1. Reflections on the role of foundations
Thank you for your kind introduction.
Good morning everyone.
It’s an honor to be with such a distinguished group.
And I’ve learned a lot from the presentations this morning.
Others more knowledgeable than I have spoken in detail about the Say Yes model.
I am going to shift the focus to the role of foundations in fostering social innovations like Say Yes.
For about 20 minutes, I’ll share some perspectives from the literature about philanthropy, from the Wallace Foundation, and from my personal experience and then I’m hoping we can open it up for discussion.
I have three topics to cover:
First, some recent thinking on how foundations can create social value, with Wallace’s approach as one example
Second, why Wallace believes that new models like Say Yes to Education are important
And then a few questions to think about going forward
Will Miller
President, The Wallace Foundation
Efficient Investment for
Urban Education and Economic Revival
The Ford Foundation
January 30, 2013

2. Foundations in America
Growing rapidly
1987: 25,000
2010: 70,000
Giving away substantial sums
$47 billion annually
Small in the grand scheme of things
$5 billion to K-12 public education
Only 1% of $536 billion in public spending on K-12 (2004)
America has a larger number and a wider variety of foundations than are found in other parts of the world.
And the number of US foundations is growing rapidly.
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Between 1987 and 2010, according to the Foundation Center their numbers nearly tripled, from 25,000 to nearly 70,000.
Annual giving from U.S. foundations is estimated at about $47 billion annually.
That sounds like a lot, and it is. But it remains small compared to the large, public systems in which foundations often work.
For example, annual foundation giving in the field of K-12 public education is about $5 billion. In 2004, the latest figures I have, the U.S. Department of Education estimated total government spending in the U.S. on K-12 public education was $536 billion.
So Foundation giving in this area is less than 1 percent of the total being spent by government.
The implication is that foundations are not going to be able to solve most social problems by directly relieving the government of the burden of funding the solutions. To make a meaningful contribution to progress, we have to find ways to leverage our dollars.
Source: Foundation Center

3. The functions of philanthropy
Public functions
Create social and political change
Locate and support important social innovations
Improve economic equity
Pluralism as a civic value
Private functions
Self-actualization of donors
In his book “Strategic Giving; The Art and Science of Philanthropy,” Peter Frumkin identifies five possible purposes or “functions” of philanthropy.
The first four aim to create value in the public sphere, either through spurring positive social change, supporting social innovations, improving economic equality, or promoting pluralism as a civic good.
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The fifth possible purpose – philanthropy as an expressive act of self-actualization – creates primarily private value in Frumkin’s view.
None of these purposes are “right” or “wrong”, from my perspective. All are legitimate and useful.
Now, I have a bit more than 30 years of experience making personal donations and serving as a board member of every form of foundation in the U.S. – from family to community to corporate to global. Based on that experience, I am not sure this is a comprehensive list.
Do individual contributions to religious organizations, the single largest category of gifts, fit in pluralism or the self-actualization of donors? What about service organizations like the Red Cross or the Girls Scouts?
It is also hard to locate on this list an organization like our family foundation, which was dedicated to improving the economic vitality and social health of a particular place: my hometown of Columbus, Indiana. A focus on economic development or efficient investing in economic revival – to use the subject of our meeting today – does not fit neatly into Frumkin’s framework, unless you argue they fit under “economic equity.”
In spite of its limitations, I find this an interesting list, in part because all of the public functions -- and related purposes like investing in economic vitality -- involve taking risks with philanthropic capital that may or may not pay off.
Through this lens, foundations can be seen, as they are by a number of commentators, as an important source of social risk capital in our economic system.
Source: Strategic Giving: The Art and Science of Philanthropy, Peter Frumkin, University of Chicago Press, 2006

4. Social risk capital
“Free of market and political constraints, [foundations] are uniquely able, if they choose, to think the unthinkable, ignoring disciplinary and professional boundaries. They can take risks, consider approaches others say can’t possibly work – and they can fail with no terminal consequences.”
Helmut Anheier [AN-higher] and Diana Leat, authors of the book Creative Philanthropy, note that this unique opportunity to create social value fundamentally derives from being free of market and political constraints.
Foundations operate in a world that is not subject to the pressures of the next quarterly earnings report or the next election. This is sometimes cited as a indication that we lack accountability because we can’t be voted out of office by shareholders or the electorate, which somehow makes us suspect or even undemocratic.
My personal view is that, with a couple provisos, our society is made stronger by having at least one sector with substantial resources whose purpose is to add social value independent of the required rate of return for a market-based investment and not captive to partisan politics.
My personal list of provisos include:
First, that the actors in this sector embrace accountability by being transparent about how they use the resources and what the results of these efforts are, and
Second, that we use our unique position responsibly and creatively by taking risks or – as [AN-higher] and [Leet] describe it, by considering approaches others say are not likely to work but which, if successful, could add real social value.
-- Helmut K. Anheier and Diana Leat,
Creative Philanthropy

5. Value creation by foundations
Selection: Carefully selecting grantees who can most effectively use scarce resources
Signaling: Signaling to other funders that an activity or organization is important
Improving effectiveness: Improving the overall effectiveness of grant recipients, thus improving the social return on all the money they spend
Advancing knowledge: Advancing the state of knowledge and practice by learning from the  work of the grantees, filling knowledge gaps in fields, and helping to set agendas
So how might a foundation go about creating social value? Michael Porter, the famed strategy guru of the Harvard Business School, and Mark Kramer identified four possible strategies in an article in 1999:
You can be really good at selecting grantees, creating value by allocating your own scarce resources to the greatest advantage.
If you are known to be really good at this, other funders might take that as a signal that an activity or organization is important, thus adding value by improving the resource allocation of other philanthropists.
You can work directly with grantees, or indirectly by funding technical assistance, to improve the overall effectiveness of grant recipients, thus improving the social return on all the money given to them.
And, finally, you can work to add value in an entire field through advancing policy and practice by learning from the work of the grantees, filling knowledge gaps in fields, and helping to set agendas.
Porter and Kramer argue that improving grantee effectiveness and advancing knowledge are most powerful strategies in leveraging philanthropic dollars to create the most social value.
Source: Philanthropy’s New Agenda: Creating Value, Michael Porter & Mark Kramer, 1999, Harvard Business Review

6. The Wallace Approach (Our theory of change)
Understand the Context
(Engage with the external environment to identify knowledge gaps, field interest, and time lines)
Generate Improvements and Insights
(Build promising new approaches and new evidence/knowledge)
Let me briefly describe the strategic approach that underlies all of the grant initiatives we undertake at Wallace as one example of an attempt to harness these observations about effectiveness and knowledge by Porter and Kramer.
We invest heavily in providing non-monetary assistance to our grantees, both directly by our staff and through building the funding of independent technical assistance into our grants.
And we design the work we do with our partners to simultaneously deliver services to their target beneficiaries and develop knowledge and insights that can help strengthen policy and practice nationwide. Let me illustrate how a knowledge agenda informs all our work.
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We start by trying to understand the context, and identify what we call a high-leverage knowledge gap. With Say Yes to Education, we were interested in learning how shared governance systems at the community level combined with a holistic approach to the challenges faced by our least advantaged kids could help children succeed.
Next, we work with our grantee partners both to help them generate improvements, and to generate insights and evidence on what works and does not work. Our $4.2 million dollar, three-year grant to Say Yes falls in the box on the right.
We then work to share widely what we and our partners have learned so that the field can benefit. Anheier and Leat point out that this is often a missing ingredient – meaning that innovations, even if they work, often do not spread.
Experience has shown that what we learn often deepens our understanding of a field and leads to new questions that become the focus of additional initiatives or rounds of grants.
So at the heart of our approach to philanthropy is this idea that progress is often blocked as much by lack of knowledge of what to do as it is by lack of money.
We aim to create social value in two ways:
first by supporting the work of our grantees to benefit the kids they serve directly, and
second to add value by advancing knowledge that improves policy and practice in the field as a whole.
To hold ourselves true to this second goal, we ask ourselves a simple question: What are we doing that has the potential to make a meaningful difference for those working in this area who never get a dime from us?
Catalyze Broad Impact
(Improve practice and policy nationwide)

7. K-12
More kids are succeeding, but the achievement gap in math is widening
NAEP 4th Grade Math Proficiency
1996
2011
African Americans 4%
17%
Whites
27%
52%
The mission of the Wallace Foundation is to enhance opportunities for learning and enrichment for the least advantaged children in the U.S., so we spend a lot of time working with the K-12 public education system. As a country, we HAVE made progress in public education, but not near enough.
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According to the Educational Testing Service, the academic achievement gap narrowed for about five years after No Child Left Behind was introduced, but has stalled since and, in math, has begun to widen again. The problem can be illustrated with data from the National Assessments of Educational Progress or NAEP, a consistent test taken nationally that most observers view as more rigorous than all but a few of the individual state standards. From 1996 to 2011, proficiency on the NAEP math test among 4th graders quadrupled for African Americans from 4% to 17% and nearly double for whites from 27% to 52%. However, a much larger percentage of white kids achieved proficiency over that time period – widening the achievement gap in math.
We also face an opportunity gap in areas like arts education and other forms of enrichment. According to recent as-yet-unpublished research by Robert Putnam at Harvard, over the last 40 years upper-income parents have increased the amount they spend on their kids’ enrichment activities, like tutoring and extra curriculars, by $5,300 a year in real terms. The financially stressed lower classes have only been able to increase their investment by $480, adjusted for inflation.  The increase among affluent parents was on average 9X more than low-income parents.  
And we lag in some important international comparisons of college and career readiness.
Our graduation rate is 77 percent, below the OECD average of 84 percent
And relatively speaking, it’s harder for children in America whose parents didn’t go to college to climb the educational ladder than in all but two other OECD countries.
Both achievement and opportunity gaps persists
Affluent parents increased spending on enrichment activities for their children 9x more than low income parents from 1960 to today
We lag in some international comparisons
High school graduation: 22nd of 27 OECD countries
Odds of children of less-educated children going to college: 26th of 28 OECD countries

8. A job too big for one institution
Problems complex – few silver bullets
Taking action rarely the province of a single sector
Especially true in a time of strained fiscal resources
Tackling the problems of US public education, especially for the poorest children, can sometimes call to mind the ancient Greek story of Sisyphus, doomed for eternity to spend all day rolling an enormous boulder uphill, only to have it roll back down every evening.
Many of the most promising and innovative interventions fail to producing measurable benefits. Those that do often have trouble repeating or sustaining them. Gains from one helpful change, such as time on task, can be swamped by outside factors such as health issues or a family crisis. Programs that work in a specific setting or community can prove hard to replicate with fidelity in others, or lose their effects when scaled up. The reality is that these are very complex problems for which there are no simple solutions.
Public education, like other areas of government, tends to be a complex system. Given the lack of “silver bullets,”
Taking action on the broad range of problems requires many hands rolling the ball uphill and keeping it from slipping back down through effective collaborations among multiple stakeholders in a community.
And increasingly, in a time of strained fiscal resources, governments are more likely to make progress when allied with other sectors.
I mentioned earlier that two of the innovative aspects of the Say Yes model that particularly drew us to it were
its shared governance model and
its holistic approach to addressing the entire range of challenges that disadvantaged children face.
Say Yes is producing some encouraging early results…
[as we have heard from other presenters this morning]
-- or –
[such as a 7% increase in graduation rates since 2008 and 22% more students transitioning to post secondary programs.]

9. Partnerships are not easy
Problems can stem from:
Insufficient resources
Activities tangential to mission
Tension between partners
We need to know more about how to make these kinds of efforts successful because we already know from research and experience that cross-governmental and public-private partnerships like these are not easy.
As the researcher Francie Ostrower has noted in this publication available without charge on our web site, collaborations – often promoted by foundations like ourselves – can badly stumble when there are:
Insufficient resources,
Activities that are not central to the missions of the organizations involved, or
Tensions resulting from mismatches that partners have over priorities, data, culture and metrics
We are learning some things about what makes such partnerships effective.
Francie Ostrower, Stanford Social Innovation Review, 2011

10. A collective impact model
Shared agenda and approach -- metrics based on agreement about what success looks like
Development of trust among partners who closely coordinate their actions
A team to plan, manage and support the effort
Persistence over a long time frame
John Kania and Mark Kramer have identified four essential factors that can make the difference between wheel-spinning – and the highly productive collaboration they call “collective impact:”
The partners must have a common agenda and a shared view of success;
They must take care early on to earn each other’s trust;
A team of full-time people must be dedicated to make the partnership work, and
The partners must be prepared for the fact that the bigger the change, the longer it will take -- or, as my father used to say: “A good deal is one where you will still be happy if it takes twice as long to get half as much… because it usually does,”
As we have heard this morning, the Say Yes approach has all the elements of the collective impact model.
Adapted from: Collective Impact, John Kania and Mark Kramer, Stanford Social Innovation Review, Winter 2011

11. Collective impact: Columbus, IN
Trust: Weak at first, built by working on the facility needs of the institutions
Shared agenda: Ensure youth have training to get jobs
Metrics: Move focus at community college from enrollment to relevance of coursework and graduation
Team: Community Education Coalition
Persistence: Columbus Learning Center opened in 2005
This kind of approach made a lot of sense to me because -- well before Kania and Kramer described the collective impact model, I experienced the power of its key elements personally.
Prior to 2011, I lived for 27 years in Columbus, Indiana, a community of 70,000 people about an hour south of Indianapolis. While I was chair of the local economic development board in the mid-1990s, it became clear to us that the biggest constraint on our future economic vitality was that students were not graduating from our local two- and four-year colleges with the skills needed for the 3,000 advanced manufacturing jobs we estimated could be created in the area over the next decade. We had a sense of urgency because we also knew that if the skills could not be found locally, the employers would take the jobs elsewhere.
In 1995, we formed the Community Education Coalition – a partnership of local business and political leaders with the heads of our school district and local branches of state two- and four-year colleges – to address this problem. We set out to convince the post-secondary institutions to shift their own measure of success from enrollments (at which they had excelled) to the relevance of coursework to local economic opportunities and completion rates (at which they were decidedly less successful).
When the business community first began theses conversations, our local educational leaders took our questions as an attack. The tone did not change until we figured out that we needed to bring to the table something that met their needs as well as ours. The two state-funded post-secondary institutions happened to both have dire needs for more space. At the time, the state had a list of 72 similar building projects, with only one or two being funded a year. A project for one of our local campuses was number 45 on that list – meaning they could expect the building in about 20 years, and the other wasn’t even on it.
The Education Coalition made them a proposition. The community would fund and own a building that the two universities would share if they would put relevant programs in it and focus on completion rates over enrollment. It took persistence to make good on this deal. Through a combination of advocacy at the statehouse and philanthropic participation in funding both programs and facilities, we were able to open a state of the art facility in In this way, we were able to build trust over time and create a shared agenda with these institutions.
The results have been telling. From 2000 to 2010, the percentage of the county’s population with a high school degree or higher increased from 83.8% to 89.2% and the percentage with a bachelor’s degree or higher from 22.0% to 26.7%. And the advanced manufacturing jobs are being created locally rather than going elsewhere.

12. Say Yes: What we might learn
This experience was one of the reasons why I was personally interested in what Say Yes was doing in Syracuse – with the promise of college rather than the promise of a new building. Philanthropic social risk capital was essential to both innovations. Neither the State of Indiana nor the State of New York could or would fund this kind of work, but both can -- and, I hope will -- learn from it to shape better policies.
That is one of the primary reasons why I believe providing risk capital for the work of Say Yes and other social innovations is a good use of foundation resources; and, why it particularly makes sense in public education.
With Say yes, important question remain.
Will it work in the long run?
How far can it go in producing measureable changes in the lives of the most challenged kids?
Will it be replicable in other cities?
How will the two demonstration sites—Syracuse and Buffalo—inform one another?
Will different outcomes emerge based on local characteristics?
Can it survive a change in the political administrations that collaborated to create it?
At Wallace, we are okay with making our investment without all the answers because we are in it to learn and believe that we will learn a lot.
In general, a funder does not know the answer to questions like these when given the opportunity to invest in a social innovation like Say Yes.
But who else can take these risks? Who else will make these kinds of investments for the good not only of the communities like Syracuse and Buffalo, but -- if we capture and share useful lessons -- for the benefit of children and communities across the country? Who else, if not philanthropy?
Thank you for listening to these reflections this morning. Now, I would be happy to take your questions.
Say Yes: What we might learn