Creative Grantmaking Done Legally

By Ruth Masterson, Exponent Philanthropy 

Your foundation can be extremely imaginative while still keeping its grantmaking straightforward. Or it can take full advantage of the tax code’s flexibility to make grants that are more complicated—and still perfectly legal. Our goal is neither to encourage you to stay simple or to get complicated with your giving, but to help you be aware of all the strategies at your disposal.

In fact, private foundations can make grants to almost anyone or any organization, including other private foundations and tax-exempt organizations, such as 501(c)(4)s, 501(c)(5)s, and 501(c)(6)s. Private foundations also can make grants to foreign organizations, individuals, unincorporated groups, and for-profit entities. You must just follow two steps: the grant must be for a charitable activity or project, and you must follow appropriate procedures as determined by the IRS.

Do speak with an attorney before taking on any of the “somewhat complicated” or “complicated” grants below, because there are nuances that are beyond the scope of this article.

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Chemistry, Compensation, and Other Lessons From Our Nonprofit Mentoring Program

By Carrie Avery, The Durfee Foundation

Rick Nahmias started Food Forward without any intention of becoming a nonprofit executive director. A photographer, Nahmias was moved by the mirror issues of U.S. hunger and food waste that he documented in his work. He started bringing volunteers together to pick fruit from backyard trees in L.A.’s San Fernando Valley that would otherwise go to waste, and donating it to food banks. This immediately caught on, with volunteers clamoring for opportunities, property owners wanting their trees picked, and food banks grateful for the donated produce. Rick put more and more time into Food Forward and realized that he was running an organization.

Food Forward received a grant from The Durfee Foundation’s Springboard Fund, which supports young L.A.-based community organizations with strong leadership. For two years, Springboard grantees receive $35,000/year in unrestricted funding and a mentor—an alum of one of Durfee’s Sabbatical or Stanton Fellowship programs—who is paid to work with them up to 50 hours per year.

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5 Tips for New Foundation Staff

By Jenna Wachtmann, Ball Brothers Foundation

When I started my job as a program officer at Ball Brothers Foundation a little over two years ago, I knew I had a lot to learn. There were technical aspects of working for a foundation that I knew I’d need to master (grant files, legal dos and don’ts), and it was also important for me to quickly immerse myself in the culture of the foundation…the how and the why.

I was fortunate to join a family foundation staff who helped me to jump right in and quickly learn the ropes. As I reflect back on my experience, here are my top five tips for other new foundation staff members:

1. Meet grantees in person
Relationships are critically important to grantmaking. It’s one thing to blindly review a grant request, but it’s an entirely different thing to meet an organization’s leader in person, see an organization’s facilities, talk about an organization’s challenges and opportunities, and see first-hand the organization’s impact on those it serves.

Throughout my first few months on the job, I had the opportunity to sit down one-on-one with dozens of our foundation’s grantees. Ultimately, these meetings formed the basis for relationships with grantees that are the bedrock of the work I do as a staff member.

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Ready to ACT? 3 Steps to Effective Foundation Communications

By Sara J. Redington and Danielle M. Reyes

An effective communications strategy can amplify a foundation’s impact by lifting up the successes of its grantees and other partners, elevating the causes that matter most to the organization, and connecting ideas, people, and resources around a common purpose.

Every foundation, regardless of size, can reap the rewards of integrating a strategic communications approach into its mission. Three steps can help foundations ACT on an impactful communications plan:

Align Goals (to the foundation’s mission and vision)

Clarify Audiences (the foundation seeks to engage)

Target Channels (that will connect with key stakeholders)

A – Align Goals. Although it’s tempting to jump directly into the tactics of communications (e.g., a certain social media platform, op-eds in the newspaper, or a press release), setting clear goals at the outset helps to ensure that each communications effort has a purpose and furthers the foundation’s mission and vision.

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Investing in Nonprofit Leadership for the Long Run

By Cheryl Taylor, Foellinger Foundation

I owe my passion for leadership development to my dad, a few terrific college professors, and a wonderful group of bosses and mentors. I asked each of these people for all the wisdom they could share. In return, they opened up their hearts and their minds giving me access to their knowledge and experiences. They talked about what went right with their successes and what they learned from their failures.

Fueling my passion was a realization that many people—perhaps even most nonprofit board and key staff members—don’t have mentors or coaches as I did who offer support and encouragement. They may not have access to professional development or other training, or the culture of their organizations may not consider it important.

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Remembering Our Own Backyards

By Ervie Smith, Ervie Smith & Associates

In honor of our association’s 20th anniversary and the passionate leaders who have helped us grow along the way, we are pleased to feature a regular blog series dedicated to the reflections of our founders, early board members, and others with long careers in philanthropy. What has changed in the field—and in their giving—over the past decades? What has remained the same? Join us at the 2016 National Conference, September 26-28 in Chicago, to celebrate our milestone anniversary >>

In many ways, the past 20 years have flown by. It seems like only yesterday that 75 of us gathered in a hotel room in San Francisco and decided to move forward with creating an organization (now Exponent Philanthropy) to assist small-staffed foundations with their grantmaking.

I live in the heart of Silicon Valley, and I have noticed many changes here since that time. The high-tech industry has all but taken over the valley, and with it comes a very young group of philanthropists who see philanthropy much more globally than many who have come before them.

Our own Silicon Valley Community Foundation that was once very much a part of supporting local nonprofit organizations and guiding its donors with suggestions on local needs has become much like a bank for donors to park their funds while deciding where in the world to make a difference.

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What Will You Do Today?

By Gerald P. McCarthy, philanthropic and nonprofit advisor

Before taking on the work of philanthropy and grantmaking, I was a gubernatorial appointee in charge of environmental policies for the Commonwealth of Virginia. The first Governor I worked for used to keep a sign prominently displayed on his desk. It said, “Today is opportunity day. Do something!” What a great attitude for those of us in philanthropy to emulate.

How often do we look at each day as an opportunity? Foundations are among the rarest of organizations because they have the ability to do something useful each day if they choose to do so. Our foundation chose to focus on improving the quality of the environment by funding groups that could change public policy on the environment, mostly in Virginia but also occasionally with national impact. I found that the most important question I could ask both each day and each year, when I reviewed the previous year’s grantmaking, was, “What needs doing in our priority areas?”

To answer that question, I quickly learned, it was necessary to ask other people, people more experienced, knowledgeable, or smarter than I. What did they think needed doing? What in particular did they think our foundation could be doing that would be uniquely helpful?

This line of questioning led us deeper into explorations of our ability to contribute time, experience, and funding in unique ways, ways that neither government agencies nor the private sector could or would be able to do.

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Inside Look at a Funder Collaborative

By Elaine Gast Fawcett, Four Winds Writing, Inc.

The Ohio Transformation Fund (OTF) wants to change its state’s justice system from one of mass jailing, particularly of young people and people of color, to one based on stable families, economic security, and access to health care and education. It began with the vision of a national funder building a model together with local funders and key partner organizations.

In early 2015, after considerable research of criminal justice reform, the Ford Foundation identified Ohio as a place with potential for statewide change.

“Whereas criminal justice reform is getting a lot of attention at present, in many states, the issue has historically been an issue that politicians and funders don’t want to touch,” says OTF executive director Judy Wright. “In Ohio, leaders on both sides of the political spectrum agree that we have the opportunity now to get something done.” Pair that with Ohio’s long history of organizing capacity, grassroots strength, and committed group of funders invested in safe communities.

Inviting Fund Partners

The Ford Foundation invested $1M to the Fund, with a matching requirement to raise half that amount. The Fund then approached Ohio-based funders, or those who have invested in Ohio, in any of three areas: community organizing, policy/advocacy work in criminal justice, and civic engagement. “Our theory of change is that, whereas each of these areas is important and necessary, none on its own can create sustainable, statewide change,” says Wright.

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Impact Investing: Where to Source Investments?

This post is an excerpt from the complimentary resource Essentials of Impact Investing: A Guide for Small-Staffed Foundations, created by Exponent Philanthropy and partners Mission Investors Exchange and Arabella Advisors. Want to align your investments with your mission? Download Essentials of Impact Investing: A Guide for Small-Staffed Foundations >>

By Cynthia Muller and Catherine Toner, Arabella Advisors

For the 90-year-old Edward W. Hazen Foundation, making impact investments was not a question of if, but how. The board was eager to more closely align the foundation’s investment portfolio with its mission. With the corpus entirely in screened investments, the board had voted to allocate $1 million, or 5 percent of its total corpus, whichever is less, to test mission investing—but found it challenging to identify transactions that met its criteria.

The foundation found [its first investment]—as well as two other potential transactions that are in the pipeline—thanks to the board and staff’s efforts to solicit suggestions from peers.

To successfully invest for impact, you’ll need a steady pipeline of investable transactions. Because the field is relatively new, finding investment opportunities that are aligned with a foundation’s interests and goals often requires extra effort and effective collaborations with colleagues, partners, and advisors. Foundations active in impact investing point to a number of ways you can find or develop investable opportunities:

Conduct a landscape scan. This will identify fund managers or investments that are aligned with your foundation’s investment criteria (investment, program, geographic requirements). Peer funders are especially helpful to speak to when identifying specific investment opportunities within your area of interest. Industry platforms such as ImpactBase, Aeris, ANDE, and ImpactSpace are good resources as well. If you are able to identify specific opportunities through these resources, the next step is to have a conversation to clarify if the fund manager or organization is actively raising funds and the timeline for possible investment.

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Hypothesis: Shorter Board Terms Can Increase Family Engagement

By Carrie Avery, The Durfee Foundation

As the president of a family foundation that has made the transition to an all third-generation board, I am often asked by colleagues for tips on successfully engaging next gen family members. Here is one: consider offering one-year, renewable board terms to family.

I haven’t done a study on this, but I would guess that many boards have adopted something akin to the traditional model of three-year terms. Three-year terms have the advantage of providing some certainty about board composition, but a three-year commitment can be daunting to a family member who is not well into middle age. At an earlier stage in life, it can be difficult to know where you will be in three years. You could go to grad school far away, get married, start a new job, start another new job, become a parent, or move to a different state or another country. With all that uncertainty, a three-year commitment to anything can seem onerous. Some might decide to forgo the board altogether.

At The Durfee Foundation, we have long had a practice of offering one-year, renewable terms to family trustees. We also have non-family trustees, who are elected for two-year, nonrenewable terms. Some family members renew year after year. Others have taken breaks at different times in their lives when the demands of family or work did not allow board service. Board terms begin in January, and we check in with trustees each fall to see what their plans are for the coming year.

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