Tiny Grant Maker North Star Points the Way to Big Shake-Up in Philanthropy

North Star Fund

A city rezoning plan had sent a handful of New York community and church groups scrambling. They were worried it would result in jacked up rents for hundreds of residents in the Inwood neighborhood and that hundreds of immigrant-owned businesses would shutter as a result of real-estate speculation.

The nonprofits quickly assembled a coalition, called Northern Manhattan Is Not for Sale, to press their case. Many of the participating groups were loose affiliations without offices or bank accounts. Most foundations won’t consider grant applications from organizations that lack such basics.

However, the nonprofits were able to secure $5,000 from the North Star Fund, a small community foundation with an unusual grant-making process — a relatively extreme form of “participatory grant-making,” in which the power to make decisions shifts from donors to the people they serve.

While some large grant makers have moved toward the participatory model by bringing advisory panels on board, North Star has actually turned over most of its grant-making decisions to committees composed of activists and others from the neighborhood.

The results for the Northern Manhattan Is Not for Sale effort were mixed. The group scored a string of concessions from the city, but the zoning was approved by the New York City Council last year. Still, a victory soon followed. The experience helped connect the group to other grassroots organizations across the city, which this year successfully pushed for statewide changes in rent laws that are more favorable to tenants. And more support flowed to the coalition from North Star.

Philanthropy often overlooks emerging community-organizing groups, says Ava Farkas, executive director of the Metropolitan Council on Housing, which serves as the coalition’s nonprofit umbrella organization. But the people who decide on grants at North Star were intimately familiar with the organizers who joined with Farkas. They weren’t on North Star’s staff — they work elbow-to-elbow with the grantees who put the money to use.

“They’re definitely in the field and part of the movement, not just looking at our work from afar,” she says.

Gabe Kirchheimer

Getting Noticed

For 40 years, North Star has ceded all grant-making decisions, save a small rapid-response pool of money, to people in the New York City neighborhoods where the charity spreads its cash. North Star, a community foundation that started with gifts from 28 donors, sets up site visits to prospective grantees, hosts meetings, and provides research on community groups and on issues like housing and criminal justice for members of its neighborhood-based grant-making panels to consider. But activists, community organizers, and nonprofit leaders who live and work alongside North Star grantees have final say on where the money goes.

The process makes it easier for small community organizers to get on the radar of the grant maker because the people who make funding decisions are fellow community members and activists.

Participatory grant making has attracted fresh attention in the past year as foundations have been criticized for being too far removed from the people they intend to serve. In June, the Ford Foundation issued a request for proposals and earmarked $300,000 to study the method further, with an emphasis on how to get larger legacy foundations to buy into the practice.

North Star controls only about $10 million in assets and made about $1.2 million in program grants last year. Despite its small size, its long history of participatory grant making has been a model for much larger groups, says North Star’s executive director, Jennifer Ching.

Many grant makers have approached her to learn more about turning grant decisions over to community members.

But she thinks full-scale change is a long way off.

“Philanthropic power has essentially tightened over time, “she says. “It has not been democratized. In fact, it’s become even more donor-driven.”

Educating Young Donors

To capitalize on the rising interest in community-driven grant making, North Star in the fall will host training sessions for young family-foundation members who will learn about the practice and contribute to a shared fund that will rely on community members to decide who receives grants. North Star used grants from the Surdna Foundation and Andrus Family Fund to create the project, called the NextGen Funding Collaborative.

The idea, Ching says, is to educate younger donors about the uneven relationship between grantees and the foundations that wield control over their budgets.

Most of North Star’s discretionary support is managed by groups of activists who live in the neighborhoods the foundation serves. One of them, the New York City Community Funding Committee, makes about $800,000 in grants to grassroots organizations and leaders in the city. The fund’s Hudson Valley Community Funding Committee made $250,000 in grants last year, and the Let Us Breathe Community Funding Committee, a group that was created after Staten Island resident Eric Garner was killed by police in 2014, made $180,000 in grants.

The fund’s staff controls a rapid-response fund, which last year made grants totaling $67,000.

Seeking Bigger Players

There isn’t a clear count of how much money foundations spend based on decisions made by people who live in the neighborhoods where grants flow.

A report issued by the Ford Foundation in 2017 identified about 20 grant makers that use the approach and listed several other examples, going back to the 1990s.

Foundations use it differently. The term “participatory philanthropy,” according to Cynthia Gibson, a consultant who authored the Ford report as well as a study issued by Candid (an organization created by the merger of the Foundation Center and GuideStar), describes a range of activities. Approaches include incorporating grantee feedback into grant guidelines and strategy development, diversifying foundation boards, and organizing giving circles. The North Star model gives the power of the purse to representatives of the communities a foundation serves.

Slow Response

Foundations have been slow to take up the approach for many reasons, according to Jen Bokoff, Candid’s director of stakeholder engagement. First, it’s hard to change an organization’s culture, especially one that has developed institutional expertise in the areas it supports.

“You really have to believe in the ethos that communities understand their own needs and solutions better than anyone else can,” she says.

Also, foundations may not be comfortable with the public scrutiny of their work, and they may worry that grant-making panels made up of people from the neighborhood will get mired in conflicts of interest.

Neha Gautam

Spotting Early Winners

By handing over the grant-making reins to organizers in the city, North Star is able to identify smaller groups at an early stage in their development, says Kesi Foster, the lead organizer for Make the Road New York.

Foster is the co-chair of North Star’s New York City Community Funding Committee, and as such, he serves on the fund’s Board of Directors. Previously, he served on the Let Us Breathe committee. That group began making grants in 2015, largely to groups that worked to hold the police accountable in communities of color, although its mission has expanded in recent years to include other issues, such as gentrification, with an emphasis on supporting leaders of color.

“A lot of people talk about racial equality and the need to lift up black and brown leadership, but it’s not always reflected in who gets the resources on the ground,” Foster says.

A noteworthy success in North Star’s grant-making approach came shortly after the September 11, 2001, terrorist attacks. New York’s Muslim South Asian immigrants felt they were under “wholesale attack” by local and federal law-enforcement agencies, says Fahd Ahmed, executive director of the nonprofit Desis Rising Up and Moving, or “Drum.”

The then-fledgling group, founded just a year before the attacks, used small grants from North Star to help score some important policy successes, including the 2013 Community Safety Act, a law that aims to protect New York residents from discriminatory profiling and unlawful searches.

In the aftermath of terrorist attacks, “that was the kind of work a lot of funders were afraid to touch,” Ahmed says.

Since then, Drum continued to receive support from North Star and other donors. Its annual budget now exceeds $1 million.

A Donor’s View

To raise money, North Star invites donors to take part in the grant-making process, too. In the fund’s Giving Project, donors commit any amount of money that they deem meaningful (the project is open to people of any income level) and commit to raising money among their friends. Over six months, they receive training on the participatory model, make site visits to community organizers in the five boroughs of New York, and after studying grant proposals decide collectively where to give the funds.

Last year, the 20 or so Giving Project participants collected $240,000, and awarded grants to 20 organizations that had been vetted by North Star’s neighborhood panels.

Holly Fetter participated in the Giving Project a few years ago. After graduating from Stanford University in 2014, she arrived in New York for a job at the Ford Foundation. She wanted to support community-organizing groups, but the landscape of nonprofits doing the social-justice work that attracted her was unfamiliar. It was important to her, she says, to be connected to an organization that was “giving up power and control to the very people impacted by injustice.” Through Resource Generation, a network of young progressive donors, Fetter was introduced to North Star.

She became a donor, giving about $10,000 a year to North Star, and eventually became a board member.

Fetter, now a student at Harvard Business School, says many of her fellow students are interested in becoming social entrepreneurs so they can build institutions that can do things like alleviate hunger or improve job training. Those plans, Fetter says, often leave out the people who have firsthand knowledge of a problem and may be best poised to identify strategic opportunities and strong leaders in their own neighborhoods.

However, she acknowledged, it’s not always easy to give up control. Sometimes, a North Star panel will make a grant decision that doesn’t seem quite right, or the grantee doesn’t seem ready.

In those moments, she says, she reminds herself she’s invested in a practice that “challenges that voice inside of me that has been trained to think people with access to wealth have the answers and know better.”

Correction: A previous version of this story said that Holly Fetter gives $25,000 a year to the North Star Fund. The correct amount is $10,000.