Grantmakers Need to Focus on Growing Impact, Not Size

(11-5-10) Kathleen P. Enright, President and CEO of Grantmakers for Effective Organizations released this statement this week:

If I tried to sum up the discourse in philanthropy in 2010 with two words, they would be innovation and scale. Innovation and scale are key themes in several new, high-profile federal initiatives, including the Social Innovation Fund and the Promise Neighborhoods program, and even in Facebook founder Mark Zuckerberg’s $100 million donation to Newark public schools. These efforts respond to a growing feeling that current approaches to improve health, education and economic opportunities are not having the desired impact. Government, private and individual funders alike have a keen interest in identifying and growing the impact of successful community-based solutions.

The focus on innovation and scale has been met with a healthy dose of skepticism. Some of the nonprofit sector’s greatest champions and most thoughtful leaders have voiced concern that the focus on innovation and scale is just the latest fad, that it doesn’t appropriately build on what we know works, and that it is an insider-only conversation with little relevance to the broader field. When innovation and scale are framed as ends in and of themselves, these criticisms are entirely valid. But when scale and innovation are exclusively in service of growing the impact of important programs, these criticisms fall away.

Some common conceptions about innovation and scale could actually prevent those who command philanthropic dollars from successfully leveraging limited resources for maximum impact. Insights generated by members of the Grantmakers for Effective Organizations’ community suggest we need to frame the conversation in some new ways, including:

1. Bigger is not always better. Many think of scale exclusively in terms of bigger organizations and programs replicated in more sites. These are important approaches, but not the only ones. The most important thing to scale is not the size of an organization, but the results it achieves. Scaling impact is about leveraging resources and relationships to achieve better results, namely significant and sustained benefit for people and communities. This can be done in a variety of ways including some that do not require a major expansion in size. In fact, several smaller, regionally-based foundations have found creative ways to scale impact with limited dollars.
2. Innovation and impact are not synonymous. Innovation is primarily important in so far as it enables an expansion of social impact. While fostering innovation can lead to new breakthroughs, we must recognize that impact can grow by appropriately resourcing ideas that have been around for years.
3. Waiting for Superman can be your kryptonite. Most high-performing nonprofits are led by inspiring, visionary leaders. Leadership is a key ingredient for all efforts to grow impact. Yet the type of leadership the most effective social entrepreneurs are now exhibiting, and the approach that will insulate their organizations against dependence on a single person or idea, is a collective, facilitative and networked approach. Both individual and institutional donors can grow impact by supporting those organizations that are built to far outlast their founders.
4. Funders can do harm. When funding nonprofit solutions, we must ensure our investments are not structured in a way that is harmful to those we intend to help. Funders can be sure to “do no harm” by weeding out inefficiencies in the grants process, picking partners well, providing significant, ongoing, flexible funding, and remembering that growing impact at any scale will take time. Additionally, funders are wise to steer clear of trying to be the sole architects of social solutions and instead trust the instincts and ideas of the high-performing nonprofits and other stakeholders that are closest to the problems we hope to solve.

The GEO community, which includes more than 2,000 individuals representing 360 grantmakers, has consistently challenged the status quo in philanthropy to help nonprofits achieve more. Our new initiative, Scaling What Works, will translate learning from the Social Innovation Fund and other philanthropic efforts to help grantmakers and public sector funders collaborate more effectively and apply important changes to their practices to more efficiently support nonprofit organizations that are ready to increase their impact.

Scaling What Works is a multi-year project to expand the number of grantmakers and public sector funders across the country that are prepared to support the evidence base, capacity and growth of promising nonprofits. Through this work, GEO demonstrates and shares effective practices that grow social impact, including lessons learned from the Social Innovation Fund.

The Edward M. Kennedy Serve America Act authorized $50 million for the creation of the Social Innovation Fund. Administered by the Corporation for National and Community Service, the fund focuses on reducing poverty and inequity by increasing economic opportunity, preparing America’s youth for success in school, work, citizenship and other aspects of their lives and promoting healthy lifestyles and reducing the risk factors that can lead to illness. Grantmaking institutions, acting as intermediaries, will match the fund one-to-one and then re-grant the dollars to innovative nonprofits ready for growth. These sub-grantees will also be required to match funds on a one-to-one basis. All told, the program will represent $200 million of investment.