My guest today is Jeff Martin. Jeff is Director of Media Relations for
the Council on Foundations. Jeff discusses the events that led up to
bloggers being invited to attend the recent conference, plans to
provide streaming video of conference sessions next year and the need
for transparency to be embraced by foundations.

• Launch Podcast

Expand this post using the link below to read the transcript.

Sean Stannard-Stockton: Hello and welcome to the Tactical Philanthropy podcast. I’m Sean Stannard-Stockton, author of the Tactical Philanthropy blog, and Principal and Director of Tactical Philanthropy at Ensemble Capital. My guest today is Jeff Martin. Jeff is Director of Media Relations for the Council on Foundations. Good morning, Jeff. Thanks so much for joining us.

Jeff Martin: Good morning, Sean. Thanks.

Sean: Why don’t you begin by introducing yourself and explaining to the listeners what the Council on Foundations is and what you do for the Council.

Jeff: Sure. I am, as you mentioned, I’m the director of media relations here at the Council on Foundations. The council is an association based in Washington, DC, of about 2,000 foundation members and corporate giving programs.

Sean: OK. For this year’s Council on Foundations’ conference, you decided for the first time to invite a number of philanthropy bloggers, myself included, and you issued them press credentials. How did this decision come to pass? Do you think the Council’s going to continue this practice?

Jeff: Absolutely. Absolutely. I think it was actually long overdue, Sean. We wanted to bring in the bloggers because there’s no escape from it. They are a part of the media. It’s 2007 – I wish we’d did this three, four years ago – gotten them on board. There was some concern in the field of how this would be received, and also what exactly the bloggers would be doing. I think there was some confusion or misperceptions of even what the bloggers would be doing. My response was that how would you handle it if the New York Times were there or any of the major newspapers or any of the major media? It’s the same medium. I just think that we need to get into the 21st century.

Sean: Do you think that council members – the large foundations in particular – were they happy with how things played out, or did they have some concerns?

Jeff: They were pleased. I think they were very pleased. It’s funny because this goes with anything in life. They were afraid of what they didn’t know, and once they saw the bloggers, and what you were posting, and the responses, and the genuine conversation that you helped promote, they were overall very pleased, very pleased.

Also, what was interesting was, of course, the real-time. They’re used to reading – we had great articles in the Seattle Times, but that was the next day. So it was interesting to see things done in real-time.

Sean: So, it’s my understanding that the council is currently making an effort to make sure that the public at large is aware of the work that foundations engage in, and that your CEO, Steve Gunderson, is kind of particularly adamant about this communicating the role of foundations. Why is this such as important issue? What misperceptions do you think you’re trying to rectify?

Jeff: I’ll tell you what. The misperceptions that we’re trying to rectify is – well, first of all it’s interesting because I don’t even know if it’s a misperception. There isn’t even a perception. We ran a survey. This was several years ago, about four or five years ago. We asked the person on the street if they could name one foundation, and only 11 percent could name a foundation. Eighty-nine percent couldn’t even name one foundation — Ford, Rockefeller, Gates, anybody.

So there isn’t even a perception. They just kind of have this shrug of the shoulders and when they hear philanthropy, they don’t know what it means. If they do know foundations, they think, “Well, you guys write checks and you help people.” A shrug of the shoulders.

Interesting point of that is when asked if they knew of a foundation, a higher percentage actually named a charity. Like, “Can you name a foundation?” “Sure. Red Cross. Catholic Relief. Salvation Army.” So there’s no distinction between. It’s all just charity to them. So that was an interesting point in that there isn’t a perception.

When we did talk to influentials and people that did know the foundations, some of the negatives that came out were that they thought foundations were arrogant, paternalistic, and overly-academic. The positives were that they have the resources, and they’re able to take the risk, and they can do what government and industry can’t do.

In government, if you take risks, you could be out of office. If you take risks in the corporate world, the bottom line is you lose money. It’s not good. Foundations can take that risk, and that’s what they like. So you see the positive and the negative. Arrogance as opposed to risk-taking and researching and getting out there. That was one of the things we found out.

What we want to do now is, we need to take it to the next level, and I think we are, in getting the public to know exactly who we are, what we do, and now, most importantly is how we do it – transparency and accountability.

Sean: What are some of the steps you’re taking to get that out there? Obviously, you kind of opening the conference to bloggers was one piece of that, but what are some of the programs you’re putting in place right now?

Jeff: Well, some of the programs we’re putting in place is we conducted the research a couple of years ago to get this ball rolling. The research on the foundations, and what we meant to society, and what we mean to the communities, and trying to get a communications campaign together to push that out to, as I say, the influentials, policy-makers, and the public. The main thing is it boils down to storytelling. We need to tell our stories.

Every time you have a foundation trying to communicate, what it was in the past was it was numbers, it was data, it was research. There was, “Here’s our assets, and here’s how much money we give out.” They need to drill down and get down to exactly what it means in a story, telling a story.

What happened then is a number of foundations have stepped up to the plate. The first one that comes to mind is Packard, with their Philanthropic Awareness Initiative. What they were doing was drilling down into the types of stories that get coverage. What’s interesting is they found that only one percent of the stories in the paper would be listed as positive, and the foundation world nods and says, “See, I told you.”

But what’s interesting was another one percent were negative. A full almost 98 percent of the stories were transactional. They’re just transactional; in other words, the Jeff Martin Foundation gave away $50,000. It didn’t really drill down into the storytelling. So that’s one of the things we are promoting. Packard is promoting it. The Knight Foundation I know has a lot going with this. Kellogg. There are just a number of foundations that are now getting it and pushing the storytelling component.

Sean: The Philanthropic Awareness Initiative is certainly very interesting. Mark Sedway was the moderator at one of the sessions at the conference called Demonstrating Impact. The session was really about how do we demonstrate to the world at large the impact that foundations have.

The post that I wrote on my blog about that session was by far my most widely read post. What I was looking at was that one way to demonstrate impact is simply to be transparent. So rather than having to go out and tell your story, simply letting people see the story.

A lot of times transparency is viewed as a kind of a public accountability issue, that foundations should be transparent, but I really see it as more of a mark of a foundation that’s really trying to do good. By sharing information, they’re assisting other grant-makers to make the best possible decisions. Does the council believe that foundations should be more transparent than they currently are?

Jeff: They do. They do need to be transparent. And, again, I think a number of people are moving in that direction. There’s a lot of 990s on the cover of their web page; you’ll see diversity policies, front-and-center. I could [inaudible] that whole point.

One thing I do want to go back, which is interesting, is that you mentioned having people come to the site and do that. It’s a push-pull thing in the marketing world, and while we are pulling people toward our websites and learning more about… Again, if you were to go down to the man on the street, or even some of our policy-makers, it’s not going, they’re not pulling.

So one of the things we’re trying to get is the push factor. We still have a long way to go in pushing people to know about us so they will come to our website and get out there. We had a little bit. I started seven years ago when there were only a handful of people in this field.

And they now have estimates of more than 170 reporters in philanthropy as a specific beat: From Sally Beatty at the Wall Street Journal, to Stephanie Strom at the New York Times, Charles Storch at the Chicago Tribune — just a number of them who have this as a specific beat.

And it’s interesting because the editors… for the longest time, reporters had this wonderful relationship, and that was–until about 10-15 years ago–reporters rarely asked questions into the foundation world, and foundations were pretty much happy to keep to themselves and not talk to reporters. At some point, editors got it where it was a “follow the money” scenario.

So the reporters have it, and they’ve stepped up to the plate, as you can see; and it’s one of these stories. Foundations were a little bit slower to come along, but I would say in the past 4-5 years, they’re starting to get that. And they’re starting to tell their story more.

Sean: What do you think their attitude–the members’ attitude–is as it relates to transparency? You have them really going out of their way to embrace transparency, and I look at most foundation websites, their communications, and there hasn’t been a huge change since, say, five years ago. So is this member-driven, or is this more council-driven?

Jeff: That’s a chicken-or-the-egg question. It’s interesting. It’s a little of both; and that’s not just a political answer. We, as the Council, we have been pushing for this. We actually developed, about four years ago, stewardship and standards principles for each of our divisions: That’s Community Foundations, Corporate Grantmaking, Family Foundations, and International Foundations.

So we have a set of standards, and in every one of Steve Gunderson’s speeches, he is always promoting the accountability and transparency issue. It was one of the main topics out of every one of our conferences. We always have sessions on it. Our legal team travels the country and promotes it. So we’ve been beating the drumbeat.

At the same time, our members, I think, have gotten it, and as you’ve said, some of the leaders in transparency–Hewlett comes to mind–they’ve been pushing it. They’ve been pushing it both locally and on a national level. Foundations–if I can go back for a second–foundations really only learned how to talk 10 years ago, 15 years ago. They just learned to talk. “Hey, we’ve got to get our message out there.”

So it takes time. It’s been kind of incremental. And that’s why you’re still not seeing the transparency issues. They’re certainly not hiding; I think a lot of them just don’t realize it’s in their best interests to be front-and-center. But that’s coming along.

Sean: Jeff, you took a big step–and a big risk, I think–when you decided to invite bloggers to conference. And on your website now, you have video of the plenary sessions, which is a great step. What do you think next year of actually recording, in audio or video, the actual conference sessions, and releasing them? So you don’t just have people like myself telling people what happened, but you actually…

Jeff: Yeah. Well actually, I wanted to go back… when you said, “taking a risk” it’s funny because you and I know, and I think a lot of your readers know as well, that it wasn’t much of a risk at all. The people who are familiar with blogs, and especially your blog and Lucy Bernholz’s and some of the leading philanthropic blogs, know that it wasn’t much of a risk at all. But to the ones who didn’t know, yeah, it probably was some kind of a risk.

But having said that, next year we do have to take it up a notch or two, and what we will be working on with our web team is probably some live streaming video, to make it as live or as close to live as possible, so that people can be a part of it who can’t be physically there.

The next thing I’d like to bring up, which is interesting going to the next step, is recently I’ve had conversations with a number of people who are jumping into the New Media and philanthropy. And the first one to come to mind is Starfish Television, the first sanctioned and dedicated television solely focused on philanthropy. And they’re just dying for content right now, but they’re going to be producing videos and documentaries on what philanthropies are doing. So there’s a TV station focused on it now.

There’s also a company called Good Works, which runs videos via the Internet. They have an Internet channel. And they’re dying for content. So again, they’re running these videos on philanthropy. There’s also FORA.TV, I love it, they call themselves a “Thinking Man’s YouTube.” You can go in and get videos on any subject: health, education, environment… But now they’ve added philanthropy as a specific topic.

You can click on “philanthropy” and you can see Melinda Gates’ speech at our conference in Seattle. You can see some of the people who are talking about philanthropy, get on and actually download it. So I’d love it, at our next conference, to have a full session on this, on dealing with the New Media and bringing the foundation world along.

Sean: That would be great. The Morphing Media session you had at the conference was really more about how media was changing and how we, as philanthropy, should react; what you’re talking about is more “How can we use these tools?” And media is no longer a one-way issue. How does philanthropy take control…?

Jeff: Oh, it’s here. The New Media is here. And the foundation world needs to figure out how to use these tools to promote themselves, to promote awareness, but also to promote the specific issues and what can be done, and hopefully build collaboration. For me, because I’m a communicator, the whole thing is about awareness.

Sean: Well Jeff, thank you so much for your time today.

Jeff: all right, Sean; thank you.

Sean: This has been the Tactical Philanthropy Podcast. For more information about the Council on Foundations, visit CoF.org. Thanks so much for listening.

At the end of her presentation, Clara gave a list of “Enterprise Friendly Funding Principals”. Here they are:

• Make the program decision first…[full stop]…then structure the money
• Ignore overhead rate and fundraising cost in favor of good metrics
• Builder or buyer? Not every organization can and should grow
• Have a scalable grantee? Become a good builder: keep it simple, look at the whole enterprise, and join others

You can find a complete  discussion of the “builder or buyer” language here.

Nancy Roob’s presentation focused on EMCF’s efforts to help scalable organizations grow with quality. The example she used was Nurse-Family Partnership (NFP). In explaining the effectiveness of NFP, Roob certainly did not cite overhead rate or fund raising cost. Instead, she shared these statistics:

• Child abuse and neglect: Down 48%
• Arrests of previously home visited children: Down 59%
• Children with behavioral troubles: Down 90%
• Arrests of mothers after visits: Down 61%
• Months mothers stay on welfare: Down 30%

EMCF isn’t the only group to notice the measurable impact of NFP. If you’re interested you can The Colorado Trust’s publication "Invest in Results. The Story of The Colorado Trust’s Nurse-Family Partnership & Invest in Kids Initiative" and the Coalition for Evidence-Based Policy randomized controlled trial showing a major impact on life outcomes of the mothers and their children.

In her presentation, Nancy said that one of the major questions that EMCF is trying to answer right now is how they can work more effectively with other funders. From what I know of EMCF, it seems that they have an excellent program in place and are practicing a very effective form of philanthropy. I’m sure that the evidence they are building will do a lot to convince other big foundations to join them in supporting effective, scalable organizations. But imagine the leverage they could employ if they managed to tell the story of their grantees to the public at large (which gives at an annual rate of over 7 times the level of foundations). That is the promise of things like Project-Agape. With leaders like EMCF providing data and the qualitative story of high impact nonprofits, a well-developed social networking site could channel massive philanthropic dollars to good causes.

1. Video from the Council on Foundations conference is now available. None of the actual sessions are included, but the video does include well received speeches by Melinda Gates and Mark Warner.
2. I had coffee with Jeff Brooks of Donor Power Blog while I was in Seattle. So I can answer the question on everyone’s minds. Yes, the caricature of Jeff from the masthead of his blog does look exactly like him. I’d never met him before but spotted him from the top of an escalator and knew without a doubt that it was him.

Knickman gave as an example a project that The James Irvine Foundation did on end of life care (if readers know more about this project, email me the relevant links). He called it “the most successful failure I’ve ever seen”, because it really changed the way people approached the issue since the project really seemed like it should have worked.

Thank you to everyone who wrote to say that Knickman was referring to a project of the Robert Wood Johnson Foundation, not the James Irvine Foundation. An explanation of why the project failed and an analysis of what was learned can be found here. I found this part of the introduction to be of particular note and useful in thinking about why philanthropy should work on being more transparent:

The findings from the demonstration project at the core of the study were negative: the interventions did not achieve the goals expected. However, the large investment by the Foundation–which has totaled approximately $29 million to date–may have other payoffs. The findings clarified that changes in care at the end of life are not going to happen with marginal adjustments in the way we organize services. It takes a much more sustained effort on many fronts to refocus priorities for the care of the critically ill. Changes in social norms, professional values, and social priorities all need to be part of the solution.

SUPPORT suggests another lesson for a philanthropy that uses some of its resources to support research and analysis. The project was expensive in part because of the detailed, high-quality data-collection effort designed to measure outcomes associated with different interventions. This dataset is providing a range of collateral payoffs as the research team explores the data. For example, an important study published by some members of the team raises serious questions about the efficacy of the Swan-Ganz catheter, a common intervention to monitor cardiovascular function in critically ill patients in hospitals. Thus, investments in quality datasets can lead to important research beyond the questions that motivated the data collection.

Another way of asking the question Sean asks is this. You spent several days in Seattle. What question do you have that is still unanswered, that is related to what is in your inbox, and that you’d like to keep discussing? What will happen to that question if you continue with business as usual? What ways might you actually pursue an answer or a discussion about the question if you could stay in touch with other participants, speakers, or people you passed in the halls of the Seattle Convention Center?

Email me or email Lucy your thoughts.

Like Perla, I was particular impressed by the passion of Doug Stamm, executive director of Meyer Memorial Trust. Guess what? Meyer Memorial has a blog. With only six posts this year, maybe what they actually have is a potential blog. I would love to hear from Doug and others at the foundation about their views on mission related investing.

They actual started the blog in 2005. Here’s their first post:

Some have advised us not to open our website to invite visitors to tell us what they think. They tell us that foundations usually keep themselves above the fray and more removed from direct and open exchange with nonprofits and anyone who happens by. But that’s not the kind of foundation we want to be. We want to open ourselves to those we serve because we think that makes us stronger and better at what we aim to do.

What do you think? Are we being naive or do you think this is a healthy move for a foundation?

They got 31 comments (I’ve never gotten that big of a response) with all 31 telling them that starting a blog was a great idea. Maybe with a little coaxing, MMT can join the blogging community and enter the conversation on a regular basis.

Pioneering Ideas was launched in 2006 by the Pioneer Portfolio, the grantmaking area within RWJF charged with scouting innovative ideas that may drive breakthrough improvements in the future of health and health care.  Pioneer looks to support unconventional, often higher-risk projects that go beyond incremental improvements to seek transformative change.  You’ll come across several in browsing the blog – posts highlight projects that are redesigning the personal health records of the future, outlining new policy approaches to combat antibiotic resistance, and applying video games to improving health, to name a few.

Included under that umbrella of innovation is room to test new models of doing philanthropy.  For instance, you’ll read below that we’re launching the second in a series of online, open-source idea competitions with Ashoka’s Changemakers initiative. "Disruptive Innovations in Health and Health Care: Solutions People Want," kicks off May 2…

I’ve blogged on disruptive innovation before – the area continues to intrigue me as ripe with opportunity for philanthropy. In my view, what distinguishes philanthropies from charities or government organizations is that we possess the vision, assets and staying power to drive this type of transformative change.  We also know from experience how to discover, test and leverage fresh "disruptive innovations" of our own.

This is philanthropy as it should be – summoning the forces of disruptive innovation and retooling to improve the health, health care and quality of life for everyone in America.

• Capacity building
• Collaboration
• Communications
• Effectiveness
• Relations (government & corporate)

I think that collaboration, communications and effectiveness can all be addressed by embracing social media tools (blogs, wikis, podcasts, etc). These tools can also help tackle capacity building and relations. Technology is never a panacea, but these tools are the building blocks to overcoming these challenges.

The 2007 Council on Foundations Conference made some significant changes to its structure, but its pretty much “inside-the-beltway” kind of stuff, probably not of much interest to those outside the conference… But I have seen a few things of potential interest on a broader scale.

Read the rest here.

Lucy also attended the Philanthropic Fault Line session that I was interested in but could not attend:

Can we facilitate the discussion, informed by thoughtful provocation, open to anyone with an opinion, and moderated over time toward actual strategies for change? We’re not making any progress in the old manner of small, closed conversations that devolve into kvetching. Perhaps we can enhance the thought and practice by bringing video, blogs, written materials, comments, panel discussions and specific proposals for change to these issues – and shining some light on these closed door, “same old, same old” topics.

Read her full post here.

As conference participants head back to their respective foundations, remember that online the discussion is really heating up. Did you enjoy the session “Changing Poverty Through Profit”? Did you know some people refer to this set of topics as Micro Loan Sharking? Were you interested in the mission aligned investing concepts that came up in a number of session? The online discussion of foundation investment policies held here in January was called “unprecedented” by the Aspen Philanthropy Letter. Did Clara Miller and Nancy Roob get you thinking about growth capital and scaling nonprofits? Listen to my interview with Clara Miller that will be posted tomorrow and then leave your comments or questions. Is your foundation experimenting with transparency? Let me know what you’re doing and I’ll showcase your project.

At the end of the Demonstrating Impact session, Mark Sedway had a stack of written questions from the audience that had not been answered. He announced that he would be posting them at the Philanthropy Awareness Initiative and asking the panelists to blog their answers. You don’t have to wait until next year to learn more about the subjects we’ve all explored over the last few days. The information capabilities of the web are already being utilized by a number of people to learn and discuss philanthropy. Spend some time on the blogs I list in the right-hand column or at least use the Chronicle on Philanthropy’s Give and Take blog to stay on top of the discussion.

Last night, Jeff Martin, who had invited me to attend the conference and two foundation staff members, got into a debate about foundation payout rates. It was a good debate, with the two foundation employees holding diametrically opposed views. I told Jeff that he should invite them to record a podcast (online audio) and post it to the Council on Foundations website. Everyone thought is was a good idea. It would take about 20 minutes and cost about $20 or less to make happen. These tools are available, they’re effective and cheap. Nonprofits have been quick to start using these tools. Now it is time for Council on Foundations members to do the same. I believe deeply that we are witnessing a Second Great Wave of Philanthropy. I see the way that technology has revolutionized many industries including the financial services industry that I work in. The time is now for philanthropy to embrace information technology and accelerate the cultural significance of philanthropy as a defining aspect of the early 21st century.

Foundations regularly use grantmaking strategies to orient their philanthropic investments.  These strategies are typically developed by foundation staff, by “philanthropic intermediaries,” or by consulting firms.  Through this Wiki site, we would like to experiment with an alternative to these models for strategy development.  We are concerned that the existing models for strategy development cast far too narrow a net in their search for creative solutions.  They are unable to benefit from the wisdom, experience, and expertise present within civil society, private sector, and academic institutions.  They lack the transparency and opportunity for critical review that could aid in their development and that could help grantees to determine whether they might play a role in implementing the strategy.  And, they tend to reinforce networks involving individuals and institutions with existing relationships to the foundation without providing opportunities for the creation of new networks and partnerships between donors and possible grant recipients.

Through this website, the Packard Foundation would like to bring the “wisdom of crowds” to bear on its development of a possible grantmaking strategy.  Our hope is that this will help to improve the goals and elements of any such strategy while also helping the Foundation to identify individuals, institutions, and projects that could play a role in carrying it out.   If successful, we also believe that the Wiki site could help to inform the work of other organizations and the grantmaking strategies of other Foundations.

Diana Scearce of the Monitor Institute is the project manager and she emailed me an update on how the project is working so far:

At this point, interest level among participants has been roughly consistent with our expectations, while interest in the site as a model for philanthropic strategy development has exceeded our expectations…

There are currently about 140 people registered on the site – coming mostly from the scientific, NGO and philanthropic communities. Of the 140, about 40 have contributed to the forum in some way; and of that 40, a subset of 12 or so participants are making regular contributions. Before we launched the site, we were told by a leader in the social software world that once a dozen people are active on the site it will be self-sustaining; these dozen or so will be the core surrounded by another couple dozen irregular contributors. This advice has proved to be spot-on.

Although the conversations and editing on the wiki site are still underway, it is clear that the ideas generated on nitrogen.packard.org will significantly influence the nitrogen strategy proposed to the Packard trustees. What is not yet clear is the indirect impact of the forum. What is the community of observers taking away? How might the ideas developed on site influence researchers and activists working in the field? How will relationships developed on the site evolve over time? Has the process of working together on nitrogen.packard.org resulted in connections that will extend to collaboration outside of Packard sponsored activity? What is the potential for the emergent nitrogen network?

These are just a few thoughts midway through the process. The story is still unfolding. Packard will be doing an evaluation of strategy forum that will be captured in a narrative account of lessons learned. This report will be made available on the Packard Foundation’s website and the archived wiki site, nitrogen.packard.org.

So why should foundations be thinking about transparency at the program development stage as well as the program review stage? Because what Packard has done is used an ultra low cost tool to gather experts in the field who are contributing their thoughts, for free, to develop the program strategy. People who care about philanthropy are willing to share valuable information for free because of the huge social return that is produced. This gets back to my post regarding the Morphing Media session. Social media tools allow for easy sharing of valuable information and analysis. In the for profit world, there is a critical need to redesign economic models to create better incentives around information distribution. But philanthropy has the unique advantage of social returns already being produced under current models. The knowledge is out there, the incentive exists for it to be shared, foundations and other philanthropic entities just have to set up the technological infrastructure to capture and use this latent knowledge.

To me [Demonstrating Impact: How Foundations Can Show Their Value] is the one that you most have to go to. You have argued consistently (and strongly) for more foundation transparency. You should ask the foundations the questions you pose in your posts: why not share everything they have on a website? Why not publish things that are currently “internal,” like evaluations of specific charities (as opposed to “overall programs”)? Why not blog?

Mark Sedway, director of the brand new Philanthropy Awareness Initiative, had shot me an email last week encouraging me to attend. Reading the description of the session it looked like a class on how foundations can engage in better PR.

I was wrong.

Demonstrating Impact was an incredible session. The room was packed, every corner of the room full of people pressed against the walls and people outside trying to poke their heads in through the doorways. I have over five pages of single-space, type written notes. What I want to share with you isn’t just a blog post. I’m going to have to figure out how to put this all down on paper in a more comprehensive way, but I’ll share some highlights now.

The panelists were:

• James Canales, CEO, The James Irvine Foundation
• James Knickman, CEO, New York State Health Foundation
• Joel Fleishman, author of The Foundation: A Great American Secret

The discussion was nominally about how foundations can do a better job letting influential Americans and the general public know about the good work they do. But at the root of this is a discussion about identifying and measuring the impact of foundation grantmaking. And at the root of that is a discussion about transparency and the sharing of information about what works AND what doesn’t work.

Yes, foundations do great things and most people don’t understand the magnitude of these good works (the very existence of emergency 911 service is attributable to the Robert Wood Johnson Foundation, Fleishman pointed out). But what I found so incredible about the session was the advocating for communication to be designed right into the program strategy from day one. Fleishman talked about The Wallace Foundation and how they do grantmaking in teams with Program, Research and Communications all taking part in strategy design from the beginning.

To me the most important part of Fleishman’s message, the most important message of the session and maybe the conference, is that transparency is NOT about public accountability, it is about improving the sector of philanthropy. It is about improving the way that all of us do our jobs. It is about transforming ourselves from a series of silos to an integrated, robust intellectual capital platform upon which all future grantmakers, big and small, can draw.

Sharing the good works of philanthropy is not enough. A good bit of debate centered on how and why foundations should share their failures as well. To me the issue of why failures should be shared, and why doing so is not a risk for the organization if handled correctly, was nailed by James Knickman:

“We need to frame our release of “failures” as an attempt to learn. No one tells scientists they are a failure when one of their experiments don’t work!”

That’s it right there. What philanthropy is engaged in is an experiment. An experiment in how we can all make the world a better place. We don’t know what the right answer is. In fact, the “answer” is probably evolving as quickly as we can design experiments. But by being transparent, by sharing successful ideas and failed ideas. By judging ourselves not on the outcomes of each grant, but on the body of knowledge that we contribute to the field, we will truly transform philanthropy.

Knickman gave as an example a project that The James Irvine Foundation did on end of life care (if readers know more about this project, email me the relevant links) (see correction). He called it “the most successful failure I’ve ever seen”, because it really changed the way people approached the issue since the project really seemed like it should have worked.

Humans don’t like to talk about their own “failures”. But halfway through the session, someone from the audience who identified herself as a professor of marketing stood up to say that people who admit their mistakes publicly are viewed with more trust afterwards. We need to reframe transparency away from some sort of thing that philanthropy is being forced to consider by outside forces and instead celebrate transparency as the mark of an organization that is truly committed to improving the field.

I’m writing furiously in a Starbucks with a half eaten sandwich next to me. I have another session I have to attend soon. The great thing about blogging is that there is no page limit and there is no final draft (the same could be said of philanthropy). I wanted to get my first impression of the Demonstrating Impact session down while it was still fresh. I’ve completely ignored important themes of the debate that I can’t cover right now. But I’ll be returning to this topic frequently.

Thanks for reading.

So without further ado, here’s my sister, Jessica Stannard-Friel who writes for OnPhilanthropy and co-founded Future Leaders in Philanthropy, on George Overholser and growth capital:

Growth capital, as Overholser framed it both in his speech and in his working paper “Nonprofit Growth Capital: Defining, Measuring and Managing Growth Capital in Nonprofit Enterprises, Part One: Building is not Buying,” is an investment in the firm, whether it be nonprofit or for-profit.  As defined in this article, “Growth Capital is used to build the means of production,” while “Revenue is the money a firm receives from its customers in return for products or services rendered.”  In other words, growth capital is intended to grow the capacity of a nonprofit, while revenue pays for its operations.

Overholser also argues that, in addition to covering the costs of “bricks and mortar” and similar needs, growth capital plays the important role of paying for mistakes, for the learning process that an organization goes through in its quest to become “compelling” to other funders, those who will provide the revenue it needs on an ongoing basis in order to deliver services.  Says Overholser, the “enterprise that surrounds the program” needs support growth capital and often doesn’t get enough.

You can read the whole thing here.

This was my favorite session so far. Clara challenged the notion that nonprofits need to “scale”, get bigger, to be most effective. She pointed out that since nonprofits, by definition, lose money on every “sale” they can’t make up the losses by doing more volume. Instead, in order to get larger, they have to grow both their core business as well as their subsidy business, the fundraising that they do in order to continue an unprofitable business.

Her point, and the message of Nancy Roob, was to discuss how grantmakers can support nonprofits by supplying the growth capital they need to scale. I took away a more general message about which kind of nonprofits philanthropists should even attempt to help grow. Clara mentioned a paper written my her colleague George Overholser, Building is Not Buying:

Building an enterprise is fundamentally different than buying services from that enterprise. And yet, standard nonprofit accounting sheds no light on the building vs. buying distinction. George Overholser believes that this missing distinction is a major reason why a market for nonprofit growth capital has failed to materialize. The good news is that the system can be fixed more easily than one might expect.

When thinking about the difference between a great nonprofit that should simply be funded and one that should be given growth capital, Clara suggested we consider a neighborhood diner that served an incredibly good breakfast menu. Should it scale up? How many national chains serve an incredibly good breakfast menu? Not many, quality is difficult to scale. In this case, the customer should be content eating at the diner (funding its annual needs), but not provide growth capital to open new locations.

I’ve asked for a copy of the presentation to be emailed to me. If I get it, I’ll post some of the relevant slides. The last page of the presentation was four simple tips for grantmakers on how to structure grants. If you’ve been reading GiveWell, none of them will be a surprise, his advocacy of ignoring overhead cost ratios and making unrestricted grants mirrored Clara’s suggestions exactly.

The same is true for philanthropy. I’m less interested in the causes I care about then I am the way in which philanthropy works. Because of this bent, I was more than a little worried that I wouldn’t find many COF sessions that interested me. There are four “tracks” to the conference: Poverty, Public Health, Environment and Disaster Preparedness. The issue-based approach to planning the conference makes sense, but it doesn’t coincided with my set of interests. Without any obvious choice for the afternoon slot yesterday, I chose the Combating Poverty session just so I could see William Schambra speak.

I was electrified…

I’m the first to say that we need to focus on root causes, that Band-Aid solutions are nothing more than temporary relief and that as an industry we need to identify the cause of the problem and attack that cause rather than simply repairing the symptoms of the diseases. My focus on root causes isn’t something special. In fact, many people have defined philanthropy as the practice of dealing with root causes rather than the derisively referred to “charity” which is "just about managing symptoms".

Schambra thinks I’m all wrong. And listening to him, I’m tempted to agree. He argued that by focusing on root causes (which he rightly points out we tend to identify and then change our minds about every couple of years) we are missing nonprofits that are actually doing the heavy lifting of making change. He cited the nonprofit Family House, which he says does a tremendous job of caring for seniors in a poverty stricken neighborhood, but which has gotten no funding from large foundations because it is just a “charity”, it’s not focused on curing the root cause. The fact that the staff of Family House has lived with and helped seniors in poor neighborhoods actually works against them because foundations think they are “too emotional and close to the events”, that it would be preferable if they were “coolly removed and appraising the situation” in the way that foundations deem important.

All of this reminded me of the difference on Wall Street between “strategists” who often discuss the market in terms of long-term “themes” and actual money managers, who care most about what works. I’m attracted to academic “themes”. I like the elegance of well thought out theories that explain why certain problems exist and therefore show where we need to focus our efforts if we hope to stamp out those problems. But as an investment professional, I also know that the single most important thing is figuring out what works. Where and how can I make money? Where and how can I reduce social problems or enhance social programs? That’s the question. And the best answers often come from the people on the ground who are actually making the money or solving the problem. Does company X have the end all solution for a certain economic issues? Does nonprofit X have the end all solution for a certain social problem? Maybe we should just focus on whether something works. If so, invest in that company, fund that nonprofit and leave it at that.

PS: I couldn’t leave out one unrelated note. Deepak Bhargava, executive director of Center for Community Change, announced half way through the program that he was going to paraphrase Margaret Mead and got a huge laugh from the audience:

Never underestimate the power of a small group of people… with billions of dollars in their endowments… to change the world.