Futurist Scenario Exercise

Besides being interested in the nonprofit sector, I have also been interested in new ways of delivering education and how these disruptors are changing pedagogy. One way that these two interests have intersected is that I am volunteering to be a "test pilot" for the American Alliance of Museums's Center for the Future of Museum's (AAM/CFM) MOOC that is in beta-testing mode (i.e., Massive Open Online Course). (I know, I know--that's just way too many acronyms!) While writing my previous post from November 2 about the limits of the nonprofit sector,  I was also completing a homework assignment for CFM's MOOC class. I did enough of a good job on my homework assignment (whew) that CFM posted it on their own blog. I didn't realize the conceptual connection between my blog post and homework assignment until CFM's founding director Elizabeth Merritt called it to my attention, and so I'm posting my homework assignment here. This can be a companion, exercise-oriented piece to my November 2 post.

To give a little context to the exercise, what follows is an imaginary scenario written to stimulate thinking about trends happening today that will impact the future. This scenario is not meant to be predictive, rather it is meant to be provocative. Exercises like this help organizations really plan for the future, not just in short three-year strategic planning chunks, which is far too short-term to effectively plan ahead. You can answer these questions yourself or as a group with co-workers. One of the shortcomings of organizations in the nonprofit sector has been their inability to plan ahead in ways that take into account major trends, such as demographic changes, economic forces, and technological advancements. I wrote a guest blog post on that topic for CFM way back in 2010, which you can also read here. Using the following exercise is a way to anticipate and ready organizations today for dramatic changes that will certainly come.

(Originally published by Elizabeth Merritt, founding director of the Center for the Future of Museums on November 5, 2013. The following is her original post copied here.)

THE FOURTH SECTOR
The second flight of “Test Pilots” is winging their way through the CFM Digital Badging project. Besides helping the Alliance test the potential of this form of microcredentialing to serve our members, and providing some training on strategic foresight as applied to museums, I had hoped the course might generate some good content to share on this blog. And it has! This week’s post is a “story seed” created by CFM Council member (and test pilot) Angie Kim. This seed is the kernel of what could become a longer, more detailed story of what I think is a very plausible future.

Date of this scenario: 2025

Trends observable today, and a plausible future event, that could lead to this future:

Trend 1: Government support of social issues continues to decrease.

Trend 2: Private philanthropic support continues to underfund pressing social and humanitarian issues relative to personal-interest giving (such as for arts and culture, medical research, and higher education).

Trend 3: Triple bottom-line private enterprises continues to grow in number and in strength making corporations that operate for the social good both popular and commercially viable

Trend 4: Wealthy, young business entrepreneurs from the technology industries have emerged as leaders in the nonprofit sector, with an interest in applying capitalistic, entrepreneurial strategies to fixing social problems.

Event: All 50 states recognize triple bottom-line, social benefit corporations and yet-to-be-tested litigation uphold directors’ ability to prioritize social and environmental good over earning profits.

Story Seed: The Fourth Sector: 2025

Since the 1950s, the number of nonprofits in the United States has exploded, with well over 1 million 501(c)(3) public charities today. Despite this number, not all nonprofits and their issues are supported equally. The majority of private philanthropic support has gone to private-interest areas, such as elite universities, arts and culture, and medical centers, and not to helping the poor or to solving environmental issues (The Center on Philanthropy & Google, 2007). Exacerbating this problem is the unabated decline in government support for social issues. Consequently, the nonprofit sector is no longer seen as the space for solving social problems, such as poverty, hunger, homelessness and climate change. Instead, for-profit commercial enterprises that are incorporated as multiple bottom-line businesses have emerged as powerful agents of social change.

Although these businesses donate time and money to social causes, their charitable activities have far less impact than their enterprise ability to marry consumer spending with positive changes in such areas as sourcing of sustainable materials and humanitarian improvements in their production chain that protect natural resources and lift workers out of poverty. Commercial enterprises that unleash the power of capitalism on solving social problems has become so effective that new investment classes are being invented that further secure financial resources in this socially responsible marketplace. Unlike the nonprofit system that depended on the voluntary actions and behaviors of donors, the private enterprise market of consumers and investors are able to ‘move the needle’ on social issues like never before.

Here are five discussion questions Angie suggests you use to guide a conversation, in a museum or other organization, about this scenario and how it might inform your planning:
1) Is the nonprofit sector the best sector for solving social problems? Why or why not?
2) How should nonprofits respond to the evidence that the sector does not do enough to solve social problems?
3) How can nonprofits set aside their individual competitive needs in order to strengthen the overall sector’s ability to ‘move the needle’ on certain issues?
4) Is the emergence of commercial enterprises that operate for social good a positive or negative development for nonprofits? In what ways, and why?
5) In what ways might nonprofits be so shortsighted in their visions for the future that they miss the opportunity to be the leading sector for social change?

When Is the Nonprofit Sector Big Enough?

I had the opportunity to read two opinion papers back-to-back that presented very different views of private philanthropy. The implications of their ideas raise big-picture questions about the purpose of the nonprofit sector. In her article “Plutocrats at Work,” Joanne Barkan described today’s philanthropic sector as contributing to an era of plutocracy—rule by the wealthy.

Mega-foundations are more powerful now than in the twentieth century—not only because of their greater number, but also because of the context in which they operate: dwindling government resources for public goods and services, the drive to privatize what remains of the public sector, an increased concentration of wealth in the top 1 percent, celebration of the rich for nothing more than their accumulation of money, virtually unlimited private financing of political campaigns. . . . In this context, big philanthropy has too much clout.

What troubled Barkan is that a minority of wealthy elites is tremendously influential in addressing large-scale social problems with no mechanism for them to be accountable to the populace. Consequently, decisions about how to resolve critical issues, such as in education, are not made democratically, but by those with money and concomitant power. Informal channels for accountability have been ineffective: The court of public opinion does not attend to the charitable activities of the wealthy, and journalists are unwilling to critically question private foundations (Feldman, 2007). Basically, there is no direct mechanism for the public—let alone the poor, the disenfranchised, and the underserved—to shape how the wealthy spend their money on issues that affect them. In short, there is no democratic say in how private philanthropists set or enact their agendas. Furthermore, what particularly galled Barkan is that taxpayers subsidize this undemocratic approach. Through tax deductions for charitable giving and tax exemptions for private foundations, we all enable a minority of wealthy individuals and their philanthropic institutions to become powerful in determining how our nation’s social issues are addressed without any accountability to the larger public.

Rob Reich’s[i] article “Philanthropy and Caring for the Needs of Strangers” presented a very different view, arguing that the American philanthropic sector actually performs, not undercuts, democracy. In prefacing his argument, Reich acknowledged that the nonprofit sector, including private philanthropy, is not effective in supporting or solving the needs of the poor. “Philanthropy appears to be more about the pursuit of one’s own projects, a mechanism for the expression of one's values or preferences rather than a mechanism for redistribution or relief for the poor.” He cited a Google-commissioned study by Indiana University’s Center for Philanthropy, which not only found that the minority of all charitable giving goes to those in need (only approximately one-third of all giving) but also that the wealthier the donor, the less they donate to issues concerning the poor. Given these findings, Reich concluded, “philanthropy is not much about caring for the needs of strangers.” But, Reich argued that the charitable sector was not intended to be a place to solve social problems and help the poor and, thus, these should not be the measuring stick against which to judge philanthropy. Rather, philanthropy and the subsidies to promote charitable giving are meant to encourage the wealthy to express freely their charitable impulses, not to solve social problems.

As I read Barkan and Reich's positions, the mantra ‘to do no harm’ was a constraint refrain in my head. No surprise as it has remained fixed after a decade of working at private foundations. This adage is the only explicit mechanism (albeit a voluntary and subjectively interpretable one) to invoke democratic accountability among grant making decision makers. Does one worldview—Barkan or Reich’s—result in more harm than the other? In considering this question, I thought of an article that has long been influential among arts funders—John Kreidler’s “Leverage Lost: The Nonprofit Arts in the Post-Ford Era.”

In this seminal essay, Kreidler described the birth of today’s nonprofit institutional model of support as it developed out of the arts. The arts in the United States looked very different up until the mid-twentieth century when modern-day forms of public charities and private foundations began to emerge. Before then, there were two kinds of ‘arts’—the high arts supported by the wealthy, such as museums and classical music, and the low, popular arts that competed in the commercial marketplace, such as vaudeville and comedy shows, radio programs, and dance halls.
Beginning in 1957, the Ford Foundation invented a new method of proliferating the high arts throughout the country. The foundation introduced the concept of short-term grants (commitments of no more than five years) that required a match of their funds. Not only did this proliferate the establishment and expansion of institutions of high art forms, but also the lure of Ford Foundation’s matching support transformed locally based people of means to become philanthropists and enjoy the prestige that came with it. In this way, Ford Foundation’s grant design introduced an institutional support model based on decentralization of support to local levels with resource dependency on no one funder, leveraging of dollars, and establishing, growing, and expanding non-commercial institutions.

If there’s any question of the success of this institutional support model, take a look around. In 1940, there were but 12,500 charitable organizations registered with the Internal Revenue Service (Hall, 2010). In 2010, there were nearly 1 million 501(c)(3) public charities out of over 1.5 million nonprofit organizations registered with the I.R.S. (Blackwood, Roeger, & Pettijohn, 2012). Public charities had revenues of $1.5 trillion and held assets of $2.7 trillion as of 2010 (Blackwood, Roeger, & Pettijohn, 2012). (For those curious about the arts, this sector accounts for about 10% of the total number of public charities.)

Before the mid-twentieth century, the institutionally based nonprofit model basically did not exist. Certainly there have always been charitable, voluntary, association-based efforts since the time of the Puritans, but these were a far cry from the complex, interconnected, and multi-faceted system that we now call the nonprofit sector. Consider that the annual revenues of U.S. public charities, in aggregate, is larger than the budgets of most governments around the world—larger than Spain, Russia, South Korea, India, and Hong Kong (if Wikipedia is to be believed).

So why am I recalling Kreidler to talk about Barkan and Reich? Taken together, these three essays paint a troubling picture of the nonprofit sector. The nonprofit sector, according to Kreidler, was designed to focus on institution building, with roots in elitist notions of the kinds of institutions that should be supported—arts, universities, specialized medicine. Also, the data tells us (Center on Philanthropy at Indiana University, & Google, 2007) and Reich acknowledged that what’s been built so effectively since the mid-twentieth century is a charitable institutional complex that better serves the interests of the wealthy than the basic needs of the poor. Moreover, as Barkan pointed out, taxpayers are underwriting the costs of avoiding solutions by subsidizing financiers of the nonprofit sector who are both undemocratic in their lack of accountability and ineffective at addressing non-elitist issues.

Having worked at and with a number of private foundations that are trying, truly trying, their damndest to make a positive difference, it’s hard to see this unflattering macro-picture. But, whenever foundation leaders defend the philanthropic sector, such as its tax exemption or its payout rate, they are reinforcing the very structures that have been, at its root, about realizing the interests of wealthy elites. And, same too of charitable organization leaders who, in their mission-driven focus on their own sector-specific issues, lose sight that the more money that flows into their sector at the expense of bolstering public coffers, the more resources stay within a sector that data and anecdote agree is unaccountable, not redistributive, and ineffective at realizing large-scale solutions. In other words, our shortsighted trust of our own nonprofit sectors has blinded us to the significant flaws that undermine addressing social and environmental problems. After all, each one of us is so good-hearted, how can we possibly be contributing to a system that reinforces inequities and undermines social change?

Most modern-day nonprofit institutions are less than 60 years old and federally recognized private foundations have been around for only 44 years. When will we assess the nonprofit sector’s limitations in solving social problems relative to other sectors’ abilities (i.e., public governments or private enterprise)? The nonprofit subsectors have regularly taken a protectionist stance in maintaining the status quo on charitable tax exemption levels, foundation payout, and estate taxes rather than give government more money. Certainly, such defense was necessary in order to develop this sector. But, are we at a point now when growing the nonprofit sector does more harm than good? Does continuing to fight for the nonprofit sector’s growth make sense today if we acknowledge that this sector is not effective at solving social problems, especially those that affect the most disadvantaged?

In no way am I saying we should dismantle the nonprofit sector or private foundations; after all, they provide a safety net and an essential infrastructure for charitable work to occur. Not only that, but public charities and foundations do exceptionally wonderful work. Consider that Rockefeller Foundation funding helped in the founding of historically black colleges and that Ford Foundation supported the establishment of the Urban Institute and the Center on Budget and Policy Priorities to cite three of innumerable examples of this sector's public good. I am merely questioning when is enough enough? Recent efforts in the commercial sector to develop their own structures to solve social problems, such as state-recognized benefit corporations, B Corp certification, and new investment classes of triple bottom-line businesses are examples of how the nonprofit sector is not being seen as a place to realize solutions. In addition, some private funders are becoming increasingly interested in funding non-501(c)(3)s, which is another indication that there are limitations to this sector. So I leave you with these questions. In what ways is the nonprofit sector now harming, rather than helping, us reach our mission-related goals? Should it still be our priority to preserve and grow the charitable institution complex? How can we align wealthy donors’ freedoms with meeting the needs of the poor? And, when should nonprofit workers and leaders channel resources to the best sectors able to solve social problems, no matter if it is in the nonprofit or not?

Works Cited

Barkan, J. (2013). Plutocrats at Work: How Big Philanthropy Undermines Democracy. Dissent Magazine.

Blackwood, A., Roeger, K. L., & Pettijohn, S. L. (2012). The nonprofit sector in brief: Public charities, giving, and volunteering, 2012. Washington, DC: Urban Institute Press.

The Center on Philanthropy at Indiana University, & Google. (2007). Patterns of household charitable giving by income group, 2005. Indianapolis, IN: The Center on Philanthropy at Indiana University.

Feldman, B. (2007). Report from the field: Left media and left think tanks--Foundation-managed protest? Critical Sociology, 33(3), 427–446.

Hall, P. D. (2010). Historical perspectives on nonprofit organizations in the United States. In D. O. Renz (Ed.), The Jossey-Bass handbook of nonprofit leadership and management (3rd ed.) (pp. 3-41). San Francisco, CA: Jossey-Bass.

Kreidler, J. (1996). Leverage lost: The nonprofit arts in the post-Ford era. The Journal of Arts Management, Law, and Society, 26(2), 79–100.

Reich, R. (2013). Philanthropy and caring for the needs of strangers. Social Research, 80(2), 517–538.

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[i] Rob Reich often gets confused with another sharing a similar name, but the two could not be more different in their views of the nonprofit sector. This Rob Reich teaches political science at Stanford University where he co-directs the Center for Philanthropy and Civil Society. The other is political economist Robert Reich, who was former Secretary of Labor under President Clinton and now teaches at UC Berkeley.

Are Foundations too Focused on Themselves?

The Center for Effective Philanthropy (CEP) just came out with a new report, “Nonprofit Challenges: What Foundations Can Do.” There were some dismaying findings. CEP’s survey of nonprofit leaders found that 52 percent felt that foundations are unaware of the challenges that nonprofits face. Less than 33 percent felt that foundations use their resources in ways that help nonprofits actually meet challenges. And, perhaps the most alarming finding is that nonprofit leaders felt more challenged to attract foundation support than any other kind of support. Survey respondents were nearly unanimous (99 percent) about the difficulty of attracting and maintaining (89 percent) foundation funding.

Today, there are well over 75,000 private foundations operating in the United States. Their tax-exempt assets total nearly $644 billion, of which they charitably spend approximately $3 billion each year (Foundation Center, 2012). With such largess and numbers, one wouldn’t imagine that foundation funding would be so hard to come by. Given how many foundations exist and CEP’s findings that nonprofit leaders find foundation grants the hardest to get, there is obviously a sharp disconnect between supply (foundation support) and demand (nonprofit financial need). So, what accounts for this disconnect? I would argue that the nonprofit economy is inherently dysfunctional, and one main reason is that private donors (individual philanthropists and foundations) behave as if the nonprofit economy is like a capital marketplace. Just like they behave in the for-profit economy, donors make emotion-based decisions, and foundations, as charitably focused as they are, are better suited to serving internal priorities than the needs of nonprofits. As a result, nonprofits that are set up to address issues and problems that could never be supported in the for-profit marketplace still find themselves underserved in the nonprofit sector. In other words, funders of nonprofits don't prioritize the very things that were intended to be addressed in the nonprofit system.

Albeit incorporated as a nonprofit entity, foundations behave like any other consumer in the marketplace (i.e., their giving behavior is like that of irrational private donors or bottom-line focused corporate investors) because of foundations'  history, ideological roots, and, ironically, their own pursuit of excellence. Consider the following:

Firstly, foundations are inherently self-serving. When the private foundation entity was established by the Tax Reform Act of 1969, foundations were asked to do only one thing, which was to behave charitably. Regulation of private foundations was necessary at that time because wealthy nonprofits were being incorporated as a way to avoid estate taxes and as an instrument to maintain control of wealth. To counteract this, the IRS specified that private foundations must use their funding for charitable purpose and not for personal inurement. Outside of this requirement, however, government never went so far as to intrude on foundation ‘owners’ freedom of expression, with the result that today’s foundations prioritize the wishes (and whims) of donors over social needs. This historical backdrop helps explain the oddity of foundation culture: There are so many foundations that do wonderful things for the public good, but their individuality, which is rooted in the privilege of free expression, makes this sector seem incoherent, uncoordinated, and idiosyncratic in how and what they support.

Second, in order to maintain the sanctity of foundation ‘owners’ (donors, founders, trustees, executive leadership) wishes and intentions, foundations maintain a highly ritualized process for identifying, vetting, reviewing, and deciding on which nonprofits to support. This is called the due diligence process. Anyone who has been a grantmaker will appreciate that this time- and resource-consuming process has its merits. After all, with so many nonprofits and projects to choose from, funders need to be sure that they are supporting the best projects over any others. Foundations’ careful vetting and review process are useful in protecting foundations’ objectives; however, the downside of all this is that nonprofits are at a disadvantage and waste too much financial and human resources going through this process. At what point is the sanctity of upholding a foundation’s vision worth the harm it causes in the nonprofit field?

Third, the specialized practice of foundation strategic planning has done much, I would say too much, to prioritize the primacy of a foundation’s objectives. Consider that a foundation’s strategic planning process is considered a finished success when trustees feel that their plan is a unique reflection of their combined interests and visions. (This is why having a diverse and community-based board is so important.) To the detriment of society, however, too little time is spent on the needs of the field. Oftentimes, when a survey of grantees is conducted during a foundation’s strategic planning process, the results of such a scan are used to inform the tactical, and not strategic, level. In other words, any input from the field is secondary after addressing the needs and wants of the foundation board. Consequently, foundation support better reflects the lifestyles, entrepreneurial practices, and ideologies of the wealthy than the needs of society’s most underserved. (To this point, research studies have confirmed that foundations are not redistributive to the poor and that they reinforce class divisions [Center on Philanthropy at Indiana University & Google, 2007; Odendahl, 1990; Ostrander, 1984; Ostrower, 1995; Silver, 2007].)

Fourth, foundations spend an inordinate amount of time and money on assessments that are more about their own internal operating and managerial concerns and less about their impact on grantees’ capacity to realize social purpose. I looked up the number and type of assessment tools that exist today for foundations on Foundation Center’s TRASI database (Tools and Resources for Assessing Social Impact). (A wonderful, yet underutilized, resource, by the way.) There are more than 60 tools specifically designed for foundation assessment, and nearly all are meant to help foundations answer questions about their own internal operating or managerial performance. For example, CEP’s Grantee Perception Report helps to gauge a foundation’s customer service as an indicator of performance. The Wallace Assessment Tool assesses if grantees fulfilled their project objectives: In other words, did grantees make good on their promises to funders? That so many foundation assessment tools now exist speaks to the fact that foundations are seriously interested in their performance, which is a good thing. The downside though is that these tools are internally focused and do not attempt to answer how foundation funding helps grantees. With all this energy spent on foundation performance, it's a wonder that the more fruitful and challenging pursuit of answering how foundations actually help nonprofits remains under-developed.

In case you’re curious, here’s a selection of foundation assessment tools available, which can be found using TRASI on the Foundation Center website.

·      A Guide to Actionable Measurement (Gates Foundation)

·      Application Perception Report (CEP)

·      Ashoka Measuring Effectiveness Questionnaire

·      Balanced Scorecard (New Profit, Inc.)

·      Benefit-Cost Analysis (Abt Associates)

·      Benefit-Cost Ratio (Robin Hood Foundation)

·      Building a Performance Management System (RootCause)

·      Building Future Leaders Diagnostic Survey (Bridgespan)

·      Capabilities Profiler (Keystone Accountability)

·      Charting Impact (Independent Sector, BBB Wise Giving Alliance, & Guidestar)

·      Checklist for Reviewing a Randomized Controlled Trial (Coalition for Evidence-Based Policy)

·      Community of Learners (TCC Group)

·      Comparative Constituency Feedback (Keystone Accountability)

·      Compass Index Sustainability Assessment (ATKisson Inc)

·      Core Capacity Assessment Tool (TCC Group)

·      Criteria for Philanthropy at Its Beset (NCRP)

·      Developing a Theory of Change (Keystone Accountability)

·      DevResults (CaudillWeb)

·      Evaluating the Impact of Development Projects on Poverty (World Bank)

·      Evaluation Plan Builder (Innovation Network)

·      Evaluation Principles and Practices (Hewlett Foundation)

·      External Review of Program Strategy (Duke Foundation)

·      Foundation Performance Assessment Framework (Irvine Foundation)

·      Foundation Scorecard (RWJ Foundation)

·      Foundations of Success Guideline for Effective Evaluation (Foundations of Success)

·      Framework for Program Evaluation (CDCP)

·      Grantee Perception Report (CEP)

·      Impact Reporting and Investment Standards (GIIN)

·      Learning for Results (GEO)

·      Learning with Constituents (Keystone Accountability)

·      Measures of Success (Foundations of Success)

·      Multidimensional Assessment Process (CEP)

·      Operational Benchmarking Report (CEP)

·      Organizational Assessment Tool (Innovation Network)

·      Outcome-Based Evaluation (Organizational Research Services)

·      Program and Policymaking Evaluation (Kellogg Foundation)

·      Project Streamline Grantmaker Assessment Tool (CEP & GMN)

·      Prove It! (New Economics Foundation)

·      Pulse (Acumen Fund)

·      Social Audit (Social Audit Network)

·      Social Impact Assessment (Rockefeller Foundation & Goldman Sachs Foundation)

·      SROI (The SROI Network, and many others’ proprietary SROI tools)

·      Staff Perception Report (CEP)

·      Stakeholder Assessment Report (CEP)

·      Success Measures Data System (Neighbor Works America)

·      Readiness for Organizational Learning and Evaluation Instrument (FSG)

·      Theory of Change Community (ActKnowledge)

·      Trustee Evaluation Toolkit (FSG)

·      Wallace Assessment Tool (Wallace Foundation)

I took the time to type this list (and nearly wore down my fingers) from the TRASI site to point out that the foundation sector really has an embarrassment of riches when it comes to assessment instruments, guides, and tools. In the context of CEP’s newest findings, what becomes clear is that foundations are fixated on their internal objectives and not enough on the needs and objectives of the nonprofits they are supposed to serve.

Don’t get me wrong. I am excited that so many foundation tools exist because I really value foundation evaluation: There is nothing more exciting than combining program strategy and evaluation wherein clues of funding outcomes, intended or accidental, provide a way of improving grantmaking interventions. I've mined for ideas in many of the tools listed in TRASI because I am personally interested in advancing grantmaking practice. But, given what nonprofit leaders are communicating via the CEP report, I am also cognizant that foundations’ pursuit of their own excellence has hurt nonprofits. All this innovation in improving foundation performance has had a significant downside. While foundations have evolved increasingly sophisticated, professional practices, this field’s focus on its own objectives has resulted in skirting the question of how foundations are actually helping and serving public charities and, by extension, society’s needs and demands. Until foundations spend just as much time innovating in that direction, too many nonprofit leaders will feel like beggars than deliverers of society’s salvation. There is tremendous opportunity now for foundations to strike a new approach that incorporates social need and nonprofit concerns earlier and with more urgency in foundations’ planning, evaluation, management, and operational practices.

Works Cited

Buteau, E., Brock, A., & Chaffin, M. (2013). Nonprofit challenges: What foundations can do. San Francisco, CA: Center for Effective Philanthropy.

The Center on Philanthropy at Indiana University, & Google. (2007). Patterns of household charitable giving by income group, 2005. Indianapolis, IN: The Center on Philanthropy at Indiana University.

Foundation Center. (2012a). FC Stats: Number of grantmaking foundations, assets, total giving, and gifts received, 1975 to 2010. New York, NY: Foundation Center.

Odendahl, T. (1990). Charity begins at home: Generosity and self-interest among the philanthropic elite. New York, NY: Basic Books, Inc., Publishers.

Ostrander, S. (1984). Women of the upper class. Philadelphia, PA: Temple University Press.

Ostrower, F. (1995). Why the wealthy give: The culture of elite philanthropy. Princeton, NJ: Princeton University Press.

Silver, I. (2007). Disentangling class from philanthropy: The double-edged sword of alternative giving. Critical Sociology, 33(3), 537–549. doi:10.1163/156916307X189013

Nonprofit Membership Associations: Serving Members Today or Shaping the Field for Tomorrow?

As the nonprofit sector has had to shift in response to 'small government' by diversifying revenues and responding to greater social needs, there is one type of nonprofit entity that has remained largely overlooked as a potential change agent. I’m talking about membership associations that support groups of nonprofits unified by a common geography, type of entity, or cause.

What make membership-based intermediary organizations so important are the same reasons that they are not that exciting to talk about: Membership associations are the glue connecting the people that comprise the nonprofit sector together; they are a primary piece of infrastructure that enables the sector; and they are the ‘institutional memory’ of their fields helping to retain past knowledge while ramping up new professionals. In fact, researchers have attributed the “carrying capacity” of a community’s nonprofit sector (i.e., how many nonprofits a community can sustain) to how well a community has developed an infrastructure of “network exchanges” (Paarlberg and Varda, 2009). In other words, yes, nonprofits need money, but if you want to see results, take a look at how well nonprofits are networked. A nonprofit working in isolation is less capable of realizing its mission than one that is connected to others.

An intermediary, membership-based association's primary function is to provide services to its members. But these institutions can do much more than just respond to where their members are now. These organizations, because they are so well connected and influential, are well poised to deliberately shape the future of their respective sectors. Unfortunately, too often, they remain in the nonprofit background as they quietly focus on serving their members than on actively shaping the field. For instance, if membership associations continue to focus on issues that are most pressing for the majority of their members, then marginal but critical issues remain overlooked, such as support for affordable health care by those outside of the health sector, or changing copyright laws to unfetter creativity by those in the arts, or pushing for a common grant application no matter how unpopular this idea among individual members. In other words, there are a whole host of issues that need to be brought to the forefront for the good of all, and membership associations can either take up issues based on popularity among their membership—a service-based, reactive approach—or take a stand on the importance of unpopular issues that benefit the sector as a whole—a leadership-based, proactive approach. There is, of course, good reason why membership associations are not often at the forefront of change: Focusing on service ensures that dues-paying members are satisfied, while exerting bold leadership risks disenfranchising members.

To paint a picture of the distinction I'm talking about, I’ll share two examples of leadership-based changes that took place fairly recently at membership associations. The first occurred when I was vice-chair of Grantmakers in the Arts (GIA). We had a problem with a particular practice of grantmaking—the kind that ‘hollows out’ nonprofits with grant amounts that do not cover the full operating costs of implementing a funded project. For years, many in the field (notably, Nonprofit Finance Fund, Center for Effective Philanthropy, and Grantmakers for Effective Organizations) discouraged the practice of under-funding grantee organizations. But, as a board, we felt unready to ‘pick a side’ on any specific grantmaking practice; we did not want to disenfranchise members who felt they had their own good reasons for not providing general operating support or honoring application request amounts in full. For years, our softball approach was to educate members on this issue and avoid favoring any particular grantmaking practice. Ultimately, GIA picked a side, and what made us ready to be bold about our opinion was a conflation of new executive leadership, the Economic Recession, and common experience among board members on what constitutes beneficial grantmaking practices. GIA boldly communicated that undercapitalizing public charities is bad practice—public charities not only need enough money to cover the entire cost of a project but also enough to build a financial surplus to weather emergencies and afford opportunities. GIA leadership made capitalization of public charities a conference theme, commissioned research on capitalizing nonprofits, and continues to convene regional workshops on this topic. Sure, there was some complaining about how GIA was telling its members what and how to do grantmaking, but nobody dropped their membership. Most notably, GIA's influence on so many arts funders effectively pushed this message out: Today, arts nonprofits all over the country are recognizing the business enterprise aspect of their work, are working to retain surplus, and are having conversations with their funders about the real costs of projects. Looking back, it seems like such a ‘no duh’ proposition to champion a healthy grantmaking approach, but for an association that makes its living on holding onto as large and diverse a base of members as possible, this was not an easy decision. But, after more than a generation of grantmaking, certainly this sector should be improving its grantmaking practices, and a membership association of grantmakers was an ideal vehicle for pushing for better practices.

Another organization that exerted its leadership in the field is American Alliance of Museums (AAM). At a time when support for the arts and its institutions are under constant threat of defunding, the association wanted to be more influential in speaking on behalf of museums to politicians and the public. However, AAM was limited by the fact that their membership did not include all museums. Like so many membership associations, its membership reflected the participation of the ‘biggies’—well-known and/or large institutions, and less so the more numerous small-budget ones. This limitation meant that AAM could not, with any integrity, advocate on behalf of the entire museum sector when its membership was but a fraction of the population. Hence, AAM threw out and re-wrote their membership dues structure. That’s right: Instead of a simple update to their earned revenue model, AAM re-conceived it anew, which had significant financial implications. Before, to become an AAM member, a museum had to pay some amount of dues. Now, all museums—every single museum in America— are automatically a basic-tier member under a pay-what-you-can arrangement. This means that even if a museum pays $1, it is still a member. (All those wanting higher levels of service pay at more traditional dues levels.)

This dramatic change in dues structure does not just impact AAM financially (e.g., what if every museum wants membership essentially for free?!); it fundamentally affects decision-making by reminding its governing body that decisions must now be made on behalf of ALL museums, not just dues-paying members. This shift is embodied in their concurrent name change from the American Association of Museums to American Alliance of Museums. The former spotlights its function as an association of only its members; the latter calls attention to its new role in unifying the entire sector and connecting with partners. In addition, what AAM’s name change signified is that member-serving associations should think more about strengthening their sectors by finding common ground, rather than specializing and distinguishing themselves and their members as so different and unique. The former creates unity while the latter promotes fragmentation.

For funders, it’s bold moves like these by membership associations that need to be supported. This is the kind of experimentation and potential innovation that is widely needed, but is also very expensive. It’s terrifyingly risky financially to possibly disenfranchise members or re-write your entire earned revenue model. Membership associations hold tremendous promise for advancing the nonprofit field in their role and function as educators, modelers of behavior, and the connective tissue unifying so many individual organizations. Member-serving intermediaries have not been the first place funders turn to for innovation in the field but, they should be, especially if they have the kind of visionary leadership that can compel change throughout their sectors by moving their members forward.

Work Cited:

Paarlberg, L. E., & Varda, D. M. (2009). Community Carrying Capacity A Network Perspective. Nonprofit and Voluntary Sector Quarterly, 38(4), 597–613. doi:10.1177/0899764009333829

Finally! Transforming Grant Reports into Useful Data

How many of you have heard this request: "Hi, there! How's it going? I know you're busy with that convening tomorrow, but can you send me any relevant data on the impact of our funding? I need it by the end of this week for a presentation...board meeting...foundation newsletter. Thanks!" You know the drill. Today's foundation program staff's job descriptions are expanding to include the ability to make grants that have a measurable impact. Inherent in that responsibility is your ability  to collect and analyze outcome-related evidence: How do we know that our grants are having an impact? How is our support helping (or not)? What have been the effects of our grants—planned or unplanned? If these are your set of evaluation questions, this thought has likely also crossed your mind: How do I make sense of all the information from site visits, phone calls, conversations with the field, and grant report documentation (videos, narratives, studies, articles)? I know that we're having an impact, because I hear, read, and see it, but when it comes to collecting it for a report, it's hard to know where to start!

Oftentimes, this material sits in a cabinet until an evaluation opportunity comes up when, more likely than not, the consultant asks you for all this material. Or, maybe you’re one of the lucky ones who actually has an evaluation expert on staff to manage all this information. Either way, an under-recognized software tool that foundations should consider using is data analysis software. This software should be considered just as essential as your grants management software. In this post, I’m going to describe how to get started with one data analysis software called Dedoose. I’m definitely not getting paid to promote them (they don't even know I exist), and this is really just an opportunity to share my positive experience with this product.

To start, data analysis software is a tool that can be used to analyze information that you have locked up in volumes of grants reports. These software (and there are many competing products) are often used by researchers for statistical data analysis in quantitative research and/or for qualitative research to organize and identify patterns in text-, visual-, or oral-based materials. Given that the primary users of data analysis software are scientists, most are pretty technical, not very user friendly, and not cheap. I’ve been using NVivo (for qualitative) and SPSS (for quantitative), and they take a while to learn how to use, which is a reason why such products don’t get picked up outside of academia or research work. When I first encountered Dedoose, I was really impressed. I had a Eureka! moment when I first used it, because it was just so darn easy to use and holds so much promise for making all that grant report content (there's probably miles of it stacked in cabinets all across America) actually become relevant to outcome-focused work. What grantees don't realize is that their reports sit in cabinets not because of a lack of interest, but because it's 1) overwhelming to go back to them after an initial reading because there's just so many, and 2) it's difficult to transform the information into usable data without involving a lot of work. This is why program staff might have favorite writers to return to time and again when it's docket report-writing time or may keep a running document of good quotes that they update--both pretty spotty and clunky efforts.

I promised a colleague that I would help set up the technological infrastructure of their grantmaking program to operationalize their evaluation process. In other words, I am helping them organize their grant reports and other material evidence of grant impact so that they can pull up stories and documentation of their grant effects easily. So, instead of writing a procedures document just for them, I’m using this opportunity to share this with all of you.

Some notes about Dedoose and what I will and won’t cover. Dedoose is web-based, which I love because it allows program staff to access the materials from home or office or wherever and can be shared via the cloud with co-workers. But, for those of you whose foundations haven’t yet tackled what it means to place grant materials on the cloud, be sure to discuss that policy-level question first before subscribing. (I will point out, however, that much scientific data is sensitive in nature, such as for studies of adolescent behavior, incarcerated study subjects, and the like. Dedoose was built to protect your data to the utmost, but check it out for yourself.) As for what I will and won’t cover, Dedoose does a great job providing instructions on how to use its software, so I will assume that you will refer to their video presentations for instruction. What I will supplement is how to apply Dedoose for grant-related materials. I have made up a narrative grant report as my example for how to use “descriptors” and “code,” which can be applied to include video uploads (e.g., if your grantee CEO was interviewed on CNN and you want to store and code it for evaluation-relevant content). So here we go…

To start, let’s create the scenario. You are an environmental program officer working on two portfolios—healthy rivers and alternative fuels. In your healthy rivers portfolio, you have a cohort of grantees who are all part of a 2010-2013 multi-year funding cycle of advocacy-based organizations. In this portfolio, you just received an interim grant report from the fictitious Happy Earth Network, which received a three-year grant of $300,000. In it, they described what they accomplished in 2012 because of your funding. They are super excited about the many objectives they met.

Now, dust off your foundation or program’s Theory of Change. Huh, you say? Hopefully, if done well and relatively recently, it will provide you with exactly the kind of information that you need to look for in order to assess if your grantmaking is on track. You don’t have to have it but it does help, especially because a Theory of Change should reflect the expectations of key foundation stakeholders (i.e., your co-workers, boss, and board). When you start analyzing your data, you want to make sure that what you analyze is of relevance to others, not just you. Here’s what you need to pluck out from your Theory of Change (or here’s what you can ponder in the absence of one):

1. What are the objectives of my program’s funding? In this case, let’s say your program’s objective is to restore native salmon runs by dismantling dams in rivers where the environmental and social costs exceed the economic benefits.
2.   What should I be looking for to know if objectives are being met? You should have several indicators, so let’s use three as examples of outputs, outcomes, and impact. Output: Using your grant, grantee hires a communications director to sway public opinion in favor of dam removal. Outcome: Dam is removed. Impact: Salmon populations achieve sustainable levels in dam-removed watershed.
3. What indicators should I be looking for? Achieving more than output-level results is challenging, so you need to track the indicators of trends moving toward (or away from) hoped-for outcomes and impacts. Given the three levels of objectives listed, here are some examples of indicators: Output-level change indicator: Number of Happy Earth Network’s Facebook followers climbs to indicate public recognition; Outcome-level change indicator: Grantees report swaying politicians to their side; Impact-level change indicator: Scientifically commissioned report shows salmon runs are re-appearing.

So, back to Dedoose. The first thing you want to do is to think about how your stakeholders will want to slice and dice the data based on organizational or grantmaking categories. Dedoose calls these “descriptors.” Will you need to demonstrate how a particular grantmaking portfolio is doing? Is your foundation starting to expand its grantmaking to include, for instance, minority-led organizations? Think about what information you might want for foundation communications: Maybe this year’s annual report will showcase grantmaking in rural communities. In other words, anticipate how you want to categorize your grantees. These categorical buckets will enable you to organize and call up the data based on grantees’ demographic, organizational information. For this example, let’s say that these categories are: ID #(this should be the same identifying number you use in your grants management and files), Grant Program (Environment), Grant Portfolio (Healthy Rivers), Cohort (Healthy Rivers-Advocacy Building), Grant amount ($300,000), Budget Size ($2 million), Org Founded (1995), Organization Name (Happy Earth Network), Minority-Led (yes—Happy Earth Network is led by a Latina), Location of Grantees’ Office (Montana).

Next, return to your Theory of Change and look at your indicators. These are, according to Dedoose, going to be your “codes.” Now coding is a big deal. It’s the most important reason why you would turn to data analysis software in the first place. Making up precise, targeted, and relevant codes is what will enable you to call up useful grant report content and transform a 15-page narrative report from Happy Earth Network into a powerful data source. Being able to quickly pull up relevant data, which has been separated out from a lot of stuff that you don’t need, will help you generate communications content, write to-the-point docket reports that are enlivened with relevant grantee quotes, and be ready to analyze the coded content to spot trends, gather evidence of the trends, and analyze trends. In turn, all this will help you distribute more targeted, responsive grants and discern if your grantmaking strategy needs to change in order to better reach your objectives. When I’ve used codes to look for problems in grantmaking approach, that docket report section pretty much writes itself when I see the relevant data excerpted from grant reports on that topic.

I suggest starting with the following as broad categorical codes to start: (a) grant impact on organization and/or its staff, (b) the organization’s impact on the field, audiences/public, and/or influentials, (c) challenges that grantee is facing, (d) grantee suggestions for improving your foundation's grantmaking, (e) grantee's praise of your foundation/board/staff, (f) board/boss-specific information, (g) quotes that can be used for communications and docket reports, and (h) items to monitor. Code names should be concise, so just use "monitor" instead of "items to monitor."

The codes you select are also quite personal and should reflect the character, interests, and objectives of your foundation.  Let's pretend that an interest in youth is consistently shared across all your foundation's grantmaking programs, so I've used the code "youth impact" for examples of impact on youth.

Keep in mind, codes should be meaningful enough that everyone in your foundation is applying the same codes consistently. (Note, Dedoose allows individual users to review their coded work so they can compare their coding work with others, which will help avoid inter-reliability issues.) Ultimately, you want just the right amount of codes to find the information you need--not too broad that they bring up meaningless data, not too fine that the information you want doesn't come up, and not too many that you're overwhelmed by codes.

Here’s an example of coding Happy Earth Network’s interim grant report. You can see the codes I made up in the bottom right box labeled “Codes.” In the large field is the grant report. I thought that these two sentences, which I highlighted and then made into an "excerpt," indicate how Happy Earth Network used their grant, is affecting public perception, and is exciting youth attention to their cause.  Hence, I assigned the following codes: "impact on grantee," "youth impact," and "grantee's impact." You can assign as many codes as you like to your selection. The idea is that every time you want to generate a report of all content that was assigned a code, such as "impact on grantee," only this content will be gathered and displayed together, with all other content filtered out.

Here's another example: I selected these sentences (highlighted in green), which are about Happy Earth Network's current organizational challenge (they have a hard time retaining scientists in their rural, low-paying community). At some point, when I want to review all the different kinds of challenges my grantees are facing, I can generate a report of just those selections coded "staff challenge" to analyze for any trends. I also coded this same selection "monitor" to remind me that I want to follow up on how Happy Earth Network is doing with hiring and retaining skilled staff.

And, here's what the document looks like when I'm done coding. Notice that some sentences don't get any coding at all, while others (as in the examples above) got one or more codes.

It looks quite messy, but you'll never need to look at this document in this state again. (If you want to read original grant reports, remember that your grants management system is the best place for managing and reviewing this kind of material. Data analysis instruments are just for analyzing the content.) Upon coding, you can forget about reading this grant report in this long narrative format. You, or your program associate, just read it in order to code it--now you just want to be able to call up the relevant bits. As an example, let's say you want to review only information that is relevant to how your grantmaking affected your grantees. Remember you have a code for this, so you can export all data coded "impact on grantee." Here's an example of how Dedoose exports this information (you can export it as an Excel or Word document--either one makes it easy for you to cut and paste for your report writing).

I've only coded one organization in this example, Happy Earth Network, but if we had other grantees' reports, their data would also come up under this code assignment. Keep in mind that you can upload and code not only grant reports, but also your site visit notes, transcripts of recordings, reviewers' notes, media coverage--anything that can be selected as text for you to assign codes. Also, remember your descriptors? You can apply a filter for only those types of organizational characteristics you want to examine. For instance, you can review the codes of only organizations in your grant portfolio (1st descriptor) that are in the current cohort (2nd descriptor).

You can use Dedoose as an individual program officer, or this tool can be used throughout the foundation. There's healthy competition in the world of data analysis software, trying to make them easier and more powerful to use. A couple years ago, when I didn't know about Dedoose, I would never have suggested using data analysis tools for nonprofits, unless they were actually doing social science research and high-end evaluations. But, I stumbled on Dedoose for a project and found out first hand how they made this sophisticated program easy to use for any social change-oriented organization. What I love is that you can upload and code just about anything text or video based, it works on a Mac or PC, and it's remotely accessible as it is web- and not desktop-based. Dedoose will help you track, organize, and discern evidence of impact. So the next time you're asked for data about how your foundation's grantmaking is affecting your grantees or the field, you can say, "I can have it to you today!"