Overcrowded schools, drugs and gang violence, lack of employment opportunities and adult supervision — the problems that condemn low-income and disadvantaged youth to non-productive, unfulfilling lives have been well documented. Confronted by ever-growing demands on its resources and a favorable disposition toward lower taxes by the voting public, government at all levels has struggled to devise and fund strategies to address these problems, with little apparent success.
As government has become less generous in its response, the private sector, however reluctantly, has stepped into the breech. But while foundations, corporations, and individuals have contributed desperately needed ideas and resources to finding solutions to these problems, the results, as often as not, have been disappointing, leaving many to question not only the strategies pursued, but whether the private sector can ever hope to solve these problems without a renewed and deepened commitment from government.
In May, Philanthropy News Digest spoke to Michael Bailin, president of the New York City-based Edna McConnell Clark Foundation, about the foundation's decision to depart from its longstanding program areas and concentrate its efforts in the field of youth development. In the course of that conversation, Bailin explained the theory of change that informed the foundation's decision, provided an overview of its new high-engagement approach to grantmaking, and talked about the similarities — and differences — between that approach and venture philanthropy.
Michael Bailin was appointed president of the Edna McConnell Clark Foundation in February 1996. Before coming to the foundation, he had been president and chief executive officer of Public/Private Ventures (P/PV), a nationally recognized nonprofit organization dedicated to improving opportunities for young people in poor communities. Before founding and joining P/PV in 1977, Bailin worked as a consultant to the Ford Foundation and was the deputy director and counsel of the South Street Seaport Museum in New York City. He also practiced law and taught at both Dartmouth and Franconia colleges in New Hampshire. Mr. Bailin has also served as a board member and advisor to numerous not-for-profit organizations.
Philanthropy News Digest: Tell us about your background. What did you do before you were named president of the Edna McConnell Clark Foundation?
Michael Bailin: For seventeen years I was at a Philadelphia-based organization called Public/Private Ventures, which I helped found. We designed and tested models of social intervention for kids — particularly in the areas of youth employment, community service, and education. There was a bit of a think-tank dimension to our work — with some attention to public policy — but for the most part we were a group of practitioners and researchers who understood kids from the perspective of lots of different disciplines and views. We tried to develop targeted interventions based on knowledge and gaps in knowledge about what worked and what didn't. We would then put those carefully crafted models into five, ten, fifteen cities and try to learn something about them — whether they actually worked or didn't, for whom or not, and why or why not. As a final step, we'd take what we learned and distill it into forms useful for both policymakers and practitioners. I guess you could say we did a little bit of everything, from the designing and testing of different program models to research, evaluation, assessment, and the dissemination of results.
|"...The dance that takes place between foundations and grantseekers left its impression on me. You could even say I entered foundation work with a little bit of a chip on my shoulder...."|
PND: Was P/PV a grantee of the Edna McConnell Clark Foundation?
MB: We got some money from the Clark Foundation, but the bulk of our support came from as many as sixty to seventy-five funding sources a year. Actually, the Clark Foundation was one of the harder ones for us to crack. Its grantmaking was very circumscribed. But whether it was this foundation, or many others I had to call on, the dance that takes place between foundations and grantseekers left its impression on me. You could even say I entered foundation work with a little bit of a chip on my shoulder that came from the way that Public-Private Ventures — and almost every not-for-profit I know — was frequently forced to behave and market itself to foundations. I appreciate the fact that each foundation has its own way of doing things, but the net effect is that a grantee gets pulled in many different directions at once as it tries to please and accommodate different interests. As a result, grantees don't always get to really focus on what they need to do, but instead have to tell a foundation how they can do what the foundation wants done.
In a perfect world, foundations would say to us, "You guys are smart. You know your business better than we do," and they'd let us put our good ideas to work. What happens more often, however, is that everybody requires of you a little something different, so that by the time we raised the money we needed, we could honestly say we didn't know what we originally applied for support to do.
So one of the things I wanted to explore when I came here was whether we could conduct ourselves differently with grantees than most foundations generally do.
PND: What were the foundation's primary areas of interest when you arrived in 1996?
MB: They were largely the longstanding areas that the foundation had started off with in the early seventies. When I arrived there were five program areas, four of which were variations of what the foundation had been doing over the past twenty-five years. One area was concerned with education and student achievement. It began as a school-to-work program, and by the time I got here the focus was on middle-school reform of entire districts, using standards as the basis to drive reform. The second, called the Children's Program, dealt with kids who were neglected and abused, and it, too, was striving to reform the public systems that dealt with child welfare. A third area was criminal justice, and it concentrated on reforming sentencing and the adult corrections systems, with some juvenile justice in the mix. We had a fourth program called New York Neighborhoods, which initially focused on homelessness. But when I arrived, it was moving away from a focus on shelters to community improvements in defined neighborhoods as a way to address at their source some of the factors driving homelessness in those communities. Our last program had focused on tropical disease research for twenty to twenty-five years, especially on blinding diseases in the developing world.
By and large, the foundation tended to stick closely to these areas. That's not to say it didn't change the focus or vary the grantmaking approaches it used, or sometimes even change the geographic area in which it worked. But perhaps more than most foundations, it had a notable track record for staying with what it was doing, hanging in there, and giving these reform efforts a real good ride.
|"...It's hard to ever put enough money into a large public system that will allow you to gain sufficient leverage to actually push change and make things happen...."|
PND: With some success?
MB: Yes, I would say there were some successes, but results were often hard to track, and mostly because of the kinds of systemic reforms these programs were aiming for. I mean, even when we put what seemed like a lot of money to us in a big public system, it was hard to tell what our dollars were doing, or, for that matter, what anybody's dollars were doing. It's hard to ever put enough money into a large public system that will allow you to gain sufficient leverage to actually push change and make some things happen. But that doesn't mean we didn't accomplish anything or have some successes; it just meant that, several decades later, when we looked back at what we'd done, the most we could say was that we had made some good grants, supported some thoughtful work, and that there were good things we could talk about or point to.
But what we couldn't do is be very specific about what had changed for the better, or what would likely stick after our work ended. If you consider that the foundation spent up to $5 million a year in each of its five program areas, and you multiply that amount by ten or twenty years, you'll see that we made grants, over a decade or two, of between $50 million to $100 million in each area. Even so, if change or some social return that would justify the investment of those dollars against the problems they were meant to address was our goal, it's really hard to answer the question, "Did we get our money's worth?"
And that raises, of course, the question about a strategy based on systems reform for a foundation our size. Foundations generally like to see big effects, big impacts, and you often hear the refrain, "Let's go to scale." Reforming an entire system is one way of trying to do that, of trying to do something that will affect a larger number of the population you're concerned about. For example, our student achievement program staff realized very quickly that changing an individual school, as hard as that is, really wasn't going to make a difference for enough of the kids in the community who needed it. So they switched their thinking to, "Let's change the way the school system works, so that more kids will benefit." Systems reform is simply the vehicle this foundation used over the past decade or two in its attempts to achieve scale.
PND: So, after a few years as president, you announced that the Clark Foundation was going to shift its focus to youth development and adopt a different approach, which came to be called the Institution and Field Building, or IFB, approach. What were the factors that drove those two important decisions?
MB: I probably ought to say a little more about systems reform, because I think the contrast between the two approaches will help explain why we decided to move in a new direction.
In systems reform, you're really trying to change the attitudes and behaviors of multiple actors in order to improve services to a particular population. But, as I said, it's really hard to get the leverage to do that. It's hard to know what your resources are doing. It's hard for your million dollars in annual grants to any large school system, whether it's New York, Los Angeles, Chicago, or San Francisco, to achieve very much. In large urban school systems, a million dollars is just a drop in the bucket. But more to the point, it's hard to measure the impact of your investment, when, year after year, you keep granting your money without ever really being able to figure out whether anything you are doing is making a difference.
And it's just as hard to sustain any changes, if in fact you are fortunate enough to achieve them. Even in those instances where you may see some success, it can get washed out very quickly. A change in leadership, a change of the party in power, a change in any number of things can affect the focus of a public agency. Not only that, but you've got to remember that large public systems are fiercely resistant to change.
By contrast, through our Institution and Field Building approach, we begin with something that seems a bit more manageable, something that we can touch — a reasonably sized institution where you can get to know the people running it and the programs they're operating. Our goal — if they meet our criteria — is to help such organizations operate more effectively, more efficiently, and to better serve more kids with better programs — something we believe we have a reasonable shot at making happen. For us, it involves getting to know the leadership of the organization, understanding their goals, and working with them to develop a thoughtful and well-crafted business plan that will help drive the organization's future growth. And, not insignificantly, we're willing to get behind them in a big way — making that same million-dollar investment that we made before, but this time in an organization to whom an investment of that size, over several years, can honestly make a hell of a lot of difference.
Let me put it this way: If we find an organization that's already delivering an effective service to five hundred kids, and we believe that with our support, over time, it can become capable of delivering that same service, at the same level of quality and with the same care, to ten times that many kids, we'll say, "If it makes sense to you folks, we'd like to help you move from serving five hundred to five thousand kids." And if we can help the organization get to that point, we'll see a clear and tangible return on our investment over a reasonable period of time.
With our new approach, we won't get behind an organization if it doesn't look like it is capable of growing, and when we do invest, we won't be guessing whether our investment is producing a return. We invest only in solid organizations that already have compelling products or service models, and that have developed business plans that have clear performance benchmarks, indicators, and outcomes. On top of that, we assign one of our staff who gets to know the organization well and stays close to it while it implements its growth plans. These individuals serve a very important role. They monitor progress and keep up with activities. When they see a problem, or the organization brings a problem to their attention, they work with the organization on addressing it. Sometimes, that might mean bringing in outside help. The point is, by working against a plan, tracking performance against predetermined objectives and being alert to unexpected developments, everyone — the organization and the foundation — can quickly see whether things are working or not working.
|"...With this new approach, we're dealing with something that's better defined, something where there are clear measures against which to work, and where we've already done exhaustive due-diligence...."|
So with this new approach, we're dealing with something that's better defined, something where there are clear measures against which to work, and where we've already done exhaustive due-diligence that tells us whether an organization has not only the will but the ability do what needs to be done in order to reach its goals. And if we select our grantees well, we have a reasonable certainty that we're going to get some decent and discernable outcomes down the road, because the organizations we've chosen to work with have already shown themselves capable of delivering an effective product or service.
PND: Before we talk about how you choose your grantees, could you say a few words about why, within the field of youth development, you've decided to target organizations that work with young people during non-school hours?
MB: There are a lot of reasons, actually. I guess the first is that if you really think about kids and how they spend their time, there is a real opportunity in the non-school hours to do constructive things for young people. Those are the hours that kids otherwise spend alone or with their peers, often with few meaningful programs or activities to occupy them constructively. We're especially interested in kids who have the fewest opportunities and are at risk of getting entangled in harmful or destructive activities. Given the range of options available to us, it just seems that a focus on kids and their out-of-school time is the most productive area in which to put some dollars with the reasonable expectation of seeing some positive things happen.
Of course, we could just as easily have opted to develop a strategy that focuses on lots of things that go on in school, but that would have put us right back on the same track of working inside a public system that I just described as unwieldy and hard to deal with, and where the million dollars seems too little and often gets absorbed without discernable outcomes. So going outside the system and focusing on the non-school hours seemed like a potentially productive way to go, and I think the research — what little there is — bears that out. I should point out, however, that many of the programs we are supporting do themselves have strong connections to schools, and some draw their participants from schools.
PND: What was the reaction of your grantees and colleagues — especially funders working in areas you had been active — to the announcement of your new approach?
MB: I think there was a great deal of curiosity about what we were planning to do. For those who had relied on the Edna McConnell Clark Foundation to put money into the same things they were doing, obviously there were feelings of confusion and regret. But your question also raises the larger issue of people, of grantees, becoming accustomed to a foundation doing its business in a certain way over time, and, as a consequence, making it difficult for the foundation to change or move into new areas.
For staff here who were nurturing those longstanding initiatives, it really didn't matter what kind of new approach we might introduce. They flatly would have preferred to see those resources allocated to the approaches they were already directly familiar with. As for this particular new institution-building approach — most of the staff here didn't really see it as complementary or as something they could effectively incorporate into their existing initiatives. Instead, they viewed it as something that could pull them in a different direction, something competitive and a challenge to their longstanding programs.
I think it's fair to say that some of our senior staff were a bit chagrined. And long-time grantees in their programs were, of course, disappointed. The trustees, however, were enthusiastic, because I believe they were starting to see many of the same things in the systems-reform approach that first concerned me when I got here.
Other funders? That's probably the most interesting group to consider. You can't control what other foundations do, and they can't control you. They're pleased when you're with them, and sorry when you leave them. But they realize they're going to move on at some point, too, so no foundation really suffers the approbation of its sister institution when it bows out. Those who viewed us as a long-time partner in a given area were probably the most chagrined, because our leaving would make things harder, and either they or somebody else would have to pick up the dollars that we wouldn't be kicking in anymore.
So I guess I'd have to characterize the general reaction to our departing these longstanding areas as disappointment, and I'd have to say that it wasn't easy for many to see us make that change.
Also, you have to realize that we had announced we were going to fund far fewer organizations with this new approach. Not only were we were going to focus on one area — youth development — instead of five, but instead of a hundred and fifty to two hundred grantees a year, we were talking about, at most, making six or seven new grants a year, resulting in maybe thirty to thirty-five grantees at any one time, and never more than that. So the new approach also involved winnowing the number of grantee organizations down, and that dismayed many. But then there are the new grantees in youth development that we're beginning to work with, and I'm pretty sure they're glad to see us enter the field.
PND: Let's talk about your new approach. As it's documented on your Web site, the IFB model comprises five stages. Without going into a lot of detail, can you describe those five stages?
|"...Our approach to dealing with the disappointment of grantees and others in our long-time areas was to be very candid and forthright about why we were exiting and how we planned to do it...."|
MB: Sure, but before I do I want to make one other point in response to the previous question. Our approach to dealing with the disappointment of grantees and others in our long-time areas was to be very candid and forthright about why we were exiting and how we planned to do it. We shared that information as directly as we could and did not equivocate or pull punches.
I would also add that I don't think we could've been much more thoughtful about our exit from each of those areas. I won't go into it at length, but essentially we announced several years ago that we were going to do this in each of our existing program areas. We said that for each of those five areas we were committed to identifying the most promising grantees or the most promising activities in our portfolio. Assuming we could find that, we would then try to figure out how we could shape something so that, as we exited, there would be a locus of activity in place that would help keep the best of whatever was happening moving forward.
So far, as part of that commitment, we've already spent tens of millions of dollars to support some former EMCF programs and grantees. For example, from our work in tropical disease research, we actually had what appeared to be a way to effectively combat trachoma, the leading cause of blindness in the developing world. To move that work to the next stage, we established, in partnership with Pfizer Inc., a new nonprofit called the International Trachoma Initiative. Today, we are both making significant grants to ITI, which, by the way, also has received $20 million from the Gates Foundation and $5 million from the Starr Foundation. Operating as a stand-alone organization, but in partnership with other NGOs and the United Nations, ITI is now moving into select countries and successfully confronting trachoma head on, and there is every indication that the disease will be substantially reduced over the next couple of decades.
Let me give you another example. Earlier this year, we moved our children's program's, the Community Partnerships initiative, which is a program that's testing a model way for involving more people in the community in child protection, to a new unit created within the Center for the Study of Social Policy in Washington, D.C. We chose CSSP because it had been the program's key technical assistance provider for many years. Under this setup, the Community Partnerships initiative will continue to operate in its four demonstration communities, and that will allow a high-quality evaluation of the program and its outcomes to continue over the next several years. In addition to our more than $11 million investment, the Annie E. Casey Foundation agreed to join with us in putting up a substantial amount of money. As a result, the Center now has two organizations fully supporting the initiative and enough money to keep it operating for the next several years before it has to raise any more dollars. And, with a little luck, at the end of that period, we should be able to tell whether it works.
For our New York Neighborhoods program, in which we had focused on helping improve five neighborhoods, we've supported business planning at the agencies responsible for leading these individual improvement programs. And, through investments in those with the best plans, we're helping them build the capacity to sustain and expand this work following our exit.
In each case, where something seemed to be working, we've looked for ways to strengthen our grantees, strengthen their programs, and make it possible for them to continue their work beyond our involvement.
Now, what was your other question?
PND: You've documented five stages as part of your new approach....
MB: Right. The first stage involves identifying organizations with compelling products or services, with good leadership, that wish to grow, that are within a proscribed geographic area, and that focus on defined outcomes. This involves finding those not-for-profit youth-serving organizations that we believe can take best advantage of the kind of investment we're prepared to make. Quite frankly, one of the first discoveries we've made is that there aren't that many of what I'd call "investment-ready" organizations in the youth-development field. As a result, we have to dig very deeply and cast a very wide net to find candidate organizations. To assist us, we rely heavily on a network of experienced people who know the youth development field well and who can bring to our attention organizations that look like they have a good shot of meeting our criteria.
However, we don't make decisions about an organization on the recommendation of this network of experts alone. We do several other things as well. We take a close look at all the publicly available data about an organization — its 990s, annual reports, whatever we can find that might be helpful. If we like what we see and think the organization has potential, we then move to what we call the due-diligence phase.
But even before due diligence, the first time we actually contact an organization is to tell the executive director that we're interested in possibly supporting it. We have a very straightforward and honest conversation about our interest and how we plan to go about our due diligence. We say something like, "Look, we think we might be interested in doing something with you, but before we even come and talk to you about it, we'd like you to send us any materials you have. Don't write a single word for us, not even a cover letter. Just send us whatever you have on hand — personnel policies, job descriptions, previous evaluations, audit statements, anything you can pull off the shelf that's about you — throw it in a package, and send it to us." And that material becomes the basis for the due diligence that follows.
After we've reviewed all that material, we have a very clear sense whether there really is an opportunity for both of us. We then make a second call and say to the executive director, "We'd like to come and talk to you." We also let the organization know that the process doesn't guarantee that it will get a grant from us. We tell them that that depends on what we learn about the quality of their services, their leadership and management, their internal operations and fiscal health, their concern about and commitment to outcomes and, just as important, whether we're compatible and whether they are comfortable with us and our way of doing business. The complete due-diligence effort can easily involve a hundred and fifty to two hundred hours of foundation staff time. We're really in there, on location, looking at the operation of the program, going through the books, talking to the kids, the staff and board members, talking to other funders, considering everything we possibly can.
|"...Many organizations will tell you they have a plan for growth, but it's usually not developed enough to really give a funder an idea of how to best invest its resources to make solid growth really happen...."|
When that's over, we move to an even more intensive and time-consuming part of our selection process — business planning. At that point, we'll say to the organization, "You've passed our due-diligence test; it confirms that you're the kind of organization we want to work with. There may still be a few things we'll want to deal with together, but the principle challenge left is to develop a sensible growth plan." Sensible, to us, means something that's doable. Many organizations will tell you they have a plan for growth, but it's usually not developed enough to really give them or a funder an idea of how to best invest its resources to make solid growth really happen. Generally, what plans exist are little more than ideas or wishes about growth rather than what is actually required to grow. For instance, an organization might know it needs things like more money, more staff, better marketing. But its plans to do all that rarely include a very disciplined way of thinking about these things.
The business-plan process we initiate helps them get to that stage. It helps them focus on their theory of change, on their business, and on their organizational strengths and weaknesses. It helps them think about where they want to go and how they might get there; how they would apply additional funding, if they had additional funding; how to assess their current operations to determine the effectiveness of different components of the organization, what needs to be added, what should be jettisoned or refined, and so on. We've seen instances, involving some of the best organizations we've worked with, where the leadership really didn't know how effectively they were spending their dollars or even what they were spending money against. That's not surprising, considering that few not-for-profit organizations, even the stellar ones, have sophisticated information technology or evaluation systems in place. So, by the time business planning is complete, an organization ends up with a very clear sense of what it is about, where it wants to go, and how it plans to get there.
I want to make absolutely clear that everything we do during the business-planning stage is meant to ensure that the plan that's produced is the grantee's, not ours. Our involvement in the process is not to push the organization in one direction or another, but rather to help it be more realistic about what it's intending to do. If it gets to a point where the organization starts to do something just to please us, our job is to step in and help it stay focused on how to achieve its own growth objectives. We'll also tell the organization not to promise what they can't realistically deliver. We certainly expect the plan to be ambitious, but not something that's beyond the organization's capabilities. We don't want to go forward with a flawed plan with improbable performance objectives; we want to see goals that are reasonable and achievable.
Once the business plan is completed, we negotiate a set of terms and conditions governing our investment, which is stage four in our process. It's at this point that we reach agreement on what the organization is accountable for and what we're accountable for in going forward with the plan. As a final step, the terms and conditions are reviewed formally with the organization's board and its senior staff — all of us sit down together and essentially close the deal.
As for the investment itself, we'll monitor how the organization uses the money but not scrutinize expenditures against individual line items. We simply want to know whether the organization is getting done what it says it's going to do and whether it's delivering what it promised.
I should note that each of our individual investments are overseen by a staff member we call a portfolio manager. The portfolio manager doesn't monitor operations in a traditional sense but rather is there to offer counsel and advice. These folks typically have had experience analyzing businesses, running operations, or taking organizations through change, or at least knowing a lot about what transitions are like. Our portfolio managers are also seasoned individuals to whom an executive director will likely feel comfortable talking about his or her problems and challenges.
Once we move from business planning to implementation of the plan, we're into the last stage — what we call the "ongoing-relationship" phase, and this is still pretty new for us. We haven't yet worked with any organization on implementing its business plan for more than a year and a half. So we don't fully know what will be required from us at this stage to help organizations deliver on their plans. That's something we're still in the process of figuring out.
PND: And I gather the investments of time and money you're making in individual organizations are not open-ended?
MB: No, they're not open-ended. They're pretty much defined to coincide with phases of the business plan, some of which extend out nine, ten years. Our commitments so far go from two to six years. Whether we stay involved as investors beyond those commitments is something we'll have to evaluate as the time approaches. But our hope is that whenever our involvement with an organization ends, it will, by then, be much stronger and better able to deliver quality programs to more kids and have a strengthened fundraising and operational capacity to sustain it going forward.
PND: Once you've made an investment in an organization, is it your expectation that the organization will scale its programs to a larger population?
MB: Yes. We have another expectation though, which we try to address first. And that is, we try to make sure that when an organization reaches the point where it's ready to go forward without further help from us, it has a good ongoing evaluation system in place, something that will help it continue to improve its operations as well as more effectively market its product to the funding world, and that it will be able to accomplish both based on solid, useful data, which most of these organizations don't currently have. We want it to be in a position to be able to say to parents, funders, and kids: "We know how effective our organization is. We know what the strengths of our services are, and we can demonstrate that if a kid has this much exposure to this or that, here's what the results are likely to be."
So, yes, we're interested in scaling programs, but the only ones we really want to scale are those that are demonstrably effective or proven effective. For those, you can say, "Let's just increase the numbers," with a reasonable assurance that you are truly expanding effective programs and adding social value.
PND: Many people who have looked at the IFB approach would describe it as venture philanthropy —
MB: Yeah, they would, wouldn't they.
PND: I gather you're not completely comfortable with that label. Why not?
MB: Well, I guess, to some extent, it has to do with the different mindset of some people who inhabit that world. For the most part, I think venture capitalists who become venture philanthropists are people with a very strong sense of how to do things. While they are definitely well-intentioned, they're not always familiar with the nonprofit world, or how the nonprofit world works. They're not familiar with a lot of the challenges nonprofits have to deal with, the values that animate people in the sector, or the complexities that attend improving the lives of less advantaged kids or other underserved populations. The work is simply not the same as building widgets, or writing software applications, or creating Web sites.
|"...There's often a mindset and value structure among newly minted venture philanthropists that doesn't match up well to what not-for-profits are all about...."|
So there's often a mindset and value structure among newly minted venture philanthropists that doesn't match up well to what not-for-profits are all about. And my serious concern, when venture philanthropy was becoming the flavor of the day, was that the label was being applied without there being any clear definition or understanding of what it actually meant. For instance, when I looked at many of the people who said they were doing venture philanthropy, I couldn't figure out what they really were doing. But I did know we weren't doing that. I also felt that the criticism of venture philanthropists as people who were jumping into the field with unwarranted self-confidence and, well, arrogance, was often valid. And I didn't want our efforts to be lumped in with that.
So I just thought it just made sense to call us what we were, which is an old-line foundation that's trying to accomplish its mission of helping kids through much more hands-on, focused, and outcomes-oriented work. And we do that work by helping to strengthen and build the capacities of effective nonprofit organizations in the field of youth development. I didn't see why we had to be called venture philanthropists in order to do that. It didn't help us any; in fact, it could only hurt us at the time. And to this day, I'm still concerned that many venture philanthropists don't look as closely at program effectiveness and outcomes for kids as they do at things like organizational efficiencies. That's what most fascinates them: efficiencies. Efficiencies, innovation, and changing philanthropy — those are the goals I most frequently hear that are of interest to venture philanthropists. All that is perfectly good stuff, but the mission of our foundation is to help improve the life prospects of greater numbers of kids through more effective programs and services. Kids who, without some effective intervention, aren't going to make a successful transition to adulthood. It's that simple.
It also seems to me to be smarter and far more modest to describe our work in more traditional terms. We don't then have to distance ourselves so much from the foundations and funders whom I know, down the road, we're going to have to try to engage in our work. To start off calling oneself a venture philanthropist makes you sound trendy in a way that suggests you're casting your lot with the new guys who have come up with all the answers. And I didn't want to be seen that way. We have a lot of experience with the nonprofit sector and understand what its issues are, and I think we might do better trading on that, rather than acting like one of the newer, smarter kids on the block.
PND: Is there, in your opinion, a difference between venture philanthropy and capacity building? Or between high-engagement grantmaking and building organizational effectiveness?
MB: I think the first two terms, venture philanthropy and capacity building, are less useful, because they're so broad and hard to define. The other pair is easier to grasp. We know what building organizational effectiveness entails; we understand that. And high-engagement grantmaking, for me, is really one type of organizational effectiveness building; it's a matter of degrees. If it's high-engagement, it's just more hands-on.
PND: Would you call your IFB approach high-engagement grantmaking?
MB: Well, we have our portfolio managers — which, by the way, is not at all a well-defined term in our sector. But we use it to distinguish their role from that of the more typical program officer role. Our portfolio managers are people who are expected to be highly engaged with the grantee. They're available to the CEO to be as useful as they can be in thinking through strategy, identifying resources, and helping to keep things on track. In contrast, the typical program officer at a foundation rarely visits a grantee more than once or twice a year, if that, gets reports, and is lucky to have a chance to read those reports — never mind keeping current with what the grantee is doing. With our portfolio managers, a full case load may be six or seven organizations, which means the portfolio manager may have a half-day or a day a week, or several days a month, that he or she can devote to each organization. So, yes, I would call that high-engagement.
PND: Do you think the venture philanthropy label will be around in five years?
MB: The concept is going to have to prove itself. The folks who are out there calling themselves venture philanthropists would do well to document their results to show what things have actually happened as a result of their efforts. We certainly intend to do that. If they don't, or can't, then I think that, rather than it being more widely used, you may hear less about it. But that's something they'll need to pay attention to.
PND: How do other foundations view venture philanthropy?
|"...Clearly, many foundations felt threatened by the idea that new people could come in in this highly engaged way, rolling up their sleeves to get stuff done, and might actually succeed...."|
MB: I think, for the most part, they more or less turned their backs on it very quickly without doing much to see whether it made sense. I think many traditional foundations were turned off by the arrogance and impatience of the first generation of venture philanthropists. I don't condone that attitude, either. But clearly, many foundations felt threatened by the idea that new people could come in in this highly engaged way, rolling up their sleeves to get stuff done, and might actually succeed.
Also, there was anxiety at some foundations that one of the things that the first generation of venture philanthropists was asking for was accountability. Many foundations really don't work all that hard on accountability issues. They make their grants, hope things go well, and, if they don't, well, they leave. I think to the extent that these new guys insisted that things be measured and focused on outcomes, that was a terribly threatening thing and another reason for traditional foundations to want to turn their back on the venture-philanthropy approach.
PND: Is the kind of high-engagement or institution-building approach we've been talking about hard work?
MB: It's really hard work.
PND: Is it too early to say whether it's harder than you expected it would be? And do you think other foundations might take a pass on it for that reason?
MB: It's as hard as I expected it to be, maybe harder. And I don't think there are going to be too many foundations willing to jump into this kind of thing so fully as we have, nor willing to transform themselves so completely in pursuit of a single, highly engaged approach. Speaking from experience, I can tell you it's a hard thing to do, and a risky thing to do as well.
Now, if a couple of the big guys — foundations that award hundreds of millions of dollars every year — got interested in trying to do what we're doing with ten or fifteen percent of their grantmaking budgets, that would be great. It might just be R&D money for them. Whereas for us, we've bet the farm on this new way of working and, in effect, risked all that it will work. Our grantmaking budget is around $25 million a year. If we had remained active in five areas — each one with a budget of $5 million — and had taken a million or so from each to try something like this, I don't think we ever would have seen much in the way of results. So, it's really a large bet to see what will happen if we put everything — our time, our money, our staff, our convictions — on the line. And you can be sure we'll work hard to make all this happen. As Samuel Johnson liked to say, "The prospect of one's public hanging tends to marvelously focus the mind."
PND: Is it your hope that, through your work here, you might be able to highlight commonalities between traditional philanthropists and the venture-philanthropy crowd and maybe even encourage the former to consider aspects of the venture-philanthropy approach?
MB: Yes, I think that's quite possible, and that's the way I'd like to see it happen. As far as our doing the encouraging, it probably doesn't really matter what we say. Our grantees are going to have to produce and successfully perform against their plans. If they do manage to achieve what they've set out to achieve, someone's going to pay attention. The proof, as they say, is in the pudding: Can our grantees do what they say they're going to do, and can we, as their allies, really help them to do it? That's the bigger question for us. If the foundation world sees that happening, it's going to be interested.
Whether or not this new approach actually gets some traction and other funders start to join in will depend on a whole series of things. I feel it's too early to go out and say, "Look at what we're doing, isn't this great?" But, intuitively, I think this is a sensible way of investing the foundation's money and of ensuring that it has some impact over time. But I have to be cautious about how much selling I do. When you go off the way we've gone off with a new thing, you have to be careful not to make lots of noise or fanfare about it, because it can easily blow up in your face. It is also not considered good form in the foundation world to sound off about what you are doing. So we're going to make sure we see some results before we start telling other funders what a great thing we're doing.
PND: A final question: Are we, as a nation, making progress in addressing the problems faced by low-income youth? When you look at the field, what developments encourage you? And where are we falling behind?
MB: Well, that's a very big question. And my short answer is that I'm very unhappy with this country's reluctance to take seriously the lack of supports and opportunities for millions of its low-income young people. Huge sums are consumed by the juvenile-justice system and the child-welfare system, but dollars are scarce for constructive opportunities and the good stuff all kids need to stay out of trouble and have a decent shot at making it through adolescence okay.
I'm disappointed about the lack of public support for youth development generally. And I don't feel good about the fact that those of us who have worked in this field haven't succeeded in winning over the public to open the purse strings and put some real dollars on the table. But you can't fault the public. There's just not enough evidence about which programs or activities work and are capable of making a difference for kids and thus merit more investment. At the end of the day, it's a chicken-and-egg kind of thing: Until the field gets more resources, it probably won't be able to build the record of achievement and accomplishment that would open the spigot and start the resources flowing.
The reality is there's a lot of work to be done. There's no profession of youth development. There are no degrees, no training. The people who work in the field — and nobody works harder — are people who come in, work to make a difference against all odds, get burned out, and leave. Wages are low; benefits are sparse. Proper funding comes from a lot of small tributaries — there's no single, reliable funding stream for the good stuff I referred to. And the best organizations are fighting for the scraps.
I don't mean to sound pessimistic. If I didn't think improvement were possible, then our foundation wouldn't be doing what we're now doing, and I'd pack it in. On the contrary, I'm hopeful that if we can find twenty or thirty effective models and muscle them up a bit, give them the support and exposure they deserve, and demonstrate clearly what good can be done for kids who need help, we might have a chance of seeing the field start to grow.
PND: Well, Michael, I wish we could continue the conversation, but I know you have things you need to get to. Thank you for taking the time to speak with us today, and best of luck with the new approach.
MB: Thank you. Thank you very much.
Mitch Nauffts, PND's editorial director, interviewed Michael Bailin in May. For more information on the Newsmakers series, contact Mitch at firstname.lastname@example.org.