Category Archives: community

Right Money, Right Time, Right Purpose

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or…All You Need is Cash

Ages ago, I took economic development finance and nonprofit finance classes. I now can’t run a detailed pro forma if you stuck a loaded spreadsheet to my head. But the basic concepts have been tugging at my brain as I’ve followed news about three issues.

First, the United Way of the National Capital Area recently decided to restrict grants to nonprofits with budgets of more than $50,000. (The National Center for Family Philanthropy summarized some of the reactions here.) Many people argued that the decision would diminish innovation, crowd out small nonprofits, and increase the gaps between the haves and have-nots. Others argued that the decision made sense given the United Way’s roles as a community problem-solver and an intermediary for big donors’ money.

Second, blog posts by Alexandre Lange, architecture and design critic, and Ethan Zuckerman, director of the MIT Center for Civic Media, questioned the use of crowdfunding sites to fund community development and public improvements projects. Lange called it “Kickstarter Urbanism.” They and others worried about letting government off the hook for its responsibilities and also worried about the crowdfunding process leaving poor communities behind. The same arguments have been used for Donors Choose.

Last, a Chronicle of Philanthropy article described how Denver area nonprofits honorably turned away unneeded donations sent in sympathy for victims of wildfires and the mass shooting at the movie theater. The coalition National Voluntary Organizations Active in Disaster (NVOAD – someone get them a snappier brand) has started a marketing push to educate donors on the most helpful and cost-effective giving after disasters.

The articles and blogs are describing situations in which donors, funders, and nonprofits didn’t think through two basic concepts in finance:

1. Cash is King. The King loves sitting on big piles of unrestricted, flexible cash. The King also loves covering the true, full cost of delivering a product or service plus profit. (OK, technically the King loved peanut butter and nanner sandwiches, but I digress.)

2. Right Money, Right Time, Right Terms. Foundation folks sometimes substitute “right terms” with “right purpose.” The most effective money fits all of these criteria. Basic economics defines “right” as the type of money, timing, and terms eventually negotiated by both parties or by the market as a whole.

Janis Foster Richardson, executive director of Grassroots Grantmakers, had an alternate take on the “right terms” concept in her blog post Giftmaking vs. Grantmaking. She wrote about the problematic confusion in philanthropy between giftmaking (an act of generosity with no strings attached) and grantmaking (a deal struck with expectations attached).

In the case of the United Way decision, were the terms of its grants and follow-up reporting really right for small nonprofits? Did its process deliver money in a timely way? Did its grants inspire other donors to give or crowd them out? Is United Way really the right money to spur and support innovation? Just because the money was available, it doesn’t mean it was right for the nonprofits. But I’m guessing the United Way’s critics were wishing its money was more like gifts and less like grants.

In the case of Kickstarter Urbanism, crowdfunding may indeed deliver cash at quicker and easier terms than a municipal government can. But are small gifts always the right money to build and maintain public spaces and amenities? With rare exceptions, crowdfunding sites don’t produce “Cash is King” situations for project sponsors, so who ensures there’s money for cost overruns and maintenance? And, does it matter if the terms of the cash are truly altruistic or come with hopes for tangible, personal returns (e.g. a nicer park next door or iGizmos for my grandkids’ classroom)?

In the case of disasters, donors often send gifts that are heartfelt (bottles of water and used clothes in the first week or two) but they’re the wrong money and wrong timing for the nonprofits. An NVOAD representative put it simply in the Chronicle article: “Cash is best.”

Blurrier Roles for Cash
Figuring out “right money, right time, right terms” often enough to produce consistent net King Cash has never been easy for any enterprise (business, nonprofit, or the hybrids in between). But communities tended to have patterns of where to look for support. A certain foundation was a stalwart supporter of afterschool programs. A well-known donor couple sought out edgy artwork. A certain bank had friendlier lending terms for nonprofit facilities. There were the three congregations that would help pull the rest along around a social service issue.

It’s not that easy now. Recent changes in grantmaking, giftmaking, and investing seem to be creating an ongoing culture of anxiety in people trying to do good work in their communities.

The near-term culture of downsized government and the agonizingly slow crawl out of the recession are forcing tough choices for donors and donees. Will they step in to fill the gaps in direct services, or will they instead direct cash to advocacy efforts that push for re-instituting government support?

Also, the line between “giftmaking” and grantmaking is blurrier. When a nonprofit approaches a donor for a gift, it more and more often is receiving a check through a donor-advised fund or family foundation. Now strings are attached, even if unintentionally. And, more wealthy donors are protecting their interests through restrictions on their large gifts and hiring consultants to write detailed gift agreements. Nonprofits may have to start running scenarios for “right money, right time, right terms” before they even make an ask.

And, the market for funding sources is downright confusing. In the “olden days” (maybe 5 years ago), the nonprofit CEO or social entrepreneur looked for charitable donations, grants, and earned income opportunities, sometimes taking loans. Now she has a rapidly evolving set of other options – crowdfunding, microgiving, social giving, impact investing, social innovation bonds, and more. If she truly understood them all, she’d have no time to manage her mission. She’ll also find that individuals and informal groups use many of the options to do good on their own, bypassing her nonprofit or social enterprise entirely.

The Big Question
How do communities develop new maps of how they choose to finance social good* – how financial resources are used for community benefit?

I know, I know, the idea of mapping how money is spent to benefit the community sounds wonky, boring, and difficult. But, the real-life consequences aren’t.

  • If your community’s United Way stops funding small organizations, will family foundations pick up the slack or should the nonprofits try to turn out donors through social media campaigns? Or do the small groups just die in a sort of natural selection process?
  • If creative citizens choose to launch their own public art projects, will the arts council and wealthy arts patrons support that grassroots momentum or squash it because it doesn’t match their own long-standing priorities?
  • Can intermediaries like United Ways and arts councils still add value? In the face of expanded and blurry cash sources, can they still create valid community plans for services or organize around the currently-popular collective impact model?
  • Foundations and banks often manage their giving and investing in community development projects based on assumptions about government investment in infrastructure and public safety. When government limits that investment, what should the foundations and banks do?
  • Crowdfunding sites, Awesome Foundation chapters, and other grassroots giving efforts can launch dozens of cool ideas. Some ideas could even be remarkable innovations or healthy signs of renewed civic activism that need nurturing. Will the idea sponsors be able to find the right money at the right time and terms to replicate and expand?

There will never be a unified vision or master plan for financing social good in a community – there never was. Communities will always be wonderful messes of people, organizations, and money committed to good intentions. But, given the increased blurriness of financing options, I think communities would benefit from honest and open discussions about their values and aspirations for “right money, right time, right terms.”

Sometime, soon I hope, a bright person or consulting group that will develop an effective way to facilitate answers to those questions and more – to develop 21st century answers to the right King Cash for social good. When you find that person or group, send them my way. I know at least my adopted hometown of Pittsburgh could use them.

*Thanks to Lucy Bernholz for the first reference I saw to the term “financing social good”

The Foundation World Needs Community Philanthropy to Succeed

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“Participation is the new endowment.”

This observation from the Aspen Institute’s Janet Topolsky has been stuck in my head since I read it a month ago in the Nonprofit Quarterly. She was part of a panel discussing the recent report The Value of Community Philanthropy by the C.S Mott Foundation and Aga Khan Foundation.

The article came around the same time that philanthropic provocateur Emmett Carson spoke in Pittsburgh. He cited the Philanthropy Awareness Initiative’s research showing the majority of civic leaders across America don’t feel informed about the work of foundations and can’t cite an example of a foundation’s impact. He thought the lack of awareness also led to poor public policies, including those that propose to restrict philanthropy or decrease charitable deductions.

In addition, polls show that Americans’ trust in institutions is continuing to decline while their participation in anti-establishment groups is rising. For example, in Edelman’s 2012 Trust Barometer, only half of Americans trust a nonprofit to do what’s right or see a nonprofit leader as credible.

The Philanthropy Awareness Initiative tells us to counter the lack of awareness (and I suppose trust) with increased strategic communications. I’m not convinced that increased communications works when people don’t feel personally and emotionally connected – when tan issue doesn’t touch their daily lives.

I’d argue that true community philanthropy is the most effective and sustainable countermeasure to the lack of awareness and trust in foundations.

Community Philanthropy’s Benefits
There are many different takes on the definition of community philanthropy, but the benefits described would definitely be healthy for the foundation world and for the communities it serves. A few examples:

  • Asian Americans/ Pacific Islanders in Philanthropy (AAPIP) describes community philanthropy as when “Communities expand their pool of economic assets, build their social capital, and demonstrate enhanced and increased capacity to develop tools that meet their own needs.”
  • The Mott and Aga Khan report lists six common characteristics: organized and structured, self-directed, open architecture, civil society, using own money and assets, and building an inclusive and equitable society. It notes that when people give together, they build self-identity, trust, and community leadership. Their giving to solve local problems confers legitimacy on the solutions that is missing from government aid or big foundation projects.
  • Bill Schambra recently reminded a group of grantmakers that the acts of everyday citizens forming associations and nonprofits are fundamental to sustaining and strengthening democracy. He also saw the foundation world as at best ineffective in supporting these acts, and at worst accidently working against them. His comments could easily apply to community philanthropy and foundations’ support for that approach. The TCC Group’s Chris Cardona also writes regularly about philanthropy’s role in society and about democratizing philanthropy.
  • A relatively new project, Adventures in New Giving, looks at community philanthropy through the lenses of the sharing economy and the new technology tools that accelerate collaborative giving and building communities of givers. Lucy Bernholz and many others also are watching and writing about these trends.

Supporting everyday people in getting together, giving together, solving problems, and innovating together. Shouldn’t the benefits of community philanthropy be an easy sell? Shouldn’t participatory philanthropy be the new endowment?

Connecting Foundations and Community Philanthropy
And yet, most traditional foundations don’t seem sold on the idea. Even community foundations often miss the point and end up practicing philanthropy in communities but not practicing community philanthropy.

I do think that community philanthropy efforts can and will succeed without (or in spite of) support from traditional foundations (or “Big Giving” as Tim Hwang calls them). Giving circles, Awesome Foundation chapters, and other micro-philanthropy efforts will keep kicking butt on their own.

However, there’s too much at stake for traditional foundations to ignore community philanthropy. It is too easy to lump even the most community-minded foundations into “the establishment,” not to be trusted and not to be left to manage itself. Big Giving needs community philanthropy to reconnect civic leaders and everyday people with the power and joy of organized philanthropy. To make their work more of the community and less like an inaccessible, disconnected option only for the wealthy and powerful.

Regional associations of grantmakers could actively invite community philanthropy into the fold. More foundations could adopt community philanthropy approaches (see the  Philanthropic Ventures Foundation and Grassroots Grantmakers’ members as examples). As the Mott and Aga Khan report notes, foundations could improve government programs through community philanthropy. Heck, foundations could even pick up on my idea of developing Trusted Community Giving Centers.

So what do you think? Is community philanthropy a great answer to rebuilding civic trust and broader connections to the foundation world?

Foundation Executive as Community Builder

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“…outside resources will be much more effectively used if the local community is itself fully mobilized and invested, and if it can define the agendas for which additional resources must be obtained.” - Building Communities from the Inside Out, John P. Kretzmann and John L. McKnight, 1993.

I’ve been reflecting on how much my early training in community economic development continues to influence my current work in philanthropy.  I fell into both professions by accident, and the book quoted above and subsequent training on the Asset-Based Community Development (ABCD) approach continue to be integral to my worldview.

I was lucky that mentors ranging from neighborhood leaders to national foundation staff continued to introduce me to leaders and tools that worked in the same spirit:  Jim Diers, Bill Traynor, Everyday Democracy, Grassroots Grantmakers, Project for Public Spaces, and Cambridge Leadership Associates, just to name a few.

Because of these influences, I tend to take as a given that:

  • All people and communities are full of assets and capabilities
  • Smart community leaders help people identify those assets, make use of them, and grow additional skills and talents
  • Enduring community improvement starts with everyday people connecting with each other, cultivating their civic leadership and civic entrepreneurship skills, and planning and acting on the future of their community
  • Community building and trust building work has value by itself and not just as a means to another end

In looking back on my first year as executive director of a family foundation, I realize that I’ve continued to adapt these influences to the family and its philanthropy.  I see my work as an internal community builder.  My job is to help each family member identify her or his philanthropic skills and interests, and create an environment in which those skills and interests are recognized and flourish.  And, my job is to help them stay connected to each other and become more invested in and mobilized around their foundation’s future.

The tougher task is to continue the ABCD spirit in the foundation’s grantmaking – to see the nonprofits and communities we serve as full of capabilities, and to ensure our grants help them build on their assets effectively. Years of work in grantmaking unfortunately often translate into a lazy “been there, funded that, didn’t like the grant report” cynicism and distrust in community improvement powered by everyday people.  I hope my role can be to guard against that cynicism and distrust, including in myself.

As I write this, I’m attending the 2012 Family Philanthropy Conference.  NCFP’s CEO Retreat has started the conference with a discussion of the family foundation CEO’s role using GrantCraft’s Roles@Work materials.  “Community builder” didn’t appear as a role, though many of the roles described feel familiar, including bridge builder, connector, organizer, talent scout, and validator.

If the asset-based community building approach makes sense to you in family philanthropy work, drop me a line. I’d love to find more foundation staffers who are working from the framework!

(Also posted at http://www.cofinteract.org/rephilanthropy/?p=3919)

Whom do you trust to lead community improvement?

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Whom do you trust to lead community improvement?

This question keeps rolling through my head as I’m participating in the Growing Social Impact for a Networked World conference.

It’s not an easy question. It gets to the heart of a person’s values, upbringing, work history, own sense of self-control, and more. And, it’s a tough conversation for a group, whether that group is a philanthropic family or a foundation board.

But I’m convinced it’s an essential question for self-reflection by foundations and philanthropists, especially now as people, communities, and nations struggle to find the best paths out of the recession.

I think when you boil everything down, a foundation or donor ends up with three choices as answers:

  • Citizens – philanthropy that strengthens citizen engagement and leadership and even helps them exercise their voice in and lead community progress. It’s philanthropy that puts its trust in everyday people, consumers, start-up social entrepreneurs, and unincorporated networks.
  • Frontline delivery mechanisms – philanthropy that strengthens nonprofits, schools, and congregations. It’s philanthropy that puts its trust in the professionals who have studied the issues and had experience in delivering effective solutions.
  • Strengthening institutions – philanthropy that strengthens the ability of government agencies or the corporate community to move our communities and nation forward.  I know that most people will hate that I’ve lumped these together.  But I see them both as expressions of supporting the existing aggregations of power (market and elected).  And the philanthropy that puts its trust in them looks similar – support of public policy, public will-building, multi-sector partnerships, etc.

The easy answer is to support all three, and it can be sometimes be smart to do. But “all 3″ is also the weak way out.  It disconnects giving from fundamental core values and beliefs – of the real answer to where you see power* and authority should be placed.

As one example, the community foundation field especially struggles with this question because they try to serve all three audiences simultaneously. Their answers show through how they design their strategic philanthropy and community leadership initiatives. Some answer “We’re about empowering donors and/or neighborhood residents to lead change” (trust the people).  Others answer “We’re about building strong nonprofits and social entrepreneurs through grants and capacity building services” (trust the delivery system).  And others answer “We’re about building community assets for the long run and hiring smart staff to run initiatives” (trust us as the institution to lead change).

As another example, funders in my adopted hometown of Pittsburgh are paying for an assessment of the community development system. Though the essential question above hasn’t been explicitly asked in discussions so far, funders, intermediaries, and government officials are revealing their biases. Some see the community development system at its roots as being about supporting citizen-led change; others as about robust delivery of units, jobs, and saved lives; and others about catalyzing and increasing the investments of government and financial institutions.

So, what’s your answer – where do you place your philanthropic bets?  And, do you have other answers?

 

Caveat:  I’m a white Midwestern guy, child of two generations of entrepreneurs, with an employment history in state government and endowed foundations. Many will say I have no standing or legitimacy to discuss power dynamics. I’m ok with that.

Creating a Trusted Community Giving Center pt. 4

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Recent conversations and readings have inspired my thinking about a hypothetical Community Giving Center – a physical and virtual network of and for generous people.

What’s a Community Giving Center about?  In my last three posts, it was about the right physical environment, a culture of reciprocity, low-level affiliation, open architecture operations, employing network weavers, and mobilizing resources around resonance.  In addition…

It’s about “meaningful giving,” not “effective giving” – the recent research report, Money for Good, showed that wealthy donors say they care about the effectiveness of nonprofits and their own gifts.  However, few donors do intensive research into effectiveness before they give.  What’s more, donors are incredibly loyal, with 86% of donations going to the same organizations as last year.

This shouldn’t come as a surprise.  People naturally want to be right – we naturally feel we’re smart donors or investors.  It’s called confirmation bias, “a tendency for people to favor information that confirms their preconceptions or hypotheses, independently of whether they are true.”  Behavioral economics and communications research confirms that our emotions and beliefs will outfox facts and rationality every day.  Two recent great reads on this include Network for Good’s Homer Simpson for Nonprofits (doh!) and the Boston Globe’s article, How Facts Backfire.

There will never be universal demand for nonprofit effectiveness ratings, outcomes data, and program logic charts.  (Sorry friends in the evaluation world.)  But what is universal is our search for meaning and for connections to community and something bigger.

Our hypothetical Community Giving Center is ultimately focused on helping people get their generous stuff done, whether that is donating, volunteering, advocating, or investing.  I think this will mean more time helping people define and act on what is meaningful for each of them.  More time helping them connect with others who share their hopes and concerns for the world, and even taking action together.  Questions about impact and effectiveness may naturally flow from the network of generous people and the Center would help them explore options that make sense for them.  But the Center would lose donors’ trust if it tried operating with a culture that “impact-based giving is better than emotion-based giving” (e.g. “we professional staff or long-time donors are smarter than you”).

What if nonprofit CEOs, foundation staff, and philanthropy advisors (including me) and philanthropy critics gave up their addiction to telling donors what to do and how to give? (And, who will create the drugs and 12-step groups necessary to support that process?)  What if a traditional philanthropic institution was truly generous and gave away the concepts of “good giving” and “right solutions to community problems” to generous community members?

Conclusion (for now)

Consultants more experienced than I am say the world of philanthropy is going through big changes.  The Monitor Institute’s What’s Next for Philanthropy and Duke University’s Disrupting Philanthropy are just two of the important current analyses of philanthropic trends and changes.

The world is working in more networked and transparent ways.  Boundaries between private, philanthropic, government, and citizen sectors are blurring.  Individual donors and entrepreneurs have more options to express their generosity, attract others’ generosity, and drive community change.  Existing institutions that work in community philanthropy – United Ways, giving circles, community foundations, churches, youth service initiatives, and others – are facing tough culture changes to survive these changes and more.

My hope is that the hypothetical Community Giving Center I’ve described may offer some clues on new ways for those existing institutions to do business.  At the core, the idea of the Center is about helping people get their generous stuff done, however they define that along the way.  It would attract people through a setting and culture that create a trusted, authentic, fun, and useful experience – one that meets the changing ways the world works and changing options people have to express their generosity.  Done right, I think the result would be increased giving, volunteering, advocating, and socially-conscious investing.

What do you think?  Is the Community Giving Center idea worth pursuing?  Is it even feasible?

Creating a Trusted Community Giving Center pt. 3

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A recent conversation with Bill Traynor and other readings on networks have inspired my thinking about a hypothetical Community Giving Center – a physical and virtual network of and for generous people.  Hopefully the ideas will inspire other community philanthropy groups.

So, what’s a Community Giving Center about?  In my first two posts (here and here), it was about  the right physical environment, the culture of reciprocity, low-level affiliation, and open architecture.  In addition…

It’s about “weaving not managing” – And, it’s about leadership focused on network building over managing or institution building.  Traynor talked about the importance of his staff and other neighborhood leaders being “network weavers.”  Their purpose is to grow their community’s capacity for collective decision-making, problem-solving, and information sharing.  The Networked Weaving blog says that weavers connect people strategically where there’s potential for mutual benefit, help people identify their passions, and serve as a catalyst for self-organizing groups.

I love the idea of people dedicated to growing and connecting others’ philanthropic problem-solving skills.  Many community foundations, giving circles, and donor groups strive for this.  However, I see them often caught up in focusing on the grant transaction process.  After the grants, the donors may understand little more about their individual hopes or how to achieve them not just as donors, but as connected citizens, community leaders, volunteers, and people of faith.

What if your local community foundation hired “network weavers” instead of “program officers” and “donor service officers”?  Or, what if philanthropy network weavers were co-hired by the community foundation, United Way, and local wealth and estate planning advisors? What if their charge was to be a trusted resource to increase community giving, regardless of the outcome for their employer(s) and regardless of their personal or organizational agendas?

It’s about mobilizing resources around resonance – the article “Working Wikily” describes how networks (online and in-person) make it easier to mobilize people and to coordinate resources and action.  In The Networked Nonprofit, Beth Kanter and Allison Fine discuss how nonprofits can work with networks and even “free agents,” passionate givers working outside of organizations.

Bill Traynor talked about how his network-based organization is striving to be more demand-driven, deriving new programs and community agendas from trends in choices the network members make or desires they voice.  Bill uses what he calls “resonance testing,” a process through which his staff members help community residents formulate ideas, test if there’s interest in the idea in the larger network, and then test if there’s willingness to act on the idea.  The process builds authentic buy-in but also creates a low threshold for letting an idea go if there’s no resonance or ongoing purpose.

It’s easy for a nonprofit or grantmaker to set an agenda and then go after other people’s money to accomplish the agenda.  (Score points in philanthropy buzzword bingo by calling it “seeking aligned co-investors to move the needle in a community change agenda”).  However, these agendas only make a lasting different when a broad set of well-connected community stakeholders own them.  Using great stakeholder engagement, as advocated by Grantmakers for Effective Organizations, is a start but isn’t enough.  Truly effective and lasting community improvement will draw from the power of resonance testing and resource mobilization by a network of generous people.

What if community philanthropy groups mobilized community resources based on resonance testing rather than boring needs assessments?  What if they put their own philanthropic resources behind the action of free agents and helped weave those agents together?

I think a great Community Giving Center would be a hub for weaving generous people and helping them test their own ideas for engaging others in community change.  Is this too uncontrollable “power to the people” for you yet?  Maybe, but ultimately it’s about trust and true generosity – more next week!

Creating a Trusted Community Giving Center Pt. 2

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Bill Traynor and other experts who are applying network theory to nonprofits have inspired my thinking about a hypothetical Community Giving Center.  Hopefully the ideas will inspire other community philanthropy groups.

In my last post, I talked about the center’s physical environment and culture of reciprocity.  Here’s what else a trusted, cool Community Giving Center would be about:

It’s about “low-level affiliation” and “choice” – we all value choice and options based on our changing interests and needs.  The concepts of options, opportunities, and real consumer-driven choice are some of the most effective communications messages (see The Language of Trust, Words That Work, or other books on communications framing for a deeper dive on this).

The Community Giving Center would be set up to be easy to join and leave, to move in and out of options to participate, and to take advantage of options for reciprocal value exchange.  Bill Traynor said to think of a networked organization as a health club without a binding contract; people want to be connected to a place with exciting options, but not obliged to it.

It’s about “nimbleness” and “open architecture” – It’s about function (getting things done) over form.  Traynor noted that people of all demographics are fleeing highly-structured organizations with high expectations of “members.”  People want environments that are flexible, time-limited, and able to re-organize as they go.  Nonprofits, unfortunately, tend to have a tough time moving away from hierarchical, rule-bound committees and organizational forms.  A network-oriented Community Giving Center would revolve around rapid iteration.  It would support self-defined, self-organized groups of donors in testing new ideas and projects, evaluating next steps, and expanding or shutting down the project as they saw fit.

What if a generous person was able to jump in at any point and watch or even participate in a grantmaking committee at your United Way or community foundation?  What if your local giving circle invited you and your friends to test some ideas with them, allowed you to give along side of them as it made sense for you without having to officially join?

Intrigued?  Me too.  More ideas in the coming days.