NEW YORK — Many discussions about scale often focus on what NGOs or social entrepreneurs should do. But this week a group of foundations turned the lens on themselves to see what they can do to accelerate the scale of solutions to critical problems and make progress on the Sustainable Development Goals.
Foundations talk about wanting to help catalyze systems change and scale solutions, but too often their structures, the way they fund, and their relationship with grantees make those goals a challenge.
A new report released this week, Scaling Solutions Toward Shifting Systems, based on interviews with leading NGOs and grantmakers, seeks to offer some concrete recommendations and catalyze a conversation about how to change the industry with an eye toward scale.
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“What we don’t want is more talk,” said Heather Grady, vice president of Rockefeller Philanthropy Advisors, which wrote the report. “The test if it is important is: “Will funding behavior change?”
The goal behind the report and the steering group made up of the Skoll Foundation, which funded the report, Draper Richards Kaplan Foundation, Ford Foundation, Porticus Foundation, and Rockefeller Philanthropy Advisors, is to push action on these issues, she said. And seeing other foundations take the lead — a sort of foundation peer pressure — can be a useful tool for spurring change across the sector Grady added.
Foundations need to walk the talk, said Edwin Ou, the director of funder alliances at the Skoll Foundation. They need to share transparency about what is motivating their funding and be more efficient resource providers of financial, intellectual, and social or human capital.
The report outlined five key ways that funders could change their behaviors:
1. Shift the power dynamics. Funders tend to have significantly more power in these relationships, which often doesn’t allow for active collaboration, can put pressure on grantees to conform to foundation priorities, and limit their ability to do systems-oriented change. Foundations need to be more cognizant of power dynamics and look to adopt practices that provide grantees with more flexibility to determine their own needs.
2. Look beyond financial support. If funders and grantees have strong relationships built on trust, they can have ongoing conversations that allow foundations to better understand needs and help identify and provide nonmonetary support.
3. Build a knowledge base. Systems change requires big thinking and identifying all the relevant actors within a system. Foundations can both help map those systems and connect grantees with other actors within the system.
4. Work together to ease the burden. Funders should collaborate more often to share insights and information about grantees and consider establishing joint assessment and due diligence processes to limit the burden on grantees. They should also look at how to better align the metrics they look for with existing systems, such as the Sustainable Development Goals or the Social Progress Imperative Index.
5. Change the way they give. Perhaps most critically, the report says, foundations have to change the way they give money. If the goal is systemic change, restrictive one-year grant cycles are not the way to achieve big goals. Foundations should look to provide unrestricted funding or allow a significant portion of funding to go to overhead costs. They should also extend grant periods and consider accepting strategic or business plans instead of specific foundation templates. Distribute money in a way that allows staff to work strategically and not chase specific grantmaker demands.
Being “caught in short-term cycles does not allow them to think, plan, or execute for the long term” Ou said. It’s one of the reasons Skoll has worked to make its awards three-year, unrestricted grants so that the social entrepreneurs they choose, with advice from Skoll when needed, can make the decisions they need to scale.
The challenge in the sector is largely a result of the discourse, Grady said. In venture capital, a cautious investor is scoffed at — but in philanthropy, a cautious investor is lauded. That frame of mind may need to change to make a difference.
“We talk about innovation, but we don’t fund in a way that allows it, partly because of the discourse in the sector,” Grady said.
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