Donors must cede decision-making power to grantees and actively share information with each other if they hope to address root causes of social problems, according to a report released Tuesday.
Even with limited resources, philanthropy can help bring major change to the social systems that perpetuate things like gender inequality and poverty, according to Edwin Ou, director of funder alliances at the Skoll Foundation.
“I’m absolutely a believer,” he said. “But it’s going to take a more systematic, collaborative approach to bring these resources together more intentionally.”
With a $210,000 grant from Skoll, Rockefeller Philanthropy Advisors interviewed two dozen nonprofits and social entrepreneurs and more than 100 grant makers. Rockefeller, Skoll, and an advisory group that included the Draper Richards Kaplan, Ford, and Porticus, foundations used the responses to develop recommendations to support transformative, rather than incremental, change to social problems.
Among the takeaways: Donors should allow grantees and social entrepreneurs who are directly working on social and environmental issues to have more say in decisions. It suggests that donors provide unrestricted, multiyear grants, which can help grantees stay focused on their mission rather than on chasing down more cash.
The report also suggests that foundations offer nonmonetary support, such as introducing grantees to other grant makers, nonprofit leaders, and policy makers who might help a grantee acquire new support to expand its work. When doing so, however, donors should avoid offering “unhelpful help” and should assure grantees that declining advice will not harm their chances of securing additional grants.
Aim for Transparency
When fueled solely on grants, organizations are “pushed off a steeper cliff” if they continue to grow without discovering other sources of revenue as the footprint of their work expands, Mr. Ou said. To ensure nonprofits and social entrepreneurs have the ability to grow, he said, donors have to adopt an “open source” mentality, where information is freely shared.
By sharing program audits and financial checks, and by using common application and reporting templates, nonprofits and foundations would be able to work more efficiently, he said. As projects get bigger and have more potential to have a systemic impact, other larger sources of capital will be at the ready to help out if they are part of an open-source effort. For foundations, that means thinking beyond the life cycle of a nonprofit’s grant to focus on how the grantee will acquire outside capital to expand its work.
“We find ourselves in our own status quo that needs to be disrupted,” he said. “Our own transactions, by definition, are time-bound. We had to realize that our exits have to be someone else’s entry.”
Investors With Patience
The report includes several examples of nonprofits that are attempting to change systems to improve health, economic opportunities, and the environment. In each case, foundations that supported those organizations needed to listen closely to nonprofit leaders about changes they felt were necessary to have a bigger impact. And they needed to be patient investors, because systemic change can be a long-term process.
One nonprofit featured in the report, Health Leads, connects vulnerable populations with community health-care clinics. Around the time that the Affordable Care Act was passed in 2010, leaders there realized that to have a deep impact, the organization had to change its approach. By responding to medical queries as they came up, Health Leads would never catch up with a seemingly endless line of patient needs.
Instead of caring for the needs of whichever patients walked into a clinic, Health Leads began to develop strategies to identify social determinants of health, such as poverty and housing quality, that allowed clinics to try to prevent health problems.
But to shift from direct service to responding to the changing needs of a larger patient population, Health Leads needed to find supporters, including Skoll, that were willing to provide general operating support, so money could be shifted as new needs arose.
Mr. Ou said the report is just a snapshot of how philanthropy might make more of a difference if it attempts to change larger societal systems.
The work on the report did not involve a pledge to follow the recommendations, and Skoll has committed to fund a follow-up. It remains unclear how many foundations might take up and implement the recommendations. However, Mr. Ou said there was strong interest from the advisory-group members to continue investigating how philanthropy can change entire systems rather than make gains in bits and pieces.
Mr. Ou said “emergent” grant makers, particularly those in developing countries that have not been working in philanthropy for years, might find the recommendations particularly valuable, because following them would not require as much retooling of existing strategies.
He hopes the advisory group will provide nonprofits in various geographic and subject-matter areas a guide to the practices and players that can help them achieve broader, more sustainable success.
“Over time, we can start to develop a road map,” he said.
