How Funders Can Leap from Good to Great

August 23, 2018

Last week, Lowell made a presentation to new board members of a family foundation interested in raising its game. It was a great opportunity to synthesize several years’ worth of learning about how positive-outlier foundations find good organizations and help them become great.

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Finding good organizations: Regular readers of the Leap Update won’t be surprised to learn that Lowell used performance as his lens. He explained that whenever he assesses organizations for clients, he wants to know if the organization is on a path to performance. (Mario was none too happy that Lowell’s slide deck included a photo of the Cleveland Browns to illustrate an organization that hasn’t exactly been a high performer. He hoped that Lowell would at least give the Browns credit for being on a slightly upward trajectory!)

Lowell then shared The Performance Imperative‘s definition of high performance (“the ability to deliver—over a prolonged period of time—meaningful, measurable, and financially sustainable results for the people or causes the organization is in existence to serve”). And he shared the seven organizational disciplines (e.g., courageous leadership, well-designed programs, a culture that values learning) that organizations generally need to develop if they want to achieve high performance.

Yes, funders are notoriously reluctant to provide the funds for nonprofits to strengthen these disciplines—tarring organizational development with the derogatory term “overhead.” And yet Lowell can’t in good conscience give a thumbs-up to any organization that isn’t striving to meet at least the lowest tier of evidence that its approach works. He’s seen too many well-intentioned organizations discover after the fact that they weren’t making the difference they thought they were, not making a difference at all, or even causing harm.

Helping good become great: During this portion of the presentation, Lowell drew together key cross-cutting themes from the Leap Ambassadors Community’s Funding Performance profiles, which feature top foundations invested in helping their grantees improve their performance. Across every giver—the Einhorn Family Charitable Trust, Impetus-PEF, Blagrave Trust, Weingart Foundation, Mulago Foundation, and the philanthropist Duncan Campbell—he’s seen the following practices:

• Positive Outliers Provide Flexible, Multiyear Funds. All six funders have discovered that their grantees need multiyear general-operating support to make core investments such as strengthening their leadership or improving their learning capacity. In the words of the Mulago Foundation, “Unrestricted funding drives innovation and growth…. If we don’t think an organization knows how to use the money better than we do, we don’t give them any…. We don’t abandon a good thing. If we continue to see real impact … we stay in the game.”

• Positive Outliers Build Strong Relationships with Grantees. All six funders see relationships and results as inextricably linked, so they invest in building trust-based partnerships—the kind where grantees feel comfortable sharing hard truths, not just happy talk. In the words of Weingart’s Belen Vargas, “Without trust, core support—or for that matter, any other form of grantmaking—won’t work.”

• Positive Outliers Focus on Outcomes. All six funders care about assessing outcomes—not for measurement’s sake but for improvement’s sake. “I’m the most cynical optimist you’ve ever met,” Duncan Campbell said. “Given my [unstable] childhood, everything starts with reality for me. Whatever I was going to do for children, I knew it had to be grounded in real data and real outcomes … [not] poignant stories.”

• Positive Outliers are Good Listeners and Learners. All six funders invest in their own learning and improvement, not just that of their grantees. And they recognize that their own grantees, and the people their grantees serve, are invaluable sources of information and insight. Blagrave Trust has seen so much value in listening to constituents that it’s inviting two young people who’ve benefited from grantee programs to become Blagrave trustees with full decision-making power.

• Positive Outliers Provide Value Beyond the Check. Yes, cash is king. But these funders have built talented teams that go to bat for their grantees in many other ways—from setting up funding consortia to improve grantees’ sustainability to building connective tissue between grantees working on similar efforts to providing hands-on management support. Impetus-PEF’s “investment directors” spend a day a week on average providing strategic counsel to each grantee.

In the coming months, we’ll share additional cross-cutting themes from the Leap Ambassadors’ profiles in philanthropic courage. Our goal isn’t just to help funders learn how to support grantees’ journey from good to great. We also want to see funders go from good to great themselves!

Keep the faith (and reason),

Signatures: Mario and Lowell
Mario and Lowell

Mario Morino is chairman of the Morino Institute, co-founder and founding chair of Venture Philanthropy Partners, and author of the lead essay in Leap of Reason. Lowell Weiss is president of Cascade Philanthropy Advisors, co-editor of Leap of Reason, and advisor to the Leap of Reason initiative.

Updates From Around the Leap Community

Our “must read” article this month is “One of the Country’s Largest Foundations is Trying to Change How Philanthropy Works,” which produced a lively exchange and much appreciation across the Leap Ambassadors Community. The article describes Ford Foundation executive Kathy Reich‘s big ambitions for Ford’s $1 billion BUILD initiative, a five-year experiment in giving nonprofits flexible, long-term, organization-strengthening support. “I do have these grand plans to try to get other foundations to embrace this approach, as well,” Reich told Inside Philanthropy‘s Tate Williams. “Organized philanthropy in the United States is investing tens of billions of dollars a year in the nonprofit sector, and we need to be investing it in the right ways that are going to get us the results we want.”

Mario was recently interviewed by Denver Frederick for his radio program “The Business of Giving,” and you can stream or read it here. Mario was his typical blunt self. Here’s one representative sound bite: “I got so pissed off…. [Funders and policy wonks] were talking about what nonprofit leaders should do and what measures they should [have him or her] use. As an ex-CEO, I thought to myself, I’d be really offended if someone else would be telling me what to do…. Don’t try to change what the grantee’s trying to do…. Pick those grantees where you agree with that mission, and then figure out how you can help that grantee get stronger, better, more effective, so they can be more effective for those they serve. That to me is the magic.” If you only have a few minutes to spare, here are Mario’s answers to Frederick’s fun “Take Five” lightning round of questions.

Now that the beach-reading season is almost over, we want to plug two serious books from seriously smart thinkers who make us think of that classic ad tagline “When E.F. Hutton talks, people listen.” Stanford’s Paul Brest and Energy Innovation’s Hal Harvey have just released a revised edition of Money Well Spent, incorporating new insights on the most important advances in outcomes-focused philanthropy over the past decade. The Center for Effective Philanthropy’s Phil Buchanan has just completed Giving Done Right (you can preorder it now on Amazon), which we had the honor of previewing. The book is no mealy-mouthed, milquetoast presentation of others’ ideas! Buchanan’s strong, passionate point of view on effectiveness is built on the vast dataset his organization has collected on foundations and their grantees—as well as hundreds of revealing, true-colors conversations he’s had in the course of advising foundation executives and boards.

It was great to see Sarah Hemminger‘s work profiled by New York Times columnist David Brooks, every progressive’s favorite conservative. “Where American Renewal Begins” highlights Baltimore’s Thread, which “weaves an elaborate system of relationships, a cohesive village” to help underperforming high school students confronting significant barriers. We think it’s significant that the organization has committed to deepening its presence and impact in Baltimore despite the fact that dozens of cities have come calling.

Kudos to our wonderful colleague Fay Twersky on Tracking Progress: Setting, Collecting and Reflecting on Implementation Markers. The guide began life as an internal resource to help Hewlett Foundation program staff, but Twersky decided to make it available to all comers, because she wanted to practice what she preaches about the value of learning and sharing. The guide is a companion to two other valuable resources: A Practical Guide to Outcome-Focused Philanthropy and Evaluation Principles and Practices. “Taken together, this suite of materials represents our current best thinking about how to stay focused on results and ensure we are learning and reflecting along the way,” Twersky explained.

We have no idea why we were so late to the party, but we’ve just discovered and are super impressed by Greater Good Magazine, an online-only publication chock full of science-based insights on how to add more meaning, purpose, and joy to your life—the theme of the Leap Ambassadors Community’s profile of philanthropist Duncan Campbell. We learned about the publication from our friends at the Einhorn Family Charitable Trust, which supports the magazine and its wide array of programs aimed at increasing “pro-social” behavior and helping our society rediscover its better angels.