Participatory Philanthropy for Individual Donors

Participatory philanthropy is not a new practice in philanthropy and participatory processes have an even longer history dating back centuries, yet contemporary interest in participatory philanthropy has grown significantly over the last few years. As we, at the Effective Philanthropy Learning Initiative (EPLI) at Stanford’s Center on Philanthropy and Civil Society (PACS) looked into the practice more closely, we thought it might be useful to provide some guidance to individual donors or smaller family foundations who want to engage in these practices.

In reviewing the literature on participatory philanthropy, we came across a newly published book, Letting Go: How Philanthropists and Impact Investors Can Do More Good by Giving Up Control, by Meg Massey and Ben Wrobel, which was the first resource we found speaking to the individual donor, the same audience as EPLI’s work. Based on this book and our literature review, we published a new chapter to our Guide to Effective Philanthropy detailing this practice for the individual donor.

So what is participatory philanthropy? It is a continuum of practices which involve engaging beneficiaries and other stakeholders in the entire range of decisions that a funder makes. The practices center around shifting decision-making power to those most affected by a funder’s decisions.

There are several rationales for engaging in participatory philanthropy:

  1. This process may improve philanthropic outcomes through better strategies and implementation processes.
  2. Participation by a philanthropist’s intended beneficiaries and other stakeholders has intrinsic value.
  3. The participatory process builds the capacity of community-based organizations to meet their communities’ challenges.
  4. The process can build trust between funders, grantees, and affected communities.

Participatory philanthropy can take place during the pre-grant phase (identifying funding priorities and developing strategies), the grant phase (evaluating applications and making grant decisions), and the post-grant phase (monitoring and evaluating the grant).

So if you’re a donor interested in exploring this approach, what would this actually look like? Let’s consider some examples at each stage of the philanthropic process.

Finding your (Geographic) Focus

Most donors begin their philanthropic journey with a particular cause or organization in mind. However, an alternate approach is to select a geographic community you wish to support and let community members decide which causes to prioritize for funding. This can be tricky, though, because communities are often heterogeneous and complex, and you must learn who speaks for the community or can make decisions on its behalf. You might consider talking to or surveying residents to identify local leaders or other participants such as local elected officials, nonprofit leaders, or other residents. In 2004, the Ontario Trillium Foundation’s board initiated a process to invite more than 1,000 Ontarians to share their perspectives on the community’s need through “Community Conversations” and an electronic survey.

Understanding Problems, Causes, and Approaches to Solutions

Once you have decided to focus on a particular community, you will want to consult stakeholders and potential grantees to help define the problem being solved and to understand the causes and possible approaches to solving it. Beyond just consulting with a chosen community, you might invite deeper participation by seeking the consensus of stakeholders or actually delegating decisions to them. A community that already has a strong, strategically oriented community organization in which diverse residents feel well represented presents a great opportunity for consultation or delegation of decision-making authority.

Because participatory processes can be complex, some funders engage an expert facilitator to support the work. You should additionally be sure to devote sufficient budget to provide capacity building for participating stakeholders and to compensate them for their time.

Finding Effective Organizations

On one level, it’s difficult to avoid doing your own due diligence: You must determine whether a community has a group of residents or organizations that you feel confident in consulting or delegating decision-making authority. One aspect of due diligence at this level is whether the group has an ethos of avoiding conflicts of interest. Community members’ “insider” knowledge, experiences, and relationships can contribute to more candid discussions, but also be sources of bias. The Headwaters Foundation for Justice, for example, has in-person, one-on-one conversations with grant panelists to see if they have any bias that would prevent them from being impartial decision makers. The Red Umbrella Fund emphasizes the importance of ensuring there is both sufficient diversity on decision-making panels and trust between members to “call out” one another regarding potential biases or blind spots.

Making the Grant

Some funders may take the further step of empowering community members to make actual funding decisions. The Annie E. Casey Foundation’s Making Connections Initiative asked residents of Denver and Boston to select small-dollar projects that would build local leadership and create a pipeline for longer social change projects. The International Trans Fund requires that its 12-member grantmaking panel is entirely composed of trans activists and everyone making funding decisions is a member of the population the fund supports. The Youth Lead the Change initiative in Boston Public Schools allows students to engage in the process of participatory budgeting by convening “idea collection assemblies” and allocating funds to the projects that students choose through a voting process.

Monitoring the Grant

You and your nonprofit partners will wish to monitor its progress in order to get the feedback needed to make corrections where necessary. Your shared goals might be participation or the achievement of particular substantive outcomes or both. Therefore, monitoring would focus on the extent and quality of participation—Is it adequately inclusive? Was the decision-making process open and free of conflicts? — and whether the substantive outcomes were achieved.

Let’s say you made a three-year grant to a community-based organization and it’s time to consider renewing the gift. What criteria would you use to decide whether to renew? Possibilities include:

  1. The inclusiveness and quality of the participatory process.
  2. Whether the process led to an improvement in the community’s capacity to address the problems that face it.
  3. Whether the process led to the development and implementation of sound strategies to address important problems facing the community.
  4. Whether the process produced tangible benefits for the community.

Because participatory philanthropy takes considerable planning and operational capacity, many donors find it simplest to contribute to a participatory fund such as UHAI-EASHRI, the Brooklyn Community Foundation, the Red Umbrella Fund, and the Wikimedia Foundation—all of which accept gifts from donors. Other foundations that practice participatory grantmaking and accept donations include the Haymarket People’s Fund, the Headwaters Foundation, Native Voices Rising, the Disability Rights Fund, the New York Women’s Foundation, FRIDA, and the Global Greengrants Fund. There may also be other participatory funds in your own community.

Despite its potential, well thought-out participatory philanthropy typically requires more time and human resources than conventional philanthropy and is not a panacea for the problems facing marginalized communities. But the next time you’re revisiting your grants portfolio and philanthropic strategy, consider whether the potential benefits of a participatory process resonate with you and, if so, how you might shift your processes at various of these stages to empower the communities you aim to support.

Philanthropy: Licensed to Risk Plus What’s New in 2022

Dear Friends,

I’ve been thinking a lot about risk recently, both personally and professionally. From sending the kids back to school, to mask selection, and re-entry decisions about travel and gatherings, it all presents risk-related mental calculus that is new and stress inducing. But of all the risks our family has taken this year, none felt as big and stressful as the rite of passage of our teenage son getting his driver’s license. With everything that can go wrong on the road, the risks feel huge. But through driving instruction, lots of practice, and ensuring the old car he uses had a check-up to verify its safety, we addressed those risks and are now benefitting from the pretty big reward of freedom from carpools and surprise errand runs.

Basically, by investing in technical assistance for his instruction, equipment maintenance to mitigate any unforeseen issues, and making time for honest conversations, we were able to arrive at a place where the risk seemed manageable for all concerned and our power of the purse was used to cushion potential blows (or blowouts). New Risk eCourse LaunchesIn my professional life, this all reminds me of our latest eCourse for funders in Candid Learning, Risk & Reward: Safeguarding Impact in an Uncertain World . The course is designed to help funders re-think risk and understand how it can be used and misused in due diligence processes. One need look no further than the events of the last two years to understand the importance of considering the power of the unexpected to disrupt and derail the best laid plans. How can funders safeguard impact in an uncertain world? How can the exercise of risk mitigation support grantee efforts rather than create a burdensome process? And how does paying attention to risk support innovation, learning, and continuous improvement? Candid Learning teamed up with Open Road Alliance, a long-time advocate of using risk mitigation strategies as a form of social sector strengthening, to develop this new, free eLearning course to help funders use risk management to preserve impact in an uncertain world. Click here to learn more and register. Coming in 2022With the end of the year fast approaching, plans are in full swing for new or updated offerings next year, so I also wanted to use this message to give you all a sneak peek:GrantCraft Web RedesignFirst up, we will be redesigning the GrantCraft website to better align it with our Candid brand, and aiming to deliver on our goal to strengthen and streamline Candid Learning tools so our audiences can more easily find what they need. With any good web redesign comes the exercise of taking a hard look at which tools and content are and are not getting used, and then pruning accordingly to make room for the new. Otherwise, over time, one might end up with a website that resembles an overstuffed closet. So, after reviewing recent trends in GrantCraft website usage, we discovered that the personalized dashboard is getting relatively little use, so for those of you who have created personal libraries there, please be sure to take a moment to download the contents or bookmark them elsewhere, as we will be removing the dashboard function in January 2022.[email protected] Cards ReturnAlong with the redesign of the site, we also have some new tools launching in 2022. In the first quarter, I am excited to report that thanks to support from the William and Flora Hewlett Foundation, a GrantCraft classic will return with the re-launch of the [email protected] cards. For the uninitiated, the [email protected] cards are a physical deck of cards that make facilitating reflective practice fun. The cards were designed to help program officers consider the many roles they must play and think about how to strike a balance. The new and expanded [email protected] deck has been enhanced to also include roles for program staff at nonprofit organizations, so they will now also make an excellent resource for both grantee and grantmaker gatherings. New GrantCraft Climate Justice GuideIn 2022 GrantCraft also will be issuing a new field guide for funders focused on funding climate justice. Despite its urgency and potential, according to Candid data, most institutional funders are opting out of incorporating climate strategies into their work, largely relegating it to a few environmental funders. As a result of underestimating its importance and its connection to other philanthropic priorities, not enough funding is flowing to climate change efforts and even less of it for ameliorating its toll on vulnerable populations. To address this gap, Candid will launch a new GrantCraft field guide in the spring, focused on the why and how of supporting climate in an integrated way, exploring how to use a justice lens with both climate mitigation and adaptation funding strategies, and how to embed it within existing priorities such as human rights, public health, and economic development. The field guide will identify common barriers to the development of more holistic support strategies by foundations, ways to overcome them, and share case studies from experienced funders who have helped their institutions use a climate justice lens for greater impact within their existing grantmaking priorities. We are currently in the process of curating these case studies, so if your foundation has experience in this area and would like to become involved, please contact meWishing you all a safe and rewarding end of year season.

Janet Camarena

 

Building Trust, Making Moonshot Bets

According to Andy Bryant, Executive Director of the Segal Family Foundation, the ability to take risks as a philanthropy organization comes down to one thing: trust. More than a decade ago the staff of the foundation approached the board with a request for a little bit of leeway to take a risk. The board invested their trust as well as the resources in staff, and over that decade the risks—which were taken by staff through sweat equity in finding the right risks to take—became larger and broader, and incrementally built to a program of embracing risk.

What advice do you have about building trust with my board?

In our new course, “Risk & Reward: Safeguarding Impact in an Uncertain World,” we ask who should be taking risks and why. Bryant answers straightforwardly: The role of philanthropy is to invest the sweat equity to build new relationships and to make sometimes risky moonshot bets in search of greater impact.

In philanthropy, who should be taking risks, and why?

“Philanthropy should experiment and serve as an innovation laboratory, so the good ideas can get taken to scale by someone else. When we have identified a risk proposition, we decided we’re not going to let unfamiliarity of a place, or of a visionary leader, define risk; we want to be a little ambitious and gird organizations with visionary leaders.”

This kind of approach to risk enables organizations to put their money where their change ambitions are. Learn how to practice trust and aim for the moon with our Risk & Reward course.

Stating Your Risk Appetite

When taking on the issue of risk in your foundation, one of the things you should do is develop a risk appetite statement, but how do you begin? Here, Jocelyn Mackie, Co-Chief Executive Officer of Grand Challenges Canada, discusses their process of looking for frameworks and partners to emulate, having conversations with stakeholders, and engaging with innovators they supported to develop a statement that was true to Grand Challenges Canada and its values.

How did you start creating your organization's risk appetite?

Risk appetite statements are covered in Candid and Open Road Alliance’s new course, “Risk & Reward: Safeguarding Impact in an Uncertain World.”

According to Maya Winkelstein, CEO of Open Road Alliance: “Reward and risk are two sides of the same coin. As the saying goes, taking great risks can often lead to great rewards, which is the conventional wisdom of traditional investing and a wisdom that can translate into philanthropy as well.”

Take the Risk & Reward course to learn how to begin crafting your own risk appetite statement.

 

VIDEO TRANSCRIPT

For program officers looking to start the conversation about risk with their grantees, I really do think that the most important thing here to do is to build trust.

Your grantees need to know that they can trust, that if they are going to share their honest assessment of the risk and initiatives upfront or how things are going or not going, that you're gonna support them to manage that risk, not deny them funding or worse yank funding because something doesn't go according to plan. And I think to build that trust, I think it's a four components or elements to it.  One is really demonstrate that you understand that your grantees know their context, and the risks inherent in their work best. They are the experts. And I think we really need to defer to them in those conversations.

Another piece of it is inviting early and often. So approach the conversation with a sense of inquiry. They've likely thought through all of this, far before we walked in the door of this conversation. So you wanna invite them to share what they see and how they plan to approach those risks. Third I'd say, is really demonstrating that we understand that our role as funders is to support them in mitigating those risks. This may include, you know, direct support, so the most obvious one that comes up is helping fundraise when a key risk is access to capital. Something we can do pretty well on the funder side and it's an easy one where we can offer, really direct on point support to a key risk area. But it also may mean being a sounding board, and a thought partner sharing perspectives from other efforts that we've seen. At minimum, it means demonstrating to the grantees that your funding is not at risk, simply because things don't go according to plan. And affirming that on a regular basis.  And finally, I do think it's about agreeing on with your partner on some milestones. So many funders set those milestones artificially based on what they're, you know, needing to be accountable to internally or what they think is best. But if you really have a mutual understanding with your partner of what are the key milestones in the grant and you agree on them, then they're gonna be more likely to sort of both track them naturally. And then also to report to you on what's going on. So set those milestones, but also establish a clear understanding that complex works evolves over time, and that we're gonna support them in that sort of adaptation as it goes along.

Expanding the Network of Who We Listen To

This post first appeared on CEP’s blog

In the Hewlett Foundation’s Knowledge for Better Philanthropy strategy, we fund the creation and dissemination of high-quality knowledge regarding philanthropic practice for foundations. We recently released an evaluation of the strategy entitled, How Funders Seek and Use Knowledge to Influence Philanthropic Practice. In this study, 89 percent of funders report their peers (internal and external colleagues) as one of their primary sources for knowledge about the practice of philanthropy; that’s consistent with our earlier research. Peers aren’t the only source funders cite, but funders in our study highlighted the value of peers who understand foundations’ inner workings and serve as practical examples for making changes in practices. At the same time, funders acknowledged the risks and limitations of peers – in particular, that such a reliance on peers can limit diversity of perspectives and resources.

As I finish my eight-year term at the Hewlett Foundation, I’ve been reflecting on which conscious and intentional efforts have helped me to seek out diverse perspectives, meet people outside of my natural networks, and fund organizations with varied approaches to effective philanthropy. Our 2013 evaluation of the Knowledge strategy called for an effort to support more diverse voices and perspectives. True to that call to action, most of the organizations we’ve newly funded in this strategy are not ones I already knew. I learned about them by being open and intentional in meeting new people and spending time in diverse spaces. This includes providing support for the First Nations Development Institute, CHANGE Philanthropy, Funders for LGBTQ Issues, ProInspire, and Equity in the Center. We have also supported deeper internal and external diversity, equity, and inclusion work by the Stanford Social Innovation Review (the “This is What Racism Looks Like” and “Breaking Through Barriers to Racial Equity” series) and the Chronicle of Philanthropy (DEI source audit).

It’s clear that diversifying staff and boards of philanthropic institutions ensures that reliance on peers will represent a broader range of views and perspectives. For example, when I joined Hewlett in 2013, the staff was more than two-thirds white. Today, that figure is 49%. But these aren’t the only ways to intentionally include diverse perspectives. We have to systematically build this inclusion into our design and strategy development processes.

Fund for Shared Insight, a national funder collaborative that includes Hewlett, has put forth powerful efforts to expand networks that funders (and nonprofits, as well) listen to as they shape their strategies. Shared Insight aims to ensure that funders systematically collect and use input from people closest to their work. One of my most influential experiences on this front came earlier this year, when I represented Shared Insight in a participatory design team charged with providing input for the parameters of a participatory grantmaking process. Our only starting parameter was to focus on climate change in the United States, a focus area chosen because it is such a critical one to the planet. Some Fund for Shared Insight core funders have a lot of experience with climate philanthropy whereas others have none, but this project gave us all the opportunity to work together and to center the people who are most affected but often least heard. The effort grew out of Shared Insight’s interest in expanding our listening and feedback work to include funders and organizations working in advocacy and policy. We commissioned a landscape scan from the Aspen Institute which helped us identify participatory philanthropy as an approach to take in this new work, paving the way to both shift power and center people with lived expertise.

Each of my twelve design team colleagues were individuals with lived expertise around climate change, ecological disruption, and/or traditional ecological knowledge (in addition to other areas of professional expertise and experience). They come from communities that have been historically excluded from policy decision-making, such as BIPOC communities and rural and small-town communities. As part of the design process, I had multiple one-on-one conversations where we discussed and weighed in on different aspects of the grantmaking design. For me, these personal interactions were the highlight of the process, because I was able to learn more about the lives and perspectives of people from so many walks of life – people that I wouldn’t ordinarily connect with in my day-to-day work or through my existing networks.

I had a phone call with a church pastor in the South who was also a lifelong climate advocate and organizer. My second call was with a young woman who was home from college during the pandemic, living on the Native American reservation in South Dakota where she grew up. Her passions include indigenous health, wellbeing, and food systems. I also spoke with a visionary nonprofit leader and climate activist from the Twin Cities in Minnesota. Each brought essential perspectives to what grantmaking needed to be done. To this day, I can hear other design team members in my head – their provocations for what is needed from philanthropy and from this grant round – to define climate work in ways that will resonate with communities most impacted by climate change, to center equity and justice, and for philanthropy to do more. You can read more about each of the design team members here.

We started with plans to dedicate $1 million to one participatory grant round, but my fellow design team members challenged us to raise another $1 million or more to do participatory grantmaking focused on climate justice in two regions – the U.S. South and Hawai’i and Alaska together. As a funder representative in the group, I heard this request to raise another $1 million and played a role in successfully championing it to my colleagues. And I hope more funders will join this effort. I am confident that the participatory grant round ahead will focus on real work that needs to be done, and it will be because people with lived experience of the impacts of climate change in their lives and communities will have guided it there.

While the aforementioned specific design team was focused on creating the guideposts for a participatory grantmaking process to follow, similar design teams could be utilized by funders in many other ways to ensure that the voices of people closest to the work help shape and influence other grantmaking processes. For example, if you are reviewing a strategy or starting a new one, a team and structure like this could provide input on any combination of past work and future focus. In my experience, this is not a tool funders commonly make use of, yet this participatory process reiterated to me how do-able and valuable it is. Indeed, bringing together diverse perspectives is a central part of the Hewlett Foundation’s Outcomes Focused Philanthropy. Our Education team listened extensively to inform its K-12 Teaching and Learning strategy refresh a few years ago. This included reaching out and receiving feedback from parents, teachers, students, as well as groups that we had not funded in the past and those who disagreed with our previous approaches to education work. Our Performing Arts team took a similar approach in recent years to widen the circle of who provides input to inform its approach to San Francisco Bay Area Arts Funding.

It can be hard to try new things and move outside your “comfort zone” and typical ways of working, and even harder to share power and control when you’re used to having a monopoly. While it is understandable that funders often lean into habit and routine in their day-to-day work, my experiences as a member of Shared Insight’s participatory design team have been powerful reminders of the importance of breaking out of comfortable habits and existing networks to experience new things and share power with others in service of creating a more equitable world.

Learning from Disruption: Two Case Examples of Resilience

Mass disruptions are likely to increase as communities seek greater social and economic equality and the climate crisis deepens. What wisdom can funders draw from the past 18 months to inform future strategy?

We are living at a profound moment in global history. COVID-19 has shaken the foundations of our economic, social, and health systems. No corner of society has been left untouched by the pandemic’s effects, including philanthropy. Indeed, we observed a common phenomenon during the onset of the pandemic and its ensuing turmoil: some foundation strategies struggled to find their footing while others adapted easily, enabling grantees to harness previously unanticipated opportunities to influence change.

In this blog, we share two case examples to illustrate what makes some funding strategies more resilient than others — that is, when they support the ability of grantees to collectively achieve long-term aims amid significant disruptions in context. These case studies draw from a recent article that presents a more full analysis and theory about foundation strategies that are succeeding at adaptation vs. those that are struggling. At the core of this theory is the belief that, given today’s complexities, philanthropy must use its power differently — releasing control over organizations and their change strategies while using its unique position to work in solidarity with community leaders.

As the case examples illustrate, resilient strategies are characterized by the following:

  1. Address Systems, not Symptoms. Rather than focusing on the symptoms, these strategies focus on the causes of social inequities. Grantees seek to change how systems drive problems and reinforce historical patterns that lead to inequities.
  2. Support Networks, Not Solutions. Strategies that support grantees to take so-called “proven” solutions to scale are less effective in the face of disruption than those that resource networks of organizations that share a vision and hold multiple ideas about how to achieve change.
  3. Release Control over Pathways and Outcomes. Resilient strategies are ones that identify a problem and broad goal and provide grantees with the flexibility to pursue multiple change pathways and outcomes aligned with that broad goal.
  4. Focus on Transformational, over Transactional Capacity. Resilient strategies also build the capacity of networks, rather than individual organizations, to rapidly assess the external environment, select strategies and tactics, and work in partnership with others.
  5. Supplement, Don’t Supplant Community Power. Strategies are more resilient when funders activate their own power, not over grantees, but to resource grantees’ emergent ideas and solutions.

Art for Justice Fund

In our first case, the Art for Justice Fund purposefully created space for more than 100 grantees to gather and engage in immersive, interactive activities, fostering networking and collaboration, and celebrating progress and community. This launched a strong grantee network [2. Support Networks] of artists and activists working together to disrupt mass incarceration where members actively engage with one another online and through project collaborations.

While staff are clear about the Fund’s ultimate goals--reducing prison populations, promoting justice reinvestment, and changing the narrative around incarceration--grantees have wide latitude to define their own outcomes and tactics [3. Release Control]. Fund staff actively look for opportunities to support grantees’ leadership efforts, using its power to connect leaders with resources and to amplify and draw attention to their work [5. Supplement Community Power]. In addition, the Fund explicitly seeks to use the power and influence of its founder, art collector and philanthropist Agnes Gund, to inspire other art collectors to donate funding to reduce mass incarceration.

This flexible approach has worked well in the face of the COVID-19 pandemic. Overcrowding combined with the inability to quarantine or practice social distancing in jails and prisons presented a grave threat. Grantees adapted quickly, creatively, and effectively, drawing connections between the plight of prisoners to the larger public health and racial equity crisis [1. Address Systems] and sharing information with one another about what was and wasn’t working.

N Square

In 2014, the leading funders in the nuclear security space came together to invest in a new organization, N Square, with a goal of building a collaborative that would disrupt and stimulate innovation in a stagnating field of experts and advocates to accelerate the achievement of nuclear security goals. N Square, which focused on building a network of innovators [2. Support Networks], was initially housed within one of the funding partners, but was moved to an independent fiscal agent, giving it more freedom and flexibility [3. Release Control]. After a first year of active participation in many different levels of decisions, the funders agreed to be more selective about which decisions they would hold authority over and where they would let go and trust the Executive Director and her staff.

The funders, Executive Director, staff, and network partners have all steadily built their network development and systems skills, going through multiple processes to build an understanding of the types of organizations needed and apply systems sensing skills to assess what it would take to enable the field to operate more effectively. One of N Square’s signature interventions has been the creation of a network of fellows who are trained in design skills, systems thinking, innovation approaches, and more. These emerging and established leaders then prototype bold solutions for the nuclear security space, such as the SAFE Network, an innovation that harnesses non-classified data from a range of sources, analyzed by a network collaborators to identify the risk of nuclear proliferation or a nuclear crisis, with international diplomats, nuclear security experts, and former military leaders on standby to respond. Simultaneously, N Square worked closely with key organizations, helping to build their capacity for innovation and design [4. Focus on Transformative Capacity]. One of the funders leaned into this network, using its resources to create an Acceleration Fund managed by N Square to support emerging innovations [5. Supplement Community Power].

When the worldwide pandemic disrupted the in-person structures by which N Square steadily knits together the network and field, the team shifted very rapidly. Within weeks, they had identified not only the need to move to a virtual model, but also the opportunity to increase fieldwide competency in distance collaboration. In addition, they launched a futures and foresight training series designed to prepare leaders to manage uncertainty and better prepare for future disruptions [4. Focus on Transformative Capacity]. This program included decolonized methods and a partnership with the Black Speculative Arts Movement, helping build the community's resilience at a time when many were still reeling from the initial shock. They also retooled existing programs to work effectively online, taking advantage of unanticipated change to build a more substantial international network that collaborates seamlessly, both synchronously and asynchronously, across time zones.

Conclusion

In conclusion, resilience, as used here, does not mean a return to pre-disturbance status quo. Rather, the case examples speak to the inherent strength of a network of organizations working in concert to not only survive disruption but to redefine their approaches as opportunity permits – to bounce-forward, not merely bounce-back. We encourage foundations to consider these and other insights from the past 18 months as they plan and resource future funding strategies.

The Myth of Risk

How to make good on the promise of “big bets” in philanthropy

There are no bad grants. Period.

My hope is not just that funders remember that, but that they believe it – and then act accordingly.

There’s an interesting phenomenon that takes place when someone says something to you that you often say to others. Last October, I was speaking with Hanh Le as she was preparing to depart her post at the Weissberg Foundation and I was just arriving as the new CEO of PEAK Grantmaking. When she said to me, “there really are no bad grant investments,” I felt the room light up: Did I just hear her say what I also know to be true – what I myself have said again and again?

Our conversation turned naturally to the role of funders in supporting organizations right now – and with urgency. If a funder desires to not only support a program, but to see a nonprofit thriving when the grant term ends, write a bigger check! If you are worried about risk, then cover the full programmatic costs and add a healthy dose of capacity building or general operating support dollars on top. After all, what exactly is stopping you?

I am a Black woman who grew up in Akron, Ohio. From an early age, I learned that there were always people, often friends of my parents or folks from church, who needed us kids to help them “get the word out” about something important. Maybe a family had survived a house fire in which all the children’s clothes and toys had been destroyed, and we were needed to help raise money for the nonprofit assisting  them – typically a small, local organization operating out of unused space at a local church or co-located with another organization like the Y, run primarily by volunteer or people receiving a modest salary of a few thousand dollars (in a time when the average income for a family of four was just above $21,000).

These are the nonprofits, run by and focused on BIPOC (Black, Indigenous, People of Color) communities, that have been chronically underfunded for decades. Typical funder perceptions – that a nonprofit needs to “pass" a risk assessment or meet a funder’s “risk tolerance” to receive a grant – reek of misapplied principles. Risk models were not invented to help philanthropy advance their work: They were created for businesses most intent on protecting their profit margins and financial standing. This doesn’t mean you shouldn’t think about the risks involved in a particular project as a way to determine how providing extra support may help mitigate that risk, but don’t import risk models and jargon from industries that are not in the business of providing for the public good.

Surely, these terms ring a bell: Sustainable. Evidence-Based. Traditional. Proven. Well-resourced. Familiar. We now call these descriptors “micro-affirmations,” bywords that signal a nonprofit is “ready” for investment. Less-resourced organizations, as well as newer nonprofits are often labeled differently (in the rare cases they even get to speak to a funder): Untested. Risky. Nontraditional. Typically, what they hear is this: “Thank you for completing our risk profile, budget outline, grant application, demographic survey, and anticipated outcomes form, and for providing two years of audits and your board list. However, because we were hoping to make a ‘big bet’ with this investment, we  are concerned that your organization might be overwhelmed by our support.” With all due respect, nonprofits are left with only one thought: “How can you make a ‘big bet’ if you’re unwilling to take a risk?”

As someone who speaks on behalf of an organization that recently received a significant grant investment, I can tell you first-hand: We’re not overwhelmed. We’re executing.

Unlike nonprofits and those they serve, funders have the resources and flexibility to take risks – but far too many are only comfortable investing in either known entities or programs of the funder’s own design. Kresge Foundation CEO, Rip Rapson, at a recent event for PEAK, reminded foundations, “You’re not Fidelity.” Though his comment was aimed at community foundations, it applies broadly: Being a great steward should not be about how big your endowment or portfolio gets, or how well they might be “managed.” Rather, it should be about how seamlessly (and quickly) financial resources are deployed to advance the mission and support community.

Approaching grantmaking primarily as a risk avoidance exercise – by micro-analyzing each nonprofit and potential grant looking to uncover faults – appears to be more of a “weeding” tactic than a plan to sow community dividends. Cue the timeless words of the Ford Foundation’s Darren Walker: “It’s not your money.” This kind of “weeding” approach leads to missed opportunities and poor grantee-grantmaker relationships.

Instead of starting with concern for the endowment, concern yourself first with the challenges the nonproft is facing and how you can help overcome them. The nonprofit sector is bursting with new energy, new approaches to old problems, and newly diverse leadership, staff, and volunteer support. As substantiated in a 2020 Echoing Green and Bridgespan Group report, leaders of color are uniquely situated to help advance social justice – and narrow the equity gaps prevalent in funding practices – because “these leaders often bring strategies that intimately understand the racialized experiences of communities of color and the issues these communities face.”

The simple reality is that funders don’t have all the answers and those most impacted by an issue often have the solutions, if we just make the space to listen. Nonprofits in our communities are doing the hard work involved: creating partnerships, gathering constituents, and engaging them to ensure we provide the resources they actually need. Unfortunately, the power gaps inherent to the funding landscape mean that, far too often, nonprofits must direct their energy to meet funder expectations, when it could be put to much better use supporting our teams, going deeper to meet our own core goals, and pursuing objectives that are responsive to our communities. And even after we’ve shifted to your direction, completed all the paperwork, attended the meetings, and hosted your board, our dedication does not always result in funding.

One might even conclude that risk mitigation has become hopelessly entangled with compliance requirements. Yes, compliance requirements and IRS guardrails are mandated by law for certain types of funders. But once those basic requirements are met, and nonprofit eligibility is established, the only question remaining is the grant amount decided upon by the funder.

The bottom line is this: Providing a $20,000 grant to an organization with a $300,000 budget is not risky, especially considering the reserves held by most foundations. As Nonprofit AF’s Vu Le would say, “Come on! You can do better!”

If, as a funder, you feel a little uncomfortable looking at a nonprofit’s programs because they’re operating via new norms or otherwise upending how things have “always” been done, my advice is to lean into that discomfort. That grant might be the best one your foundation ever makes.

At this precarious moment, the biggest risk that funders face is not doing enough. If GuideStar gives the nonprofit the green light, consider general operating support, write the check, and send it electronically!

Behind the best of funders’ intentions, there remains a storehouse of bad grantmaking processes. Our goal at PEAK is to be the partner that helps funders see, and adopt, operating methods that are more efficient, effective, and equitable. Thankfully, we are joined by amazing peer organizations like Candid and Open Road Alliance, philanthropic industry leaders, and grants professionals, all pushing back against bad processes and entrenched biases often hidden in funders’ “best practices.” That’s why I was excited to help Candid and Open Road Alliance develop a new online eCourse, Risk & Reward: Safeguarding Impact in an Uncertain World. The course helps funders avoid the common pitfalls of risk assessment I’ve just described and reframes risk conversations to be about providing a safety net to the grantee rather than a gotcha.

Risk & Reward: Open Road Alliance and Candid Launch New Risk Management Course for Funders

One need look no further than the events of the last 18 months to understand the importance of considering the power of the unexpected to disrupt and derail the best laid plans. How can funders safeguard impact in an uncertain world? And how can the exercise of risk mitigation support grantee efforts rather than create a burdensome process? Candid Learning teamed up with Open Road Alliance, a longtime advocate of using risk mitigation strategies as a form of social sector strengthening, to develop a new, free eLearning course designed to help funders use risk management to preserve impact in an uncertain world.

In this post, Janet Camarena, Senior Director of Candid Learning, interviews Maya Winkelstein, CEO of Open Road Alliance, to discuss the project, the importance of risk management, and learn about what’s next for Open Road Alliance.

Janet Camarena: Open Road Alliance was founded in 2012 with the ambitious goal of helping the social sector weather the unexpected risks that threaten to derail impact. Looking at your mix of support strategies, this has meant you have realized this goal by doing things like bridge funding as well as one-time grants and loans to grantees experiencing unexpected external roadblocks. So, it seems, from the beginning you were focused not just on the “what” of your grantmaking, but more specifically on the “how,” which is rare for a start-up funder. What made you focus on the “how” and what has reinforced its importance for the last decade?

Maya  Winkelstein: We focus on the ‘how’ because that’s where system-change lives. There’s not enough grant money anywhere to solve the world’s problems. So if we want any hope of moving the needle, we need our market to operate more efficiently. Ultimately, Open Road’s strategy is an efficiency play. By providing relatively small amounts of money to keep much larger initiatives on track, not only do we get massive leverage as an individual donor, but we improve the efficiency and effectiveness of the system as a whole.

Over the past decade, our observation that the philanthropic market doesn’t operate efficiently has been underscored time and again. Luckily, we’ve also seen that our original hypothesis that we could solve for that with fast, flexible, emergency and bridge funding has also been remained true.

Janet: Open Road Alliance has developed a variety of tools and presentations to help support funder learning around risk management. What makes this new Risk & Reward course different? And can you describe a few of the tools the course helps funders learn how to use?

Maya: This new e-Learning course synthesizes everything we’ve learned about risk management since our work on this topic began in earnest back in 2014. It’s also our first self-learning tool that allows grantmakers and donors to acquire both the information and the tools to begin tackling this topic in their own work. For example, not only does it describe what a risk management cycle is, but it provides a template risk matrix which can be directly used to complete step 1 of that cycle: identify and prioritize risks.

Ultimately, this course democratizes the research, knowledge, and tools that we’ve developed over the years. It’s our offer to the sector writ-large, to pass the torch to our community to be able to continue building on this foundation themselves.

Janet: The title of the course is Risk & Reward—what is the reward? What are some of the success stories you can point to from working in this way for the last decade?

Maya: Reward and risk are two sides of the same coin. As the saying goes, taking great risks can often lead to great rewards, which is the conventional wisdom of traditional investing and a wisdom that can translate into philanthropy as well. For example, making a grant for a new, unproven – and therefore “risky” – avenue of research might yield the rewards of a cure for cancer. But there is also reward baked into simply walking through the steps of risk management – regardless of how “risky” the project is. That’s because when we appropriately manage risk, we increase our grantee’s chances for success. Applied correctly, risk management maximizes impact. That’s a reward we all need.

Janet: The dual tragedies of the pandemic and George Floyd’s murder brought into focus structural inequities that have resulted in some funders rethinking their own processes and practices. For example, as funders look to embrace more flexible approaches to unburden grantees, they may be more likely to embrace Trust-Based Philanthropy approaches and believe that conversations about risk may signal a lack of confidence in the nonprofit and opt to deprioritize such dialogue. Why would this be a mistake and how can risk mitigation strategies actually serve to support trust-based models and grantees?

Maya: We are huge fans of the trust-based model of philanthropy, but leading with trust doesn’t eliminate risk, it simply changes the way we can talk about it.  The grantees of trust-based funders get hit by the same risks as everyone else whether it’s a global pandemic, employee fraud, a change in government, or simply discovering that your nonprofit office has flooded due to a burst pipe. We can’t trust risk away. However, I think what trust-based philanthropy does offer us is a wonderful framework to help us see risks as an inevitable challenge that we can solve with our grantees. Risk is not evidence of weakness or a ‘gotcha’ moment for funders to judge. Ultimately, a candid, honest, two-way conversation about risk is an expression of trust.

Janet: You are completing a decade of work in influencing the field to lean into its power to remove barriers that can derail impact. Candid is proud to team up with you to house what you have learned from this work in the form of this eLearning course. What else is next for this work and for Open Road Alliance?

Maya: In working on these issues, our most rewarding moments have been seeing organizations across the country engaging in a meaningful conversation about risk as an essential and necessary component of good grantmaking. In recent years, we have realized that making risk management mainstream will only be successful as an open- source community of practice for all. As we approach our own 10-year anniversary in 2022, it is time for Open Road to pass the torch to our peers, our grantees, and you, the grantmaking community, to carry this conversation forward. We are thrilled to partner with Candid on this course to provide our peers in the philanthropic community the tools, lessons, and resources needed to carry the practice of risk management in philanthropy forward. While Open Road will continue to practice what we preach, we leave the work of sharing this body of knowledge in good hands, with you, to encourage, question, explore, share, learn, and cultivate the ongoing conversation and practice around risk.

To learn more or register for the new course, visit Candid Learning.

More Words for Greater Action

In 2018, Barbara Chow authored a GrantCraft leadership series paper called “From Words to Action: A Practical Philanthropic Guide to Diversity, Equity, and Inclusion” that recognized that while communities around the country were experiencing rapid demographic shifts, philanthropy was not reflecting that same diversity in its grantmaking, nor working to account for historic disadvantage. The paper dives into the challenges and opportunities to explore how DEI can become more integrated into grantmaking practices and broader foundation ethos.

Much has changed since 2018 that heightens the importance of this work, so GrantCraft invited Barbara to share additional thoughts.

 

GrantCraft: What do you think has changed the most since you wrote the paper in 2018? What has remained the most unchanged?

Barbara Chow: April 2018 feels like a long time ago. In the intervening 3+ years, we’ve endured unimaginable catastrophes spanning nearly every aspect of our lives—environmental, political, health, racial injustice. The unexpected and unthinkable have become the hymnal of our time.  So, in some larger contextual sense, everything has changed.

However, in the small microcosm of philanthropic life, change has been slower. Most of us have weathered the pandemic from our remote offices, we have pivoted our grantmaking to respond to COVID, we have become more conscious of issues of racial equity, our endowments did not suffer sharp declines as we had feared. Mostly, we are personally are OK. But we know the world is not.

The words “diversity, equity, and inclusion/DEI” have become deeply ingrained in philanthropy-speak, more so than at any time I’ve observed in the past.  I’ve attended very few philanthropic conferences or gatherings that have not centered on issues of racial justice. On the word and reflection front, our awareness, statements, and conversations about DEI have grown in eloquence, passion, and genuine emotion.  We have become good at finding the words to express our outrage.

And some of this has found its way into our grantmaking. According to a survey of foundations conducted by the Center for Effective Philanthropy (CEP), more than “three-quarters of foundations surveyed are making new efforts to support organizations serving communities of color.” (Foundations Response to Crisis: Toward Equity?) Nearly 60 percent say they are “now giving a higher percentage of grant dollars to organizations created and led by CEOs from communities most affected by the pandemic.”

But, while improving, there remains a gap between words, intentions, and actions.  Looking at overall giving levels, philanthropy still allocates a relatively small percentage of funding to support specific racial and ethnic groups. Drawing on data from Candid, a report by PRE (Philanthropic Initiative for Racial Equity)—“Mismatched: Philanthropy’s Response to the Call for Racial Justice”—found that funding for racial equity in 2018 (the latest year of complete data) made up just 6 percent of all foundation and corporate giving. Candid’s Racial Equity Map makes publicly available the grants and pledges awarded in support of this topic in the United States since 2011.

One hopeful note is around data collection.  Many foundations are now beginning to collect demographic data on their grantee organizations. They are using this data as a window into their grantmaking practices and to diagnose barriers that might prevent the increasing diversification of their portfolios. The William and Flora Hewlett Foundation recently wrote an excellent blog post on what they are learning from the demographic profiles of their grantees.

GrantCraft:  What are the lessons learned from the guide that are still relevant?

Barbara Chow: If the past year has demonstrated anything it is how existing inequities are exacerbated when anything goes wrong. Those of us with privilege can buffer even extreme events like pandemics and wildfires. However, for so many, particularly marginalized Black, Brown, and Indigenous communities, this painful year has unleashed a torrent of health challenges, job loss, deep levels of stress, material hardship, hunger.

If ever there was a time to shift from words to action, this is the time.  And yet in the same CEP report that suggested greater attention to issues of racial equity "leaders more frequently described reflecting and learning, rather than making changes to their internal policies and practices.” In part, I believe this is because those practices are still emergent and can feel overwhelming to implement. In this sense, this paper and others that focus on concrete shifts in grantmaking practices can provide actionable starting points, even if all the branches are not taken.

GrantCraft:  What are you learning about DEI in your current role at the Heising-Simons Foundation?

Barbara Chow: Over the past year, my colleagues (Malia Ramler, Kim Brenneman, September Jarrett, Andrea Michel, and Sarah Lerner) and I at the Heising-Simons Foundation have followed one of those branches -- new grantee identification and selection coupled with following the lead of impacted communities -- through to its logical conclusion.  The result has been a new grantmaking program called Families Lead California.

I have learned three things from this experiment: 1) equitable grantmaking practices take a lot of time; 2) this is in part because our systems are not set up for them; 3) nonetheless I believe these practices are worth it, and if we are to stick to our equity principles there aren’t a lot of alternatives.

The goal of Families Lead California was rooted in the idea of strengthening parent voice, recognizing that Black, Indigenous, People of Color (BIPOC) parent-led organizations could and should play a powerful role in shaping the future of early childhood education in California but would benefit from greater organizational capacity, peer learning, and financial support.  We wanted to experiment with a model that centered the needs of community-based groups, placed parents at the decision-making table, opened our grantmaking beyond “the usual suspects” and provided for a wide variety of focal areas (well beyond our interests in early math, dual language learners, and policy advocacy).

What this meant was a near wholesale change to the way we sourced and evaluated grants. For example:

  • We are usually an “invite-only” foundation with limited experience in supporting open Requests for Proposal (RFP). In Families Lead California, we ran an open process, which meant that we needed to create an RFP, circulate it widely, and hold information sessions for interested parties.
  • We wanted a more inclusive decision-making process that shifted power to parents, which entailed identifying and compensating a set of knowledgeable but not conflicted parent advisors, coming to a common understanding of the goals of the project and proposal rating criteria, and then presenting their recommendations to our Board for approval.
  • We sought to minimize the burden on potential grantees, by for example, requiring very short proposals, which meant that the Foundation staff needed to shoulder more of the due diligence process by conducting its own research into the organizations that applied for funding.
  • We thought that written proposals may not convey all of the information we wanted to know, so we supplemented these with a set of interviews that included parent advisers and Foundation staff.

All of this took far longer, probably double the average processing time for an individual (or cluster) of grants. In sum, Families Lead California was a pilot to which we allocated 10 percent of our California grantmaking budget, but it absorbed about 30% of our Education staff time, required additional time and input from Foundation colleagues, and relied upon consultants to support the community advisor and RFP processes.

We learned that our grant systems were not well suited to this form of grantmaking.  Like most foundations, our grants management systems assume that one proposal will be reviewed by one program officer and then pass through the various gates of approval.  We had to ask our always gracious IT department to build a separate application outside of our standard grantee portal as well as create matching fields within Salesforce to enable clean recordkeeping and allow for more than one reviewer per application (including those from outside the Foundation). Our team also worked closely with our ever patient grants management team to develop a streamlined application process and with our communications team for support with informational webinars and more. Several of the organizations we chose to recommend were small and less established and we sought permission (happily given!) to waive financial due diligence requirements.  And we needed our Board to take this leap of faith with us, which they did with enthusiasm and grace.

At this early point in our experiment, we do not know what the specific outcome of Families Lead California will be although we are making the bet that it will improve early education because those most impacted are at the helm.  And it has already achieved one of our early goals which was to expose the Foundation to nonprofits that we had not met before and to raise questions in the diligence process that we might not have thought of.  Our next steps are to co-create the precise measures of success along with the grantee organizations we will be supporting.  This is messy, inexact, and time-consuming work.

At times, I have found this lack of certainty to be disorienting, as I’m fond of a clear theory of change, defined outcomes, and concrete metrics.  Instead of being able to answer every question, we are asked (an unnaturally high standard to which many of us are insanely attached) we must admit that there is a lot we don’t know.  In fact, traditional notions of expertise may not apply in this situation. But if we are to honor the equity goals that our strategy demands and achieve the impact we are hoping for, I don’t know any other way to get there other than some version of this effort.  And I believe that having done it once, we and our systems will learn and improve in the next iteration.

GrantCraft:  What would you like to say about the topic given today’s diversity climate?

Barbara Chow: Do something. Change something. Try something.

Tough Questions We Asked Ourselves and Where it Took Us

For many of us working in philanthropy, 2020 was a wake-up call for overdue reflection.

The toll of the pandemic and then the rallying cries following the murder of George Floyd called for philanthropy to ask some tough but important questions. Are we being bold enough given this moment? Are we using our own power effectively and to the best benefit of the communities we work with as funders? How are we amplifying community power and agency of the people most impacted? We had to examine if we were walking our talk, and we realized we needed to step up our game. Reflecting on such questions of accountability and power led the Convergence Partnership in bold, new directions, and I’d like to share a bit about our journey here.

At the heart of the Convergence Partnership, a national funder collaborative to advance racial justice and health equity, is the knowledge that we can achieve greater impact when listening, learning, adapting, and aligning our work together. We test ideas and take on issues that individual institutions wouldn't or couldn't, and the partnership model allows for institutions to go above and beyond their organizational priorities to achieve greater and more expansive impact. Convergence has always been about showing that the sum can be greater than its individual parts. Over the last fourteen years, we have created a space where people from foundations with different priorities, practices, and funding approaches come together to reexamine individual ways of operating to push ourselves to break away from the comfortable and move into the necessary.

When the Partnership was established in 2007 and began exploring its on-the-ground approach, we decided to focus on “field building” as a central strategy for creating and leveraging connections across various fields and sectors to advance health equity, policy, and environmental change. The goals of field building included generating greater philanthropic investment in local and state policy advocacy to advance equity outcomes. We also operated under conventional norms by centralizing all grantmaking decisions and power with the funders.

2020 pushed us to act and fund differently. We knew we could no longer be in the driver's seat as a national partnership, deciding what local issues or work gets funded. Instead, we leaned into community-determined, trust-based funding by ceding control and working with frontline grassroots organizations to determine where dollars were most needed.

For example, through our COVID rapid response grants, each of the regional funding partners reached out to their local grassroots and community partners and deferred to them to define their priority issues, scope of work, grantmaking needs. Grant applications were streamlined to simply include a letter of support from the regional funder on behalf of the grassroots organization(s) they identified to receive funding. We also streamlined approaches to reporting and put the onus of due diligence on the funders to understand the work of grantees without burdensome paperwork or vetting processes for the grantees themselves. The grants concluded with the Partnership offering to produce an optional podcast in partnership with each grassroots grantees in lieu of a final written report. We also hosted a virtual forum where grassroots partners could share what was helpful during the grantmaking process and more importantly what we could do better as funders next time.

We heard our grassroots partners loud and clear when they asked us to disrupt conventional grantmaking that perpetuates power imbalances. These investments showed us that it is possible and necessary to share and shift power to local and state grassroots leaders to drive policy and structural change. And that we must also do the critical internal work to transform our own relationships and approaches with grantees.

Philanthropy needs to put into practice the same principles and values that we have been asking nonprofits and communities to follow: to be more sophisticated and nuanced in our understanding of anti-racism, power, privilege, and organize ourselves accordingly; and to make our work accountable and effective for our constituents.

That was a huge impetus for the New Vision to Amplify People Power for Racial Justice and Health Equity we announced in January of this year.

Though Convergence has worked on equity issues since its inception, our commitment to do better by our communities is driving us to expand our definition and root racial justice more deeply in our work. Understanding that the primary driver of health inequities is structural racism and power, our new strategy holds us accountable to make our contributions meaningful and additive toward racial justice and health equity by:

  • Amplifying Community Power: Investing in the power and agency of people of color and low-income people to fully engage in democratic processes for transforming racist policies and systems. We will do this by making investments that strengthen and expand grassroots, power-building infrastructure for local, state, and national policy change.
  • Transforming Narratives: Elevating narratives and stories that shift public attitudes toward inclusion, belonging, and the dignity of all people. We will do this by using our positioning and platforms to advance a national narrative driven by local experiences and successes of people of color and low-income people that shifts the paradigm toward racial justice and health equity.
  • Shifting Funder Practices: Mobilizing and influencing funders, including ourselves, to embrace transformative practices and relationships that dismantle systemic racism and power imbalances in philanthropy. We have seven new partners, and all are committed to this fundamental shift and to bringing more of our sector into equitable practices.

We cannot go back to business as usual—the health of our communities and our nation's democracy is on the line. We will continue to do the necessary self-reflection work in the Convergence Partnership and ask others to test their threshold and willingness to be adaptable. We can be accountable and walk the walk together.