No One Model

On the CEP blog this week and next, CEP President Phil Buchanan is discussing, in a series of eight posts, recent critiques of large, staffed foundations and assertions that recently-established, “lean” foundations are paving a promising new path without being saddled by “bureaucracy.” The following is the fourth post in the series. To make sure you don’t miss a single one, subscribe to the CEP blog and get each post in your inbox as soon as it goes live.

Sometimes it’s as if critics of institutional philanthropy think there is one superior model. Inside Philanthropy’s David Callahan argues that “Foundations should provide more general operating support and fewer program grants … and they should also more narrowly focus support on those grantees that are first in class. If they pursued this strategy, they would need smaller staffs.” He lauds foundations that provide “big general support grants to major nonprofits.”

This is one model, of course, but it is hardly the only one. Nor is it the right model for every context and situation.

Just as whether a minivan or a two-seater sports car is right for you depends on who you are, what matters to you, and what you’re going to use your car for, there is no single “right” model for philanthropy.  A Miata won’t work for a family of six. And a Tesla may not be right if you’re driving across the country (or if you don’t have $100,000 to spend).

William and Flora Hewlett Foundation President Larry Kramer put it this way in a comment on my second post in this series earlier this week: “The idea that lean staffing is ‘better’ is just a variation of the argument that lower overhead is better, except now critics are applying it to funders rather than NGOs. And it’s misguided for the same reason.” As he notes, “staff size does and should vary depending on how one works.” 

Another comment on the same post, this time from Scott Downes, a consultant and former program officer at The Colorado Trust, makes a similar argument. “The first order question for funders — new or old — shouldn’t be whether it needs a lean or large staff,” he writes. “Rather, it should be what needs to happen to fulfill a vision, what change needs to be instigated, and what strategies need to be deployed to do that. Staff structure and size (and function and role) should be aligned to those answers, not the other way around.”

Kramer and Downes are right.

Look, I am at some level sympathetic to Callahan’s argument. I have also urged foundations to make more large, unrestricted, multi-year grants. In the situations when that’s possible, and when they have confidence in the potential or proven efficacy of a nonprofit’s work, foundations surely should do that.

I agree with leaders like Edna McConnell Clark Foundation President Nancy Roob, Bridgespan Co-Founder and Managing Director Jeff Bradach, and Venture Philanthropy Partners Founder Mario Morino that it shouldn’t be so hard for organizations that have demonstrated impact to get the funding they need to expand to serve more people. But, as I discussed in my last post — and as I think they would likely agree — investing in the rapid growth of organizations, or only in already “major” nonprofits (to use Callahan’s word), isn’t always the right move.

Especially in certain communities and fields, crucial and effective grantees may not be well-positioned to receive multi-million dollar grants or even be interested in expanding to other geographies. As Bradach has put it, it’s not always about scaling organizations, it’s about “scaling impact.”

After all, most nonprofits are local — often focused both in terms of geography and population served — for very good reason.

I spent time last month at UTEC, a Lowell, Massachusetts-based organization that works “to ignite and nurture the ambition of our most disconnected youth to trade violence and poverty for social and economic success.” Specifically, UTEC works with those who are seriously involved in gang or criminal activity, seeking to help them chart a different path through interventions that include employment in one of their social enterprises. (I highly recommend the panini at the UTEC café!)

UTEC can claim strong outcomes for those it serves, which have earned it increasing recognition — the current and former Governor of Massachusetts have rightly lauded UTEC for its performance, and the Boston Globe ran this front-page story on the organization earlier this year. The organization garners about $4 million in annual revenues after several years of rapid growth (thanks in part to foundation support).

Yet UTEC is clear that it is not expanding to other communities. It was created by the youth of Lowell in 1999 as a local response to a local problem and context, and it intends to stay local. The leaders of UTEC are trying to share what they’re learning about what works with policymakers and other youth workers (through a planned teaching and learning institute), but they’re not interested in “scaling” the organization to other geographic communities.

“There’s so much more for us to do here, with our specific target population,” says Gregg Croteau, UTEC’s executive director. “Ultimately, we hope to redefine the vision of scale a bit. For us, it entails further scaling the efficacy of our outcomes — for example, maintaining laser-like emphasis on moving from 80 percent to 90 percent of all our youth having no new arrests.”

In other words, Croteau is interested in deepening UTEC’s impact with those it already serves.

“We hope to scale the level of supports each young person has to remove their barriers to increased education and employment through new initiatives such as a two-generation early education program and expanding our social enterprises,” he explains. (Disclosure: Croteau and I went to college together.)

If foundations are to find and support organizations like UTEC, they need staff to get out and interact — building relationships and making connections. That’s what happened to UTEC when it received crucial foundation funding from the Parker Foundation, Robert Wood Johnson Foundation’s Local Initiative Funding Partners Program, Richard and Susan Smith Family Foundation, Strategic Grant Partners, and Edna McConnell Clark Foundation’s (EMCF) PropelNext Program, among others. (Disclosure: RWJF provides significant grant funding to CEP.)

“Some of these funders provided the essential support needed to launch an idea into an organization,” Croteau explains. “Some provided us the key capacity to build performance measurement into our organizational DNA. And others offered consultancy to help us further improve key program design areas. As we move forward with our growth plans, we hope to partner with more funders that can help further the conversation of how ‘scale’ and local growth do not have to be mutually exclusive.”

Interestingly, the diversity of foundation approaches that Croteau alludes to — with some providing primarily financial support and others, like EMCF, providing crucial assistance beyond the grant — benefited UTEC. As the Rockefeller Brothers Fund President Stephen Heintz put it in an email to me this week, “There is no magic model or approach, and diversity in styles and methods is as healthy and constructive as diversity in human resources.”

Foundations of various sizes and approaches matter in supporting organizations like UTEC. Callahan seems to believe it is only the “big” and “major” nonprofits that should receive foundation funding.

I don’t agree.

Finding organizations like UTEC that are changing communities for the better, and giving them the right kind of help to get to the next level, is important. And it takes time.

And staff.

Find all posts in the series here.

Phil Buchanan is president of CEP. Follow him on Twitter at @philCEP.

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