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Article published in Foundation News and Commentary, March/April 2000
by
Joseph A. Connor, Chrissa Harley Ventrelle, and Stephanie Kadel-Taras
Perhaps nothing signifies the breakdown of community more vividly than people rioting in the streets—setting fires, destroying property, unleashing rage and frustration on anyone and anything within reach. Whatever factors get a community to such a breaking point have to be addressed when rebuilding that community. A group of local and national foundations realized the enormity of such a task when considering how to respond to the 1992 Los Angeles riots that brought widespread attention to L.A.’s neglected neighborhoods and residents. In order to maximize their resources and knowledge to address complex needs, they created an alliance, known as Los Angeles Urban Funders (LAUF), to pool funds and share responsibility for empowering low-income neighborhoods to renew their sense of community.
LAUF is one of several innovative funder collaboratives around the nation that are seeing the value of working together to help communities solve problems. These collaboratives differ greatly in structure and focus, but they are all convinced that improving communities is a shared effort that requires not only collaboration among service providers but also collaboration among those providing the resources. Each funder collaborative described here has something to teach foundations—whether large or small, community-based or national—about the benefits of working with other funders and about approaches that will lead to success.
This is an especially important time for funders to enter into collaborative relationships, because so many of the communities they seek to help are realizing the need to convene across traditional boundaries to address complex problems. As the impacts of government devolution, welfare reform, outcomes measurement, and sector blurring begin to be felt at the local level, one response has been an increased use of community-wide visioning and planning. Fortunately, it doesn’t have to take a riot to get leaders and residents focused on shared goals and community building as they form agency coalitions, community boards for homelessness or economic development, or sustainability initiatives.
These new decision-making structures present new opportunities and challenges for foundations. Funders may be called upon not only to participate more in local planning but also to respond to the difficulties posed by traditionally fragmented and program-specific funding mechanisms. Funder collaboratives can both enable and drive change efforts that call upon many organizations across the nonprofit, business, and government sectors to work together.
No One Right Way
We looked at four funder collaboratives from different parts of the country, all of which reported successful results. While they are all motivated by a desire to pool funds in order to open up new grantmaking opportunities, their differences reveal the flexibility foundations have in designing governance, membership, administration, and funding approaches.
Los Angeles Urban Funders (LAUF)
LAUF was created by the Southern California Association for Philanthropy in 1993 to encourage local and national grantmakers to pool their resources and experience to support comprehensive, neighborhood-based change. In 1995, LAUF established its own board of directors with seven foundations. By 1998, 22 family, corporate, and community foundations were participating in LAUF, with each funder receiving one vote on the board. Members include The James Irvine Foundation, BankAmerica Foundation, Fannie Mae Foundation, L.A. United Methodist Urban Foundation, Boeing Employees Community Fund, and California Community Foundation.
LAUF hired two full-time staff members who coordinate three-year projects in three L.A. neighborhoods. Pooled funds provide up to $1 million for each neighborhood. The purpose of the funds is to help neighborhoods develop the partnerships, leadership, data, and strategies necessary to implement improvements. LAUF members participate in neighborhood visioning processes to clarify their own roles in creating change. Funding for specific projects and agencies is still provided through categorical grants from individual grantmakers, whether or not they are part of LAUF. “We want to catalyze and enhance the effectiveness of all grants,” says Maria Grace, LAUF’s Assistant Project Director.
LAUF has succeeded in helping one neighborhood design a streamlined system for job placement and in helping another neighborhood develop a set of community standards that led to improvements in the local availability of fresh food. LAUF has enhanced the work of its member funders by providing a better understanding of the neighborhood contexts in which their grantmaking takes place and allowing funders to bring non-financial resources, including access to policy makers, to these neighborhoods.
Strategic Alliance Fund (SAF)
SAF of New York City began in 1995 as a funder collaborative to promote and support collaboration among nonprofit organizations. Twenty corporate and foundation funders (such as The Ford Foundation, Chase Manhattan Foundation, GE Fund, and Foundation for Child Development) as well as the United Way of New York City have made available over $2 million through SAF. The original purpose was to fund nonprofit collaborations in order to help organizations reduce costs while maintaining service availability at a time of state and city budget cuts. When the financial crisis eased after SAF’s first year, the grants were made to promote interdisciplinary, collaborative services for families and youth.
The funders, as well as representatives from social service providers, sit on an Oversight Committee where everyone receives one vote, regardless of their investment in the fund. United Way manages operations for SAF, but the grants are not part of the United Way process. Evaluations of SAF grantees found that many had improved the efficiency of their service delivery or management systems and created new joint programs.
Northern California Citizenship Project (NCCP)
Operating in twelve urban and rural counties in the San Francisco Bay Area, NCCP is an initiative to help legal, permanent residents attain U.S. citizenship. It began in response to welfare reform which denies eligibility for food stamps and income assistance to non-citizens. The services involved in NCCP—which include ESL classes and technical assistance with immigration procedures—are funded and organized by a Consortium Coordinating Council of community foundations and private funders, who are officially overseen by Northern California Grantmakers. In the beginning, these funders acted as both grantmakers and fundraisers, because they were responding to a $5 million matching grant from The Open Society Institute of The Soros Foundation.
Funds for NCCP come not only from members of the Council but also from local governments and private donors and are co-mingled as necessary to support the services. Nine regional networks of service providers, community foundations, and government agencies receive the funds from the Council, and then community foundations within each county make granting decisions that allow for local variations in need. NCCP has served 40,000 people in the past two years, nearly a third of the estimated affected population of legal permanent residents.
Community Shelter Board (CSB)
Private and public funders joined together in 1986 to establish CSB in Franklin County, Ohio, in response to the growing problem of homelessness in the Columbus area. CSB initially focused on “a streamlined funding process and general long-term system planning,” says Nancy Smith, a member of the CSB staff. While hands-on involvement from philanthropic and government funders was essential during this visioning and planning phase, CSB now operates as an independent nonprofit organization that coordinates most of the private and public funding for homelessness in the county. Local funders, including The Columbus Foundation, Leo Yassenoff Foundation, and City of Columbus, serve on the CSB board, along with other community members (but not homelessness service agencies).
Service providers apply directly to CSB for funds, rather than to the original funding sources, and the CSB board votes on allocation decisions. CSB expects to grant $5.7 million in co-mingled public and private funds to local agencies in 1999. CSB also maintains an extensive database on homelessness services and clients. Over the years, CSB has developed a unique intermediary role between funders and grantees, smoothing the fundraising and funds management activities for agencies while improving accountability to funders. At the same time, local funders on the CSB board are seeing how their resources benefit the whole system of homelessness services, rather than simply responding to individual agency requests.
Issues to Consider When Starting a Funder Collaborative
As these examples demonstrate, the definition of a funder collaborative can be quite broad and allow for various responses to the need for pooled funds and shared decision making among grantmakers. Despite their differences, however, these examples provide some common lessons for foundations today who want to take advantage of collaborating among themselves to support comprehensive change.
Involve diverse funders who can bring expertise on issues or valuable connections, not just dollars, to the table. Many foundations can offer their knowledge of a particular community need, such as housing or health care or the arts, to enrich the planning and grantmaking process. Other foundations may have strong networks in the business community or among policy makers. While large funders may contribute a substantial sum of core money, smaller foundations can act more quickly to unexpected needs for flexibility.
Seek membership from national foundations in local collaboratives. Because many large foundations encourage their grantees to collaborate, they are interested in the concept and may be a significant contributor of money and expertise to a funder collaborative. However, be sure to clarify in advance the level of participation that the national funder will have.
Give each funder one vote in collaborative decisions regardless of the level of financial contribution. This approach recognizes the equal value of a person’s contributions to the planning and decisions, regardless of the foundation’s size.
Consider whether to include other community members in the decision making. SAF includes representatives from service agencies on its grantmaking board, while CSB involves church leaders and the Chamber of Commerce. Opening the circle to non-funders can enhance the process, but additional voices bring additional agendas that will have to be reconciled, and forethought must be given to how to respect service providers without creating conflicts of interest.
Establish a shared understanding of what the funder collaborative will accomplish, and then design the collaborative structure to meet those goals. Although coming together to pool funds is a primary driver of these collaboratives, simply writing a check doesn’t count as collaboration. Will funders be expected to attend frequent meetings, develop a shared vision and strategic plan, and work closely with grantees throughout the life of the project, as is the case in Los Angeles? Or will funders simply meet to develop an RFP and then meet later to make grant decisions, as in New York City? Whatever plan a collaborative develops should flow from the members’ vision for the impact that they can make as a collaborative.
Develop and work toward short-term goals, but prepare for long-term engagement. The Community Shelter Board’s thirteen-year existence demonstrates that funding alliances need not limit themselves to finite initiatives but can result in permanent, independent entities. A new collaborative may not want to look that far ahead, but its original vision can be built around an indefinite lifetime. LAUF is completing its original five-year plan but is now considering a variety of next steps to take advantage of the valuable alliance it has created. NCCP has successfully responded to the immediate crisis resulting from welfare reform, but their 1999 report states that, “The key issue now facing NCCP is how to transform a response to a crisis into a sustainable network of organizations capable of contributing to the long-term process of integrating immigrants into mainstream society and civic life.”
Distinguish between the purpose of pooled resources and the continuing role of individual grantors and categorical funding. LAUF made a clear break between its collective focus on neighborhood capacity building and the need for individual grants to fund specific programs. While the collaborative will want to encourage many funders to get involved, it also does not want to deter funders from continuing their own initiatives on the relevant issue. SAF Project Director Barbara Coleman-Burroughs notes that, “Projects succeed best when partners have a very clear idea of how collaboration will further their individual and joint agendas.” Individual funders should not feel threatened that the collaborative will impinge on their ongoing grantmaking activities and special projects, but they should be encouraged to seek opportunities to align their activities with the collaborative’s goals as appropriate.
Explore the possibility of co-mingling private and public funds. Both NCCP and CSB have effectively pooled government grants and foundation funding for the benefit of their client populations. Success at this approach will require that local government leaders participate in the collaborative and that accountability for government funds be handled differently than for the private contributions.
Decide early on how logistical and administrative tasks will be handled. NCCP’s Project Director, Lena Avidan, emphasizes hiring a full-time staff person to organize the effort so that funders can devote their time to strengthening the collaborative relationship and pursuing goals rather than getting bogged down by simple tasks. Funders may also consider aligning the collaborative with a Regional Association of Grantmakers, local United Way, or other established agency that can provide meeting space, administrative support, and planning assistance.
Warnings
Any collaboration requires caution, and funder collaboratives have to watch out for some unique pitfalls:
Expectations can float too high.
A funding consortium can create high expectations among community groups, leading grantees to envision limitless funding streams.
Other funders may think they’re no longer needed.
Funders not involved in the collaborative may hear about the intent of the new initiative and plan to discontinue their targeted funding for a particular issue.
A flexible structure can turn into an organizational nightmare.
In their effort to make the funding collaborative highly responsive to local needs and diversity, funders can end up with an unwieldy structure and much confusion. NCCP’s complicated mix of an overarching Council, regional networks, and county-level decision makers worked to accommodate the variations in twelve diverse counties, but it required extensive coordination. Funder collaboratives that seek to co-mingle various funds, serve large and diverse regions, and respond thoughtfully to new challenges will need clear guidelines as well as flexibility to keep the initiative on track.
General Collaboration Lessons Apply
In addition to these tips and warnings, funder collaboratives can learn from the extensive research and practice on all kinds of organizational collaborations. These include such bits of wisdom as:
- Begin slowly. (LAUF spent a full year working through the logistics of establishing the collaborative before they began working with the neighborhoods.)
- Expect that a visionary leader will be needed to maintain enthusiasm, organize logistics, and create buy-in at the beginning.
- Develop the collaboration around good chemistry, trust among participants, and organized means of communication.
- Clarify terms and avoid jargon.
- Take time to educate the collaborative about the issues being addressed, the political and cultural contexts of the community, and diverse perspectives on the problem.
Reaping the Rewards
While funder collaboratives can be challenging to create and operate, the potential benefits to funders, grantees, and the larger community are many. First, a funder collaborative can reach for broader community outcomes, envisioning and facilitating solutions that improve the quality of life for the whole community, rather than settling for the results of discrete programs and services. As a consequence, participating foundations experience the pleasure of seeing their resources used to tackle complex problems with greater success. Likewise, funder collaboratives become a catalyst for increased community engagement in problem solving as diverse stakeholders come together to make the most of pooled resources.
Second, foundations that have long encouraged or required collaboration among their grantees can now demonstrate their commitment to this approach by undertaking the effort themselves. In this way, foundations learn first-hand what it takes to collaborate successfully, and grantees gain a stronger sense of partnership with their funders.
Third, if planned in advance, financial accounting and outcomes tracking can be streamlined, for both foundations and agencies. Many separate grants with various and sometimes conflicting procedural and reporting requirements can be replaced by one set of expectations from all funders to all grantees. Not only could this improve efficiency on both sides, but it would allow funders and their communities to make sense of the costs and benefits of addressing whole problems—information essential for community-wide planning.
Finally, funder collaboratives create a valuable forum for foundation leaders to put their heads together. As simple as this may sound, breakthrough ideas and meaningful visions can result when funders regularly interact around significant problems and share their varied expertise and broad perspectives on community life. While a crisis can always motivate people to try new things, funder collaboratives have too much potential to wait for a riot to bring everyone together.
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