Transparency Talk

Category: "Transparency Tips" (114 posts)

Transparency and the Art of Storytelling
June 28, 2017

Mandy Flores-Witte is Senior Communications Officer for the Kenneth Rainin Foundation. This post is part of the Glasspockets’ #OpenForGood series done in partnership with the Fund for Shared Insight. The series explores new tools, promising practices, and inspiring examples showing how some foundations are opening up the knowledge that they are learning for the benefit of the larger philanthropic sector. Contribute your comments on each post and share the series using #OpenForGood. View more posts in the series.

Mandy Flores-WitteFoundations are uniquely poised to support higher-risk projects, and as a result, failures can happen. Recently, I was searching online for examples on how to share the story about a grant that had some unexpected outcomes and found that, while the field strives to be transparent, it can still be a challenge to learn about initiatives that didn’t go as planned.

Communicating about a project doesn’t always have to happen in a scholarly report or detailed analysis, or by hiring experts to produce an evaluation. Sharing what you learned can be as simple as telling a story.

Embracing the Facts and Checking Our Ego

"Sharing stories can help you reach people in a way that statistics cannot."

When the Rainin Foundation funded our first public art installation in San Francisco’s Central Market, a busy neighborhood undergoing a significant economic transformation, we knew it was an experiment with risks. The art installation’s large platform, swing, and see saw were designed to get neighborhood residents, tech workers, customers of local businesses, and visitors — people spanning the economic spectrum—to interact. There’s no doubt that the project succeeded at bringing people together. But after seven months, it was relocated to a different part of the city because of complaints and safety concerns about the types of people and activities it attracted.

These issues were addressed at several community meetings—meetings that helped build stronger relationships among project stakeholders such as city departments, businesses, artists, local nonprofits, and neighbors. We were disappointed that the project did not go as planned, but we were amazed to see how one public art installation could spark so many conversations and also be a platform for exposing the city’s social issues. We knew we had to share what we learned. Or put another way, we saw an opportunity to be #OpenForGood.

Selecting a Medium for Sharing

Rainin Foundation - Block by Block
The Kenneth Rainin Foundation hosts "Block by Block," a public music and dancing event. Credit: Darryl Smith, Luggage Store Gallery

We considered a formal assessment to communicate our findings, but the format didn’t feel right. We wanted to preserve the stories and the voices of the people involved — whether it was the job fair hosted by a nearby business to help drug dealers get out of the "game," the woman who sought refuge at the installation from domestic violence, or the nonprofit that hosted performances at the site. These stories demonstrated the value of public art.

We decided the most engaging approach would be to have our partners talk candidly about the experience. We selected Medium, an online storytelling platform, to host the series of "as told to" narratives, which we believed would be the most authentic way to hear from our partners. Our intention was to use the series as a tool to start a conversation. And it worked.

Taking Risks is Uncomfortable

The Rainin Foundation intentionally supported art in the public realm — knowing the risks involved — and we thought the discussion of what happened should be public, too. It was uncomfortable to share our missteps publicly, and it made us and our partners vulnerable. In fact, just weeks before publishing the stories, we were cautioned by a trusted colleague about going forward with the piece. The colleague expressed concern it could stir up negative feelings and backfire, harming the reputation of the foundation and our partners.

We took this advice to heart, and we also considered who we are as a foundation. We support cutting-edge ideas to accelerate change. This requires us to test new approaches, challenge the status quo, and be open to failure in both our grantmaking and communications. Taking risks is part of who we are, so we published the series.

Jennifer Rainin, CEO of the Kenneth Rainin Foundation, shares the year's pivotal moments in Turning Points: 2015.

We’ve applied a transparent approach to knowledge-sharing in other ways as well. To accompany one of our annual reports, the foundation created a video with Jen Rainin, our chief executive officer, talking about the foundation’s pivotal moments. Jen read some heartfelt personal letters from the parents of children suffering from Inflammatory Bowel Disease, explaining how their children were benefitting from a diet created by a researcher we support. Talking about scientific research can be challenging and complex, but sharing the letters in this way and capturing Jen’s reaction to them enabled us to humanize our work. The video was widely viewed (it got more hits than the written report), and has inspired us to continue experimenting with how we share our work.

Start Talking About Impact

I encourage foundations to look beyond formal evaluations and data for creative ways to be #OpenForGood and talk about their impact. While reports are important to growth and development, sharing stories can help you reach people in a way that statistics cannot. Explore new channels, platforms and content formats. Keep in mind that videos don’t have to be Oscar-worthy productions, and content doesn’t have to be polished to perfection. There’s something to be gained by encouraging those involved in your funded projects to speak directly and honestly. It creates intimacy and fosters human connections. And it’s hard to elicit those kinds of feelings with newsletters or reports.

What are your stories from the times you’ve tried, failed, and learned?

-- Mandy Flores-Witte

Bringing Knowledge Full Circle: Giving Circles Shape Accessible and Meaningful Philanthropy
June 21, 2017

Laura Arrillaga-Andreessen is a Lecturer in Business Strategy at the Stanford Graduate School of Business, Founder and President of the Laura Arrillaga-Andreessen Foundation, Founder and Board Chairman of Stanford Center on Philanthropy and Civil Society and Founder and Chairman Emeritus of the Silicon Valley Social Venture Fund. This post is part of the Glasspockets’ #OpenForGood series done in partnership with the Fund for Shared Insight. The series explores new tools, promising practices, and inspiring examples showing how some foundations are opening up the knowledge that they are learning for the benefit of the larger philanthropic sector. Contribute your comments on each post and share the series using #OpenForGood. View more posts in the series.

Laura Arrillaga-Andreessen PhotoNathalie Morton, a resident of Katy, TX, was passionate about giving back to her suburban Houston community. However, she felt her lack of philanthropic experience might hinder her effectiveness. 

After initial conversations with her friends and neighbors, she discovered that they shared her desire to give locally and, like herself, lacked the financial ability to make the large contributions that they associated with high-impact philanthropy. After initial online research, Nathalie learned that a giving circle is a collaborative form of giving that allows individuals to pool their resources, knowledge and ideas to develop their philanthropic strategy and scale their impact. Nathalie then discovered the Laura Arrillaga-Andreessen Foundation’s (LAAF.org) Giving Circles Fund (GCF) initiative, an innovative online platform that provides an accessible and empowering experience for a diverse group of philanthropists to practice, grow and scale their philanthropy by giving collaboratively.

“Philanthropists have an imperative to share the research and rationale behind their philanthropic decisions for the greater good.”

With LAAF support, Nathalie was inspired to create the Cinco Ranch Giving Circle to pool her community members’ resources for the greater good. In its first year, this circle of over 30 families has come together to invest thousands of dollars in local nonprofits — all through donations as modest as $10 per month. Every member found that sharing time, values, wisdom and dollars not only deepened their relationships with one another but also that the measurable impact they could have together far exceeded that which they could achieve alone. This experience empowered Nathalie and her fellow giving circle participants to see themselves as philanthropists and develop their practice in a collaborative environment.

Nathalie’s story is just one of myriad ways that the giving circles model has made strategic philanthropy more accessible. Two years ago, I wrote a post on this same blog about how funders should have not only glass pockets but also “glass skulls,” underscoring that philanthropists have an imperative to share the research and rationale behind their philanthropic decisions for the greater good of all who are connected to the issue.  Or put another way, giving circles can help donors of all sizes become #OpenForGood. GCF allows philanthropists, like Nathalie, to do just that — by empowering givers at any level to make their thinking and decisions about social impact more open and collaborative.

LAAF logoA lack of financial, intellectual and evaluation resources are barriers to entry for many people who want to give in a way that matters more. That’s why I’ve committed the past two decades to not only redefining philanthropy — I believe that anyone, regardless of age, background or experience, can be a strategic philanthropist — but also to providing highest quality, free educational resources (MOOCs, teaching materials, case studies, giving guides) to empower anyone to make the most of whatever it is they have to give. Although most GCF individual monthly contributions are in the double digits, the impact of our giving circles is increasingly significant — our circles have given over $550,000 in general operating support grants to nonprofits nationally. By design, giving circles amplify individual giving by providing built-in mechanisms for more strategic philanthropy, including increasing

  • Transparency: Giving circles are effective because they are radically transparent about their operations, selection processes, meeting etiquette, voting rules, etc. We have found that giving circles grow and flourish when members understand exactly how the circle works and their role in its success. In addition, all of our circles publish their grants on their GCF pages, so that current and prospective members have insight into each circle’s history, portfolio and impact.
  • Democracy: GCF giving circles have a flat structure, in which everyone has an equal vote — regardless of their respective donations’ size. With LAAF support and a comprehensive portfolio of resources, group leaders facilitate meetings — ranging from casual meetups to knowledge sharing and issue ecosystem mapping gatherings to nonprofit nomination and voting sessions. Even in multigenerational giving circles where members are able to give at different levels, all of their members’ voices, perspectives and opinions hold equal weight.
  • Accessibility: Giving circles require a lower level of financial capital than other philanthropic models. A 2014 study has shown a higher rate of participation in giving circles for Millennials, women and communities of color — reflecting the spectacular pluralism that makes philanthropy beautiful. [1] On our GCF platform, we host multiple college and high school circles that have started teaching their members to carve out philanthropic dollars even on a minimal budget. Additionally, most of our circles are open to the public, and anyone can join and actively participate (yes, that includes you!).
  • Risk-tolerance: With more diverse participants and lower amounts of capital, GCF giving circles are more likely to give to community-based or smaller organizations that typically struggle to secure capital from more established philanthropies, thus meeting a critical social capital market need.

The power of collectively-pooling ideas, experiences and resources, as well as sharing decision-making, inspired me to found Silicon Valley Social Venture Fund (SV2) in 1998. What began as a small, local giving circle has grown into the second largest venture philanthropy partnership in the world. More importantly, its experiential education model — grounded in the principles listed above — has influenced the philanthropic practice of hundreds of now highly strategic philanthropists who respectively have invested hundreds of millions of dollars globally.  To this day, being a partner-member of the SV2 giving circle continues to inform how I give and evolve my own philanthropic impact.  Now, powered by the GCF platform, technology gives all of us the ability to scale our own giving by partnering with like-minded givers locally, nationally and globally so we can all move toward an #OpenForGood ideal. The mobilization of givers of all levels harnesses the power of the collective and demonstrates that the sum of even the smallest contributions can lead to deeply meaningful social change.

--Laura Arrillaga-Andreessen

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[1] https://www.philanthropy.com/article/Giving-Circles-Popular-With/150525

Why Evaluations Are Worth Reading – or Not
June 14, 2017

Rebekah Levin is the Director of Evaluation and Learning for the Robert R. McCormick Foundation, guiding the Foundation in evaluating the impact of its philanthropic giving and its involvement in community issues. She is working both with the Foundation’s grantmaking programs, and also with the parks, gardens, and museums at Cantigny Park. This post is part of the Glasspockets’ #OpenForGood series done in partnership with the Fund for Shared Insight. The series explores new tools, promising practices, and inspiring examples showing how some foundations are opening up the knowledge that they are learning for the benefit of the larger philanthropic sector. Contribute your comments on each post and share the series using #OpenForGood. View more posts in the series.

Rebekah Levin photoTruth in lending statement:  I am an evaluator.  I believe strongly in the power of excellent evaluations to inform, guide, support and assess programs, strategies, initiatives, organizations and movements.  I have directed programs that were redesigned to increase their effectiveness, their cultural appropriateness and their impact based on evaluation data, helped to design and implement evaluation initiatives here at the foundation that changed the way that we understand and do our work, and have worked with many foundation colleagues and nonprofits to find ways to make evaluation serve their needs for understanding and improvement. 

“I believe strongly in the power of excellent evaluations."

One of the strongest examples that I’ve seen of excellent evaluation within philanthropy came with a child abuse prevention and treatment project.  Our foundation funded almost 30 organizations that were using 37 tools to measure treatment impact of treatment, many of which were culturally inappropriate, designed for initial screenings, or inappropriate for a host of other reasons, and staff from these organizations running similar programs had conflicting views about the tools.  Foundation program staff wanted to be able to compare program outcomes using uniform evaluation tools and to use that data to make funding, policy, and program recommendations, but they were at a loss as to how to do so in a way that honored the grantees’ knowledge and experience.   A new evaluation initiative was funded, combining the development of a "community of practice" for the nonprofits and foundation together to:

  • create a unified set of reporting tools;
  • learn together from the data about how to improve program design and implementation, and the systematic use of data to support staff/program effectiveness;
  • develop a new rubric which the foundation would use to assess programs and proposals; and
  • provide evaluation coaching for all organizations participating in the initiative.

The evaluation initiative was so successful that the nonprofits participating decided to continue their work together beyond the initial scope of the project to improve their own programs and better support the children and families that they are serving. This “Unified Project Outcomes” article describes the project and established processes in far greater detail.

But I have also seen and been a part of evaluations where:

  • the methodology was flawed or weak;
  • the input data were inaccurate and full of gaps;
  • there was limited understanding of the context of the organization;
  • there was no input from relevant participants; and
  • there was no thought to the use of the data/analysis;

so that little to no value came out of them, and the learning that took place as a result was equally inconsequential.

Mccormick-foundation-logo_2xSo now to those evaluation reports that often come at the end of a project or foundation initiative, and sometimes have interim and smaller versions throughout their life span.  Except to a program officer who has to report to their director about how a contract or foundation strategy was implemented, the changes from the plan that occurred, and the value or impact of an investment or initiative, should anyone bother reading them?  From my perch, the answer is a big “Maybe.”  What does it take for an evaluation report to be worth my time to read, given the stack of other things sitting here on my desk that I am trying to carve out time to read?  A lot.

  1. It has to be an evaluation and not a PR piece. Too often, "evaluation" reports provide a cleaned up version of what really occurred in a program, with none of the information about how and why an initiative or organization functioned as it did, and the data all point to its success.  This is not to say that initiatives/organizations can’t be successful.  But no project or organization works perfectly, and if I don’t see critical concerns/problems/caveats identified, my guess is that I’m not getting the whole story, and its value to me drops precipitously.
  2. It has to provide relevant context. To read an evaluation of a multi-organizational collaboration in Illinois without placing its fiscal challenges within the context of our state’s ongoing budget crisis, or to read about a university-sponsored community-based educational program without knowing the long history of mistrust between the school and the community, or any other of the relevant and critical contextual pieces that are effect a program, initiative or organization makes that evaluation of little value.  Placed within a nuanced set of circumstances significantly improves the possibility that the knowledge is transferable to other settings.
  3. It has to be clear and as detailed as possible about the populations that it is serving. Too often, I read evaluations that leave out critical information about who they were targeting and who participated or was served. 
  4. The evaluation’s methodology must be described with sufficient detail so that I have confidence that it used an appropriate and skillful approach to its design and implementation as well as the analysis of the data. I also pay great attention to what extent those who were the focus of the evaluation participated in the evaluation’s design, the questions being addressed, the methodology being used, and the analysis of the data.
  5. And finally, in order to get read, the evaluation has to be something I know exists, or something I can easily find. If it exists in a repository like IssueLab, my chances of finding it increase significantly.  After all, even if it’s good, it is even better if it is #OpenForGood for others, like me, to learn from it.

When these conditions are met, the answer to the question, “Are evaluations worth reading?” is an unequivocal “YES!,” if you value learning from others’ experiences and using that knowledge to inform and guide your own work.

--Rebekah Levin

The Real World is Messy. How Do You Know Your Foundation Is Making an Impact?
June 7, 2017

Aaron Lester is an experienced writer and editor in the nonprofit space. In his role as content marketing manager at Fluxx, Aaron’s goal is to collect and share meaningful stories from the world of philanthropy. This post is part of the Glasspockets’ #OpenForGood series done in partnership with the Fund for Shared Insight. The series explores new tools, promising practices, and inspiring examples showing how some foundations are opening up the knowledge that they are learning for the benefit of the larger philanthropic sector. Contribute your comments on each post and share the series using #OpenForGood. View more posts in the series.

AaronLesterIn a perfect world, foundations could learn from every mistake, build on every new piece of knowledge, and know with certainty what impact every effort has made.

Of course, we’re not in that world. We’re in the real, fast-paced world of nonprofits where messy human needs and unpredictable natural and political forces necessitate a more flexible course. In that world, it’s more challenging to measure the effects of our grantmaking efforts and learn from them. It turns out knowledge sharing is a tough nut to crack.

And without meaningful knowledge sharing, we’re left struggling to understand the philanthropic sector’s true impact — positive or negative — within a single organization or across many. The solution is a more transparent sector that is willing to share data — quantitative as well as qualitative — that tells stories of wins and losses, successes and failures—in other words, a sector that is #OpenForGood. But, of course, this is much easier said than done.

My role at Fluxx creates many opportunities for me to talk with others in the field and share stories the philanthropic sector can learn from. I recently had the chance to speak with grantmakers on this very issue.

Measuring Whose Success?

Even within a foundation, it can be difficult to truly understand the impact of a grant or other social investment.

“Lose the mindset defined by a fear of failure; instead, embrace one that drives you to search for opportunity.”

As Adriana Jiménez, director of grants management at the ASPCA and former grants manager at the Surdna Foundation, explains, it’s difficult for foundations to prove conclusively that it’s their slice of the grantmaking that has made a meaningful difference in the community. “When you collect grant-by-grant data, it doesn’t always roll up to your foundation’s goals or even your grant’s goals.”

The issue is that there’s no standardized way to measure grantmaking data, and it’s an inherently difficult task because there are different levels of assessment (grant, cluster, program, foundation, etc.), there is similar work being done in different contexts, and a lot of data is only available in narrative form.

One way to combat these challenges is to make sure your foundation is transparent and in agreement around shared goals with grantees from the start of the relationship. Being too prescriptive or attempting to standardize the way your grantees work will never create the results you’re after. Part of this early alignment includes developing clear, measurable goals together and addressing how the knowledge you’re gaining can and should translate into improvements in performance.

A grantee should never have to alter their goals or objectives just to receive funding. That sends the wrong message, and it provides the wrong incentive for grantees to participate in knowledge-sharing activities. But when you work as partners from the start and provide space for grantees to collaborate on strategy, a stronger partnership will form, and the stories your data tells will begin to be much more meaningful.

The Many Languages of Human Kindness

If sharing knowledge is difficult within one organization, it’s even more challenging across organizations.

FluxxJiménez points out that a major challenge is the complexity of foundations, as they rely on different taxonomies and technologies and discuss similar issues using different language. Every foundation’s uniqueness is, in its day-to-day work, its strength, but in terms of big-picture learning across organizations, it’s a hurdle.

Producing cohesive, comprehensive data out of diverse, fragmented information across multiple organizations is a huge challenge. Mining the information and tracking it in an ongoing way is another obstacle made more difficult because the results are often more anecdotal than they are purely quantitative. And when this information is spread out over so many regions and focus areas, the types of interventions vary so widely that meaningful knowledge sharing becomes untenable.

Gwyneth Tripp, grants manager at Blue Shield of California Foundation, also cites a capacity issue. Most foundations don’t have designated roles for gathering, tracking, organizing, and exchanging shareable data, so they resort to asking staff who already have their own sizable to-do lists. Tripp says:

“They have an interest and a desire [in knowledge sharing], but also a real challenge of balancing the everyday needs, the strategic goals, the relationships with grantees, and then adding that layer of ‘let’s learn and think about it all’ is really tough to get in.

“Also, becoming more transparent about the way you work, including sharing successes as well as failures, can open your foundation up to scrutiny. This can be uncomfortable. But it’s important to delineate between ‘failure’ and ‘opportunity to learn and improve.’”

Sparking Change

But foundations know (possibly better than anyone else) that obstacles don’t make accomplishing a goal impossible.

And this goal’s rewards are great: When foundations can achieve effective knowledge sharing, they’ll have better insights into what other funding is available for the grantees within the issues they are tackling, who is being supported, which experiments are worth replicating, and where there are both gaps and opportunities. And with those insights, foundations gain the ability to iterate and improve upon their operations, even leading to stronger, more strategic collaborations and partnerships.

Creating and promoting this kind of accessible, useful knowledge sharing starts with a few steps:

  1. Begin from within. Tracking the impact of your grantmaking efforts and sharing those findings with the rest of the sector requires organizations to look internally first. Start by building a knowledge management implementation plan that involves every stakeholder, from internal teams to grantee partners to board executives.
  1. Determine and prioritize technology needs. Improvements in technology — specifically cloud-based technology — are part of what’s driving the demand for data on philanthropic impact in the first place. Your grants management system needs to provide integrated efficiency and accessibility if you want to motivate staff participation and generate usable insights from the data you’re collecting. Is your software streamlining your efforts, or is it only complicating them?
  1. Change your mindset. Knowledge sharing can be intimidating, but it doesn’t have to be. Lose the mindset defined by a fear of failure; instead, embrace one that drives you to search for opportunity. Promote a stronger culture of knowledge sharing across the sector by sharing your organizational practices and lessons learned. Uncover opportunities to collect data and share information across organizations.

There’s no denying that knowledge sharing benefits foundations everywhere, along with the programs they fund. Don’t let the challenges hold you back from aiming for educational, shareable data — you have too much to gain not to pursue that goal.  What will you #OpenForGood?

--Aaron Lester 

Because What You Know Shouldn’t Just Be About Who You Know
June 1, 2017

Janet Camarena is director of transparency initiatives for Foundation Center.  This post is part of the Glasspockets’ #OpenforGood series done in partnership with the Fund for Shared Insight. The series explores new tools, promising practices, and inspiring examples showing how some foundations are opening up the knowledge that they are learning for the benefit of the larger philanthropic sector. Contribute your comments on each post and share the series using #OpenForGood. View more posts in the series.

Janet Camarena Photo"Knowledge is obsolete."  As a librarian, my ears perked up at this TEDx talk and articles buzzing about this in the education field.  It seems plausible.  Why memorize facts, when anything one wants to know can be readily looked up, on the go, via a smart phone? As a mom, I imagine my kids sitting down to prepare for rich, thought-provoking classroom discussions instead of laboring over endless multiple-choice tests. What an exciting time to be alive — a time when all of humanity’s knowledge is at our fingertips, leading experts are just a swipe away, the answer always literally close at hand, and we’ve been released from the drudgery of memorization and graduated to a life of active, informed debate! And how lucky are we to be working in philanthropy and able to leverage all this knowledge for good, right?

Though the active debate part may sound familiar, sadly, for those of us working in philanthropy, the ubiquity of knowledge remains more sci-fi mirage than a TED Talk rendering of our present-day reality.  As Glasspockets reported in “The Foundation Transparency Challenge” infographic, released last November, still only 10% of foundations even have a website, so even a smart phone is not smart enough to help connect you to the 90% of those that don't.

The Foundation Transparency Challenge also reveals other areas of potential improvement for institutional philanthropy, including a number of transparency practices not widely embraced by the majority of funders. Indeed, the data we’ve collected demonstrates that philanthropy is weakest when it comes to creating communities of shared learning, with fewer than half the foundations with a Glasspockets profile using their websites to share what they are learning, only 22 % percent sharing how they assess their own performance, and only 12 percent revealing details about their strategic plan.

Foundation Center data also tells us that foundations annually make an average of $5.4 billion in grants for knowledge-production activities, such as evaluations, white papers, and case studies. Yet only a small fraction of foundations actively share the knowledge assets that result from those grants -- and far fewer share them under an open license or through an open repository. For a field that is focused on investing in ideas -- and not shy about asking grantees to report on the progress of these ideas -- there is much potential here to open up our knowledge to peers and practitioners who, like so many of us, are looking for new ideas and new approaches to urgent, persistent problems.

“Sadly, for those of us working in philanthropy, the ubiquity of knowledge remains more sci-fi mirage than a TED Talk rendering of our present-day reality.”

As for having a universe of experts a swipe away to help inform our philanthropic strategies, the reality is that the body of knowledge related to philanthropic work is scattered across the thousands of institutional foundation websites that do exist. But who has time for the Sisyphean task of filtering through it all?

No coincidence, perhaps, that a main finding of a recent report commissioned by the William and Flora Hewlett Foundation was that foundation professionals looking to gain and share knowledge tend to prefer to confer with trusted foundation peers and colleagues. At the same time, the field is doing a lot of soul searching related to diversity, equity, and inclusion -- and what it can do to improve its performance in those areas. But if practitioners in the field are only sourcing knowledge from their peers, doesn’t that suggest their knowledge networks may be unintentionally insular and lacking in well…diversity of opinion and perspective? And might there be a way to connect the dots and improve the effectiveness, efficiency, and inclusivity of our networks by changing the way we source, find, and share lessons learned? 

In other words, shouldn’t what we know not just be about who we know?

#OpenForGood

The good news is that as more foundations professionalize their staffs and develop in-house expertise in learning, monitoring and evaluation, (as well as in grants management and communications), there are a number of developing practices out there worth highlighting. At the same time, a number of technology platforms and tools have emerged that make it easy for us to improve the way we search for and find answers to complex questions. Here at Foundation Center, for example, we are using this post to kick off a new #OpenForGood series featuring the voices of “knowledge sharing champions” from the philanthropic and social sectors. Some of these experts will be sharing their perspectives on opening up knowledge at their own foundations, while others will clue us in to tools and platforms that can improve the way philanthropy leverages the knowledge it generates (and pays for), as well as discovers new sources of knowledge. 

But before we get there, you might be wondering: What does it mean to be a social sector organization that is #OpenForGood? And how does my organization become one? Not to worry. The following suggestions are intended to help organizations demonstrate they are moving in the direction of greater openness:

  1. Grantmakers can start by assessing their own foundation’s openness by taking and sharing the “Who Has Glass Pockets?” transparency self-assessment survey.
  2. Funders and nonprofits alike can openly share what they are learning with the rest of the field. If your organization invested in monitoring and evaluating results in 2015 or 2016, make the effort to share those evaluations in our new IssueLab: Results In exchange for sharing your recent evaluations, you will receive an #OpenforGood badge to display on your website to signal your commitment to creating a community of shared learning.
  3. If you have lessons to share but not a formal evaluation process, share them in blog format here on Transparency Talk, on PhilanTopic, or on GrantCraft, so others can still benefit from your experience.
  4. Adopt an open licensing policy so that others can more easily build on your work.

The #OpenForGood series is timed to align with the launch of a new Foundation Center platform designed to help philanthropy learn from all the collective knowledge at its disposal. Developed by the team at IssueLab, whose collection already includes more than 22,000 reports from thousands of nonprofits and foundations, IssueLab Results is dedicated in particular to the collection and sharing of evaluations.

IssueLab Topic Graphic

IssueLab Results supplies easy, open access to the lessons foundations are learning about what is and isn’t working. The site includes a growing curated collection of evaluations and a special collection containing guidance on the practice of evaluation. And it’s easy to share your knowledge through the site – just look for the orange “Upload” button. 

The basic idea here is to scale social sector knowledge so that everyone benefits and the field, collectively, grows smarter rather than more fragmented. On a very practical level, it means that a researcher need only visit one website rather than thousands to learn what is known about the issue s/he is researching. But the only way the idea can scale is if foundations and nonprofits help us grow the collection by adding their knowledge here. If they do – if you do – it also means that philanthropy will have a more inclusive and systematic way to source intelligence beyond the “phone a friend” approach.

The bottom line is that in philanthropy today, knowledge isn’t obsolete, it’s obscured. Won’t you join us in helping make it #OpenForGood.

If you have a case study related to knowledge sharing and management and/or the benefits of transparency and openness, let us know in the comments below, or find us on Twitter @glasspockets.

--Janet Camarena

Transparency Talk Welcomes Arcus Foundation to Glasspockets
March 29, 2017

(Melissa Moy is special projects associate for Glasspockets.) 

Arcus foundation logoWe are pleased to welcome Arcus Foundation to our community of foundations that have publicly commited to working transparently. By taking and sharing the “Who Has Glass Pockets?” (WHGP) self-assessment, Arcus is contributing to a growing collection of profiles that serve as a knowledge bank and transparency benchmarking mechanism.

Arcus, with its offices in New York and Cambridge, United Kingdom, advocates for global human rights and conservation movements: “Together, we learn from each other and take bold risks on groundbreaking ideas that drive progress toward a future of respect and dignity for all.”

“We strive to apply a high level of transparency in our operations and in our relationships with grantees, partners and other stakeholders.’”

This month, Arcus became the 87th foundation to join WHGP.  As a way of welcoming Arcus to the Glasspockets community, we’d like to highlight some of the ways in which this foundation openly shares its environmental and social justice work.

First, Arcus has pledged a rare commitment to openness in its transparency statement that is part of the website’s introduction to Arcus’ work.

The foundation uses its website to explain its grantmaking process,  shares expectations for grantees, and offers a searchable grantee map and database.  A short video invites and informs prospective grant applicants.

Other ways that Arcus lives up to its transparency statement is by opening up its knowledge via  grantee impact stories, reports, and a foundation blog.  Additionally, the foundation discloses more than a decade of its financial information

Enjoy exploring the work that Arcus is doing for social justice and the environment.  Perhaps it will inspire your foundation to become #88!  Does your foundation have glass pockets?  Find out

 --Melissa Moy

Warren Buffett Has Some Excellent Advice for Foundations That They Probably Won't Take
March 16, 2017

(Marc Gunther writes about nonprofits, foundations, business and sustainability. He also writes for NonprofitChronicles.com. This post also appears in Nonprofit Chronicles.)

This post is part of a Transparency Talk series, presented in partnership with the Conrad N. Hilton Foundation, examining the importance of the 990-PF, the informational tax form that foundations must annually file. The series will explore the implications of the open 990; how journalists and researchers use the 990-PF to understand philanthropy; and its role, limitations, and potential as a communications tool.

Marc GuntherWith a collective $800 billion in assets under management, America’s big foundations spend vast sums of money to buy investment advice. They’re getting little, if anything, of value in return.

Their own investment offices, and the Wall Street banks, hedge funds, private equity firms and consultants they hire, when taken together, deliver investment returns that lag behind market indexes, all evidence indicates.

These foundations would do better to call an 800 number at Vanguard or Schwab and buy a diversified set of low-cost index funds.

So, at least, argues Warren Buffett, one of the great investors of our time. In his latest letter to investors in Berkshire Hathaway, Buffett writes:

When trillions of dollars are managed by Wall Streeters charging high fees, it will usually be the managers who reap outsized profits, not the clients. Both large and small investors should stick with low-cost index funds.

The limited data available about foundation endowments bears him out.

It’s not possible to prove that Buffett’s advice would enable foundations to improve their returns–and thus have more money to devote to their grant-making. Most foundations don’t disclose the financial performance of their endowments.

Of the 10 largest grant-making foundations in the US, only two — the MacArthur Foundation and the W.K. Kellogg Foundation — publish investment returns on their websites. MacArthur’s disclosure is exemplary. (So is its performance, perhaps not coincidentally.) I emailed all ten and got nowhere with the rest.

The best evidence about how foundations are managing their endowments comes from an annual study published by the Council on Foundations and Commonfund, a nonprofit asset management fund that serves foundations, colleges and nonprofits. Their most recent survey, which covers the 10-year period from 2006 through 2015, found that returns averaged 5.5 percent per year for 130 private foundations and 5.2 percent per year for 98 community foundations.

Further insight can be gleaned from Cambridge Associates, an investment firm whose clients include foundations, universities and wealthy families. Cambridge tracked the performance of 445 of its endowment and foundation clients and found they generated average annualized returns of 4.97 percent for the 10-year period ending June 30, 2016. (These returns should not be considered Cambridge’s performance track record, a spokesman told me.)

High pay for money managers does not necessarily translate into superior returns for foundations.

By contrast, Vanguard’s model portfolio for institutional investors, a mix of passively invested index funds, with 70 percent invested in stocks and the rest in fixed income securities, delivered 5.81 percent over the 10-year-period through 2015, and 6.1 percent for the 10-year period ending on June 30, 2016, according to Chris Philips, head of institutional advisory services at Vanguard. (All figures for investment returns are net of fees, meaning fees are taken into account.)

That may appear to be a small edge for Vanguard. But when institutions are investing hundreds of millions, or billions of dollars, small gains compounded over time add up to big money. Money, again, that could be better spent on programs.

Actually, it’s worse, because the figures reported by the Council on Foundations and CommonFund do not include the salaries that foundations pay to their in-house investment offices. The chief investment officers are often the highest-paid executives at foundations, and their deputies do well, too.

Why, then, do foundations continue to pay high salaries and high fees in the pursuit of market-beating returns, when so many fail?

They should know better. It’s no secret that passive approaches to investing outperform most active money managers, once fees and trading costs are taking into account. In 2005, Buffett wrote that “active investment management by professionals – in aggregate – would over a period of years underperform the returns achieved by rank amateurs who simply sat still.”

Taking aim at hedge funds, with their high expenses, Buffett then offered to bet $500,000 that no investment professional “could select a set of at least five hedge funds – wildly-popular and high-fee investing vehicles – that would over an extended period match the performance of an unmanaged S&P-500 index fund charging only token fees.”

Only one — one! — investment pro took the bet. Not surprisingly, Buffett will win the bet, by a very comfortable margin. And yet foundations and those who advise them are pouring more, not less, money into hedge funds.

Everyone Wants to Be Special

Buffett has a theory about why those in charge of foundations entrust their endowments to active money managers and hedge funds:

The wealthy are accustomed to feeling that it is their lot in life to get the best food, schooling, entertainment, housing, plastic surgery, sports ticket, you name it. Their money, they feel, should buy them something superior compared to what the masses receive.

In many aspects of life, indeed, wealth does command top-grade products or services. For that reason, the financial “elites” – wealthy individuals, pension funds, college endowments and the like – have great trouble meekly signing up for a financial product or service that is available as well to people investing only a few thousand dollars.

Vanguard’s Chris Philips has a similar theory:

There is this perception that by going index you are ceding that you do not have any skill and you are going to be average in the marketplace. That doesn’t feel good. As humans, we want to be good. We don’t want to be average.

Foundation executives may be especially prone to believe that they deserve better than “average” investment advice. By dint of their position, they are often told that they are wiser, funnier and better-looking than average.

Jeffrey Hooke, a senior lecturer at the Johns Hopkins Carey Business School and a former investment banker, says the trustees of foundations who serve on their investment committees are likely to favor active asset management.

The people on the boards tend to be in the business. They’re private equity executives, they’re stockbrokers or they’re in hedge funds. They’re totally biased in favor of active managing because that’s how they’ve made their living.

Hooke has researched public pension funds and found that they, too, underperform the markets by choosing active managers. Investment officers don’t want to talk themselves out of a job, he says:

They are never going to walk into the boardroom and say, ‘Hey, it just isn’t working.’ They’ve got wives, they’ve got mortgages they’ve got kids.

These investment officers aspire to be the rare bird who can consistently outperform the market, like David Swensen, the storied portfolio manager at Yale. (I profiled Swensen in 2005 for the Yale Alumni Magazine.) But Swensen, like Buffett, says that identifying the best asset managers is exceedingly difficult. In a 2009 interview, Swensen told me that investors who rely on “low-cost, passively managed index funds” and rebalance regularly will “end up beating the overwhelming majority of participants in the financial markets.” Buffett has said that in the course of his lifetime he has identified only about 10 investment professionals who can beat the markets over time; there are about 87,000 foundations in the US.

Pay for Performance?

In fairness, the foundation trustees and investment officers labor under a peculiar burden. They are obligated by law to give away five percent of their assets every year. So if they want to exist in perpetuity, they must earn in excess of five percent on their investments, which is a tall order. Of course, no foundation is entitled to live forever. If some spend down their assets, well, new foundations come along all the time.

Most foundations, though, aim to survive in perpetuity, and chase superior returns, at a cost. Consider, for example, the Ford Foundation, which, with assets of $12.2 billion (as of 12-31-2015), is the second-biggest foundation in the US, behind the behemoth Bill & Melinda Gates Foundation.

In 2015, the Ford Foundation’s highest-paid employee was vice president and chief investment officer Eric Doppstadt, who was paid $2.1 million. He was followed by  director of public investment Michael Walden at $1,017,061, director of private equity Sherif Nahas at $972,362 and director of hedge funds William Artemenko at $955,479. All were paid more than Darren Walker, Ford’s president, whose compensation was $788,542, according to Ford’s Form 990-PF filing,

Then there were Ford’s outside asset managers. In 2015, they included Silchester International Equity Management which was paid $2.2 million, Wellington Energy Investment Advisor, which collected just under $2 million and Eagle Capital Management, which got $1 million.

How did they perform? “Sharing the investment returns is outside of our policy,” says Joshua Cinelli, Ford’s chief of media relations, by e-mail.

In this, Ford is typical. At the David and Lucille Packard Foundation, chief investment officer John Moehling was paid $2.3 million, and three other investment professionals earned more than $1 million. All were better paid than Packard’s chief executive, Carol Larson. Packard, too, will not disclose its returns.

The Robert Wood Johnson Foundation, William and Flora Hewlett Foundation, Gordon and Betty Moore Foundation and MacArthur Foundation all pay their chief investment officer more than their top executives. The argument for doing so, presumably, is that these investment professionals could make as much money or more in the private sector.

But, again, with the exception of MacArthur and Kellogg, the foundations won’t say whether their investment officers and their outside asset managers are delivering market-beating performance.

What we do know is that high pay for money managers does not necessarily translate into superior returns. Interestingly, when pension-fund critic Jeff Hooke analyzed data from 33 state pension systems, he found that the 10 states with the highest fee ratios achieved lower return rates than those that spent the least.

Transparency and Accountability

Foundation endowment returns could probably be calculated by going through years of IRS filings. Unfortunately, the Form 990-PF tax form for foundations is “seriously flawed,” “unwieldy” and “unintelligible to the many lay readers, including trustees and journalists,” according to longtime foundation executive John Craig.

In a 2011 blog post for the Foundation Center, Craig lamented the fact that investment performance is not solicited on the Form 990:

Since their endowments are the only source of income for most foundations and effective endowment management is a challenge for many foundations, this is an egregious omission—equivalent to not requiring for-profit corporations to report their earnings on tax returns and financial statements.

I asked Brad Smith, president of the Foundation Center, which promotes transparency through its laudable Glasspockets initiative, why foundations won’t disclose their investment returns. “They don’t report it because it’s not required,” he said, “to state the obvious.”

Smith went on to say that foundations may be “worried about perverse incentives that could be created by a ranking.” If foundations compete to generate the best investment returns, he explained, they could feel pressured to take on risky investments. During the Great Recession, some foundations that pursued aggressive investment strategies had to sell highly-leveraged, illiquid investments at a loss. 

Still, I wonder if there’s a simpler explanation for the lack of disclosure: Foundation staff and trustees don’t want to be held accountable for mediocre results.

If MacArthur and Kellogg are exemplary in their disclosure — Kellogg kindly arranged a phone interview with Joel Wittenberg, its chief investment officer —  the Gates and Bloomberg foundations are unusually opaque. Gates Foundation money is housed in a separate trust and is reportedly managed by Cascade Investments, which also manages Gates’ personal fortune. (Buffett is a trustee of the Gates Foundation, and presumably keeps an eye on the endowment.) Bloomberg’s philanthropic and personal wealth are reported to be managed by Willett Advisors. Cascade and Willett have access to some of the world’s top money managers, and may have a shot at outperforming the averages.

This isn’t a new issue. Testifying before Congress in 1952, Russell Leffingwell, the chairman of the board of the Carnegie Foundation, famously said:

We publish our investments. We have to be very careful about our investments because we know that others, some others, take investment advice from our list of investments. Well, that is all right. We think the foundation should have glass pockets.

The bottom line: America’s foundations, as a group, are taking money that could be devoted to their programs – to alleviate global poverty, to improve education, to support medical research or promote the arts — and transferring it to wealthy asset managers. They should know better, and they do.

--Marc Gunther

Apocalypse Later? Philanthropy and Transparency in an Illiberal World
March 6, 2017

(Brad Smith is president of Foundation Center. As recently reported by Nonprofit Quarterly, the National Council of Nonprofits has launched a campaign to get nonprofits to sign a Community Letter in Support of Nonpartisanship that calls for preservation of the Johnson Amendment in its current form. This blog also appears in PhilanTopic.)

This post is part of a Transparency Talk series, presented in partnership with the Conrad N. Hilton Foundation, examining the importance of the 990-PF, the informational tax form that foundations must annually file. The series will explore the implications of the open 990; how journalists and researchers use the 990-PF to understand philanthropy; and its role, limitations, and potential as a communications tool.

Brad Smith PhotoHow long will it be before nonprofit transparency takes its place alongside diceros bicornis on the endangered species list? Hopefully never, but in a world that's growing more technologically sophisticated and more illiberal, I'm beginning to think that if it's not Apocalypse Now, maybe it's Apocalypse Later.

The value of transparency

Transparency has been a boon to the philanthropic sector, making it possible for organizations like Foundation Center, Guidestar, the Urban Institute, Charity Navigator, and others to create searchable databases spanning the entire nonprofit and foundation universe. Our efforts, in turn, contribute to responsible oversight, help nonprofits raise funds to pursue their missions, and fuel online platforms that enable donors to make better giving choices. Transparency also enables foundations to collaborate more effectively, leverage their resources more efficiently, and make real progress on critical issues such as black male achievement, access to safe water, and disaster response. The incredibly rich information ecosystem that undergirds the American social sector is the envy of others around the globe — not least because it gives us a clear view of what nonprofit initiative can accomplish, how it compares and contrasts with government, and how social, economic, and environmental issues are being addressed through private-public partnerships.

Where we are today

Federal law — U.S. Code, Title 26, Section 6104 — stipulates that public access to Form 990, a federal information form that tax-exempt organizations are required to file annually, must be provided promptly on request at the exempt organization's office or offices, or within thirty days of a written request. However, exempt organizations don't have to provide copies of their Forms 990 if they make these materials broadly available through the Internet, or if the IRS determines that the organization is being subject to a harassment campaign.

“ The social sector is about hope and the unshakable belief that the world can be made better by our efforts.”

In 2015, Carl Malamud, the Don Quixote of open data, dragged transparency into the digital age when he brought suit against the Internal Revenue Service to force it to make the 990s of a handful of organizations that had been filed electronically available as machine-readable open data. Malamud won, and, somewhat surprisingly, the IRS then did more rather than less to comply with the order: as of June 2016, all Forms 990 filed electronically by 501(c)(3) organizations are available as machine-readable open data through Amazon Web Services. As such, they can be downloaded directly in digital form and processed by computers with minimal human intervention. The development represents a victory not only for Malamud but for the Aspen Institute’s Nonprofit Data Project, which has toiled for years to make 990s more accessible. The idea, of course, is that free, open data on nonprofits will enable more innovators, researchers, and entrepreneurs to use the data in ways that help make the sector more effective and efficient. Since Malamud won his case, the IRS has posted some 1.7 million Forms 990 as machine-readable open data.

Philanthropy in a shifting world

The increasingly illiberal world in which we find ourselves was not made in America: it is a worldwide phenomenon born of globalization, income inequality, technology-driven unemployment, the unprecedented movement of migrants and refugees, and the specter of terrorism. The democratization of information driven by social media and the Internet also has been accompanied by distrust of traditional media, the narrowing of the space in which civil society organizations operate, and growing attempts to restrict thought and behavior. Author William Gibson (credited with inventing the term "cyberspace") presciently (if darkly) described a world we probably all recognize today in his 2003 reflections on George Orwell: "A world of informational transparency will necessarily be one of deliriously multiple viewpoints, shot through with misinformation, disinformation, conspiracy theories and quotidian degrees of madness. We may be able to see what's going on more quickly, but that doesn't mean we'll agree on it any more readily." Indeed.

The bitter, divisive 2016 presidential election in the United States saw information from the 990s of the Clinton and Trump foundations used to support allegations of influence peddling, self-dealing, and the like. The resulting bad press and subsequent investigations by the New York State Attorney General's office caused both foundations to eventually announce that they planned to wind down their activities.

At the same time that foundations are being subjected to more scrutiny, we see a growing number of high-net-worth individuals turn to alternatives that require little or no transparency in exchange for the tax advantages they receive for their charitable giving. The most common of these are donor-advised funds administered by community foundations or investment firms such as Fidelity, Vanguard, and Schwab. Community foundations do file 990 tax returns, so information about each grant they award is reported and made available to the public, though without the identity of the donor. With the charitable gift funds sponsored by investment funds, however, information on individual grants remains invisible. Then there are newer, hybrid structures like the Chan-Zuckerberg Initiative, the LLC formed by the co-founder of Facebook and his wife, Priscilla Chan, to "advance human potential and promote equal opportunity." There is no public disclosure requirement for the tax returns of LLCs, which means that any details we learn about the grants made by CZI will be what Zuckerberg, Chan, and their colleagues choose to tell us.

The first step?

So what are the implications of all this for the social sector in the Unites States? The media (traditional and social) has been on fire with stories about the Trump administration's intent to remove information on issues like climate change from government websites. In response, universities and others are rushing to download as much of that data to non-government servers as possible. In the same vein, it would not be difficult for the IRS to suddenly stop posting 990 tax returns as open data, especially given all the "trouble" they caused during the presidential campaign. This might be met by another Malamud-style legal challenge but that would take time to unfold. And if successful, this time around the IRS might comply by releasing only a handful of specific 990s rather than all those that have been digitally filed.

"Destroying" the Johnson Amendment

President Trump also has announced his intent to "destroy" the Johnson Amendment, a 1954 provision (named after then-Sen. Lyndon Johnson) in the U.S. tax code that prohibits all 501(c)(3) non-profit organizations from endorsing or opposing political candidates. Repeal of the provision could open the way for huge amounts of so-called dark money — donations from corporations, unions, and individuals aimed at influencing the outcome of elections — to find its way into 501(c)(3) organizations. Unlike 501(c)(3) nonprofits and foundations, the current recipients of such funds — primarily 501 (c)(4) and (c)(6) nonprofits — are not required to disclose their donors.

I am not a lawyer and may be out on a limb here, but overturning the Johnson Amendment would require an act of Congress, and would not be easy. Yet, if Congress decides to do so, it is not inconceivable that the administration, with the assent of Congress, could then remove the public disclosure requirement for Forms 990 in order (depending on your point of view) to: 1) protect donor privacy as an exercise of the First Amendment right to free speech; or 2) make it more difficult to "follow the money" when it comes to political campaigns.

If this were to happen, it is not entirely clear which constituencies would emerge to fight for the continued provision of Forms 990 as public information. Foundations, in particular, are not universally enthusiastic about having their grants and other information in the public domain for a variety of reasons (including privacy, journalistic scrutiny, and wariness of being swamped by applications for funding). What's more, in recent conversations with foundation leaders, I've heard concerns that when it comes to controversial issues such as immigration or charter schools, having their information made more visible could make them targets for harassment. And, of course, neither nonprofit organizations nor foundations enjoy filling out 990s, which like a lot of tax forms are long, time-consuming, and expensive to complete. Yes, organizations like the National Council of Nonprofits, Independent Sector, the Council on Foundations, and the Philanthropy Roundtable might rally to defend broad public access to Forms 990, but only if their members were firmly behind them.

Transparency and hope

Born in 1956 out of hostile McCarthy-era hearings accusing foundations of supporting "un-American activities," Foundation Center has worked for many years with the Internal Revenue Service and other organizations to build a public information system for philanthropy. GuideStar has done much the same for nonprofit organizations. The cornerstone of these systems has been data contained in the Forms 990. If access to these forms were reduced or eliminated, the transparency of the entire social sector — and with it the promise of greater efficiency, effectiveness, and innovation — would be an obvious casualty. It also would strengthen the position of those in government and the social sector, both here and abroad, who, for whatever reason, believe the need for donor privacy outweighs the value of transparency. Russell Leffingwell, a Republican banker and trustee of the Carnegie Corporation of New York, said it best in 1952 in his testimony to the Cox Commission declaring that his foundation "should have glasspockets." Leffingwell went on to say:

"I think [foundations] are entering into the most difficult of all fields....They are going right straight ahead, knowing that their fingers will be burned again, because in these fields you cannot be sure of your results, and you cannot be sure that you will avoid risk. If the boundaries of knowledge are pushed back and back and back so that our ignorance of ourselves and our     fellow man and of other nations is steadily reduced, there is hope for mankind, and unless those boundaries are pushed back there is no hope...."

At the end of the day, the social sector is about hope and the unshakable belief that the world can be made better by our efforts. We live in an age, illiberal or not, in which our mission to serve the public good to the best of our ability is powered by technology that allows us to share knowledge as never before. And knowledge is rooted deeply in transparency. Apocalypse later? We can't let that happen.

-- Brad Smith

From Good Idea to Problem Solved: Funding the Innovation Means Funding the Process
February 8, 2017

(Mandy Ellerton and Molly Matheson Gruen joined the [Archibald] Bush Foundation in 2011, where they created and now direct the Foundation's Community Innovation programs. The programs allow communities to develop and test new solutions to community challenges, using approaches that are collaborative and inclusive of people who are most directly affected by the problem.)

This post is part of the Funding Innovation series, produced by Foundation Center's Glasspockets and GrantCraft, and underwritten by the Vodafone Americas Foundation. The series explores funding practices and trends at the intersection of problem-solving, technology, and design. Please contribute your comments on each post and share the series using #fundinginnovation. View more posts in the series.

Mandy Ellerton

Molly Matheson Gruen

Good ideas for solving our toughest social problems come from a variety of places. But, we need more than just good ideas – we need transparent and thoughtful ways to get community buy-in and a wide variety of perspectives to make those ideas a reality.

For a cautionary case in point, take the origin story (later chronicled in the book The Prize) of the ill-fated attempt to transform the failing Newark public schools. A prominent governor, mayor and, later, an ultra-wealthy tech mogul, hatched the idea to radically transform the schools in the back of a chauffeured S.U.V. Commentary suggests that these leaders did not consult community stakeholders about the plan, only half-heartedly seeking community input much later in the process. As one community member put it to these leaders, "You have forced your plans on the Newark community, without the

measure of stakeholder input that anyone, lay or professional, would consider adequate or respectful." To some observers, it's no surprise that without initial community buy-in, nor a transparent process and over $100 million later, the plan ultimately crashed and burned.

But, let's not throw stones at glass houses. The Newark example is indicative of a larger pattern especially familiar to those of us in the field of philanthropy. We've learned that lesson the hard way, too. Many of us have been involved in (well-intentioned) backroom and ivory tower deals with prominent community leaders to magically fix community problems with some "good ideas." Sometimes, those ideas work. But a lot of times, they don't. And unfortunately, we often chalk these failures up to innovation simply being a risky endeavor, comparing our social innovation failure rates to the oft-discussed (maybe even enshrined?) business or entrepreneurship failure rates. What's more, we almost never actively, sincerely discuss and learn from these failed endeavors.

But social innovation failure often comes at a cost, leaving behind disillusioned community members, bad outcomes for some of our most vulnerable, and lots and lots of wasted dollars that could have gone to something better. Take the Newark example: the failed attempt to transform the schools created massive civic disruption, re-awakened historic hurts and injustice and will likely leave community members even more skeptical of any future efforts to improve the schools.

Through our work at the Bush Foundation, we've learned that truly good ideas–those that will really have a sustainable impact–are often created in deep partnership and trust between organizations, leaders, and–most critically–the people most affected by a problem.

But, that kind of deep community partnership and transparency takes a lot of work, time, and attention. And, most everything that takes a lot of work takes some funding.

Community-innovation

That's why we created our Community Innovation programs at the Bush Foundation in 2013: to fund and reward the process of innovation–the process of solving problems. While the emphasis in innovation funding is often on "early stage" organizations or projects, we joke that we are a "pre-early" funder or that we fund "civic R & D." We provide funding for organizations to figure out what problem to address in the first place, to get a better understanding of the problem, to generate ideas to solve the problem, and then, after all that work (and maybe having to revisit some of the earlier stages along the way), the organization might be ready to test or implement a good idea. See how we depict that "pre-early" problem solving process here.

Most importantly, throughout the innovation or problem-solving process, we also look for particular values to drive the organization's approach: Is the organization genuinely and deeply engaging the people most affected by the problem? Is the organization working in deep partnership with other organizations and leaders? Is the organization making the most of existing resources?

Let's bring it to life. Here are three examples of the 150+ organizations we've funded to engage in a process to solve problems in their communities:

  • World Wildlife Fund's Northern Great Plains initiative is bringing ranchers, conservationists, oil business developers, and government officials together to create a vision for the future of North Dakota's badlands and a shared energy development plan that protects this important landscape.
  • PACT for Families Collaborative engaged truant youth, their parents, education staff, and service providers to understand barriers to school attendance and redesign services and test strategies for positive, sustainable solutions to truancy in western Minnesota.
  • Pillsbury United Communities is using human-centered design processes to engage North Minneapolis residents to address their neighborhood's food desert and create North Market: a new grocery store managed in partnership with a local health clinic that will also be a clinic, pharmacy, and wellness education center.

"We've learned that truly good ideas–those that will really have a sustainable impact–are often created in deep partnership and trust between organizations, leaders, and...the people most affected by a problem."

Our grantees and partners are teaching us a lot about what it takes for communities to solve problems. One of the biggest things we've learned is that collaborative projects often take far more time than anyone initially expects, for a variety of reasons. Over the past few years nearly a third of our grantees have requested more time to complete their grants, which we have readily agreed to.

For example, the Northfield Promise Initiative is a highly-collaborative, cross-sector, community-wide effort to address education disparities in Northfield, Minnesota. The initiative utilizes action teams composed of diverse stakeholders to drive its work. Early on in the project they decided to stagger the rollout of the teams rather than launch them all at once. That allowed them to take more care in composing and launching each team and allowed interested stakeholders to engage in multiple teams. In addition, later teams could learn from the successes and challenges of the earlier ones. As the grantee put it, "Partners felt strongly that it is important to give the process this extra time to ensure that all the different community voices and insights have been included (thereby maintaining this as a community-owned initiative)." We gladly extended their grant term from two years to four years so that they could spend the time they believed necessary to lead the problem-solving effort thoughtfully and inclusively.

Bush-altlogo-colorFor more helpful examples, here are a couple of resources to explore:

  • One of our innovation programs is an award for organizations that have a track record of solving problems with their communities, called the Bush Prize for Community Innovation. Together with our evaluation partner Wilder Research, we created a report about some of our Bush Prize winners that digs into specific conditions, methods and techniques that appear to help organizations innovate.
  • We believe storytelling and transparency inspire innovation. Our grantees openly share what they're learning as they pursue solutions to community problems in grantee learning logs. The learning logs also include references to specific techniques and methods the organizations use to pursue innovation.

As funders, we also have a role in the innovation process that goes beyond writing the check. By virtue of our relationships and portfolios, we have a bird's eye view of the field. By opening up what we are learning, we hope to build trust with our stakeholders and help others build on our work, hopefully leading to more and better future innovations.

-- Mandy Ellerton and Molly Matheson Gruen

From Early Stage Funding to Lasting Impact: The Venture Philanthropy Approach to Funding Innovation
February 1, 2017

(Christy Chin, Managing Partner at Draper Richards Kaplan Foundation [DRK], is instrumental in finding, funding and supporting DRK entrepreneurs, as well as cultivating and engaging DRK’s network of donor partners. As a venture philanthropy firm, DRK provides critical early stage capital to social enterprises tackling some of society's most challenging issues.)

This post is part of the Funding Innovation series, produced by Foundation Center's Glasspockets and GrantCraft, and underwritten by the Vodafone Foundation. The series explores funding practices and trends at the intersection of problem-solving, technology, and design. Please contribute your comments on each post and share the series using #fundinginnovation. View more posts in the series.

Christy Chin Photo - DRKWow! How time flies by when a partnership works so well.  As I prepared for my final Watsi board meeting, I reflected on how much Chase and his team had accomplished and what a joy it is to be part of their quest to make healthcare accessible to all. 

In July 2013, we first met Chase Adam.  It was only a few days after he had pitched Watsi, the first nonprofit to be accepted into Y-Combinator.  In no time, Ron Conway, Tim and Billy Draper were urging DRK to take a look at Watsi.  Chase was ready to make the case for Watsi to be in the DRK portfolio, and he had a few questions of his own.  From the first meeting, there was a constructive and respectful exchange because we were aligned on the end goal – healthcare for all.  As a venture philanthropy firm, DRK conducts rigorous due diligence, not unlike the way in which a venture capital firm evaluates a for-profit investment.  These are our key questions:

Is it addressing an important social issue?

Definitely. A large percentage of our work at DRK is focused on global health, so we know that access to medical care, especially surgical treatments, is a critical problem.

Watsi, the first global crowdfunding platform for medical treatments, leverages scalable technology to solve a substantial need for patients abroad.

Chase’s commitment to radical transparency was distinctive. From the very beginning, Watsi allowed anyone and everyone to see how the money was moving and how the patients’ treatment, with their consent, was progressing.  Transparency of funding increased accountability from the moment a patient’s profile was shared to the delivery of the medical procedure. There was an elegance to Watsi that was extremely appealing.  

“ We firmly believe that multi-year, unrestricted funding is precious capital that nonprofits need to build organizational capacity.”

Is the solution being proposed likely to create meaningful change?

Yes, early results were promising.  In the first seven months after launch, Watsi processed more than 3,700 donations and funded medical treatments for more than 250 patients abroad. DRK has seen many success stories of how technology can enable rapid transformation of an ecosystem, and we truly believe in the power of technical innovation to make an impact on vulnerable populations.

Does the leadership team have potential?

Even though Watsi was still in its early stages, I was confident that Chase had what it takes to be a successful entrepreneur. His passion for the mission was contagious, and he was clearly a resource magnet. Chase was able to attract both financial and human capital to support his vision.  

Is the solution scalable?

At the time, Watsi was already operating across 13 countries and working diligently to identify new partners to scale this model. Today, Watsi operates in 24 countries globally.

DRK bet on Chase in 2013 because we saw the potential for this model to dramatically shift the way governments and institutions fund healthcare treatments abroad, with real-time data collection and complete transparency. I had the privilege of joining Watsi’s board for those three years; DRK requires a DRK representative serve on all grantee boards. As part of DRK’s portfolio support and board service, we openly share our networks to help connect our entrepreneurs with people we believe can catalyze their efforts. In return, we ask for a three-year projection of the organization’s metrics and milestones that demonstrate the impact the entrepreneur hopes to achieve while s/he is an active member of the DRK portfolio. We also expect that the entrepreneur will regularly engage with DRK through written progress updates and in-person check-ins, as well as ongoing conversations with the board representative and, as needed, other key members of our finance, operations, and development team.  

I was fortunate to be joined on the Watsi board by Premal Shah, President of Kiva (an early DRK grantee), and experienced firsthand the power of the DRK network coming full circle.  In December, as my final board meeting with Watsi approached, I reflected on what made Watsi a great example of why we at DRK are so passionate about our work and strongly believe in this investment approach.  

DRK stacked logoDRK was founded in 2002 by Bill Draper and Robin Richards, two highly successful venture capitalists who chose to leverage their success in the venture capital world, applying their skills, expertise, and resources to solve complex social issues. DRK’s venture philanthropy model has been shaped by Bill and Robin’s legacy – we find, fund, and support early stage social entrepreneurs whose ideas have the potential to drive systems-level change.

Since our founding, we’ve raised $110 million in private capital and funded over 100 social enterprises – and we’re aiming to double that number over the next five years. We seek out entrepreneurs with qualities that we know are critically important – vision, energy, determination, courage, passion, and empathy. Our entrepreneurs are tackling important challenges across the globe, including healthcare, education, social justice, poverty alleviation, and the environment.

In the 15 years that DRK has been involved in this work, we’ve learned some powerful lessons that we hope to share with the funding community.  We firmly believe that multi-year, unrestricted funding is precious capital that nonprofits need to build organizational capacity.

We’ve also learned that handing over grant dollars alone isn’t enough. At DRK, the biggest difference we can make for our grantees is providing them with unrelenting support and serving as an advocate on behalf of their organizations.  We’re one of the first institutions to believe in their vision, and we never stop asking the tough questions. As a team, we’ve developed pattern recognition from sitting on many diverse boards and have gained a deep understanding of the challenges our entrepreneurs are likely to face. However, there is always a level of risk we have to account for, and not every DRK portfolio organization becomes a successful endeavor. We are incredibly fortunate to have a supportive board and a community of donor partners that not only accept, but encourage our team to take those risks and explore new possibilities with the potential for great impact.

I can’t emphasize enough the importance of our entrepreneurs’ efforts across the globe, and I encourage you to take a moment to visit DRK’s website (www.drkfoundation.org) to learn more. For any institutions interested in exploring the venture philanthropy model, please contact us and we would be more than happy to share our learnings. We have seen the difference that early-stage funding can make for social entrepreneurs. I hope the next time your organization comes across an entrepreneur like Chase, an extraordinary leader with a big idea, you too will make that bet.

--Christy Chin

 

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