more and better learning time in school, has made since its was established a year ago.

Fundraising

On her About.com blog, Joanne Fritz gives a thumbs up to Future Fundraising Now blogger Jeff Brooks' The Fundraiser's Guide to Irresistble Communications. Among the things she liked, writes Fritz, is Brooks' admonition that "our biggest mistake in fundraising is thinking that what we like is what works. We're self-centered, rather than donor-focused. And, frankly, we are soooo off the mark."

Trouble at the IRS: What Were They Thinking?

(David Jacobs is director of foundation information management at the Foundation Center. In his last post for PhilanTopic, he blogged about an Open Data Master Class presented by the World Bank.)

Like many Americans, I was shocked to learn last week that the Internal Revenue Service had targeted conservative and Tea Party organizations applying for 501(c)(4) tax exempt status for additional review prior to last year's elections. And like many Americans, my shock turned to disgust this week as additional details -- including the alleged leaking of confidential donor information -- emerged, showing the scandal to be more serious than initially disclosed.

Regardless of whether you believe what happened in Cincinnati was an act of political malfeasance or just a case of monumental governmental ineptitude, the fact that it did happen should be sending shockwaves through the nonprofit sector. One of the bedrock principals of organized philanthropy and nonprofit advocacy in America is the idea that such activity should be tax advantaged, regardless of cause or political orientation, and that, when it comes to the nonprofit sector, the IRS should always operate in a fair and impartial manner. The thought that that might not be the case in every instance should bother and disturb all Americans.

Dear Fundraisers: The Annual Report Is Yesterday’s News

(Derrick Feldmann is CEO of Achieve, an Indianapolis-based creative fundraising agency. In his last post, he wrote about the importance of differentiating between your "sophisticated" and average donors.)

When I headed off to college for the first time, I had no idea what I wanted to study or what kind of career I would pursue after graduation. Like so many other "undecideds," I took classes from lots of different departments and hoped something would click.

Then, in my junior year, I discovered criminal justice. I had always enjoyed crime novels, detective stories, and hearing about unsolved mysteries, and after I took a few classes in the field, I convinced myself that maybe the law was my calling. Eventually, I marched into my advisor's office and declared my major: pre-law.

Well, as a pre-law major, I needed to take the LSAT in order to be able to apply to law school. But unlike just about everyone else taking the test, I didn't bother to study until the night before. Don't ask me why.

So, I took the test and, thinking I might have done okay (or even a little better than okay), I settled in at home and waited for the results. I checked the mailbox every day for an oversized envelope, and as days turned into weeks, my thoughts ran every which way. Law? What had I been thinking? The second part of the test wasn't so hard, though, and I'm pretty sure I did okay on the third part. Who knows? And, hey, I do love a good mystery.

Weekend Link Roundup (May 11-12, 2013)

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

Communications/Marketing

On the Philanthropy Potluck blog, Megan Sullivan shares a list of tools for resource-constrained nonprofit communications officers.

Fundraising

Frustrated by your organization's inability to turn its good work into consistent, sustainable donor support? Hop over to the Fired-Up Fundraising blog, where fundraising consultant Gail Perry shares a very good list of the ten things you need to understand about how fundraising really works. Recommended.

Impact/Effectiveness

On the Markets for Good blog, Laura Quinn, executive director of Idealware, argues that as much as funders and others value the idea of more and better performance data from nonprofits, most nonprofits do not have the resources to provide high-quality data about their own effectiveness. How do we get them to a point where that’s possible? asks Quinn.

It would take more than just a little training or a second look at their priorities. They'd need sizable investments in a number of areas. They'd need help with technology, and to understand how to best make use of data and metrics on a limited budget. They'd need a rationalized set of metrics and indicators that they're expected to report on, standardized as much as possible per sector with a standard way to provide them to those who need them.

Funders need to understand what is and isn't feasible, and to redirect the focus of their desire for community impact evaluations from small nonprofits to the university and research world so the nonprofits they support can be unencumbered to work toward a better world....

Building out the "information infrastructure" of the social sector, as Markets for Good and its supporters (the Gates and Hewlett foundations prominent among them) propose to do, is an admirable idea, writes Bridgespan's Daniel Stid on the Markets for Good blog. But "if we build it," he asks, "will the putative buyers and sellers in the envisioned marketplace -- the philanthropists and nonprofits spending and soliciting money within it -- use it as planned?... [W]ill better information change their behavior?" What do you think? Share your thoughts in the comments section below.

[Infographic] Mission Investing

This week’s infographic provides some basic facts, courtesy of the data architecture team here at the Foundation Center, about the relatively small but growing field of mission investing, which encompasses both market-rate mission-related investments (MRIs) and program-related investments (PRIs).

The first program-related investment was made in the late 1960s, and the Foundation Center has been tracking foundation use of PRIs for more than sixteen years. The infographic below, which is partly based on a Foundation Center survey conducted in 2011 and on more recent research, reveals the staggering amount of assets available for mission investing and the geographic scope of such investments.

5 Questions for...Katie Everett, Executive Director, Lynch Foundation

Today, as in the past, education reform tends to be politically charged and fraught with controversy. And while the needs of students often figure prominently in the debate, the devil is always in the details.

In the Boston area, the Lynch Foundation has worked to engage administrators, educators, and parents to think outside the box about how to improve the educational experience for all. In that spirit, the foundation has begun to work with educational innovator Salman Khan and Khan Academy to provide free educational materials to schools in the metro Boston area.

Recently, PND spoke with the foundation's executive director, Katie Everett, about its partnership with Khan and how new approaches to classroom instruction are making a difference in Boston-area schools.

Philanthropy News Digest: What areas of education does the Lynch Foundation fund?

Katie Everett: We fund in all areas, from early education to higher ed. We've been around for twenty-five years and have funded everything from targeted early literacy programs to comprehensive projects at Harvard, Boston College, and the University of Pennsylvania. We fund teacher training, we fund charter schools, we fund in the Catholic school sector, we fund public schools, and we fund principal leadership programs. If there's one area in which we have stopped investing, it is job training. We found it was really hard to measure the impact of those programs.

No Second-Class Families

(Ben Jealous is president/CEO of the NAACP.)

African Americans have spent much of our history fighting for equal treatment. Just two generations ago, our parents and our grandparents were banned from eating at certain restaurants, attending certain schools, and working in certain professions.

So it's not difficult to empathize with the struggle of immigrants in our country. Like our ancestors who migrated from the former slave states of the Deep South, millions of undocumented immigrants move to the United States each year to find work and a decent education for their children. When they arrive, however, they are confronted with blatant discrimination, racial profiling, and hardly any legal recourse.

As people of color, we have a responsibility to stand up for social justice whenever it is violated. That is why the NAACP has joined other civil rights and human rights organizations, including the Rights Working Group and the Leadership Conference of Civil and Human Rights, to support comprehensive immigration reform.

Across the country, an estimated 11 million undocumented immigrants live with permanent second-class status. Many immigrants come to the U.S. to find a better life but find themselves living in the shadows, in constant fear of arrest and deportation. This has a cost.

Undocumented workers are exploited on a regular basis. Many business owners pay low wages and provide dangerous working conditions for their undocumented workers, with little fear of retaliation. They know that their employees have too much at stake to risk contacting the proper authorities.

Advancing Human Rights: A 'Flip' Chat With Mona Chun, Deputy Director, IHRFG

(The video below was recorded as part of our "Flip" chat series of conversations with thought leaders in the nonprofit and philanthropic sectors. You can check out other videos in the series here, including our previous chat with Harish Bhandari, director of digital engagement and innovation at the Robin Hood Foundation.)  

Since 2012, the Foundation Center has been working with the International Human Rights Funders Group to develop a framework for assessing the state of human rights grantmaking around the globe. The two organizations recently released some key findings (12 pages, PDF) of their research based on data collected from IHRFG, Ariadne, and the International Network of Women's Funds and an analysis of more than seven hundred funders representing twenty-nine countries. 

Among other things, the analysis found that in 2010 the United States accounted for the largest number of human rights funders -- which may be a reflection of the ability to draw upon a wealth of data on U.S.-based philanthropy through the Foundation Center's database and the lack of a similar resource outside of the U.S. -- followed by Western Europe, Latin America, Asia and the Pacific, Eastern Europe, sub-Saharan Africa, and the Middle East.

The analysis also found that the Ford Foundation was the largest funder of human rights by grant dollars ($159.5 million), while the Open Society Foundations reported the largest number of human rights grants (1,248); that human rights funders awarded a total of $1.2 billion in 2010; and that the largest share (69 percent) of that funding went to U.S.-based organizations, many of which work in other countries, regions, and/or at the global level.