If money equals power, then foundations wield a mighty force. And some of them are rethinking how they use it.
“There is an inherent power dynamic between funders and nonprofits,” said Kathleen Enright, president of Grantmakers for Effective Organizations, a national association of foundations that drew some 800 people to Minneapolis this week to talk about how to improve philanthropy.
“Donors back in the day wielded their power to control — control how the money gets spent and control organizations,” Enright said. “To be entirely frank, that’s ineffective. It’s the nonprofit organizations themselves that have the street-level view and know the people they’re attempting to serve in a deeper, more compassionate and sophisticated way than donors do.”
Leaders from local foundations — with names like McKnight, Bush, St. Paul Foundation and Cargill — joined colleagues from around the country spending three days at the Hyatt Regency in downtown Minneapolis attending workshops about how to listen better to the nonprofits they fund, build trust, support social change, improve outcomes, hire more people of color and manage their billions of dollars of assets for good. With more than 1,400 foundations in Minnesota and more than $1.3 billion given in 2014 by the top 50 Minnesota foundations, this national conversation around rethinking philanthropy has big local implications.
Here are five themes that emerged from dozens of workshops:
Fund operating grants: Foundations give too much money to fund one-time special projects and should give more money away as multiyear grants without restrictions. In 2014, about 25 percent of money given nationally by foundations went to operating support, up from 20 percent in 2008, according to Grantmakers for Effective Philanthropy. Some foundations also have found new ways to explicitly fund operating support. “We wanted to be a stable, reliable funder,” said Jennifer Ford Reedy, president of the St. Paul-based Bush Foundation, which recently rolled out its new Ecosystem Grants to support operating expenses.
Collaborate: Funders get more done when they come together. “And we’re exceptionally good at it here in Minnesota,” said Trista Harris, president of the Minnesota Council on Foundations, speaking at a session highlighting Minnesota’s Start Early Funders Coalition. “The joke is that we’re the land of 10,000 collective impact tables.” Start Early brought together 28 foundations five years ago to increase public funding in Minnesota for preschool. The Northside Funders Group is also getting national attention for its work coordinating investment in North Minneapolis.
Mixing for-profit investment with philanthropy: Private foundations are required by law to give away 5 percent of their assets every year. Some foundations also have started to use the other 95 percent of their assets to enhance their mission. For example, the Minneapolis-based McKnight Foundation, with its strong environmental focus, is investing a portion of its $2.1 billion portfolio in businesses that speed the transition to a carbon-neutral economy.
Fund racial equity: Alicia Garza, a longtime organizer from Oakland, Calif., and co-founder of BlackLivesMatter, urged foundations to audit grantees to determine the percentage of funding that goes to black-led organizations. “Too few organizations support black-led organizations and black-led organizing,” she said. Some foundations are already measuring how they fund communities of color. The St. Paul-based Northwest Area Foundation, which gave $16.5 million in 2014, gives at least 40 percent of its grants to organizations led by Native Americans.
Take the long view: Foundations need to shift from measuring short-term success to investing for the long haul. “We take a very long term view on improving the human condition,” said MayKao Hang, president of the Amherst H. Wilder Foundation, which funds its own programs in St. Paul. In her presentation, she used herself as an example of long term goals. Hang arrived as a recent refugee in Minnesota in 1979. “The poverty I grew up with will no longer flow in my wake,” she said. “I’ve beaten situational poverty. But I’m not an accident. I’m the product of some very smart civic and social investments.”
