38 posts categorized "Capacity Building"

Can Philanthropy Put Humpty-Dumpty Back Together Again?

February 02, 2012

(Michael Edwards is a leading expert on global civil society and the author of Small Change: Why Business Won't Save the World. This is the second in a series of posts in which he looks at different aspects of the Bellagio Initiative, an effort funded by the Rockefeller Foundation to produce a new framework for philanthropic and international development collaboration in pursuit of human well-being. Click here to read the first post in Edwards' series, "Well-Being and Philanthropy," and here to read/download the Bellagio paper from which the quotation below is taken.)

"The more one disaggregates the components of well-being into smaller and more manageable pieces...the more each piece can be measured and controlled in order to improve returns....[B]ut the same pieces can't simply be re-arranged to the same effect in different contexts...."

MikethirdsectorcroppedOne of my most important career lessons was taught to me by Sithembiso Nyoni, an activist in Zimbabwe. "No country in the world has developed itself through projects," she said, reflecting on the tendency of NGOs to fund their own small bits and pieces of development and hope that they add up to something more substantial over time.

Unfortunately, because the larger structures of society evolve organically rather than in assembly line fashion, they rarely do. The long and messy processes that drive our politics, culture change, and institution-building can neither be predicted nor controlled, especially if the outcome is something as complex as well-being. In that sense, development is poetry and foreign aid is prose.

Of course, a clear sense of purpose and direction is important to success. In contrast to Zimbabwe, that was one of the things that distinguished South Korea, Taiwan, and other societies that developed quickly after World War II. But as the experience of those countries also shows, clear goals were balanced by the flexibility to pursue them in lots of different ways as circumstances changed. "Evolution is always surprising," wrote Whole Earth Catalog creator Stewart Brand, "so make room for it. If you let things flourish you get a wild ride, but you also get sustainability." That's been true of all game-changing experiences in development right up to the Arab Spring.

Tension between "local ownership" and "outside intervention" has been woven through the history of development efforts for half a century or more, and it's unlikely to disappear as long as foreign aid is a tool in the foreign policy toolkit. Accountability to taxpayers, concerns about corruption, and a desire to show more "value for money" have all reinforced a project-by-project mentality that a decade ago seemed to be fading in favor of unrestricted support. Projects that are carefully planned and monitored do offer the prospect of more control, even if their influence over the deeper drivers of development is weak. On the plus side, there are many ways to leverage the impact of projects -- including through policy advocacy, capacity building, networking, and knowledge-creation -- so that they become more than small pieces in a jigsaw that can never be completed.

Nevertheless -- and here's the link to current trends in philanthropy -- the idea that successful projects can be "replicated" or "scaled-up" has, for reasons I don't entirely understand, become an article of faith. There are striking similarities between the Millennium Villages Project in sub-Saharan Africa, for example, and the Harlem Children's Zone in New York City. Both have received significant injections of resources in an effort to demonstrate that good results are possible without broader changes in the surrounding environment. The same goes for school-reform efforts and the Obama administration's Social Innovation Fund. Other schools and communities will learn from these experiences and follow a similar path, or so the theory goes.

Except that they don't, because the resources aren't there, or because the same innovation doesn't work or isn't valued when transported to another setting, or because those broader forces have a nasty habit of kicking the ladder away just when you least expect it.

If that's the case, why do pilot projects (or "policy experiments," as they are often referred to in the U.S.) continue to exercise such a powerful hold on the imagination of philanthropists? Perhaps it's because they accomplish other things that are important, like building support for their favored approaches, strengthening networks of people prepared to back them, and keeping alive the comforting thought that social progress can be removed from the influence of politics, economic restructuring, and social struggle.

Even if it could, it would be something of a pyrrhic victory, threatening to sacrifice long-term improvements in the infrastructure of problem-solving for short-term advances in services and other material indicators of success. As fifty years of trial and error in development make clear, however, investing in people's capacities to innovate is much more important than replicating any particular innovation.

But how we do measure success in that kind of scenario? And is there a way to knit all these different approaches together in a positive and constructive fashion? That's the subject of next week's posts.

-- Michael Edwards

2011 Year in Review: Foundations Bet Big on New Initiatives

December 30, 2011

Global, public-private, collaboration, thinking big -- these were some of the themes in play as foundations sought to boost their impact while addressing some of the most pressing challenges at home and abroad in 2011.

In the field of international development, the Chevron-sponsored Niger Delta Partnership Initiative Foundation and USAID pledged $50 million in February to support programs that promote economic development, improve the capacity of government and civil society institutions, and help reduce conflict in the oil-rich Niger Delta region. A month later, the Conrad N. Hilton Foundation announced a five-year, $50 million commitment to help improve water conditions for more than one million people in sub-Saharan Africa and areas of India and Mexico -- a commitment that included a grant to the Foundation Center to build an online portal to serve as a central hub for information about water-related issues. In July, the Bill & Melinda Gates Foundation stepped up its own commitment to WASH issues by awarding grants totaling $41 million in support of efforts to increase access to affordable long-term sanitation solutions for millions of people in the developing world. And in October, George Soros and the Open Society Foundations pledged $27.4 million to the Millennium Villages Project to boost development in villages across rural sub-Saharan Africa.

Closer to home, a number of foundations announced major initiatives benefitting underserved communities and vulnerable populations. In April, the Home Depot Foundation launched a three-year, $30 million initiative to address veterans' housing issues; in May, the New York City-based NoVo Foundation announced a ten-year, $80 million initiative to strengthen the movement to end violence against women and girls; and in July, the California Endowment announced the creation of a $200 million public-private loan fund, the California FreshWorks Fund, to support efforts to increase access to healthy and affordable food in underserved communities.

Filmmakers and performing artists also were beneficiaries of bold thinking on the part of foundations in 2011. In January, the New York City-based Ford Foundation committed $50 million over five years to help identify and support a new generation of documentary filmmakers; in February, the Howard Hughes Medical Institute in Chevy Chase, Maryland, announced a $60 million documentary film initiative of its own; and in October, the Doris Duke Charitable Foundation announced a ten-year, $50 million commitment to support more than two hundred individual artists in the field of jazz, theater, and contemporary dance.

Finally, in the area of health and health care, in September the Robert Wood Johnson Foundation, the nation's largest healthcare philanthropy, announced the launch of a three-year, $100 million "impact" fund to help its grantees leverage additional funding from multiple sources and share solutions that actually improve health and health care for all Americans. As part of the effort, RWJF awarded $10 million to NCB Capital Impact, a national Community Development Finance Institution (and the program administrator for the California Endowment's FreshWorks Fund), to create a low-interest credit facility that will support the development of Green House nursing homes over the next ten years.

"Our goal with this initiative is to go beyond traditional grantmaking, to drive social change, achieve measurable impact, and collaborate with partners who can help us achieve our mission," said RWJF president and CEO Risa Lavizzo-Mourey. "This commitment allows us to better leverage our funding and spread innovative models, like the Green House Project."

Related Links

Ford Foundation Announces $50 Million for Documentary Film Initiative (1/19/11)

HHMI Launches Documentary Film Unit (2/08/11)

Chevron, USAID Pledge $50 Million to Improve Living Standards in Nigeria (2/21/11)

Hilton Foundation Commits $50 Million to Help Improve Global Water Conditions (3/23/11)

Home Depot Foundation Launches $30 Million Initiative to Address Veterans' Housing Issues (4/14/11)

NoVo Foundation Establishes $80 Million Initiative to End Violence Against Women and Girls (5/20/11)

Latin American Water Funds Launched With $27 Million in Funding (6/15/11)

Gates Foundation Announces $42 Million to Address Global Sanitation Issues (7/20/11)

California Endowment Announces $200 Million Public-Private Loan Fund (7/22/11)

Rockefeller Foundation, Partners Launch Initiative on Role of Philanthropy in International Development (8/10/11)

Robert Wood Johnson Foundation Establishes $100 Million Impact Capital Fund (9/12/11)

Soros Pledges $27.4 Million to Aid Development in Rural Africa (10/04/11)

Doris Duke Charitable Foundation Commits $50 Million to Support Individual Artists (10/21/11)

The Foundation Center Turns 55!

December 09, 2011

(The following post was written by Inés Sucre, reference/outreach librarian at the Foundation Center-New York.)

FC_LogoFive years ago, when the Foundation Center celebrated its 50th anniversary, we published a nifty timeline that looked at the history of the center side by side with milestones in U.S. and world history. Take a look -- it's quite wonderful!

The idea of change can sometimes be over-hyped. Even so, the last five years do seem to have brought rapid shifts in the way the Foundation Center serves its mission. Maybe I'm wrong, but consider that…

Back then, in 2006, we didn't have any blogs, not one. Now look at us! The Foundation Center communicates through eight blogs, including the Nonprofit Literature Blog, the first of our blogs to launch; PhilanTopic, a blog of opinion and commentary that draws contributors from all over the country; and our field office/library blogs.

Back then, we didn't tweet -- no one did. But today we're tweeting from our offices in San Francisco and New York -- and lots of places in between, too, like Cleveland, Atlanta, and Washington, D.C. And our main Twitter feed (@fdncenter) has more than 15,000 followers, from all over the world!

Of course, foundations are tweeting and blogging as well. So Foundation Directory Online Professional now has a Social Media tab for feeds and links to all this great content.

Back then, we had one Web site -- foundationcenter.org, which I've always loved (even before I worked here). Now, in GrantSpace, we have a new site dedicated to nonprofit grantseekers, to forging an online community, and to offering a "a robust, accessible knowledge bank for the sector."

Back then, we did very little training online. Now, our full curriculum of free classes is available in the form of webinars, with classes conducted by the same wonderful instructors who lead classes in our five learning centers.

Back then, we didn't have a standalone Web site to promote greater transparency in philanthropy. Today, Glasspockets opens the world of foundations and philanthropy to all.

Back then, although we focused our training and reference work on the topic of collaboration, we didn't have an online portal dedeicated to it. Now, thanks to our partnership with the Lodestar Foundation, we maintain the Nonprofit Collaboration Database. Check it out!

Back then, we had about 230 Cooperating Collections in our Cooperating Collections network. Today, we have over 450 and have even opened Cooperating Collections in nine countries. This network of libraries, service organizations, and community foundations provides funding information and training -- as well as access to the center's databases and core publications -- to nonprofits across the U.S. and in an ever-growing number of countries.

Back then, we didn't have the highlighted text below as part of our mission statement:

To strengthen the social sector by advancing knowledge about philanthropy in the U.S. and around the world.

Now, we do, and our data collection and dissemination efforts are being expanded and becoming more international in scope. This not only serves to broaden the audience for our servces and publications, it also helps to inspire an open flow of information about global philanthropy and global needs. Our data is also being put to greater use in our new mapping tool, Philanthropy In/Sight®, which maps the impact of (and shows the need for) philanthropy around the world.

On December 10, 1956, the Foundation Library Center, as we were known then, opened its doors with the goal of collecting, organizing, and making available to the public "reports and information" about foundations. An article in the New York Times heralded that beginning as "an important event in the history of American philanthropy … it can and should do a great deal to forward the cause of 'full disclosure' in a field where it is needed" (New York TImes, 12/11/1956).

As Foundation Center president Brad Smith wrote in announcing Foundation Center 2020, our new strategic plan, "If you believe, as we do, that philanthropy is an engine for positive social change, then please join us in our effort to nurture it, to support and advance the work of those around the world who transform lives and make the world a better place."

Happy fifty-fifth anniversary, Foundation Center!

-- Inés Sucre

Making Smart Investments in Human Capital

December 07, 2011

This article is a summary of Making Smart Investments in Human Capital (12 pages PDF), a report co-authored by James Weinberg, founder and CEO of Commongood Careers, and Dana Hagenbuch that draws on a series of four regional convenings organized by Commongood earlier this year. At those meetings, nonprofit executives, HR practitioners, evaluation experts, and funders sat down to discuss best practices, challenges, and emerging issues related to the subject of hiring and cultivating nonprofit employees. Over two hundred attendees representing a hundred and sixty-two organizations participated in the conversations.

Human_capitalIn the nonprofit sector, the focus on demonstrating and quantifying programmatic impact has never been greater. As grantmakers, foundations, government partners, and other intermediaries emphasize accountability for programmatic outcomes, nonprofits are stepping up to the plate with key performance metrics for assessing the impact of investments. This response to evolving philanthropic decision-making has spurred a culture shift throughout the sector resulting in an increase of data-driven, results-oriented programmatic strategies, particularly among social entrepreneurs and organizations seeking to make a major and measurable difference on the communities they serve.

While organizations have developed sophisticated models, systems, and tools for measuring program impact, little attention has been paid to measuring other types of organizational investments. This failure to invest in holistic organizational development has its roots in the historical reticence of the foundation community to make investments in the key functional areas often categorized as "overhead." Investments in programs are highly visible and have a direct impact on the constituent community, and that's good. But when managed correctly, every dollar invested in a nonprofit plays a role in organizational outcomes. This is especially true when it comes to human capital. Without investments aimed at getting the right people in the right roles, as well as efforts to support employee performance and drive a positive work culture, an organization cannot effectively deliver on the promise of its programs. If this is true (or at least generally accepted), why don't organizations invest more in their people?

In our "Uncommon Conversations" meetings this spring, 95 percent of participating organizations indicated that they had made at least some investments in human capital over the past few years, but mostly in such baseline areas as building organizational culture and hiring staff to manage transactional HR functions. Significantly fewer participants indicated they invested in enhancing management systems, catalyzing leadership development, and hiring senior human capital leaders -- some of the most strategic investments possible.

When asked about the human capital outcomes that are most important to their organizations, respondents overwhelmingly indicated staff performance as the most important, and staff satisfaction and retention among the least important. This mindset is typical of the dynamic that has led to high burnout and turnover expenses in the nonprofit sector; it is shortsighted thinking that has significant long-term consequences for the sector.

Across the convenings, there was tremendous enthusiasm for exploring a range of strategies that impact the ways we recruit, develop, and retain our people, as well as ideas about ways to measure the effectiveness of these investments. Some ideas that received the most enthusiasm included:

Invest in a strategic human capital hire. Sam Cobbs, CEO of First Place for Youth, expressed the value of investing in a senior management hire: "Bringing on a Director of Talent Management met a need we didn't even know we had. This hire has been instrumental in creating and implementing a performance management framework for mapping strategic organizational goals to department and individual work plans. As a result, we've been more effective at closing performance gaps and creating a talent-driven culture. We've seen higher levels of staff engagement, which translates to the frontlines of our programs."

Build integrated systems to drive performance. Today, many organizations rely on limited, disparate systems that are unable to respond to the evolving needs of an organization as it grows. A strong performance management system tracks and evaluates individual performance against larger organizational goals, provides employees with an understanding of what's expected of them, and let's them know how their individual goals fit into the bigger picture.

First "what," then "how." Organizations must first set clear goals about what it is they wish to measure, and then determine how to measure that. There was an overall sense that we are not doing enough today to measure these investments, and attendees recognized the importance of taking a results-oriented approach to their human capital systems and practices.

Taking the Next Steps

Identifying investments in human capital is easy. Taking the next steps is hard. The following are a few suggestions to help leaders determine, implement, and measure the right set of human capital investments for their organization.

1. Human capital mind shifts happen from the top down. When it comes to prioritizing investments in human capital, there is no substitute for a highly engaged CEO. In addition, an engaged committee of an organization's leadership is instrumental in gaining the support of staff, funders, and other influential stakeholders. Some organizations have created a position on their board to play the role of treasurer of human capital, mirroring the treasurer of financial capital that all boards are required to have.

2. Get funders involved. In the pre-event survey, respondents indicated that the key influencers of decisions related to human capital are executive team members (98%) and board members (62%) but not funders (12%). There is an opportunity for grantees to lead funders through an education process that illustrates the costs of turnover, poor performance, and low staff satisfaction, and how these conditions negatively impact program deliverables.

3. Budget for investments. Build line items in the budget that are devoted to human capital investments such as costs associated with consultants, systems, retreats, trainings, and surveys, as well as budgeting for a leadership role like Chief Talent Officer. In addition to creating an expense budget, predict cost savings, such as decreased recruitment and turnover costs, into budgets as well.

4. Build the case for the outcomes you want to achieve. Employee survey data, focus groups and stakeholder interviews are effective ways to determine the greatest needs for investments. Involving both internal and external stakeholders will make it easier to gain support for these initiatives.

5. Build better models for evaluation. The nonprofit sector can borrow much from the work that has been done in the private sector in this area. Some of these models include the Bain RAPID Decision Model, McKinsey Capacity Assessment Grid, Goal Alignment Cascade, and TCC Group's Core Competency Assessment Tools.

Conclusion

Throughout these conversations, organizational leaders readily conceded that human capital was their number one success-determining factor, but not their number one organizational priority. The sector has worked to professionalize other functional areas, most notably finance, fundraising, communications, technology, and strategy. Strategic human capital still lags behind. Nonprofit HR today harkens back to a time of basic, tactical, and transactional personnel management. Only by assessing the investments that will have the greatest impact on our organizations can we hope to make the most progress along these lines and secure the philanthropic support that we need. By prioritizing strategic human capital and making investments accordingly, organizations unlock their potential for growth and social impact.

-- James Weinberg and Dana Hagenbuch

A Bifocal Lens: The Value of Investing in Both Networks and Organizations

November 28, 2011

(Paul Connolly is chief client services officer at the TCC Group, a consulting firm that provides strategy, evaluation, and capacity-building services to foundations, nonprofit organizations, and corporate community involvement programs. A version of this post originally appeared on the Foundation Center's Transparency Talk blog.)

BifocalsWhat do the Arab Spring uprisings, the Tea Party, al-Qaeda, and Occupy Wall Street have in common? They all stem from flexible networks of people and groups rather than just a single organization. And they all have powerfully influenced society lately. As technology has enabled more connection and coordination, networks are playing a greater role in tackling social and environmental problems, galvanizing change, and enhancing civil society. At the Grantmakers for Effective Organizations conference "Growing Social Impact in a Networked World" a few weeks ago, funders discussed how they are changing their perspectives and practices to support and participate in networks.

One foundation leader remarked that observing a network is like looking at a Monet painting: up close, the brushstrokes can be blurry and seem disconnected, but when you stand back the power of the full picture becomes clear. Another speaker advised that funders need to view networks with a different type of lens than what they use for organizations. Networks tend to have more distributed ownership and expertise, less linear decision-making processes, more fluid boundaries, and results that are harder to measure. Funders therefore need to tailor how they assist networks -- for example, by investing at multiple levels, providing for additional improvisation, relinquishing some control, and focusing less on causal attribution of outcomes.

Along these lines, the Robert Wood Johnson Foundation has provided funding to foster a network of activists across the nation working to reduce childhood obesity by improving eating habits and increasing physical activity. In doing so, the foundation has learned that shifting from a mostly one-way broadcast mode to a more robust and interactive dialogue with constituents who are connected to the coalition has required more effort, openness, and trust. At the same time, foundation staff members have strived to listen actively to network participants and create authentic feedback loops -- both online and in-person -- to help advance the effort.

Similarly, the San Francisco-based Jim Joseph Foundation has nurtured Reboot, a network of thought leaders and culturally influential Jewish people working to engage a younger generation in "rebooting" Jewish culture, rituals, and traditions. The foundation's strategy was to get the right mix of people in the right space and then allow for serendipity. With a bold overarching goal, the foundation backs the network's process and does not try to micromanage the specific means chosen by members or the content they produce.

The Packard Foundation studied their existing portfolio of grantees and realized they already had a broad spectrum of models, about a third being networks for wide-ranging causes with varying types of needs. As Packard program director Stephanie McAuliffe noted, "Our grantee the Ocean Conservancy did not want to strengthen their organization's brand, but the ocean's brand." The foundation has improved its own network approach through an online wiki, transparently sharing data about certain programs and engaging others in their strategy development and evaluation work. [Ed note: You can learn more about the Packard wiki at the Transparency Talk blog.]

Although networks have many distinctive features, they also share many of the same characteristics as organizations. In fact, many networks are actually collections of organizations, or at least are comprised of individuals who see their participation through a specific organizational perspective. So networks can be both capable in their own right, as well as reflect the performance of the particular organizations involved. TCC Group's research on nonprofits and coalitions have found that the highest-performing ones share such central characteristics as distributed leadership, inclusive mindsets and practices, cross-fertilized programs, learning cultures, and adaptability.

Specifically, we found that the strongest nonprofit organizations:

  • have a clear vision;
  • understand community needs and services well;
  • are deeply engaged and forge alliances with external stakeholders;
  • encourage reflective inquiry; and
  • amplify their impact by not only expanding their own programs, but also disseminating replicable practices and models and by influencing policies and systems.

Our study of coalitions for the California Endowment determined that the most successful ones:

  • have a lucid mutual purpose and value proposition;
  • collaborate and manage conflict well;
  • conduct ongoing assessment;
  • have transparent decision-making processes; and
  • are action-oriented.

Far-sighted grantmakers see that scaling social impact will not happen just by growing high-performing nonprofit organizations one at a time. Increasingly, strong networks will be needed, and their respective efforts will have to intersect more and more. Meanwhile, nonprofit organizations are still the predominant vehicle for achieving philanthropic support, and many networks involve sets of them. To see organizations and networks -- the individual brushstrokes as well as the full painting -- clearly rather than through two different sets of optics, funders need better bifocal lenses. Without them, they'll be hampered by fuzzy vision and blind spots, reducing their potential to magnify positive change.

There's much yet to discover about harnessing the combined potential of organizations and networks. What tools, frameworks, and training are needed to sharpen our collective bifocal vision? How can we learn more about organizational and network effectiveness and the places where they intersect -- and do a better job of applying what we already know? How can grantmakers support networks' efforts to build superior shared learning systems and performance measurement within particular fields? Share you thoughts and suggestions in the comments section below.

-- Paul Connolly

Funding for Capacity Building: 5Qs for Karen Brown, Fairfield County Community Foundation

November 14, 2011

(Karen Brown is vice president of programs at the Fairfield County Community Foundation, where she is responsible for overseeing grantmaking and providing philanthropic advisory services to donor-advised fundholders. Laura Cronin, a regular contributor to PhilanTopic, interviewed Brown recently.)

Karen_Brown Philanthropy News Digest: Nonprofit executives have been managing against a backdrop of economic turmoil for three years years now. What have the most successful Fairfield County groups been doing to keep it together during these difficult times?

Karen Brown: One key element of navigating this economic climate is transparency. Funders need information from grantees in order to make the case internally for all the grants in their portfolio. One exemplary executive director in our area has done something very simple and smart along these lines. After each of his board meetings, he sends a synopsis to us and to his other funders. It doesn't include every single detail of the meeting, but it gives a full picture of what transpired, and when I read it I feel as if I was there. It keeps me in the loop, and it's probably a document he needs to create anyway, so it's efficient. It's just an example of how communicating with funders and donors can be managed in a cost-effective way that gives them the information they need to make informed decisions.

PND: While great management is no substitute for a robust economy and a healthy fundraising environment, what kind of strategies should nonprofits pursue to ensure that they have the capacity to manage through tough times?

KB: We've been urging grantees to continue to invest in staff and professional development and not to look at those kinds of investments as frills. Employee morale and team building are crucial in a difficult economic climate. And funders need to consider supporting these programs in order to help organizations hold the line on their budgets without sacrificing effectiveness.

Other groups we fund are asking for support for short-term strategic planning -- looking two years out instead of the traditional five. This gives them something to focus on and a set of near-term goals that can keep them on track.

Funders can also be helpful by providing support for organizational assessments. We've assisted several grantees in hiring outside experts to come in and take a thorough look at all aspects of their operation, from leadership to fundraising to their business systems. That kind of thorough organizational assessment can help a grantee focus more attention on its key strengths and identify areas in need of improvement. The key is finding the right third-party help.

Continue reading »

Foundations and the State Budget Crisis

September 21, 2011

States across the nation have been staggered by falling home prices and the residual effects of the financial crisis. From Rhode Island to Michigan to California, declining tax revenues and rising healthcare costs have put the squeeze on state budgets, forcing tough choices on governors and state legislatures. To balance their budgets, states are being forced to cut social services, lay off public-sector employees, and rethink their role in providing a social safety net for the poor, the sick, and the elderly.

Nonprofit organizations that count on state government for some or most of their funding find themselves caught between the rock of declining revenue and the hard place of increased demand for their services. To determine the extent to which foundations see their nonprofit grantees being affected by state budget cuts, the Foundation Center conducted a March 2011 survey of its Grantmaker Leadership Panel. Of the seventy-five foundation leaders who completed the survey, the vast majority (95 percent) indicated that at least some of their grantees had been affected by cuts, while more than half (58 percent) said "all" or "most" of their grantees had. Among the areas that respondents identified as being most vulnerable to cuts were human services and education, followed by health, the arts, and environmental protection.

GLP_State-Budget3 

More surprising was the relatively pessimistic view of the economic recovery shared by foundation leaders, with four out of five respondents (81 percent) saying they expected the budget challenges facing many states to continue through 2013 or beyond.

Many foundations have stepped up to help. Indeed, almost half (47 percent) the foundation leaders responding to the survey said their foundations had awarded grants or provided other kinds of assistance in direct response to funding cuts at the state level, while one-third (33 percent) reported that fiscal problems at the state level had influenced how their 2011 grants budget was set and/or how funding was allocated.

GLP_State-Budget4 

One of the most vocal of the respondents to the survey was Doug Bauer, executive director of the New York City-based Clark Foundation. In a one-page addendum to the survey findings, Bauer underscored four key needs that emerged in the findings and offered the following thoughts:

1. More general operating support. In a time of seriously constrained resources, our grantees need as much flexibility as possible to manage their programs and finances. The dollars that help the most and go the farthest in this environment are general operating support funds.

2. More capacity building support. In the aftermath of reduced public support, nonprofits need to rethink, reassess, and restructure their business models. Underwriting capacity building, which tends to be relatively low-cost, can yield high returns. Having access to resources for capacity building can provide nonprofits with the ability to succeed in the "new normal."

3. More working capital. Reduced public support means nonprofit cash flow will be squeezed and operating margins thin. Banks are leery of extending bridge loans or lines of credit when government contracts become unreliable. Foundations need to increase the ability of community development finance institutions (CDFIs) to provide short-term financing to nonprofits. CDFIs, such as the Nonprofit Finance Fund, understand the operating models of nonprofits and have more patience around delayed government contracts or grants. But CDFIs need capital to do this. For their part, foundations can use program-related investments (PRIs) to provide the needed capital without affecting their grants budgets.

4. More advocacy. Sadly, the budget battles of 2011 are not the last ones we will see at the federal, state, and local levels. In some states, the coming years will bring even larger budget gaps. The sector must develop a stronger advocacy effort to ensure that critical initiatives and the most vulnerable do not suffer disproportionately. The rules and regulations on advocacy are clear; we know exactly what we can and cannot do. But our support for advocacy must become broader and deeper, both internally and financially. The staff time, research, dissemination, and related work needed to mount successful advocacy campaigns cost money.

"We are in the nascent stages of a profoundly new era for most of the nonprofit sector," Bauer added. "Old and/or current operational models will not likely work. Having foundations seriously address these four needs will help our grantees begin to cope with, and better understand, the new era. The big question, however, is will foundations step up?"

That is the question. What do you think about the needs identified by Bauer above? Would you add anything to his list? Is the nonprofit sector in the early stages of a "profoundly new era," or is this just a re-run of the 1980s? And what do nonprofit organizations themselves need to do to ensure that the "new normal" doesn't turn into a nightmare?

Sustainability: It Requires More Than Money (Pt. 3)

August 02, 2011

(This is the last in a series of three posts by Kevin Monroe, founder and managing partner of X Factor Consulting LLC and the Foundation Center-Atlanta's Expert in Residence for July. Before you dive in, catch up on Part 1 and Part 2. Both are excellent.)

Kevin_Monroe_medium I hope it's evident to those who have read my two previous posts why sustainability takes more than money. We began this conversation by focusing on the results that stem from your programs as the foundation for sustainability planning and then proceeded to explore relationships as valuable assets for your organization. In my third and final post, we finally focus on resources. However, even in this post we're looking at more than money.

Think with me for a moment. For those willing to invest the time in an exercise, get a sheet of paper or open a fresh document, select one of the programs your organization provides, and list all the resources needed to deliver that program. (If you're starting up a new program or organization this is a great planning exercise; if you have an existing logic model for your program, this will be a great help, as well.) Now, as you look at the list, what types of resources made your list? You probably included items like:

  • staff (paid or volunteer) -- this includes program staff directly involved in service delivery as well as support staff (the folks who keep everything running), executive staff, and board members;
  • facilities (whether it's your building or a space that's donated or shared) and all the maintenance and upkeep, including utilities;
  • transportation (if you own the vehicles then you also have maintenance, upkeep, and insurance, etc.);
  • computer hardware and software (both for your staff and clients, if that's part of your programming -- and, of course, those also require maintenance, updates, and technical support);
  • office equipment (telephones, copiers, printers, fax machines, etc.);
  • program content or curriculum, and, of course;
  • funding.

The list is far from complete, but it's a start. If you already have many of these items, then (good news) you have assets and resources. If, on the other hand, you're in the early stages of starting up a program (or organization), then you probably have a wish list. Wherever you are in your journey, let's explore four possible strategies you might want to consider with respect to resources. These include: protect, conserve, leverage, and diversify (or develop). The first three strategies apply primarily to those with existing resources.

Protect

If you have resources -- especially funding (whether it comes from individuals or institutions) -- you want to do everything in your power to protect those resources. Here are a few approaches that sustainable organizations practice:

Produce excellent results for your investors. Remember people appreciate your work; they invest in your results. Make sure you know the deliverables associated with all grants and do your best to achieve them. If you know you're going to have trouble to meet agreed-upon targets, engage the funder in a discussion and see what options exist for restructuring the grant (e.g., no cost extension).

Provide timely, accurate, and comprehensive reports. Be a funder's best grantee or partner by providing them with the information they need, when they need it. Don't be afraid to go above and beyond the requirements and provide them with supplemental information (but be careful not to inundate them with e-mails).

Engage funders in media and PR (where appropriate). Learn what your funders' preferences are in terms of media exposure (and whether they want to be included in press release mailings and other media events).

Build public support for programs. This is especially important for those with government funding. Collect success stories and testimonials and engage your constituents and supporters as advocates for your organization. Make sure state and local legislators and (where appropriate) your representative know about the great results (there's that word again) your organization is producing.

In turbulent economic times like these, it's almost a given that you'll be unable to secure or hold on to certain resources, which is why it is imperative to conserve and leverage the resources you do control.

Conserve

Many organizations have become prudent to the point of being overly aggressive with their resource conservation measures. Before you start slashing away, consider these options:

Cross train staff and volunteers. Many organizations have found great opportunities to conserve resources and even save jobs by cross-training employees so that they are able to assume multiple job functions for the organization.

Audit the utilization of your facilities, programs, and staff. Make sure you are making wise use of your resources. Perhaps you can save money through creative scheduling of events or employees to reduce energy costs. One of our partners realized they could combine some programs during the summer months and not even run the air conditioning in one of their buildings on certain days.

Wisely reduce expenses wherever possible. Explore options for reducing expenses like service contracts or janitorial services. One of our clients enclosed a note with all their bill payments stating that revenues were down and asking whether vendors were willing to charge them a reduced rate. They were quite pleased by the results. (A note of caution: Think of marketing as an investment rather an expense and be careful about drastic cuts to marketing programs that may diminish the flow of funds to your organization.)

Maximize volunteer service. Explore all options for engaging volunteers in tasks that you might otherwise have to pay to have done. When unemployment is high, there are usually folks looking to fill some of their discretionary time and what may be gaps in their resumes.

Leverage

In addition to conserving resources, look for opportunities to leverage existing resources and assets that have the potential to produce revenue for your organization.

Share facilities and assets. If your organization has surplus office or meeting space explore options for renting it out or sub-leasing it to other nonprofits. Perhaps you have surplus vehicles and would consider selling them or subcontracting transportation services to other organizations. (If you do, please be sure to address all liability issues to prevent exposing your organization to risks.)

Participate in a buying coop. Combine your buying power with other local nonprofits to take advantage of cost savings. Your statewide nonprofit association (if there is one) is a great place to begin your search for coop partners.

Consolidate administrative functions with/for other organizations. Some organizations have been extremely resourceful in their approach to consolidating administrative functions through partnerships or managed service organizations (MSO). The latter build on the premise that not every nonprofit must have its own HR, finance, or facilities management department but rather can share these functions to create cost savings (and better service delivery). The Foundation Center site has a great case study documenting the creative approach two museums in Chattanooga, Tennessee, undertook and how it was a win for both. Read it here.

Explore the possibility of strategic restructuring. Joining forces with another organization may become a necessity for your organization. David LaPiana is a leading expert in this area and is featured in a podcast on the center's site that is an excellent resource for organizations interested in exploring the restructuring option.

Diversify/Develop

Finally, there are always opportunities to diversify existing assets or develop new resources for your organization or program. From my perspective, I see three (and only three) primary sources (or buckets) of funding for nonprofit organizations. Money comes from individuals, institutions, or innovative entrepreneurial efforts. Now, within these three buckets there are literally thousands of possibilities, and it's up to your organization to find the intersection of potential and capacity for fundraising success. That will differ for every organization, because so much depends on and organization's relational assets and capital. If this is your first venture into fund development beyond your current funding strategy, start by identifying opportunities where you are likely to have short-term success (low-hanging fruit). Immediate successes (even if they are small) will build confidence, enthusiasm, and momentum for the longer haul.

Here are a few questions to help identify your low-hanging fruit:

  • Which individuals or institutions can you readily approach through your organization's existing relationship network?
  • What area of your program outcomes best intersects their needs, wants, and desires and would encourage them to invest?
  • How can you mobilize board members (or other key contacts) to dedicate time to identify high-potential opportunities?
  • Can you mobilize board members to host small gatherings (house parties, informal luncheons, etc.) of their friends and associates to introduce them to your organization?
  • Can you mobilize your board to create a matching gift fund? Could you use such a fund to encourage new investment from potential donors?

My recommendation is to identify the two or three areas your organization can address that will make the greatest impact on its sustainability. Develop a detailed action plan, and be intentional about its implementation. Document and share your successes and watch the excitement and enthusiasm grow.

On the topic of resources, the Foundation Center has a wealth of information (books, classes, databases, reports, podcasts, chats, etc.) that can assist you. Whether it's online communities, libraries, databases, reports, or staff, all are excellent sources of knowledge as you seek to diversify or develop resources.

We began this series by exploring results. We then turned our attention to relationships and identifying those individuals or institutions that value your results to the point of investing resources in your organization so it can continue to produce results. This, too, is a virtuous cycle. As you tend to all aspects of the cycle, you will grow your network of supporters and enhance the sustainability of your programs and organization.

This concludes my three-part series on program sustainability. I trust the posts have, in some way, stimulated your thinking in regards to program sustainability. Even more, I hope you will use the ideas and concepts in them, as well as some of the other excellent resources I've pointed you to, as jumping-off points for discussion with your staff, board, and funders. Until next time, keep your eyes on the prize.

-- Kevin Monroe

Training for Nonprofits That Sticks? Yes, It’s Possible!

July 18, 2011

(Susan Misra is associate director of Program and Grants Management and Capacity Building at TCC Group, a national management consulting firm that provides strategy, evaluation, and capacity-building services to funders, nonprofits, and corporate citizenship programs. This post originally appeared on the Stanford Social Innovation Review blog.)

Go_sign Trainings are hardly a new (or exciting) topic when it comes to capacity building for nonprofits. But sometimes they still hold the power to surprise.

A prime example came up recently in a major capacity-building initiative that my colleagues and I managed in which our data revealed that one-time trainings brought some of the best results. According to conventional wisdom, this shouldn't have been the case. Typically trainings are regarded as an unlikely path to lasting change; the thinking is that whatever learning they produce doesn't stick. For this reason, we decided to try out some new ideas when we helped design the Strengthening Organizations to Mobilize Californians initiative (click here to read the just-released "lessons learned" report).

Funded by the James Irvine Foundation, the William and Flora Hewlett Foundation, and the David and Lucile Packard Foundation, the initiative involved twenty-seven community organizing nonprofits in California, including the Alliance for a Better Community, Communities for a Better Environment, and the Ella Baker Center for Human Rights. Focused on improving organizational capacity, the initiative ultimately sought to meet the funders' broader goal of supporting democracy through more inclusive decision-making.

Trainings were one item on a broad menu of learning community activities provided over two years, from 2008 to 2010. All told, the initiative offered twelve trainings, eighteen peer-exchange sessions, and two convenings. We were eager for the opportunity to compare these different elements. And one of our biggest questions was whether the trainings would succeed, and if so, which ingredients would lead to that success.

Our team found through an evaluation process that trainings generated some of the initiative's biggest gains. Those who attended the sessions on communication, for instance, noted marked improvement in their ability to articulate their organization's vision, develop a communications plan, implement that plan, and manage change over time.

We were pleased -- but we weren't completely surprised. The findings supported ideas about capacity building that our firm, TCC Group, has been exploring for years and increasingly putting into practice. Indeed, our evaluations of more than fifty capacity-building projects over the past decade have shown us that the reason many organizations fail to achieve change is that they focus on preparing leaders, rather than actual implementation. We use the parlance of "Ready, Set, Go." Skills-building, reports, and plans (i.e., "Ready" and "Set"), we have found, will only take people so far. In the end, they need to be able to take action (i.e., "Go").

Our idea was to make sure that "Go" happened during the training. Discussions focused on practices that work. As one participant put it, the dialogue "allowed us to compare our strengths and weaknesses with other peers and learn from their experiences." The trainings also featured hands-on worksheets, role plays, and action planning. Last but not least, they focused on concrete takeaways to guide immediate improvements.

Three other characteristics set the trainings apart. First, they were tailored to small organizations that were struggling to make change with limited resources. The practices presented, for instance, required a reallocation of these limited resources -- not additional time or money. Second, whole teams were encouraged to attend, again underscoring a focus on forging action plans and following through. Third, organizations volunteered to participate. Those that came, as a result, were highly motivated regarding the training topic in question.

"Go" is all about the time and space to think not just about big ideas but the details that really matter in implementing change. Preparing, of course, is important, but execution takes something more -- practice, feedback, realistic expectations, and insights from talking with others about their experiences. "Go" is about rolling up your sleeves and getting down to work, and for our team and many participants it managed to make trainings feel exciting and relevant.

What has your experience with organizational effectiveness training for nonprofits been? Have you been able to make it more action-oriented and "sticky"? What are your suggestions for how funders can go beyond support for assessment and planning ("Ready" and "Set") activities and provide better support for implementation ("Go") work through training, clinics, peer exchange, and coaching? Share your thoughts in the comments section below.

-- Susan Misra

Weekend Link Roundup (July 16 - 17, 2011)

July 17, 2011

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

Capacity Building

At Beth's Blog, Paul Connolly of the TCC Group argues that "fortifying nonprofits' fundraising capability" is not a "no-brainer." In fact, new research conducted by the TCC Group on the Packard Foundation's nonprofit capacity-building efforts suggests that while "fundraising capacity is essential...it needs to happen in conjunction with solid leadership and organizational learning."

Diversity

On the National Committee for Responsive Philanthropy's Keeping a Close Eye blog, Nathan Henderson-James, online director at the Leadership Center for the Common Good, commends the Freedom from Fear Award program for its use of social media tools like Twitter to crowd-source nominations for the award. "Not only does this approach have the ability to help expand the potential grant pool beyond those with the most 'insider' knowledge," writes Henderson-James, "[but] it also has the ability to reach potentially deserving grantees from traditionally underserved communities, because those communities tend to be among the most voracious users of social media."

Fundraising

"Never accept a gift that costs your nonprofit more than it's worth," writes Stephen L. Goldstein on the Fundraising Guru blog. "A gift of a collection of ancient coins to a historical museum may be interesting, but impractical to receive because of prohibitive insurance costs. Sometimes, you must say 'No.'"

On her About.com blog, Joanne Fritz shares findings from the most recent installment of Blackbaud's Index of Charitable Giving, which found that "charitable organizations experienced an uptick in donations in May to the tune of 11.3 percent."

Governance

On his Nonprofit Board Crisis blog, Mike Burns shares a few thoughts about effective nonprofit board governance.

Amy Ellsworth and Lisa Spalding of the Philanthropic Initiative wonder what a new foundation board member is to do when he/she observes "a number of bad behaviors that have become normalized." "How do you approach a difficult subject? How do you determine the best people to talk to?" ask Ellsworth and Spalding. Have you ever been around a situation like the one they describe? What's your advice? Share your thoughts in the comments section below.

Philanthropy

Guest blogging on the Tactical Philanthropy blog, Jacob Harold of the William and Flora Hewlett Foundation reflects on the challenges and opportunities facing program officers, many of whom are well positioned to facilitate collaboration among nonprofits working to address the same problem.

In a three-part series on the Philanthropy Potluck blog, the Minnesota Council on Foundation's Chris Murakami Noonan shares insights from program officers at MCF member organizations, including some of their pet peeves with respect to the grant application process, tips on how to get on a PO's good side, and general advice for development officers.

On Kris Putnam-Walkerley's Philanthropy 411 blog, Richard Woo of the Russell Family Foundation explains why it's important for foundations to frame their "grants, programs, and initiatives" around "the relevance of those offerings and the nature of our relationship with the community." Writes Woo:

What if we offered a grant and no one wanted it?

We must emphasize our relationships even as we deliver grants, programs, and initiatives. When we pay as much attention to authentic relationship development as we do to program development -- there is a greater chance of becoming relevant. Relationships are boundless, programs are finite.

Technology

On the Idealist.org blog, Jeremy MacKechnie lists a number of new Web sites that have adopted the Groupon model to promote social good.

While tools like Visual.ly make it easy for organizations to "show" their data, "You still need to know what kind of data representation (picture) helps make what kind of point," writes Lucy Bernholz on her Philanthropy 2173 blog. "No doubt about it, a picture is worth 1000 words. Especially if it shows us something we can't see in the raw numbers or raw words, shows relationships we wouldn't otherwise find, or sparks new questions. If not, it's just a cool picture."

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

-- Regina Mahone

Weekend Link Roundup (June 25-26, 2011)

June 26, 2011

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

Capacity Building

Based on his organization's success in creating a viable business model, Guidestar president and CEO Bob Ottenhoff shares some best practices -- including being patient and realistic -- related to organizational sustainablity.

Impact/Effectiveness

Social media guru Beth Kanter has a few suggestions for folks interested in making measurement more fun.

On the Tactical Philanthropy blog, Center for Effective Philanthropy president Phil Buchanan suggests that passion is a prerequisite to "doing philanthropy in a strategic, analytical, data-driven way." Writes Buchanan:

Good decision-making is hard in life. But in philanthropy, data-driven decision-making is even tougher still, because the challenges we're working to address are deep-seated, complex, and interdependent -- and because the data is often harder to come by and more open to alternate interpretations than in other domains. The work is also more emotionally intense than it often is in business or in the lab, making the lure of decision-making that is unmoored from the data all the stronger.

But, while passion and emotion are often the problem because they can lead us astray, they're also the solution. For it is only a passionate commitment to really getting it right -- to seeing results -- that can provide the will and discipline necessary to do the hard work of data-gathering, strategy formulating, assessing, and analyzing....

Continue reading »

ANNOUNCEMENT: Edna McConnell Clark Foundation Launches Social Innovation Fund Grants Competition

October 13, 2010

The New York City-based Edna McConnell Clark Foundation, one of eleven intermediary organizations selected earlier this year to receive an inaugural grant from the Corporation for National and Community Service's Social Innovation Fund (SIF), has opened the competitive application process for $20 million in funds -- $10 million from SIF and $10 million in matching funds from its own endowment -- which the foundation plans to invest in high-performing nonprofit organizations that are delivering "a truly effective and transformative service to very disadvantaged youth."

According to an e-mail circulated by the foundation yesterday, EMCF anticipates making 8 to 10 investments in 2011, generally multi-year grants, for a minimum of $2 million annually. The funds are intended to provide "upfront growth capital to help grantees build their evidence base and organizational capacity to prepare for greater public and private investment that can propel them to scale and sustainability."

To be eligible for funding, nonprofits must be based in the U.S. and active in localities where poverty is widespread, including rural areas. Initially, the foundation will focus on nonprofits seeking to expand in communities of need in the Carolinas, Oklahoma, and California. In those states, the Duke Endowment, George Kaiser Family Foundation, and Tipping Point Community have committed $15 million over three years to help EMCF's SIF grantees fulfill the 1:1 matching requirement of the SIF grant. (The Open Society Foundations has made a similar commitment of $2 million.)

Th e-mail also notes that EMCF will extend to its SIF grantee portfolio the principles of the growth capital aggregation approach that its has pioneered with three EMCF grantees (Nurse-Family Partnerships, Youth Villages, and Citizen Schools), and that it is "actively seeking local, regional and national co-investors that can ease what will be an enormous fundraising challenge and increase the leverage and impact of SIF dollars."

Nonprofit organizations that meet EMCF's eligibility criteria are invited to apply online.

Organizations that intend to apply should e-mail a notice of their intent to sifapp@emcf.org with the subject "Notice of Intent to Apply" and the name of their organization by 8:00 p.m. EDT on October 25, 2010. Applications must be submitted by 8:00 p.m. EDT on November 1, 2010.

Visit the EMCF site to learn more.

Weekend Link Roundup (June 19 - 20, 2010)

June 20, 2010

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

Arts and Culture

Michael Kaiser, president of the John F. Kennedy Center for the Performing Arts, explains in a Huffington Post entry why size doesn't matter in the arts. "If [small orgs] take the time to plan large, exciting programs four or five years in advance," writes Kaiser, "they would be far more likely to find the resources they require to mount these programs."

Capacity Building

On the Stanford Social Innovation Review blog, the Monitor Institute's Heather McLeod Grant discusses how the organization KaBOOM! used online tools to scale its offline program model.

Fundraising

"There's nothing dainty or secretive about a nonprofit arts organization's need for money," writes the Nonprofiteer in a new post, "so the more directly and entertainingly and memorably you state it, the better your chance of actually receiving the money."

On the Future Fundraising Now blog, Jeff Brooks explains why the best fundraising copy is written at a sixth-grade "reading ease" level.

Philanthropy

On the Tactical Philanthropy blog, Sean Stannard-Stockton argues that "smart funders who want to invest in the growth of outstanding [nonprofits will have] to restructure their process[es] so that the thrust of their work revolves around proactively locating great philanthropic opportunities rather than passively wading through grant applications."

Aaron Dorman and Niki Jagpal of the National Committee for Responsive Philanthropy offer three reasons why a new Florida law that keeps grantmaking institutions from having to disclose demographic information about their staff and board is problematic.

Social Media

Beth Kanter explains why you need to use social network analysis "to better understand your network." To ignore such analysis, writes Kanter, "[is] like a weatherman trying to predict a snowstorm without seeing a whole weather map."

On the Nonprofit Tech 2.0 blog, Heather Mansfield wonders whether Facebook will authenticate her Nonprofit Organizations Facebook Page, which has over 10,000 fans, or shut it down, as it has with other unofficial cause pages.

Volunteerism

On the Social Citizens blog, Kari Dunn Saratovsky outlines what every nonprofit should know about engaging the next generation of volunteers.

"It's obviously essential that people work for the common good through service and volunteerism," writes Zach Maurin on the Case Foundation's blog, "but we can't solve our most pressing social challenges if our citizenry only does that...."

That's it for now. What did we miss? Drop us a line at rnm@foundationcenter.org. And Happy Father's Day to all the great dads out there. Have a great week!

-- Regina Mahone

'Givers' Must Become Social Investors

November 25, 2009

(Jeff Mason is vice president of Social Solutions, a leading provider of human and social service software, and serves as chair of the Alliance for Effective Social Investing, a network of more than thirty-five nonprofit leaders committed to driving more money to high-performing nonprofits by helping donors adopt sound social-investing practices. This is his first post for PhilanTopic.)

Performance-Management Giving is often influenced by "tug-at-the-heart string" stories from charismatic nonprofit executive directors able to persuade people to open their hearts and wallets. Which means the funds flowing into the nonprofit sector today tend to go to organizations that tell good stories, have the right relationships, and/or have a recognizable brand. Unfortunately, none of these characteristics provides any real indication of an organization's ability to perform and generate social value and, as a result, millions of dollars of charitable "giving" are wasted on ineffective organizations and programs.

Most of those who give have the best of intentions. But they tend to view their donations as a gift rather than as an investment and therefore don’t expect to get anything in return -- except for an emotional lift and perhaps a tax deduction. What big-hearted philanthropists need to understand is that there are consequences to their giving. Giving to ineffective organizations or programs tends to draw resources away from effective organizations that generate real social value. And in some cases these donors may actually be funding programs that do more harm than good.

Take, for instance, a Washington D.C.-based organization that launched a program to treat men and women involved with domestic violence. Shortly after the program began, the organization learned that the violent tendencies of the men enrolled in the program where actually increasing. That's right. The program was making the men enrolled in it more violent. Fortunately, the organization is a high-performer -- meaning it carefully manages its performance and has a clear understanding of the effectiveness of its efforts to achieve desired outcomes. With that knowledge, it was able to retool its domestic violence program to help those enrolled. What is scary, however, is that most organizations fail to manage their performance and as a result have no idea whether they are having an effect -- positive or negative -- on those they are trying to help.

While performance management isn't easy, it is essential. And it requires the right systems, processes, and organizational culture to have real impact. Absent making performance management a top priority, most nonprofits are in effect operating blindly and potentially creating more harm than good.

So why aren't organizations embracing performance management? Simply put, they get paid to tell heart-warming stories, develop relationships, and create memorable brands. Even more disturbing, many organizations get rewarded for keeping their overhead low. What we need to do instead is to start rewarding organizations with high-performing characteristics. And that will require donors to become social investors who look for meaningful indicators of an organization's ability to generate social value. In other words, donors need to expect something in return for their investment.

So how does a donor know he or she is investing in a high-performing organization? Social investors need to take the concept of "performance management" into account when making a philanthropic investment. That means asking the right questions and looking for organizations that meet certain criteria for success. Listed below are five questions that, if answered in the affirmative, greatly improve the chances that the organization you are investing in is high performing and likely to generate social value:

  • Does the organization have clear goals in line with existing resources?
  • Does it have a clear strategy for reaching its goals and objectives?
  • Does it have a method for monitoring progress?
  • Does it have the ability to make mid-course corrections?
  • Does it have the capacity to share results and outcomes?

From a nonprofit evaluation perspective, big changes are afoot. Charity Navigator, which influences approximately $10 billion in funding annually, will be launching a new rating system in 2010 designed to assess a nonprofits' overall performance, not just their admin-to-program cost ratio. Until this new system is in place, however, social investors should focus on the five questions highlighted above when considering making a donation of any proportion.

The future of the nonprofit sector hinges upon better performance management. As more and more donors rid themselves of the "gift giving" mind-set and begin to think and act like social investors, more money will go to high-performing organizations. For organizations that are not on board the performance management train, it could mean less funding. And that's a good thing.

-- Jeff Mason

New Orleans: Moving from Muddle to Model

August 27, 2009

(Tony Pipa is a regular contributor to PhilanTopic. In his last post, he reviewed Dead Aid: Why Aid Is Not Working and How There Is a Better Way for Africa.)

Katrina01 The fourth anniversary of Hurricane Katrina and the subsequent failure of the levees in New Orleans will occur in just a few short days. Certainly the recovery of this iconic American city is far from complete and has been fraught with challenges. Halting and inadequate leadership at all levels of government has been too much on display, beginning with the flooding itself, a direct result of corners cut by the Army Corps of Engineers (with an assist from local management boards) when building and managing the levee system.* 

And yet where government has struggled, citizens have demonstrated resilience, creativity, and good old-fashioned guts. I truly believe that New Orleans has the highest level of civic engagement of any city in the United States right now. Residents keep up with what is happening in their neighborhoods, they voice their concerns, they try to come up with solutions. New Orleans is a city of neighborhoods, and almost every neighborhood has a vibrant, active grassroots group guiding its renewal. Organizations like Neighborhoods Partnership Network link them together and ensure shared support and vision.

Take Central City. A troubled neighborhood pre-Katrina, two of its public housing complexes are slated to be redeveloped with mixed-use housing, schools, and recreational facilities; an architecturally significant school, Mahalia Jackson Elementary, is being repurposed into a community resource center with cutting-edge early childhood development programs and integrated social services; and the business corridor along O.C. Haley Boulevard is being revitalized with streetscape improvements, loans leveraged from the city, and the possible use of land trusts to drive more locally-owned commercial development.

As someone who was on the ground almost immediately after the storm and frustrated, especially in the first year, by what I perceived to be an uncertain and overly conventional response from the foundation world, I have to admit that the recovery has also provided several instances of philanthropy at its best:

Philanthropy has taken risks. The Rockefeller Foundation and Greater New Orleans Foundation walked right into the middle of a hornet's nest when they provided the backing, both financial and political, for the United New Orleans Plan, a process that successfully involved many residents and put an end to the endless planning processes that kept springing up as the city tried to get off the mat. While the jury is still out on the effectiveness of school reform, the philanthropic sector has played an important role in the effort to use charter schools to turn around and redefine what was arguably the country's worst public school system.

Philanthropy has focused on building capacity. The Gulf Coast Fund for Community Renewal and Ecological Health has been advised by a committee of local grassroots leaders and has focused on supporting emerging activists and initiatives. In addition to strengthening the local nonprofit sector, foundations have even experimented with building the capacity of the public sector. The Ford Foundation, working in partnership with the Foundation for the Mid South and leveraging help from the Rockefeller Foundation and Bill and Melinda Gates Foundation, developed a loaned executive program to expand the pool of skilled professionals in city government.

Philanthropy has collaborated. Central City's renaissance has been catalyzed in part by a group of almost twenty foundations and corporations that have been intentional in integrating their approaches and communicating regularly about their work.

Philanthropy has been an advocate. The policy advocacy capacity of the Louisiana nonprofit sector was weak prior to the storm, and foundations both local and national have made significant investments to strengthen it and give it real voice at the federal, state, and local levels. In particular, the Louisiana Disaster Recovery Foundation, formed in the aftermath of the storm, has made public policy advocacy a real focus and incubated the Equity and Inclusion Campaign, a multi-state, multi-issue coalition of grassroots leaders advocating at the federal level.**

"Social innovation" has become an overused buzz phrase, but it's genuinely happening in myriad ways along the Gulf Coast. By the same token, the recovery has demonstrated the limitation of private action for the public good. After the largest charitable response in the nation's history, the work of thousands of volunteers from outside the area, and the tireless efforts of tens of thousands of residents, the challenges remain daunting. An estimated 65,000 properties in the city are blighted, the healthcare safety net is frayed (mental health services are a particular concern), and affordable housing is in short supply.

As the city shifts from a recovery mindset to a future-oriented vision, not quite halfway through what most residents consider to be a ten-year process, an improved governmental response will be critical to its success. Given the strong philanthropic and nonprofit presence, I think the opportunity exists for the Obama administration to make practical the new sort of relationship it has proposed between government and the social/philanthropic sector. New Orleans is starting to emerge as a model, with lessons for all of us, for all the right reasons. Too much hangs in the balance to walk away now.

-- Tony Pipa

* It is past infuriating how most media focus on "the storm" when describing what happened in New Orleans. New Orleans, in contrast to the towns along the Mississippi Gulf Coast, withstood Katrina's fury. Most people forget the sigh of relief the city breathed once the hurricane passed -- and before it became apparent that water was pouring through the cracks. What befell New Orleans was a man-made disaster, not a natural one.

** Disclaimer: I am a founder of the Louisiana Disaster Recovery Foundation and continue to consult with it and other foundations and NGOs working in the region.

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