How Changes in Big Philanthropy Are Impacting Local Nonprofits: From the Vantage Point of Two Former (reformed!) Program Officers Katy Hays – Sterling and Associates George Grainger – Texas A&M Foundation

Session Topic Impact investing, strategy, transformational change, evidence and evaluation have become common nomenclature within the field of big institutional philanthropy—large legacy and newly-formed private foundations. Two former foundation program officers will offer insights into what this means for local nonprofits.

Transformational change—a useful definition from Wikipedia: Impact investing Impact investments are directed to organizations with the intent to generate social and environmental change. Transformational change—a useful definition from Wikipedia: Transformative social change is a philosophical, practical and strategic process to affect revolutionary change within society, i.e., social transformation. It is effectively a systems approach applied to broad-based social change and social justice efforts to catalyze sociocultural, socioeconomic and political improvements.

“Legacy” vs. “New” Foundations

What do we mean by “legacy” foundation? Majority are family foundations (controlled by a family) Typically perpetual with no spend-down provisions in their charter Benefactor/board driven grantmaking is common Change is not easy or quick; some in our area are experiencing transitions Can be more attuned to supporting organizations rather than issues Fund organizations they trust and value Eclectic grantmaking where trends can be hard to discern Relationships matter—willingness to hear a pitch from people they know and trust Some legacy foundations will transition away from historic giving patterns to become more issue-oriented; potentially disrupting long-standing grantee relationships

What do we mean by “new” foundation? Some (not all) have a limited lifespan: Benefactors desire to see their philanthropy distributed during their lifetime, and/or Benefactors believe current resources spent relatively quickly will create larger social impact on the issues/organizations of interest to them Grant decisions can be influenced by program staff; more so than some legacy foundations Focus on issues rather than specific organizations—education reform, environment, Many will limit their grantmaking to a narrow field of interest Invest in talent and ideas that match their interests; can be agnostic to the talent’s “institutional home” High interest in evaluation and metrics Some make large investments in knowledge development (research/reports) and dissemination Less open to unsolicited requests (a growing trend with foundations generally)

A Few General Observations Is it possible for private foundations to be instruments of transformational change? Most foundations explicitly or intuitively look to answer three key questions before approving a grant: What are the results I am “buying” with my grant resources? What is the probability that the intended results will be realized? Is this a good use of the foundation’s money given the competing options? Virtually all foundations have annual spending constraints—remember: when you receive a grant from X Foundation, it displaces their current capacity to give to others (e.g.; they must make choices; it will always be competitive)

A Few General Observations (cont.) Major public charities (big local non-profits, academic health, universities, etc.) will maintain their competitive advantage over small- to mid-size non-profits that provide direct services—large organizations have capacity for scale and the issue-signaling power that small ones don’t—a structural disadvantage for small and mid- sized organization that is unlikely to dissipate What do you do really well? Lead with your strengths and be honest about areas where you can improve (smart philanthropy tries to help address weakness in systems and organizations) Can smaller organizations be creative and innovative in addressing operating challenges and creating greater impact? (e.g. MATCH)

A Few General Observations (cont.) Are there simply too many public charities for individual and institutional donors to support effectively? Of the thousands of regional public charities, only a small number are realistic candidates for appreciable, sustained support from private foundations

Practical considerations - - It's Still Fundraising 101! Relationships matter Research is important; i.e. does the foundation support your kind of organization and the work it does? If not, move on! Contacting a foundation’s board—it depends; some allow; some have strict rules against it (do your research first) Program officers are more inclined to talk to your leadership/experts; but DOs have an important facilitation role to play (you know how to connect the dots and make the ask) The best program officers have good instincts about what works or not with their leadership and board—strive to get a timely “maybe” or “no way”

Impact/Evaluation How do you define success? What measurements are meaningful to your organization? How easy is it for you to measure outcomes? Short-term? Long-term? What do foundations (or a specific foundation prospect) want to know? How much capacity do foundations have to evaluate and understand your work?