The Way Forward: Find, Fund, and Support Social Entrepreneurs

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By Bill Draper, Draper Richards Kaplan Foundation

In this open letter to philanthropists working with few or no staff, venture capitalist turned venture philanthropist Bill Draper outlines an approach to address today’s social issues. Just as the best venture capitalists achieve enormous, outsized impact in their chosen for-profit investments, each of us, as investors in the nonprofit arena, can strive for the same returns. Draper, one of the first to transfer his venture approach to philanthropy, offers a 3-step model and examples of successful investments.

At the Draper Richards Kaplan Foundation, we have one singular belief that drives everything we do. We believe that, with early funding and rigorous support, exceptional social entrepreneurs tackling some of society’s most complex problems can make the world a better place. It’s that simple.

We’ve taken this one singular belief, borrowed from our venture capital legacy, and created a unique model, proven over a decade, for working with world-class social entrepreneurs. We find, fund, and support leaders with exceptional promise and impactful ideas that have the potential to scale.

A time-tested three-step process

It’s hard work to be sure, but over the past 12 years, we have seen these organizations materially impact the lives of millions.

  • Find—Through exhaustive due diligence on hundreds of potential portfolio opportunities, working in close contact with partners, networks, and institutions crossing the public, private, and non-profit sector, we narrow our focus on a select group of exceptional leaders and organizations.
  • Fund—Early on, we recognized two things that drive our funding model: 1) unrestricted capital is the most precious capital that our portfolio companies need to build out their organizations; and 2) multiyear funding, as opposed to a one-time grant, is a critical success factor in helping these great organizations achieve scale.
  • Support—We also have learned that just giving early stage organizations money and checking in periodically isn’t enough. Our approach is materially different. We partner with the leaders of these organizations and provide rigorous and unrelenting ongoing support. We take a board seat for 3 years, often serving as the first outside board member. We work day and night with our grantees, opening our networks and contacts to each of these select organizations, facilitating meetings, convening critical resources, and working side by side with each leader to help all reach their full potential and build their organizations to scale.

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Program Notes: A Mindset Shift for Successful Collaboration

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Collaboration is not new, but there is increasing interest among grantmakers in how to be smarter in collaborative work and in the factors that can facilitate (and undermine) success. Last month Exponent Philanthropy and Grantmakers for Effective Organizations co-hosted a call to examine a particular form of collaboration: networks. While networks can take a variety of forms and have varied levels of formality, we describe them as people, groups and organizations connected by relationships and shared values.

What did we uncover about what makes networks work well?

We turned to Amanda Standerfer of Lumpkin Family Foundation who has played an active role in the creation of Good Works CONNECT, an online community space and resource center for nonprofits across Eastern Illinois to form relationships, share tools and resources, and grow and improve their work. Joining her was Megan McTiernan of Thomson Family Foundation, steering committee member of Asset Funders Network, a community of funders committed to informed grantmaking practices that promote asset building and economic security.

A key theme emerged: While the seemingly simple of act of coming together to share ideas, resources, and practice can produce profound results, it doesn’t always come naturally. Part of what enables networks to take hold is a shift in mindset — a shift in how we see ourselves and our organizations relative to the issues or missions we are working on. Instead of being the hub of the action, successful collaborators see themselves as participants in a shared ecosystem working toward a shared outcome. This shift to a more collaborative mindset also requires greater comfort with shared decision-making and control, and often longer and less-clear timeframe for outcomes that characterize networks and other collaborations. The hope, of course, is that outcomes, once they emerge, are greater than what a single funder could achieve alone.

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If Only We Are Intentional

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By Sara Beggs, Exponent Philanthropy 

Philanthropy is changing for a host of reasons, but perhaps most of all because funders are demanding more from it. The expectation that funders will be able to achieve impact, and see that impact, changes everything. No longer are donors satisfied with the mere act of writing checks. They want to see results.

Add to this “results orientation” several other realities of today’s philanthropic landscape:

  • Philanthropy is more critical, being called to fill in for government cuts.
  • Philanthropy is more complex, tackling not only the symptoms but underlying systems.
  • Philanthropy is more confusing, with really smart people sharing opposite views of “effective giving”: head versus heart, data versus intuition, proactive versus responsive.

Put these realities together, and the good work of philanthropy can quickly become more intimidating than fulfilling. It’s even tempting to throw up your hands and hope your giving will magically produce great results.

But what I’ve seen in my work with hundreds of funders over the past 14 years is that fulfillment and impact can be achieved—if only we are intentional. But what is intentionality?

To Fund With Intentionality

Being intentional in philanthropy involves the following steps:

  • Identify and articulate what you want to achieve. No other step is as critical for fulfillment and impact in your philanthropy. It is just a fact that we can only do a few things well. Focusing your giving helps you prioritize not only your grants, but your time, your energy, and everything else you bring to the table. It also makes it easier to know where to look for impact. Apply for our new Finding a Focus Intensive
  • Learn enough about your area of interest to make educated decisions. Just as successful businesses assess strengths, weaknesses, opportunities, and threats, successful funders understand the context in which they operate. It is critical to grasp key players, field dynamics, funding sources, effective strategies, gaps, and more so you can make educated decisions.

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Funding Media to Move Your Mission

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By Lauren Kotkin, Exponent Philanthropy, and Pam Harris, formerly of Media Impact Funders

Media has enormous power to inform and educate, shift policy, shape public opinion, and make social change happen. From documentary film to investigative journalism to social media campaigns, media projects are increasingly the keystone to successful philanthropic work on education reform, environmental protection, poverty, economic justice, and much more.

Grantmakers are supporting media to move their missions, understanding that their programmatic priorities depend on reaching key audiences and bringing critical attention to important social issues in ways that only media can.

In addition to this piece, the Knight Foundation’s Five Things You Need to Know; 5 Ways to Get Started is an excellent resource for funders exploring ways to use media effectively.

You Can Start Small

Successful media funding doesn’t require billions in assets or complex programmatic restructuring. Effective media projects vary in size and scope, as do the funding structures behind them.

Plant some seed (money). Early stage projects from documentary films and social media campaigns to community radio stations and online news hubs all need small but early investments to get to critical proof of concept stages.

Invest in journalism. Funders concerned with complex social issues such as homelessness, poverty, education, and healthcare often face diminished journalism coverage of issues and even less investigative journalism. Funders can play a key role in elevating public understanding and scrutiny of policies by supporting a journalism fellowship or public media programming focusing on their issues of interest. See these resources on ensuring accountability and integrity in funding journalism

Serve the information needs of your community. Cities and towns across  are reeling from the collapse of the traditional media sector and witnessing newspapers close down, reduced budgets for city hall coverage, and major gaps in reporting on issues that matter. After the Rocky Mountain News shut its doors, the Community Foundation of Boulder County helped to support a fledgling news source, I-News, which partners with existing news outlets in Colorado and conducts the kind of long-form investigative news that is missing from so many communities.

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Millennial Voices in Philanthropy: Alexis Marion

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By Stephen Alexander, Exponent Philanthropy

Join me to explore the values and visions of emerging leaders of a socially minded generation. Below is an excerpt of my recent conversation with Alexis Marion, program assistant and junior board advisor with the Frieda C. Fox Family Foundation in Studio City, CA. In 2013, Alexis participated in Exponent Philanthropy’s inaugural class of Next Gen Fellows.

Alexis Marion

Exponent Philanthropy member Alexis Marion

What are you working on right now?

Currently, I’m serving a dual role as program assistant and junior board advisor. Participation in the junior board starts at age eight. Since its inception, junior board members have received $2,000 per year to make individual grants. In addition, our board approved a special Collaborative Grant of $50,000 for 2014 just for the junior board. I assist them in conducting a regular grant cycle, including due diligence, planning around grant application and review, coordinating meetings, reaching out to potential grantees, and attending site visits. Ultimately, the group reaches an agreement on the grants it would like to award and presents its recommendations to the foundation board.

Our foundation is at an interesting turning point. We recently added new board members and have experienced success with the Youth Philanthropy Connect program since its creation in 2010. As we become introspective and think strategically about the best path forward, I’ve also gotten involved in our strategic planning process.

What are you interested in, both in and beyond philanthropy?

Within philanthropy, I really love our youth philanthropy program. Philosophically, I love it; I love that we engage youth early on.

More generally, impact has been on my mind for a while now. When I attend conferences, I usually gravitate toward sessions on impact. I’ve noticed plenty of conversation about numbers—number of grant dollars, people served, and various achievements. I think the human aspect is missing. Why do we actually do this work? I don’t know how you measure that; is there even a way to think about it that makes sense to foundations?

Diversity is one of my other main interests. The word “diversity” tends puts people off from the get-go. One thing I think about is, “How do we include as many different perspectives as possible?” I know it’s possible and I believe it’s valuable. Perhaps this has something to do with being young and idealistic, but that’s also why I believe it’s so important to get young people involved and engaged.

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Walk and Talk Washington’s Past and Present at the 2014 National Conference

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By Lauren Kotkin, Exponent Philanthropy

Like many people, places, and things in Washington, D.C., our 2014 National Conference hotel, the Washington Hilton, has its own Wikipedia page. You can read about its architect, current owner, and historic events that occurred at the hotel. It even shares the hotel’s nickname, the Hinckley Hilton, referencing John Hinckley, Jr.’s attempt to assassinate President Reagan as he exited the hotel 33 years ago.

Not only does the conference hotel boast a history, but the neighborhoods around the hotel do as well. Until the late 1800s, everything north of Dupont Circle was rural. In fact, Grover and Francis Cleveland bought a home in what is now called Cleveland Park, one mile up Connecticut Avenue, at a time when the area was still “sprawling farmland with views of the distant Potomac.”

The District has a rich history of growth and change that many visitors miss and that continues today.

At this fall’s 2014 National Conference, we will offer one-hour Early Riser Walks with conversation each morning—another way for participants to connect with and learn from our host city. 

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A Call for Your Leadership

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By Andy Carroll, Exponent Philanthropy

Funders with few or no staff provide leadership by using their many assets, and their influence, to address important issues in communities.

A surprising thing is that leadership is seldom planned; instead, philanthropists step up to leadership through a journey that begins with passion for an issue, and a desire to learn everything about that issue. Leadership is something that unfolds, a journey that takes philanthropists to places they never imagined they’d go.

A Time for Leadership 

Never has leadership been so needed. Diverse forces and trends are reshaping communities and our society, changing the demands on philanthropy.

  • There is growing recognition that many of the problems philanthropists address are complex, difficult to understand, and impossible to solve by one funder or nonprofit at a time. Many are calling for a more collective approach.
  • Many complex problems such as hunger, homelessness, and economic insecurity are only increasing in size and scope.
  • Public funding is declining for schools, child care centers, human service organizations, arts groups, and other nonprofits that funders value and support. Many in the philanthropic sector are now openly acknowledging that private dollars cannot make up for the cuts in government support.

In this landscape of scarcity and growing needs, giving in the traditional ways cannot address the demands. By stepping into leadership roles, philanthropists uncover the potential for much greater, catalytic impact.

What do changing times and challenges call us to do as philanthropists?

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Plan for Transitions Before It’s Too Late

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By Nina L. Cohen, Glenmede

World-class athletes do not casually approach a championship match, but rather spend years in training. Likewise, nonprofit organizations and the third-party advisors with whom they partner are now taking the same disciplined, planned approach to navigating the future—including periods of transition.

Transitions can be difficult, overwhelming, and can affect everyone from staff, board, and committee members to trustees, beneficiaries, and grantees. It is important for those involved to understand that being proactive and prepared is integral to simplifying and streamlining transitions. Whenever possible, transitions must be choreographed to avoid undue risks to the organization’s mission and long-term goals.

Taking the time to establish a transition plan allows you to consider a variety of scenarios ahead of expected or unexpected changes, thus limiting vulnerability. Many organizations develop leadership succession plans, but often overlook how other scenarios—such as a considerable increase or decrease in assets or change in the investment policy—may also affect their philanthropy. Recently, charitable organizations have begun to partner with experienced outside advisors to plan in advance of transition periods and take advantage of their research, resources, and breadth of knowledge.

Change impacts all aspects of an organization

A period of transition influences all areas of an organization. Along with leadership succession plans, protocols should be developed outlining how investment policies and procedures, tax and legal responsibilities, and grantmaking and reporting requirements might change during a transition. These plans should also be regularly reviewed and revised as necessary.

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Why to Support Nonprofits’ Technology Needs

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Adapted with permission from Idealware’s “A Funders Guide to Supporting Nonprofit Technology.” Idealware helps nonprofits—including funders—make smart software decisions by providing thoroughly researched, impartial, and accessible resources about software.

Wouldn’t it be nice if there was a single type of funding that could positively affect all your grantees? There is: support for grantees’ technology needs. But few funders support technology, and many nonprofits are reluctant to directly ask for that support.

Investing in your grantees’ technology infrastructure—whether purchasing actual hardware, helping them choose software, or building technology skills—has a direct impact on their important work.

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Doing More by Working Together

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By Diana Aviv, Independent Sector

The commentary below appeared in Exponent Philanthropy’s recent publication Outsized Impact, a report on philanthropy with few or no staff and the trends shaping its impact.

Reading up on philanthropy, I recently was reminded that the ancient Greeks so often got many things right. “To give away money,” said Aristotle, “is an easy matter and in any man’s power. But to decide to whom to give it and how large and when, and for what purpose and how, is neither in every man’s power nor an easy matter.”

Philanthropy, done effectively, is hard work, with quite a due diligence checklist. As donors consider in what arena they want to see needle-moving change, top of mind is likely to be the vehicles—most often, the nonprofit grantees—through which they do their work. It is through these organizations that many funders are able to realize their goals and, in some cases, accomplish even more than they had hoped.

Bringing different resources to the relationship

Donors potentially bring to the table a lot more than financial resources. Donors have the potential advantage of a broad understanding of a given field, knowledge of the various groups working on particular sets of issues, and of the different approaches they use. The most experienced donors have shared that some of the best ways to learn about the work in a given field is to connect directly with the people working on the ground: the doers.

Donors and doers alike inhabit the same broad environment. Doers typically toil in the trenches and that brings them close to the issues, needs, and realities of the challenge they are trying to meet. Donors have perspective, gained from talking to many people and seeing the problem and what needs to be done from many angles. Doers often have the community networks, the experience with what works, and the ability to collaborate in partnership with others. Each brings to the relationship a set of distinctive assets and potential skills that can only make an active partnership between them more powerful. This interdependence is the heart of highly effective work with a combination of vision, perspective, grit experience, and shared passion that brings the parties together even before any formal relationship has been affirmed.

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