Investing in Infrastructure

I did a little jig down 42nd Street in midtown Manhattan, clad in a suit and tie, briefcase in hand. It wasn’t pretty, and I got some odd looks. But sometimes you’ve got to dance.

I had just left Joel Fleishman’s office, then head of U.S. grantmaking at Atlantic Philanthropies, and he had committed $900,000 over three years to the Center for Effective Philanthropy (CEP). It was April 1, 2002, and I was eight months into my job as CEP’s first chief executive, one of four staff at the time. When I took the job, there had been $345,000 in project funding secured, but that was it. And, tellingly, the three initial funders had supported a project, not the organization, because they weren’t sure the organization was needed. We had worked hard on an examination of performance assessment practices at foundations and we had developed some ideas (including what became our Grantee Perception Report). Fortunately, Joel and his colleagues felt we were contributing something important.

In fact, all three initial funders — Atlantic, Surdna Foundation, and the David and Lucile Packard Foundation — decided during that spring and summer of 2002 to renew their support, and this time to provide grants to CEP as an organization. They wanted to help us become a resource for foundations to help them be more effective.

“What the heck, are you being serious?” my colleague Kevin Bolduc said, mindful that it was April 1, after I told him. (Note: he may not have actually said “heck.”) He knew as I did that this would be transformative for us.

Those commitments, and ones from other early funders such as the William and Flora Hewlett Foundation, gave us the opportunity to build CEP. Without that kind of funding, CEP wouldn’t exist. Since then, continued grant support — including from the Robert Wood Johnson Foundation, W.K. Kellogg Foundation, Ford Foundation, Rockefeller Foundation, Fund for Shared Insight, and others — has allowed us to undertake an ambitious research agenda, to develop assessments for foundations, and to promote a focus on effectiveness.

That’s CEP’s story.

Every one of the so-called “infrastructure” organizations that foundations and nonprofits rely upon have their own. Even those of us that have built significant earned revenue streams rely on grant funding to support some of what we do.

In recent years, there seems to have been a growing recognition of the need to support increasing the effectiveness of foundations and nonprofits. There is lots of talk of the need for increased “capacity,” better research, more investment in talent development, and so on. People understand that the sector needs its own distinctive resources because what it takes to be effective in philanthropy and the nonprofit sector is often distinct from what it takes to be effective in business. Just reading Harvard Business Review isn’t the answer.

But, unfortunately, that increased recognition hasn’t been matched with increased foundation support for infrastructure. That’s why, today, 22 “infrastructure organizations” are formally calling on all foundations to commit at least 1 percent of their grantmaking budgets to strengthening the sector.

These organizations represent a diverse coalition that includes: CEP, BBB WiseGiving/, BoardSource, the Center for High Impact Philanthropy, the Council on Foundations, D5, Exponent Philanthropy, the Forum of Regional Associations of Grantmakers, Foundation Center, Grantmakers for Effective Organizations (GEO), GlobalGiving, GuideStar, Media Impact Funders, National Council of Nonprofits, Nonprofit Finance Fund, Nonprofit Quarterly, the Philanthropy Workshop, Social Finance, Stanford PACS, Stanford Social Innovation Review, TechSoup, and VolunteerMatch.

All of us are very grateful to the handful of funders that have made significant investments in “infrastructure” organizations. Their support has been vital. But as Lindsay Louie, program officer at one such foundation, Hewlett, noted last year, citing Foundation Center data, “Philanthropy is growing, but infrastructure funding isn’t keeping pace.” 

That needs to change. In the letter we sent to all U.S. foundations making more than $2.5 million in grants annually, we argue that “civil society needs infrastructure to ensure that nonprofits and foundations can act with integrity and impact.” 

It is true that much has been achieved.

Think of the resources that we all rely upon from the organizations that have signed the letter, as well as others: from BoardSource’s vital work to strengthen governance, to Foundation Center’s crucial data on grantmaking, to D5’s efforts to promote greater diversity, to crucial publications like Nonprofit Quarterly and Stanford Social Innovation Review that raise the tough questions and offer essential resources to nonprofit leaders.

But it is also true that much more can be done.

“Collectively, we waste hundreds of millions of dollars in a fundraising process that is full of duplication and confusion,” the 22 organizations argue in our letter. “Nonprofits struggle to find the right staff with the right skills. The power imbalance between foundations and nonprofits dampens the honest conversations that are so critical to any partnership. Too often nonprofit leaders do not reflect the diversity of the communities they serve. Too few organizations admit failure; and, thus, few learn from it.”

No one of our organizations is addressing all these issues. But, collectively, we’re working on them all. And we all believe that, while the sector has done much good, it can do much better.

To get there, we need foundations to invest in infrastructure.

Phil Buchanan is President of CEP. Follow him on Twitter at @PhilCEP.