igor.stevanovic /

Editor’s Note: The following is an edited and abridged excerpt of a speech delivered at the Delaware Valley Grantmakers’ annual meeting in Philadelphia on March 20, 2013.

One could devote an entire speech to how things have changed since the economic correction in the fall of 2008. And while the Dow is above 14,000 and unemployment is below eight percent, there is still much to be concerned about. In New York City, we have two million – that’s two million – out of 8.3 million residents at or below the federal poverty line of $23,550 for a family of four. The unemployment rate in the Big Apple for black and Latino males ages 18-24 hovers between 40 and 50 percent. And just last month, the City of New York housed 50,000 homeless individuals and families in temporary shelter. That’s the highest that figure has been in almost 20 years.

The pullback of government support for various parts of the nonprofit sector is also of serious concern. Four years of cuts at the federal, state and local level has taken a toll on the human services sector, education, the arts and more…In parallel, we have not seen philanthropic support totally recover from 2008. Giving has been mostly flat…

We also lack an ability to convince politicians and policy makers of the worth of the sector and its amazing ability to deliver services and programs economically and efficiently. And this is happening at a time when our politics, especially at the national level, are unbelievably divisive.

And, of course, the latest factor is sequestration. While some argue that sequestration has a “phony war” feel to it, people who know better, like Tim Delaney, CEO of the National Council of Nonprofits, would beg to differ. On March 1st, when sequestration went into effect, Tim noted, “Nonprofits are already severely depleted from doing so much more, for so many more, for so much longer, with so much less; they can no longer underwrite government’s failures.”

The point is that things have changed and, I believe, changed dramatically. In New York City, because of the pullback of government funding, it is unclear how we are, for example, going to pay for a social safety net or, for that matter, sustain it. And as I said earlier, when you have two million of your fellow citizens at or below the poverty line, well, that is a big freakin’ problem. And this is not only a New York City problem.  According to the Census Bureau, we now have 49 million Americans at or below that poverty line.

Who has the solutions to some of these thorny problems? I would argue that it’s the nonprofits themselves. To again focus on the social safety net, most of the services provided are done so by or through nonprofits. The managers of these nonprofits know in a deep way what works and what does not work in caring for or reaching clients. They also know what it costs. I would fully trust a group of nonprofit leaders to be better able to figure out how to economically and programmatically sustain a social safety net for the poor versus a set of lawmakers in Albany or Harrisburg or in a city hall.

But before that can happen, nonprofits need to be leaders and in a position of strength in order to be that effective advocate and power player. We need to shift the nonprofit mindset from one of supplicant or vendor to one of solution provider that is armed with knowledge and experience that few can match. We want and need our nonprofits at the decision making table, not on the menu of decision makers.

For that to happen, I believe grantmakers play an influential role. Our main job is to empower our grantees. We want them to be the best that they can be. So, in this new normal, what should we do? What is the right grantmaking formula to help enhance the ability of nonprofits to be fully effective and empowered to act?

I would argue that there are three things we need to do with our grantmaking which are, I believe, straightforward:

  • Provide general operating support;
  • Fund technical assistance; and
  • Support advocacy.

Why these three?

The most important funding we can provide right now is general operating support. I hope, by now, all of you in this room understand why. It is critical money that can be used creatively and with flexibility at a time when public and private streams of support are reduced, flat, held up, or in flux.  If you strongly believe in a nonprofit and its mission and work, what would prevent you from writing a check or wiring funds for general operating support? And yet, many foundations and corporate giving programs still hesitate to do this. Why? If we want leading nonprofits to succeed in their work, demonstrate their results, and be influential in their field, then strength and resilience is required. General operating support provides and fuels strength and resilience.

America’s first philanthropist, Philadelphia’s own Benjamin Franklin, said an ounce of prevention is worth a pound of cure. While I am sure old Ben was not thinking about technical assistance for nonprofits when he said it some 200 plus years ago, he certainly could have been. Given the complexity of the new normal, nonprofits cannot sit still; they cannot be static. They must be nimble and deploy resources carefully and creatively.  Modest sums invested in technical assistance can yield important changes in how nonprofit leaders think and execute. And again, many foundations and corporate giving programs do not fund technical assistance at levels they should or could. Why? If we want nonprofit managers and the boards that support them to operate at a high level of performance, then technical assistance is essential to enhancing or maintaining managerial and programmatic excellence.

Advocacy is the third component of an effective grantmaking strategy. As I noted earlier, the public policy landscape is difficult and divisive. As one influential Albany politician said to a gathering of New York foundations in 2010, “At the end of the day, many of the state budget battles are business versus labor or government versus labor.  The common good is never at the table.”

You might think it is hard to do these three things. I would argue that it is not. The foundation I have the privilege of managing, The Clark Foundation, a fifth generation family foundation, is doing all three. Eighty percent of our funding to 92 grantees in New York City is for general operating support. We are, at $2.38 million a year, one of the largest funders of technical assistance in the metro New York region. And, we fund advocacy efforts. One such effort is “Re-envisioning the New York City Workforce System,” which involves a group of ten leaders from the workforce development sector that have laid out a set of ten recommendations for New York’s next mayor, who will take office in 2014. These recommendations have already been embraced by leading candidates like Christine Quinn, the current speaker of the New York City Council.

The final set of ideas I want to share with you is how we as grantmakers need to change the way we work and act. Einstein said, “Not everything that counts can be counted and not everything that can be counted counts.” As a field, we have become enamored or, in some cases, obsessed, with metrics—inputs, outputs, outcomes, and the ultimate, impact.  It is critically important.  Indeed, The Clark Foundation has underwritten the costs of over 75 percent of our grantees to be trained in outcomes management so that they can articulate outcomes – and this really important – in their own way and on their own terms.

But outcomes are not the only thing we should obsess about. My friend and mentor Bruce Sievers, the retired head of the Walter and Elise Haas Fund who now teaches at Stanford, would tell you that “in civil society, as in sports, the means matter as much as the ends, because in many ways the values embodied in the means are the ends.”

And even the strongest spokesperson for measurement in the field of philanthropy, Mario Morino, would tell you the means are important. In his seminal 2011 book, Leap of Reason, he admits, “I should have done more to understand soft achievements that may in fact be every bit as real and important as hard outcomes.”

Einstein’s—and I hope, my—point is that while the quant is important, so too is the qualitative. I do get a bit chagrined when I see colleagues claim utter devotion to the idea that entrepreneurial thinking, focus on numbers and technology, will dramatically change the way nonprofits operate – if nonprofit managers can only get out of the mindset of their tried and true thinking that is stuck in the 1970s.  Those steeped in business thinking as a solution to everything sometimes forget that the business of nonprofits is people intensive.  The last time I checked, it still takes a teacher to educate a child; it takes a mentor to guide a teenager away from making wrong choices; it takes a social worker to inform and help a family make wise decisions about their lives; and you need a group of talented musicians to create a beautiful sound like the Philadelphia Orchestra.

My final thought on this issue comes again from Mario Marino, who notes in Leap of Reason that “the real challenge is that organizations cannot hope to manage to outcomes unless they have in place an engaged board; leadership with conviction; clarity of purpose; and a supportive performance culture.” As Einstein and Sievers might note, that is the means.

Alan Pifer was the president of the Carnegie Corporation of New York from 1967 to 1982. In 1984, he wrote the following passage:

“If foundations in the years ahead are to make the great contributions to national and world betterment that can be rightfully expected of them because of their unobligated resources and unparalleled freedom, those who manage them will have to possess qualities of imagination, courage and leadership beyond anything we have yet seen. The three decades I have spent as an foundation officer have been an extraordinary era in world history – a period characterized by almost constant turbulence and conflict as the world’s societies have adjusted and readjusted to the impact of major economic, demographic and technological change. As I look ahead, I see little prospect of anything but more change, possibly at an even faster pace, and more instability, perhaps dwarfing that of recent decades. Of one thing, therefore, I can be sure: foundations will be needed as never before. Will they, I wonder, be up to the challenge?”

The late Mr. Pifer hit the proverbial nail on the head. Will we be up to the challenge?  Will we allow less informed and less well-intentioned individuals and institutions from other sectors influence what our grantees and the nonprofit sector need to succeed and then, in turn, as Peter Drucker wrote, create positively changed human beings? The answer is no. No, because it is our responsibility, our main responsibility, to provide what is best for our grantees so that they can create positive and sustained social, cultural or environmental change.

But that will only happen if we embrace economic and political change, behave differently, and adopt a grantmaking formula for the new normal that is pragmatic and that generates strength and leadership within our grantees.