Lucy Bernholz (who writes the rockin’ Philanthropy 2173 blog) and her company, Blueprint Research and Design, have recently released their Blueprint 2010 for Philanthropy and Social Investing.
Think of this as a 44-page road map anticipating those events, issues, and trends that are most likely to impact what happens to your social investment this year. A few of the topics included:
- Which innovations should I understand and which are just buzzwords?
- What are the key policy issues that might influence philanthropy?
- What wildcard events will matter and what should I look out for?
You can buy other books about philanthropy trends, but by the time you get them, they’re dusty inside and out. Lucy’s pretty smart. I’m running to get my copy.
There are three truths when it comes to the grantmaking process:
Fact #1: Funders get bogged down in due diligence, report review, and grant follow-up when they could be developing more effective and efficient funding strategies.
Fact #2: Nonprofits spend too much time and money meeting specific funder requirements for application and reporting.
Fact #3: Due diligence, grant applications, and reporting have to happen.
Can we make all of this waste less time?
Well, the answer is…maybe. There have been a few efforts to streamline grant processes regionally, and even a large effort nationally. The jury is still out as to whether or not these efforts are the silver bullet.
Local Efforts
Many local grantmaking associations, like Philanthropy New York (formerly the New York Regional Association of Grantmakers), have been streamlining their process for years. This means that the funders aligned with Philanthropy New York agree to accept a standard grant application from nonprofit agencies and a standard reporting format from nonprofit agencies, ensuring that agencies with programs funded by association members don’t have to write different reports for each funder — they only have to write one.
While this is happening in several regional areas, there are still many funders in those regions who decline to jump on board.
National Efforts
Managed by Grants Managers Network, Project Streamline is a national initiative developed by the following partner agencies:
• Grants Managers Network (GMN)
• Association of Fundraising Professionals (AFP)
• Association of Small Foundations (ASF)
• Council on Foundations (CoF)
• Forum of Regional Associations of Grantmakers (Forum)
• Foundation Center
• Grantmakers for Effective Organizations (GEO)
• National Council of Nonprofits (NCN)
Currently in Phase II of a three-phase campaign, Project Streamline focuses on four core principles: Take a fresh look at reporting and application requirements, Right-size grant expectations, Relieve the burden on grantees, and Make communication and grantmaking process clear and straightforward.
To date, the initiative has picked up some heavy-hitting sponsors, including the Gates, Hewlett, Ford, Robert Wood Johnson, and Packard Foundations.
Analysis
While regional efforts have had lukewarm results, I’m very interested to see how these theories work in practice nationally. This isn’t a new problem, and it’s been exacerbated over the years by resistance to change, a lack of trust between funder and grant recipient, and even a lack of trust within the funding community.
Institutional funders spend time and money developing targeted grantmaking strategies, and there’s a concern that standardizing processes might lessen the control currently held by foundations over what outcomes are being measured, reported, and publicized by individual agencies. If there is any remaining competition between institutional funders to be the most successful and most innovative, and if there is any remaining competition between nonprofit agencies motivating some to go above and beyond, you’re going to end up with people coloring outside the lines: funders will continue to require more targeted and specific information, and agencies will still spend hours customizing their applications and reports in order to stand out among the crowd.
So Can We Fix It?
Those three truths I mention in the beginning of the piece are ingrained into the current grantmaking process, and a lot of people in the nonprofit arena have internalized those truths.
That said, the more we can move toward at least the option of standardization, the better. It will take time, and it will take some shifts in thought between funders and agencies, but it is possible.
And the time savings and efficiencies picked up along the way will no doubt be useful to those funders and agencies striving to leave the competition behind them and focus on the real work.
I received comments via twitter suggesting numerous other ways philanthropy is using/funding crowdsourcing. While the jury is still out on whether crowdsourcing will provide true benefit as a new funding model, the experimentation going on is garnering lots of discussion. I’ve distilled a few of the arguments here:
Potential Pros: Crowdsourcing exposes more “real people” to philanthropy — and the organizations working to provide needed goods and services — and the concept of weighing which organizations are doing the best and most beneficial work. Also, the majority voting together will discover the greatest need (a bell curve theory).
Potential Cons: A danger that crowdsourcing will lead to popularity contests, giving an edge to organizations who are savvy with marketing or who have full coffers for influence. Also, a fear that the masses will agree on philanthropic risktaking, which some philanthropists deem necessary for the development of truly innovative ideas.
More Examples
And here are a few more examples of philanthropic crowdsourcing — let me know your thoughts:
John S. and James L. Knight Foundation
Through the Knight News Challenge, the Knight Foundation is crowdsourcing ideas for funding. In this initiative, the foundation planned to “invest at least $25 million over five years in the search for bold community news and social media experiments.”
Target projects are “innovations that use new or available technology to distribute content in local communities,” with the following parameters:
1. Use digital, open-source technology.
2. Distribute news in the public interest.
3. Test your project in a local community.
To date, three years of funding has been awarded. And while the initiative itself is an example of crowdsourcing funding ideas, several of the funded projects involve crowdsourcing.
One example is Ushahidi, an organization that seeks to expand an initiative to crowdsource crisis information. The strategy is to develop a free web map and timeline that journalists and citizens can use to contribute multiple reports of large news events. By allowing anyone to contribute news stories, the service would broaden information distribution even in places too dangerous for or inaccessible to mainstream media. Imagine the difference in news coverage of the recent demonstrations and uprisings worldwide had this been in place.
The British Government
Just this week, Britain suggested it was time to begin dabbling in crowdsourced giving, reports The Independent.
The Chronicle of Philanthropy gave the details stating, “Under the proposal, Britain’s Department for International Development would set aside about $65-million that the public would control by voting online between 10 aid projects in Africa and elsewhere.”
Everyone’s Doing It?
Small to Large; Corporate and Foundation; Open and Controlled. A breadth of organizations including the Case Foundation, NetSqaured, and American Express have tested their theories of crowdsourcing in philanthropy, including:
- Controlled experiments, wherein foundations maintain the role of determining grantees, but the public is sourced for suggestions and input, and
- Open experiments, which more resemble “contests”
You can read more about these foundations and their crowdsourcing programs at The Chronicle of Philanthropy.
The Roadblock
I recently participated in a regional health care panel with a group of field experts. Our task, over seven meetings, was developing a strategy for health care improvement in our region. As you’d expect, we began by identifying some major health care problems; then, we isolated several broad goals. Soon, we were discussing solutions and moving ahead like wildfire.
Until we hit the roadblock.
“All we have to do is figure out how to fix it. Paying for it is their problem.”
“Whose problem?”
“The big boys’ and girls’ problem!”
Unfortunately, quotes like this are all too common when solutions are being developed. Somehow, it’s always someone else’s job to figure out how to make all of the pieces — program, finance, and policy — work together.
What could be considered instead is that sustainable solutions require everyone to speak all three different languages. Delineations are quickly becoming blurred between the nonprofit, for-profit, and policy arenas, and those fuzzy edges can be beneficial — assuming the ability to identify with each unique perspective.
The Equation for Success
With that thought in mind, let’s suggest there’s a simple equation for sustainable social improvements:
money + public influence + programmatic excellence = change
If true, then sustainable solutions can only be achieved if there is an end to compartmentalizing the way programs are developed. By understanding and incorporating economic and political factors into how solutions are created, richer programs can be developed that are wholly supported and championed by for-profit and public representatives.
With these three sectors working in tandem, obstacles are virtually eliminated.
What it Could Look Like
Back to my health care group from the first paragraph. Ideally, my colleague wouldn’t be expecting that our group determine solutions while suggesting that it’s the job of a hypothetical group of financiers and public officials to figure out how to pay for those solutions.
Ideally, that conversation would have progressed with our group identifying not only the programmatic solutions to our health care issues, but also the payment models and incentives that would ensure buy-in to the program from for-profit payers and physicians, and the cost-reducing and quality-enhancing care models that would entice public officials to endorse the program.
Truly understanding the costs and benefits to all sectors — even when it seems like we’re all speaking different languages — will help to lay the groundwork for successful social innovations.
Philanthropy’s Role — Collaboration
So how does Philanthropy fit into all of this? It might be able to act as mortar. Those in the field of Philanthropy are tied to all three sectors as either financial supporters or colleagues; as such, their role may be as a connector and instigator of collaboration — a translator.
This will all be facilitated if Philanthropy learns to speak the individual “language” of each sector; understanding not only the lexicon, but also the goals, challenges, and motivational drivers. Only then can the best and most strategic connections between the sectors be made.
These questions may lay some groundwork for how to think about each sector’s concerns:
- Understanding and leveraging current and potential economic considerations: Who are the payers, and how can we build in benefit to them? How can economic incentives be used effectively? Could there be a market strategy? Is there a way for this program to produce not only social benefits, but also revenue?
- Understanding and leveraging current and potential public relations and policy considerations: Does/Will this have the backing of local, state, and federal government? Will an advocacy-based approach provide for the sustainability of this program? Is this complimentary to current or potential legislative items? Are there potential collaborations we can build that would affect how we develop this program? How will this be perceived in the public eye; will it demand public attention?
- Understanding and leveraging programmatic considerations: Does the program produce consistent, measureable results? Does the program have enough financial support to not only make ends meet, but to scale up to capacity — whether that’s local, regional, or national? Does the program have a strong management and governance base? Does the program have enough support from the public and government sectors to thrive should legislation development be called for?
Sectors aren’t quite as distinct today as they used to be, and many social innovators have proven that the closer we all work together to solve global problems, the closer we get to sustainable solutions. While we all have different incentives and motivations, taking them all into consideration dissolves roadblocks and allows even broader answers to develop.
The Birth of a New Era for Innovation?
The President spoke today to a room full of “do-gooders” in the White House about the administration’s new $50 million Social Innovation Fund, a pot of money created to find and expand existing social innovations — as opposed to creating new government programs — in the hope of solving serious social problems.
The fund, as I understand it, will essentially work as a giant driver of growth capital: Melody Barnes and her team build a massive due diligence program, take a road trip to find the best social innovators in the country, offer them a matching grant (the second half is required to come from the private sector) with the sole purpose of program expansion, and voila.
This sounds ideal. It shows that the Obama administration understands the (likely) fact that social innovators and entrepreneurs know their sector better than government bureaucrats do. That trusting the people who’ve been doing this for decades, building up an understanding of what really works, might be the best course of action. Basically, instead of flying in, cape in hand, to create a panoply of new social programs, the White House has decided to…well…outsource.
All of this is good news. Growth Capital-esque funding? Good. Fewer Government programs clogging the system? Good. Letting the experts be the experts? Good. Demanding collaboration between social innovators, government, and the private sector? Good.
But I have three questions I’ll be trying to answer as this new endeavor plays out:
1. With countless private foundations around the country squabbling to define the ideal due diligence process, how does Washington know exactly how to build one? How will we be certain that those deemed the “best” programs really are the best programs? The Innovation Fund team has a considerable social and political weight to carry here; how they draw up this criteria could change the nonprofit sector.
2. How far does $50 million really go? In my experience, scaling a good program nationally — even state-wide — is hugely expensive. It can cost $20 million to scale a good program to one new site or city. With matching dollars, the fund’s amount can leverage $100m, perhaps even $200m; but is that enough to really bring about the kind of social change that was discussed this afternoon? The Education Secretary’s “What Works Fund” carries $650m, after all; why is there such a large disparity?
3. When push comes to shove, how skilled are we at expanding good programs? Matthew Bishop mentions on his Philanthrocapitalism blog that, “There is not much of a track record of scaling up non-profits to draw on for guidance.” Unfortunately, this is largely true. The sector has a few outstanding performers, many of who have come from the private sector, who scale their non-profit programs expertly. But there are countless failures for every success story. Growing a business is just as difficult for a non-profit as it is for a for-profit. There are mis-calculations in budgets, market niches, growth rates, revenue, and expenses. With just $50 million, will we be able to prove the worth of this type of support?
So, no. I don’t think the Fund’s path is completely sorted out. There will be bumps on the road, but, in my eyes, this is already a success simply because of what it represents. Besides, social innovators have charted territory before, and they will again. And Obama said himself today, “There’s no such thing as a lost cause if you’re willing to…take some risks… .”