A Dirty Secret and Neat Solution

July 27, 2016

In the midst of the political conventions, we’re tempted to write about what we’ve been seeing and hearing from the podiums in Cleveland and Philadelphia. We’re concerned that country’s collective brain scan is showing Fourth of July-style fireworks in our fight-or-flight regions when we desperately need more activity in the areas associated with empathy. But we’ve decided to leave politics to the pundits.

So back to our regularly scheduled programming…

Funders are like fingerprints: No two are exactly the same. Yet all funders—from individual donors to large foundations—have one thing in common. They want their grants to make a difference.

There’s another common denominator, which doubles as a dirty secret. All funders come to realize that making a difference is harder than they thought. Generation after generation, funders rediscover that industrialist and philanthropist Andrew Carnegie was right on the money, so to speak, when he concluded that “it is more difficult to give money away intelligently than to earn it in the first place.”

We believe the Performance Imperative (PI) can help. The PI provides a definition of “high performance” and explains the seven organizational pillars that are necessary for achieving high performance: leadership, management, strong programs, financial health, a culture of learning, monitoring, and external evaluation. While the Leap Ambassadors Community developed the PI primarily for nonprofits seeking higher performance, funders are discovering that it’s also relevant for them. The key is recognizing that a funder’s impact is inextricably linked to the performance of his or her grantees.

If you’re a funder of any sort, from a program officer at a large foundation to an individual donor with no staff, we encourage you to take a look at the PI as a way to assess the overall performance of an organization and see how it might inform the way you select and support grantees. The PI can be used in a wide variety of ways. There’s no need for wholesale changes! Just try some simple experiments. For example:

Share the PI with an organization that applies to you for funds. Then invite a conversation about how the organization is doing on the seven pillars and how it might use your support to build on strengths and address weaknesses.

Experiment with using the PI to inform your grant decisions. Based on the organization’s reflections on how they are doing in the seven pillars, engage in your own reflections on whether they have the leadership, culture, and organizational strength to achieve what they and you envision.

Try working with a grantee you hold in high regard to get clarity on which of the seven areas they will prioritize during the grant period, as well as why and how.

Support a grantee to strengthen a few key elements within one of the areas (e.g., leadership) that grantee is eager to improve.

See if you have one or two grantees who might like to use the seven pillars as the basis for reporting on progress and challenges—for their own benefit as well as yours.

Use the PI with groups of grantees as part of a collaborative learning effort in which they discuss their progress, identify improvement opportunities, and share learnings across one or more of the pillars, (e.g., financial health). This could allow them to take back insights and actions to share with their organizations.

If one or more grantees start taking ownership of the approach, encourage them to share the PI with their board and other funders. They might find that it gives them a common vocabulary for planning and communicating with multiple stakeholders.

Over time, using the seven pillars to better understand the needs of grantees could guide your plans for investing more deeply in a subset of your grantees (e.g., shifting to larger grants, multi-year grant periods, and leveraging your investments with strategic assistance in addressing organizational needs).

Use the seven pillars to help inform how you assess and build your own team (e.g., could you add a senior leader with demonstrated experience in building and managing organizations who can be a valued resource for grantees?).

If you do any of the above—or come up with your own unique ways of putting the PI into action—please let us know so we, too, can learn and improve.

And now for brief updates from around the Leap of Reason community:

Despite all the partisan rancor on the campaign trail, Democrats and Republicans came together under the leadership of House Speaker Paul Ryan (R-WI) and Senator Patty Murray (D-WA) to pass the Evidence-Based Policymaking Commission Act. President Obama and Congressional leaders recently completed their appointments to the commission, and it held its first meeting last week. We know that commissions of this type can be all sizzle and no steak, but we’re cautiously optimistic that this effort will add legitimate momentum to the push for applying “Moneyball” principles to improve public policy.

We hope the Evidence-Based Policy Commission distributes copies of “Getting ‘Moneyball’ Right in the Social Sector” and “Defining Evidence Down,” two SSIR commentaries that, together, offer a healthy, accessible debate on appropriate methodologies for determining what works and what doesn’t. While we recognize that randomized controlled trials are no silver bullet and it’s often misleading to call them the “gold standard,” we tend to side with those pushing for more rigorous approaches to gathering evidence.

As a follow-up to Bridgespan’s excellent SSIR article “Pay-What-It-Takes Philanthropy,” Hilary Pennington explains why the Ford Foundation is reorienting its grantmaking to “focus on building strong organizations” rather than focusing solely on the success of a grant or program. “Funders systematically underestimate what it truly takes to achieve impact, and grantee organizations assume they have to play along,” she writes. “I learned this the hard way as a 20-year CEO of a nonprofit. In all that time, I can count on the fingers of one hand the number of instances a funder specifically asked me what kind of help I might need to strengthen the organization.”

Kudos to former New York City officials Linda Gibbs and Robert Doar on their four-part series on the Bloomberg Administration’s successful, data-driven efforts to reduce poverty in the midst of the Great Recession—just the kind of good-news story we can all use. “New York’s experience confirms that solid evidence can trump the liberal-versus-conservative stalemate when the welfare of the country’s most vulnerable people is at stake.” Gibbs and Doar are not objective observers of New York City’s efforts, but their account is compelling and provides a playbook for any city that wants to scale what works and move people out of poverty.

We encourage you to stream “How a ‘Whole Student’ Approach Can Lift Graduation Rates,” a report on the public radio program “The Takeaway,” the next time you’re exercising. The report, which studies school-reform efforts in Spokane, WA, is a great example of how data (head) and empathy (heart) are a deeply compatible and highly effective combination.

And here’s another example: “The Mayor of Tent City,” a profile of Jeff Kositsky, “the perfect man for the assignment” of running San Francisco’s new city department dedicated to reducing homelessness. “Homeless advocates praise his compassion (“What he does comes from the heart”) [and] city wonks applaud his data-driven analytics (“One of the smartest thinkers on homeless-service delivery”),” writes journalist Joe Eskenazi. We’ll be watching Kositsky’s progress and hoping he can create momentum for similarly comprehensive efforts in our home cities.

We’re big fans of Urban Institute’s Mary Winkler and grateful for her latest essay, “How to Build Great Organizations for Greater Societal Impact,” which focuses on Pillar 5 of the Performance Imperative. She explains that “the history of performance measurement and management for most nonprofits has been driven by external requests from funders to produce data for accountability and compliance purposes” and then describes the radical difference in mindset that results from an internal drive for learning and improvement.

Events/Webinars for Raising Performance: