Posts Tagged ‘funder-grantee relationship’

Open Sesame

Friday, February 5th, 2016

One of my favorite things to have discovered since joining the Ford Foundation last April to reboot its Philanthropy portfolio is the Fund for Shared Insight. This is a funding collaborative that seeks to advance the research and practice of feedback loops in the nonprofit sector and philanthropy, and to advance foundation openness. Basically, we think it’s really important to listen directly to the people we’re trying to help, AND to USE that feedback to improve practice. That last part is critical – lots of folks gather feedback, but precious few are able to use it, systematically and consistently.

We’re in the midst of our second year with the Fund for Shared Insight, and we’re getting ready to release a Request for Proposals (RFP) for projects that promote greater foundation openness. To walk our own talk, we want to be open about how we’re developing the concepts behind the RFP. We had the great good fortune to meet with a number of excellent organizations working on this issue, and have had a number of rich conversations among collaborative members, which have led us to some thinking that I’m honored to have been asked to share below.

We’re looking for feedback on concepts and language here. Are the ideas clear, does the language communicate effectively, can you picture what a funded project would look like? Do the concepts make sense, do they describe real foundation behavior, are they something worth working on?

You’ll notice that we include a framework for thinking about foundation openness, in a three-column table. We’ve had LOTS of discussion about this. We’ve found that it’s helped advance our thinking, and has stimulated good conversation, but it’s far from definitive. The thing about frameworks is, they’re necessarily distortions of reality. And what we’re clear on is that reality is not as simple as the three-part model we lay out below.

For one thing, different foundations will enter the continuum at different points. Some may start out with what we’re calling “fundamental” openness, and move to what we’re calling “courageous” openness. Others may start out as what we’re calling “closed” foundations, and stay there for perfectly valid reasons (a donor who requires anonymity, for example). For another thing, foundations, particularly larger ones, are complex systems. Some programs within the same foundation may embrace openness to a greater degree than others. How do we judge that foundation’s overall place on the continuum? And so on.

The essential point is, there’s a difference between one-way openness, in which a foundation makes its information available to the outside world, and two-way openness, in which it engages in dialogue with the outside world and is willing to make changes as a result. For some foundations, it’s a huge achievement even to get to one-way openness; as we point out below, nearly a third of foundations with assets over $100 million (that is, pretty big ones) don’t even have a website. For other foundations, sharing by default has become the norm, and they’re pushing themselves to address the power dynamic between funders and nonprofits, or talking candidly about failure. We want to recognize these different forms of openness and encourage conversation and practice that moves foundations toward two-way openness where that makes sense.

All right. That’s a lot of preamble, but we want to be candid about where we are. Since we believe that feedback thoughtfully gathered and applied improves performance, we want to improve our upcoming RFP by getting your thoughts about the language and framework below, which we’ll discuss and decide upon at our upcoming March meeting. Feel free to use the comments section below, or email your thoughts to melinda@fundforsharedinsight.org.

Thanks very much for believing in the power of openness, and for sharing your own insight with us.


 

Increasing Foundation Openness

Draft Concept Paper to Inform a Request for Proposal

2/4/16

Why Increase Foundation Openness?

There are many potential motivations for foundations to be more open. The motivation driving the Fund for Shared Insight’s interest in increasing foundation openness is effectiveness. We hypothesize that in today’s complex, connected world, greater openness among foundations, the nonprofits that they support, and the people that both nonprofits and foundations want to help, is a prerequisite to effectiveness. We think that greater openness enables philanthropy to:

  • Attract and empower good ideas from multiple sources;
  • Facilitate faster testing and learning (including identification and sharing of what works and what doesn’t);
  • Improve nonprofit relationships with funders and among each other;
  • Strengthen collaboration and reduce duplication of effort;
  • Increase public trust; and
  • Build communities of shared

Toward this end, we are planning to release an open request for proposal (RFP) in the spring of 2016 to fund efforts to build upon existing or seed new activities to increase foundation openness in more staffed foundations in the United States. In 2016-17, we expect to provide up to $2 million in grants to promote foundation openness, although all funds may not be expended under the RFP. The grants will be a minimum of $100,000, over either one or two years, to support efforts to increase foundation openness in service of effectiveness.

We are sharing this draft concept paper in the hope that others can provide us with feedback about what is useful and not as helpful about the framework and perhaps suggest a better set of definitions or frameworks for increasing foundation openness.

Background

Fund for Shared Insight (“Shared Insight”) is a collaborative effort among funders that pools financial and other resources to make grants to improve philanthropy. Shared Insight emerged from our belief that foundations will be more effective and make an even bigger difference in the world if we are more open – if we share what we are learning and are open to what others want to share with us, including grantees and the people we seek to help.

Shared Insight aims to do this by providing grants to nonprofit organizations to encourage and incorporate feedback from the people we seek to help; understand the connection between feedback and better results; foster more openness between and among foundations and grantees; and share what we learn.

Fund for Shared Insight is a sponsored project of Rockefeller Philanthropy Advisors. Initial funders include the David and Lucile Packard Foundation, the Ford Foundation, the Gordon and Betty Moore Foundation, The JPB Foundation, Liquidnet, the Rita Allen Foundation, the William and Flora Hewlett Foundation, and the W.K. Kellogg Foundation and we welcome other funders to join this effort, which will unfold over several years.

How Do We Define “Foundation Openness”?

We have frankly struggled with how to explain what we mean by “foundation openness.” At this time, our best attempt at defining foundation openness is to characterize two different broad categories as follows:

·        Fundamental Openness. This set of practices involves making information about the foundation’s work publicly available. Often known as “transparency,” it includes practices such as having a web site, posting names of board members and staff, and making public information about grantmaking strategies and grants made. In some cases, fundamental openness may be necessary for pursuing courageous openness.

·        Courageous Openness.[1] This set of practices goes beyond transparency. It entails a deeper transformation of organizational culture to make sharing the default; to be open about failure, evaluation and learning; and to allow external stakeholders to engage meaningfully with the development of strategy, goals, and vision. While fundamental openness is often about the one-way transmission of information, courageous openness is primarily about two-way interaction between foundations and different key stakeholders.

In presenting these two categories, we acknowledge it is too simplistic to define foundation openness as a dichotomy of fundamental vs. courageous openness. We have thought about describing it as a linear process or points along a continuum, however, in reality we know foundation openness is more complex than that. For example, a foundation might be good at listening to stakeholders and acting on what it hears, but not in sharing about its failures. Also, foundations are not typically monoliths. A single foundation may have multiple program areas whereby some programs (because of advocacy reasons, perceived risks to grantees, opposition, etc.) are more or less courageously open than others.

In 2014, through an open RFP process, Fund for Shared Insight supported five organizations for activities designed to support increasing foundation openness. Their efforts included promoting greater adoption of Creative Commons licensing by foundations; encouraging more public dissemination of foundation reports through a centralized hub; producing videos featuring foundation staff sharing about their lessons learned; modeling open philanthropic practices; and investigating foundation CEO views on foundation transparency. We continue to learn from these grants and engage in focused discussion with these grantees and others to help us further define what we mean by “openness”, explain why it is important to philanthropy, and explore how we might encourage more openness among foundations, the nonprofit organizations that they fund, and the people that we all ultimately seek to help.

Through this process Shared Insight honed its views of the differences between closed organizations, organizations embracing fundamental openness, and organizations embracing courageous openness. We recognize that organizations engage in foundation openness at multiple entry points and that the process of becoming more open as a foundation is not as linear as our language might suggest but we offer the figure below as one possibly helpful way of framing the issue[2]:

Foundation Openness Draft Framework[3]

 

  Closed Organization Fundamental Openness Courageous Openness
Type No public communication (black box) Foundation communicates out (microphone) Two-way open dialogue (walkie-talkie)
Potential Benefit  Privacy Transparency, more complete information for grantees and other potential collaborators Foundation decision-making is better informed, leading to better outcomes
Perceived Risk Could lead to public misunderstanding & mistrust Could lead to being inundated with requests, opening foundation to criticism Could force foundations to deal with “hard truths;” could add to cost of doing business; could potentially lead to damaging grantee reputations
Power Dynamics Reinforces status quo Questions status quo Changes status quo
Change Required None Processes Practices & culture
Outputs None Information & solo insight Shared Insight
Web Analog Pre-Web Web 1.0 (Broadcast) Web 2.0 (Social Network)

Currently, some foundations in the U.S. are functioning as closed organizations. For example, according to the Foundation Center, fully 30% of foundations with more than $100 million in assets do not have a website.[4] But a large and growing group of foundations is embracing fundamental openness, and a few are reaching for courageous openness.

Fund for Shared Insight aspires to spark movement of a large number of foundations along the openness continuum, with more foundations embracing fundamental openness and courageous openness over time. The foundations supporting Shared Insight realize that we ourselves are all on various points along the openness continuum (or spiral). We hope to learn and experiment along with many others over the next two years. We are sharing this concept paper with a desire to be humble, collaborative, and focused on learning, and to inform our development of an open RFP in this area in the Spring of 2016.

Footnotes:

[1] We would like to acknowledge our colleagues at Grantmakers for Effective Philanthropy (GEO) for introducing us to the phrase “courageous openness” which has helped clarify our understanding of various approaches to foundation openness.

[2] In our funder collaborative meetings, we have at times envisioned depicting foundation openness as a spiral or ongoing feedback loop with multiple entry points where foundations can work towards both fundamental and courageous openness.

[3] We acknowledge this framework does not address the role of anonymous foundation giving.

[4] We plan on including data from the CEP study on foundation transparency here as additional background and context once the data are no longer embargoed on February 23rd. 

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#FailEpic, continued

Friday, August 7th, 2015

I appreciate the lively response to my last post asking why it’s so difficult to talk about failure in philanthropy. Commenters brought up important points, including that it can be difficult to decide when failure has actually happened – when do you know to throw in the towel? – and that it’s not just admitting failure but learning from it that generates insight and improvement.

I would also note an incisive piece in Nonprofit Quarterly assessing the failure of the social impact bond designed to reduce juvenile recidivism on Rikers Island. Cohen and Zelnick rightly point out that what is being hailed as a partial success – that because the program did not hit its targets, taxpayers did not have to pay for it – masks a more complex reality. Recidivism was not reduced (no upside there), and taxpayer dollars were tapped in the form of in-kind time by city officials. This example reinforces one of the points made by a commenter on my original post: what counts as failure depends on who’s doing the telling, and when.

I see two strands of conversation worth pursuing, given the interest my original post has generated as part of an overall mini-trend toward more reckoning with failure in philanthropy.

One is to explore what it looks like to have candid conversations between funders and nonprofits about real issues of execution and responsibility (on all sides!) in a context beyond the one-on-one grant relationship. I come to this with an instinct that a more public version of such conversations would be salutary, but also deep wariness about doing it in a way that’s constructive instead of harmful.

  • Are there stages by which such conversations evolve? Do you need to start with self-reflection, then within your own organization, then within a trusted network of peers, then more publicly? That’s an awful lot of steps.
  • Perhaps the best starting place is not talking about failure within a particular grant relationship, but in the context of a topic of shared interest in which the participants don’t have a direct stake. One can imagine a study group dedicated to reviewing examples of initiatives that have failed, and seeking to generate and apply insight from them – with an audience of funders and nonprofits who aren’t part of that field. Might that be a less threatening way to get started?
  • Because trying to have a conversation within a field about what worked and what didn’t is incredibly difficult. I think about the “four pillars” strategy in the immigration reform movement, which national funders and nonprofits developed together after a failed attempt to pass comprehensive immigration reform in 2006-07. They analyzed why they lost and how they could overcome those disadvantages, and then moved resources and effort toward filling those gaps. What makes cases like that possible? Where else does this happen?

The other strand of conversation worth pursuing is to ask what it looks like within an organization, and specifically a foundation, to be open to acknowledging, learning from, and acting on failure. What values and motivations need to be in place? Who are the change agents and culture bearers? How do incentives need to change? Are there particular structures or systems that make it easier to learn from and act on failure? What do a higher risk tolerance and a culture of inquiry look like in practice? I feel like we know a lot about this in the field, but the threads of conversation aren’t necessarily organized.

  • Part of the challenge is, who owns failure within the institution? In other words, who’s responsible for identifying it, naming it, lifting it up, creating a safe space in which to discuss it, making sure meaning is derived, and then following through on application of that insight? Those responsibilities fall across a number of function – evaluation, HR, programs, senior leadership, board. What role should be the steward or the shepherd ensuring that those functions are integrated in pursuit of mining improvement from failure, and what resources or tools does that person or team need?

Thanks again to all have engaged on this topic, and to the organizations that have begun hosting conversations among funders about being more open about failure. Do the strands of conversation I suggest above seem relevant, and worth pursuing? What kinds of spaces could we create for more authentic funder-nonprofit dialogue? And how can we get clearer about the organizational culture needed to support openness about failure?

Say Say Say

Thursday, October 16th, 2014

Busy month on the speaking and conference circuit. This Friday, I’m at Philanthropy Ohio talking about “Making Strategic Philanthropy Stick.”

On October 31, in what is hopefully not a trick for the audience, I’m speaking at the Minnesota Council on Foundations annual conference on “Scaling Our Work for Greater Impact.” In that talk, I’m going to focus on tools that funders can use to play responsible roles in supporting collective action, not just from the outside, but from within such efforts. It’s a TED-style talk, short and to the point. Should be fun.

One of the topics I won’t get to cover that’s long been a passion of mine is how philanthropy can be more accessible to underserved communities. Luckily, I was honored to appear on MCF’s Fast Forward podcast series with the always thoughtful Alfonso Wenker to address just this topic. Again, so much to say! Definitely listen to the podcast, but here are a few other talking points on the topic of foundations and diversity, equity, and inclusion that I didn’t get the chance to cover.

  • Question your own assumptions – it’s well-known but bears repeating, foundations live in a bubble with little accountability. So you want to unearth your assumptions about how change happens and who needs to be at the table when decisions are made. This can extend to seemingly little things like language (“grantee partners” vs. “grantees,” for example). Who really has the power in your relationship, you who have the money or they who actually have the direct impact?
    • Now, there’s a difference between questioning your assumptions and questioning yourself. The first is about growth; the second is frankly kind of self-indulgent. It can happen when you take the philanthropy too personally, that other perennial problem of identifying the money as if it were yours. Questioning your assumptions is more like a zen practice, like mindfulness, rather than drama. How do I actually think change is going to happen? If I’m funding work in diverse communities to which I’ve never given before, how will people get to know me? Can I present myself in the same way, assuming the same level of familiarity, as I do in other environments? Does it make sense for me to go in there on my own, or with a partner who’s embedded in the community and respected there?
  • Check in with your gut, why are you doing this? Avoid “ay bendito.” My family’s from Colombia, so this isn’t a saying I grew up with, but in Puerto Rican Spanish, “ay bendito” – “oh, blessed one” – is what you say with a combination of empathy and pity. “oh, you poor thing.” Too many times, I’ve seen diversity approached from an “ay bendito” perspective. “Oh, those poor people.” This goes to questioning your own assumptions. There’s something insidious about observing that when you serve low-income communities, you’re serving “mostly” black and Latino people. The categories we use consciously, start to inform how we think unconsciously; you make that association that black and Latino people are all poor. The numbers about wealth disparity don’t lie, but then we start to make assumptions about whole groups of people that inform how we respond to an individual or an organization that we encounter, and then we get into trouble.
  • Democratize it. I’ve been thrilled to follow from afar the work of the Community Investment Network, which has been fostering African-American giving circles and has just celebrated ten years. But the thing about democracy is that it’s an ideal AND a process: “One person, one vote” AND a whole cadre of volunteer poll workers and neighborhood venues that host voting sites (mine’s in an elementary school). So democratizing philanthropy has at least two dimensions. One is communicating a democratic spirit: anyone can be a giver. The other is diffusing democratic processes of decision-making, so there are polling stations in every neighborhood, school, and church, or analogously, diffusing the mechanisms of thoughtful, effective grantmaking, whether it’s with a few hundred dollars in a giving circle or a $100 million grantmaking budget around a foundation board table. Democracy is about collective public deliberation, but even within philanthropy, which is about collective private deliberation, setting the criteria for allocating philanthropic dollars, and the process of values alignment and consensus building that are involved, are essentially democratic skills, even if they happen away from public scrutiny. That’s the paradox of this field, its simultaneous anti-democratic and democratic tendencies.

Not exactly podcast-friendly soundbites, but there you go. How do you see funders embracing – or not – diversity, equity, and inclusion in your world? What works and what doesn’t about that?

“A Responsible Funder Role in Movement Building” – Sat June 7, 10am

Thursday, June 5th, 2014

I’ll be speaking at the Joint Affinity Groups (JAG) Unity Summit in Washington, DC this Saturday, June 7, at 10:00am on “A Responsible Funder Role in Movement Building.” It’s a 20-minute TED-style talk, so come watch me wave my hands and mix metaphors for less time than it takes to do your morning commute.

This is a topic near and dear to my heart, with a group to which I was Hispanics in Philanthropy’s representative way further back in the day than I can remember. Good to see them continuing to fight the good fight on diversity, equity, and inclusion in philanthropy.

Zombie philanthropic ideas that won’t die #4

Thursday, March 27th, 2014

Returning to an ongoing series.

#1 is “Foundations are legally prohibited from doing advocacy.”

#2 is “There are too many nonprofits.”

#3 is “We can move the needle.”

And #4 is….

We’re going from being responsive to being strategic.”

Just as the zombie was once alive, and retains something of life’s essence, zombie ideas contain kernels of truth. But their expression in the world has become…something other.

The kernel of truth in a dichotomy of responsive and strategic grantmaking is the difference between funding whatever ideas come over the transom and naming specific outcomes you as a funder want to see achieved, and asking grantees to pursue those specific outcomes.

The problem comes when we view strategic as an honorific, and set up a dichotomy where responsive by implication becomes a pejorative. We’re “moving beyond” responsive grantmaking, doing something “more” strategic.

But as the California Wellness Foundation argued ten years ago, “Responsive Grantmaking Is Strategic.” There are several ways this can be the case:

  • Responsive grantmaking can complement the goals of “strategic” (or directed) grantmaking, providing an opportunity to learn about a particular field, or gauge responsiveness to a new idea or approach.
  • If we ask the question “whose strategy is it?” (and for this I’m grateful to Judy Patrick of the Women’s Foundation of California for framing it), then a different perspective emerges. If the answer is “the foundation’s,” then perhaps the strategic-responsive dichotomy holds. But if the answer is that the strategy belong to the grantee, or the community, or the field, or the movement – then responsive grantmaking appears in a different light. If you as a funder are bought in to a strategy larger than your individual organization’s, then perhaps the most strategic way to intentionally pursue your strategy is to sign on to the strategies that grantees and other partners develop on their own or in concert with you. Responding to others’ strategies that you endorse is the strategic choice.
  • Responsive grantmaking can be strategic if what you value as a funder is not your ability to define a problem and name a solution, but your ability to “pick winners,” to identify strong organizations with effective leaders and solid plans, and support them in executing on those plans. Often, the difference between these values is framed in dichotomous terms – but a picking-winners approach can be used in concert with a defining-problems approach. You just have to be willing to see what actors in the field you’ve chosen are up to and ask how you can help, rather than coming in with a defined solution.

Responsive grantmaking is undervalued because its benefits for learning, field-building, place-building, and reputation management aren’t well articulated or robustly defended. And strategic grantmaking is overvalued because its roots in ecosystem thinking, learning, and value judgements is similarly less understood than its intentionality or proactiveness. Viewing them dichotomously and assuming that strategic funding is better misses a lot of opportunities for impact.

How do you think about responsive and strategic grantmaking in your own work? How does this particular zombie idea, of a dichotomy between the two, play out in your world?

Naming the Elephant in the Room

Thursday, March 20th, 2014

Here’s my post about last week’s GEO conference from the conference blog.

It’s time to start talking about funders’ internal capacity, and how that shapes their effectiveness. For too long, funders have been externally focused, without systematic attention to whether they have the skills, abilities, knowledge, and networks to pursue their missions most effectively. On one level, this comes from a good place, like when my Colombian grandmother (either of them, qepd) would be more worried about what we were eating than whether she ate. But on another level, my Colombian grandmother was really skinny – she didn’t eat enough. I’m not saying she needed to gorge, but all that selflessness wasn’t necessarily a good thing. In moderation, some attention to funder internal capacity can help funders play their various roles more effectively. And it will give them more perspective on what they’re really asking nonprofits to do when they offer capacity building.

What forms of funder capacity do you think are most important? Which funders do a good job of building their own capacity in moderation?

Standard Time

Thursday, October 10th, 2013

At the Independent Sector conference last week, we had the privilege of seeing Wynton Marsalis speak and perform. I was excited for the latter, but came away floored by the former. His manner of speech and thought were so distinctive and insightful, it felt like an implicit reproach to the generalities in which big-tent conferences traffic.

All of Marsalis’ statements were grounded in a place and a time. To understand the origins of jazz, he explained how in the late 19th and early 20th centuries, English, French, Spanish, Creole, and African cultures converged in New Orleans to create the conditions for a new form of music. When introducing his talented backing band (piano and upright bass), he referred to them by name, age, and place. It matters that the pianist is 31 and from Milwaukee, and that the bassist is 19 and from Jamaica. Their generational and place-based experiences shape the music to which they’re exposed, the musicians with whom they can collaborate, and therefore how they play.

Marsalis went on to describe jazz as a metaphor for democracy: players learn to collaborate around a common theme, improvising within a structure. Mastery comes not just from technical skill but from deep knowledge of history and diverse modes of expression that have come before and exist now.

What would it mean for foundations to operate as part of a jazz trio, in the Marsalis mode, with nonprofits and government? (All right, it should be a quartet that involves business.) Above all, good jazz players are skilled listeners. They know the qualities of their instrument, and how it blends with the other instruments. The drums don’t carry the melody. The trumpet doesn’t play rhythm. But everyone gets a solo – for a certain amount of time. The players look at each other and listen to each other to understand when it’s time for the solo to end and the song to continue.

Funders need to learn how to listen better to the other players in the social change quartet, and how to ground themselves in the strengths and limitations of their “instrument” – grantmaking, convening, advocacy, research, field-building, etc. The more they understand what their instrument is and isn’t good for, the more collaboratively, fluently, and beautifully they can play.

Innovation comes through a thorough grounding in tradition, so that when you repeat themes that have been heard many times before – the “standards” – you can bring a new flavor to them while recognizing the work that’s gone before. So when funders indulge in what I call “zombie philanthropic ideas that won’t die“, they should remember Wynton Marsalis and ask themselves – and their fellow players – “where have I heard that one before?” And a new song can be born….

Jealous Guy

Thursday, August 8th, 2013

“I didn’t mean to hurt you / I’m sorry that I made you cry / I didn’t want to hurt you / I’m just a jealous guy”

I wonder if implicit bias is the progressive version of unintended consequences.

A truly powerful idea that’s associated with conservative thought but has become widely accepted is “unintended consequences.” You try to alleviate poverty by providing a village with a better paved road, and the town becomes attractive as a route for drug smugglers to use in transportation, bringing violence to the town. You create certification processes for businesses so that consumers are protected, and business is disincentivized because the red tape becomes unmanageable.

For foundations, you provide grants in your focus area, and nonprofits that are desperate or don’t know any better modify their missions to go along with what you fund. You try to be clearer in your grant guidelines, and nonprofits hew ever more closely to what you say.

Unintended consequences are usually marshaled as an argument against government intervention, which makes them a popular resource of conservatives. But the reality of their existence means progressives are aware of and care about them as well, even if they don’t like some of the thinking behind them. They’re a hard-to-deny reality that undermines a central tenet of progressive thought, the value of intentional collective/government action in pursuit of greater social welfare.

I wonder if implicit bias is the progressive version of unintended consequences – a hard-to-deny reality that undermines a central tenet of conservative thought, that, as Chief Justice Roberts put it in a recent decision on affirmative action, “The way to stop discrimination on the basis of by race is to stop discriminating on the basis of race.” If despite our conscious efforts, our unconscious minds betray us, Roberts’ notion is not enough.

Implicit bias is the idea that even if you don’t consciously hold racist beliefs, even if you would reject them with your conscious mind, you have still learned patterns of thought and behavior that encode biased and racially invidious beliefs.

Studies have been done looking at the way recruiters handle job applications differently based on something as superficial as people’s names (example, see page 4).

For foundations, implicit bias can affect the way that leaders of nonprofits are seen as legitimate or not, authoritative or not, trustworthy or not. There’s a gender dimension as well, as the study linked to previously points out as well.

My question is whether the moment for implicit bias to emerge as the counterpoint to unintended consequences has come. The beliefs that George Zimmerman had about Trayvon Martin based on the limited visual information he initially received – some were explicit (“they always get away”) and some were no doubt implicit. “Suspicious-looking” – so much is encoded in this slippery phrase.

We live in the era of the algorithm – they calculate what to recommend on Amazon or Netflix, what ads we see on Facebook, what search results we get on Google. We all walk around with implicit algorithms about race and propriety and danger. George Zimmerman’s came to light, tragically, fatally. How long before it becomes abundantly clear to all that implicit bias is real?

In the meantime, foundation folks who review and approve grant applications would do well to ask themselves about potential sources of implicit bias, and investigate means to mitigate them. Because it would be a tragic unintended consequence to allow implicit bias to undermine the laudable goals of philanthropy.

Change in My Pocket

Thursday, August 1st, 2013

I got a letter from my health insurance company today saying that my employer and I would be getting a rebate because under Obamacare, insurers are required to spend at least 85% of premiums on hospitals and health care services, and no more than 15% on “administrative costs such as salaries, sales, and advertising.”

The overhead ratio has come to healthcare, just as nonprofit leaders are calling for it to be transcended in the social sector.

The kicker: just for New York State, the amount of customer premiums for this one insurer in this one year is $2.2 billion. That would have put it at number 27 in the list of top 50 foundations by assets in 2011. So 0.7% of those premiums is about one-seventh of what that hypothetical foundation’s payout would be – call it one grant program. $15 million, give or take. (Now whether I as a policyholder ever see a dime of that rebate is an open question: my employer subsidizes my premiums, so they may decide to use whatever we get toward defraying those costs.)

I bring that up just as another reminder of the scale of philanthropy relative to other parts of the economy. And to observe that in the aggregate, even relatively small-seeming instances of inefficiency (missing the target by less than 1%!) can conceal some serious dollars.

But the larger issue is, do we want an overhead ratio in healthcare, is that actually a useful thing? For once, the nonprofit sector may be ahead of the game relative to other sectors. I worry we may have to really evangelize some of this thinking beyond our own sector – where it’s hard enough to get the word around. And it’s a tough sell in healthcare – hard to argue that we need more hospital marking. It’ll be interesting to monitor how this “Medical Loss Ratio”, aka the “85/15 rule”, plays out in practice. God, I hope the authors of the healthcare bill didn’t get that number from nonprofit overhead ratios….

Oh, and like everyone in philanthropy, I read and thought and talked about Peter Buffett’s blog on the “Charitable-Industrial Complex.” For me the definitive word on this is from Zack Exley here. The upshot: the unglamorous way to reduce poverty quickly is aggressive state-led development. Viva varieties of capitalism!

Back 2 Life

Thursday, May 23rd, 2013

Philanthropy creates a bubble for those who work in it. We all know this. But on the inside, it’s so easy to forget. The surface of the bubble is so shiny, as it refracts the light coming from the outside. It’s a curved surface, so things on either side look distorted. But your eyes adjust. The brain is so skilled at adapting to new realities. With time, the funhouse image feels like a mirror, or a window.

But outside the bubble, reality goes on. Surface tension, surprisingly strong, keeps the bubble aloft on gentle breezes. But it can always be popped.

What does reality-based grantmaking look like? It begins with a clear understanding of what funders can and cannot do.

  • You can fund advocacy.
  • You can do more than make grants.
  • You can include grantees and community members in your decision-making.
  • You cannot solve long-standing social problems with a three-year initiative based on project funding.
  • You cannot compare to the monetary impact of the public sector or individual giving. The budget of Hennepin County, Minnesota, is more than $1 billion. Only a couple dozen foundations exceed even that amount, and except for the Gates Foundation, their grantmaking budgets are much much smaller.
  • You cannot flit from topic to topic every few years and expect to make a difference (or get much respect).

The funders who make a difference are the ones who invest for the long term, or who partner strategically, or who accept that small victories are big in the right context. Project Streamline a few years ago advanced the notion of “right-sizing” grants – they mean grant requirements. But it’s time to right-size grants, and our ambitions along with them, to the extent of the problems we’re addressing.

Funders can do more than they allow themselves, and they can achieve less than they think they can. And that’s OK. Life in the bubble is stifling; no air circulates. Step on out. See your surroundings clearly. Touch the ground. It’ll all be fine. We could all use the knowledge you’ve gained and benefit from the independent you should be allowed to keep. But please – see what you are. Know thyself.

Back 2 Reality.

In news from the reality-based side of philanthropy, happy 10th anniversary to the Philanthropic Initiative for Racial Equity! Lori Villarosa and her PRE colleagues have been tireless, fearless advocates for a topic that’s essential for renegotiating the 21st-century social contract. Thank you Lori and company for moving that conversation forward.