I’ve been working in philanthropy for 9 months. See below for a few reflections.
And ping me in the comments if you have any feedback or advice.
1. The Best Thing I Did was Pitch a Mission and a Strategy for a Fund
This might be idiosyncratic to me, but I think I would have been unhappy and perhaps ineffective if I had joined a philanthropic organization with a set mission and strategy in education.
For both the Arnold Foundation and the Hastings Fund, I submitted an investment plan that included mission, strategy, and estimated budget *before* I joined.
In this sense, the dynamic was more akin to a venture capitalist raising a fund than it was a foundation hiring an employee to execute an existing operational plan.
I wonder if this might be a better way to do philanthropy, whereby philanthropists are more akin to sole or limited investors in funds and projects (perhaps like Alphabet?) than they are uniform operational entities.
I think that this model would be more conducive to entrepreneurship, risk taking, and innovation – with foundation boards evolving into resource allocation bodies that increase or decrease investment across a portfolio of funds that are each led by very autonomous executives.
Instead of only hiring employees and soliciting grant proposals, foundations should also seek proposals for issue based funds.
2. The Biggest Mistake I’ve Made (So Far) has Not Been Developing My Investing Skills Quickly Enough
At New Schools for New Orleans, one of my weaknesses was investing: I don’t think our school creation hit rate was good enough and there were a few projects we should have completely avoided. The organization is better at this now, but it was not my strength.
To prepare for a role where an even larger part of my job would be investing, I read a lot of books, talked to a lot of people, and tried to build a tight framework for selecting organizations.
And yet I still made some unforced errors. I brought projects to be approved for investment that, in hindsight, were not a great fit for what we’re trying to accomplish.
Specifically, the errors generally fell in a few categories:
- The investment was best made at a local level: Given that we almost always work with local partners, we have to determine when we invest directly and when we rely on local leaders to make calls. A few times, I brought forth investments to be made at the national level that were really local decisions.
- The upside was not high enough: A national foundation’s most limited resource is time. It is not money. There are only so many projects you can do diligence on and only so much time you get with your board. The opportunity cost for spending a lot of time on low-upside endeavors is very high.
- The investment was not tightly enough aligned to achieving our goals, strategy, and expertise: There are a lot of good ideas out there, that, ultimately, should be funded by other foundations. I spent too much time on good ideas that weren’t in our sweet spot. I should have just quickly recommended that the entrepreneur talk to a more aligned foundation.
3. I’m Not Sure About How to Navigate Investment Structure
There are numerous ways to define an investment relationship. Some foundations act like VC firms and take a board seat. Some foundations are extremely operational and play a shadow management role, which can include everything from weekly phone calls to shared staffing. Some foundations write checks and then just monitor annual goals and benchmarks.
Any of these models can probably be effective in the right situation and disastrous in the wrong situation.
In my situation, I happen to have previously held the role of many of the leaders of our grantees (being CEO of NSNO); we work with leaders with very different experience levels (some have been CEOs for 5+ years and some are launching new entities); we work with leaders across very different local environments (some localities are in the infancy in their reform efforts and some are 20+ years in); and we work in localities with varying levels of foundation activity (in some places we are the primary funder and in others we are one of many).
And in every case I’m not actually living in the community where the work is taking place.
All of these variables make it difficult to adopt a singular structural approach to an investment relationship.
Overall, it’s been a great nine months. I feel lucky to be doing the work.