What is a Community Foundation’s Value?

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January 4, 2014; Wichita Eagle

In Wichita, Kansas, a new version of strategic philanthropy is being played out. NPQ has run many articles over the years discussing the pros and cons of so-called strategic philanthropy, which, in essence, is the attempt by a donor to determine how to make a donation or series of donations that will have optimal measurable impact on a particular problem. Starting from the point of view that all things are measurable, these donors want to make sure that their personal investment in the community is having a large and positive effect.

Founded in 1986 by local businessman Dick DeVore and 24 other community leaders, the Wichita Community foundation has grown a $61 million asset base, according to this article, but its grant budget out of unrestricted funds is only $250–$350K per year. This means that the bulk of the foundation’s money is likely in restricted or donor-advised funds, which are given at the recommendation of individual donors, who may or may not take advice from the foundation. These grants from unrestricted funds were given in small grants to many of the community’s safety net programs.

But then Mary Lynn Oliver, the daughter of one of the foundation’s founders, started to wonder about the holy grail of proven impact. “We had all these projects we funded with $5,000 here and $10,000 there, and I hope there will always be a place for that kind of giving,” Oliver said. “But it was a question of whether we were having enough of an impact.”

So the board decided to hire as president Shelly Prichard, who formerly worked for the Girl Scouts and for Koch Industries, and to narrow its focus to take on one big hairy project. Here we will quote from the article:

“People would apply for operational grants from us and use them to pay for part of their payroll, or to buy computers,” Prichard said. “And that’s not our model anymore.” That unrestricted funds bucket has accumulated $600,000 in two years. Now, instead of sprinkling it onto a number of smaller efforts, they plan to aim it at one thing. But the risk, they acknowledge, is that by making this change, some of Wichita’s vulnerable nonprofits might lose lifelines, when every lifeline helps.

So, in times where basic needs remain high among those who have not recovered from the recession, the foundation has been accumulating grant money toward it’s to-be-determined project. Oliver’s comments seem to suggest that the decision may be to give to job-related, educational projects that will have a “multiplier effect” down the road.

This may seem like a major transition in the foundation’s methodology. The process for deciding about grants, described on the website, is that a team of community people known as the Grants Committee read and review all proposals from nonprofits. Then, collectively, they make their decision about who should get how much. Although there is no listing of who is on this committee, the implication is that it comprises a broader base of people than the businessmen and women who make up the actual board, so having the directors go to a figurative backroom and shut the door as they decide what the community needs and dole out grants accordingly is a radical shift.

However, the foundation’s mission statement and its values statements clearly indicate that the client is, in fact, the donors, not the community or the nonprofits that serve the community. So, when a donor asks if there is a way to have more of an impact with her investment, the foundation, of course, will jump to make that happen.

The Wichita Community Foundation is also not alone in this move towards targeted giving with measurable impact. According to the Foundation Center’s recent report, the top one percent of recipients received 50 percent of the total giving from foundations. This suggests that a limited number of large grants are being awarded, rather than the broad swath of small grants Oliver referred to.

Wichita, like many communities around the country, is in a process of gradual change in demographics. The population has shifted to 28 percent minority in 2010 (up from 25 percent in 2000). The average per capita income is at just about 200 percent of the federal poverty line. How this changing demographic will benefit from the foundation’s largesse in the future will be answered, hopefully, by August, when an announcement is made.

The question remains open if strategic philanthropy is any better than any other approach. The nonprofit organizations in Wichita that represent the safety net of social services are asking what will happen to a source of income they had relied on to help people who are struggling. Who is deciding what the community needs, and what granting will have the most impact? The WCF Board of Directors is made up entirely of leading businesspeople, with not a single representative of a nonprofit or community-based organization.

One wonders why the foundation did not choose to set aside other money for this kind of experimentation—take a risk on their corporate dime, in other words—because strategic philanthropy is by no means a sure bet for the community.—Rob Meiksins