File 3 strategy work in philanthropic sector

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File 3 strategy work in philanthropic sector

  1. 1. Establishing a Grant MakingFunction – A Strategic ArmFinal documentMay 01, 2010By: Sajjad Ahmed - Senior Consultant @ XXXXCONFIDENTIALAny use of this material without specific permission of the Author is strictly prohibited
  2. 2. Grant-making and performance evaluation should be viewed aspart of an overall strategic management approach Envision Design Execute Mission Theory of Values Strategic Plan Statement Change | 1
  3. 3. Each step is integral to creating a meaningful and effective organization Focus of documentEnvision ▪ Values ▪ Acknowledge the motivations and underlying beliefs of the foundation’s founder. Anchor the foundation’s approach and mission in these core values. ▪ Mission ▪ Define the foundation’s goal in a way that is perpetual and relevant, consistent with the charitable purpose of the foundation Design ▪ Theory of ▪ Articulate the foundation’s point of view on the problem to be Change solved and what approach to take ▪ Strategic ▪ Address how the foundation implements on its theory of change, Plan converting theory into action, and design an appropriate infrastructure Execute ▪ Grant making ▪ Deploy resources to support the grantees most capable of delivering on the foundation’s strategy; manage grant contracts ▪ Monitoring and ▪ Conduct research and evaluate progress to inform the Evaluation foundation’s decisions and benefit other stakeholders ▪ Knowledge ▪ Create an environment where learning is codified and Management shared to improve the foundation’s work and the sector as a whole ▪ Reach out to various stakeholders to share lessons, raise • Communication awareness, and advocate for support of program priorities | 2
  4. 4. XXX needs to establish grantmaking and performance evaluationprocesses that lay emphasis on impact and effectiveness Key process Key objectives ▪ Increase impact created by leveraging grantees to target white spaces not being directly addressed by XXXX, in XXX focus areas ▪ Ensure optimal and effective deployment of funding by supporting Grant making strong existing players, avoiding duplication in the system ▪ Support capacity building in XXX’s social sector and promote development of philanthropic network ▪ Create a high performance culture internally and set a high bar for grantee performance ▪ Create transparency around inputs, outcomes and impact, and Performance capture knowledge to improve quality of future decision-making management ▪ Develop compelling and credible external communications, supported by fact-base of impact achieved, to attract international donors to XXX social sectorSOURCE: Internal Analaysis | 3
  5. 5. Contents • Grant making processes • Performance management processes | 5
  6. 6. XXX can set broad targets upfront for nature and size of PRELIMINARYgrant-making activity based on overall portfolio allocation Portfolio Venture Seed Grants Funding ▪ Broad targets will provide focus and XXX portfolio share1 ~20-25% ~2-3% enable XXX team to plan manageable scale of activity Number of grants/year ~5-10 ~3-5 ▪ Over time, experience will help Avg. grant size ~$0.25 - $1 M ~$0.05 - $0.1 M to refine approach and annual targets Total funding/year ~$5 M ~$0.5 M ▪ It is also natural for sponsor passions to be among the U.S. Foundations’ grant-making biggest drivers of benchmarks2 indicate average grant grant-making activity, size of ~$150K in Education and especially in early ~$240K in Health years1 Remaining 70-75% allocated to operating own projects in health and vocational training2 From survey of 1,300 largest US foundations, 2006 dataSOURCE: Chronicle of Philanthropy, 2008, http://philanthropy.com/premium/articles/v20/i10/10001401.htm | 6
  7. 7. XXX should adopt practices from best run foundations globally PRELIMINARYto design its grant making processes (1/2) Detailed best practice process description in backup Recommendation Rationale1 ▪ Engage sponsors and BOT early to agree ▪ Ensue clarity and alignment around Setting on key questions, e.g.: ground rules for grant-making activities Guidelines – Share of grants vs. OpCos in portfolio ▪ Set foundation for developing grantee – Degree of focus in grant-making and external communications – Nature of grantees (orgs vs. individuals) – Nature of grants (traditional vs. VC) – Grant approval authorities2 ▪ Invite applications by invitation/RFP from ▪ Focus grant making resources only on qualified organizations priority areas and screened organizations Application ▪ Use brief preliminary proposals for initial ▪ Reduce evaluation time and effort screening ▪ Source innovative business proposals ▪ Consider sponsoring venture business ▪ Identify qualified organisations at lower plan competitions cost to XXX ▪ Leverage 2-3 collaborators as filter organisations3 ▪ Analyze merits / feasibility of individual ▪ Assess grantees for eligibility and fit Due grant proposal and fit with portfolio ▪ Assess ability of grantee to be successful, Diligence ▪ Review support for the grantee as well as gain insights about the grantee organization from community, experts and from other parties peer organizations ▪ Verify information gathered during the initial ▪ Conduct site visits stages of due diligence | 7
  8. 8. XXX should adopt practices from best run foundations PRELIMINARYglobally to design its grant making processes (2/2) Detailed best practice process Recommendation Rationale description in backup4 Portfolio ▪ Allocate grants in close proportion to core ▪ Grant portfolio which has correlation with Selection/ operating focus (vocational and health) to XXX operating core will help move the Grant support activities not directly addressed by needle in focus areas Approval XXX ▪ Tiered approvals can improve efficiency of ▪ Decisions on grants should be made by grant making Director grants/CFO with help from financial ▪ Personal passion around grantee projects analyst and involvement of top management will ensure continued/growing sponsor and BOT when appropriate commitment and deliver desired returns to ▪ Grant portfolio must reflect sponsor “shareholders” passions5 ▪ Focus contract requirements on protecting ▪ Reducing reporting requirements to the Contract XXX investment and transparency while extent possible can free grantee Negotiation ensuring impact, avoid unnecessary organizations to focus on their mission paperwork burdensome on grantee6 ▪ Remain engaged with grantee through life ▪ Ongoing support to organizations can be a Portfolio of grant and support grantee organizations powerful enabler for their success Management by serving as a resource for advocacy and networking7 ▪ Ensure grantee project is self sustaining or ▪ XXX should understand if grantee Renewal/ make long term commitment upfront organizations can become self-sustaining Tie-off ▪ Measure and review outcomes and link in 2-3 years, and if not, decide on renewal decision to reasonable confidence supporting them on an ongoing basis of impact | 8
  9. 9. Different stakeholders at XXX should be involved at each stage of PRELIMINARYthe grant making cycle Activities Responsible Timeline/Frequency ▪ Identify areas of focus ▪ XXX Board of Trustees ▪ Upfront duringSetting ▪ Identify grantee type and ▪ XXX top management foundation set upGuidelines method of sourcing team days, annual review ▪ Pre-select organizations ▪ Periodic (e.g.Application based on focus area biannually) ▪ Develop RFPs ▪ Director Grants/CFO ▪ Assess potential grantees ▪ Financial analyst ▪ Ongoing, based onDue Diligence ▪ Site visits, and checks with grantee selection peer organizationsPortfolio ▪ Validation of proposed ▪ Director Grants/CFO ▪ Ongoing, based onSelection/ grants against portfolio ▪ Relevant advisory board grantee selectiongrant approval using relative criteria ▪ XXX CEO (>$--), BOT (>$--) ▪ Development of standard ▪ Director Grants/CFO ▪ Ongoing, based onContract grant contracts ▪ CEO (if >$--) grantee selectionNegotiation ▪ Monitoring grantees and ▪ Director Grants/CFO ▪ Ongoing, withPortfolio providing support ▪ Financial analyst quarterly reviewsManagement ▪ CEO/BOT oversightRenewal/ ▪ Evaluating performance and ▪ CEO and analyst team ▪ Review decision: 3Tie-off/ learn- making renewal decisions ▪ Director Grants/CFO months before endings capture ▪ Relevant advisory board of grant, learnings capture: ongoing | 9
  10. 10. Criteria used for grantmaking should vary by stage of PRELIMINARYgrant approval Advance to next phase? Proposal Criteria categories Criteria components Yes No Yes No Initial screen Quality of Fit with exclusion/eligibility criteria Is this proposal worth proposal Fit with mission considering? Basic content quality Strength Weakness Not applicable Preliminary Quality of Fit with program areas proposal proposal Relevance to the foundation Long-term sustainability Is this proposal worth detailed due diligence? Innovativeness Quality of Experience and knowledge grantee Reputation Full Quality of Fit with program areas proposal proposal Relevance to the foundation Long-term sustainability Innovativeness Adequate budgeting Replicability by other organization Design of proposal and project Is this proposal worth Quality of Experience and knowledge investing in? grantee Reputation Capabilities Network access Financial robustness of the organization Communication Interest by relevant target audiences potential Reflection of current developments Grantee support of communicationSOURCE: Internal Analysis | 10
  11. 11. In addition, XXX could continue to leverage the concept of the “XXXMultiplier” as a rough measure of relative economic impact of grants ILLUSTRATIVE The social impact model follows a 5-step process to measure 5-year economic impact of any intervention as a proportion of the dollar cost of making the intervention Calculate present Divide by annualized 1 Identify drivers 2 Define expected 3 Calculate impact 4 value of 5-year 5 investment to get of impact outcomes on future income impact “XXX Multiplier” ▪ X% increase… ▪ Earnings start x Driver # 1 years from ▪ $x of additional program… earnings per year ▪ X% decline… ▪ 5-year earnings= Driver # 2 ▪ Y-years of $x ▪ 1.x – 1.y additional productive life ▪ Discount rate = 10% Limitations of the approach – Why the social impact model must be used in conjunction with other criteria • Due to the future discounting of income, any interventions involving children will be inherently devalued. This may not lead to a fair comparison because the child’s development can be fundamentally altered based on an early intervention. • Secondary benefits are very difficult to measure, and are not fully captured here. For example, what is the additional impact of vocational training on the education of a child in that person’s household? Or how does saving a mother’s life affect child health and development? • Saving a life is measured based on income value rather than something greater. Thus doubling a person’s annual income would be viewed as equivalent to saving another person’s life.SOURCE: team analysis | 11
  12. 12. Type of support provided can either be via traditional grantsor in the form of venture philanthropy Approach Examples ▪ Foundations focus on funding program development, rather Traditional than organizational development. foundations ▪ Grants often fund the program demonstration, and the evaluation of the early results. Occasionally, grants support the promotion of the findings to create interest in the program elsewhere. ▪ This approach does not always enable nonprofits to spend time assessing the strengths, goals, and needs of their own organizations. ▪ As a result, nonprofits often lack the organizational resources to scale the programs they have so carefully designed and tested. ▪ Application by foundations of the more hands-on Venture techniques used by venture capital firms to guide their philanthropy1 portfolio companies through the early stages of organizational development. ▪ In addition to putting up capital, foundations closely monitor the programmes in which they have invested, provide management support, and stay involved long enough to see them become sustainable. ▪ This approach builds sector capacity and can achieve higher impact through a more outcome oriented structure. ▪ It is expensive to execute due to being labor-intensive and requiring specialist skills and a high level of involvement.1 Detail on venture philanthropy approach in backup | 12Source: Grossman, Allen, et al. “Virtuous Capital” Harvard Business School Press 1997
  13. 13. Over time, XXX can test approaches leading foundations are PRELIMINARYdesigning to solving social sector problems “I like the idea that philanthropy can be innovative, using the latest advancements to bring results to many people” --Jeff Skoll Examples of recent innovations in philanthropy ▪ The Bill and Melinda Gates Foundation co-founded the GAVI alliance, a public Public Private private partnership including governments, multilaterals, research organizations, Partnerships pharmaceutical companies, and NGOs, devoted to accelerating access to existing vaccines to fight diseases common in the developing world Investing in ▪ Founded by Jeff Skoll in 1999, the Skoll Foundation invests its resources in social entrepreneurs worldwide. Skoll believes that strategic investments in social community leaders can lead to lasting social change entrepreneurs ▪ In order to invest in both nonprofits and socially-minded for-profits, Pierre Omidyar Hybrid created the Omidyar Network, a hybrid investment organization. The Omidyar funding Network can make grants and investments, allowing it to support social enterprises structures regardless of their nonprofit status ▪ The Case Foundation, founded by Jean and Steve Case in 1997, enlists the Participant public’s help in making some of the foundation’s grant decisions philanthropy ▪ This “citizen-centered” approach to philanthropy seeks to encourage people to create new spaces where they can come together, become connected to each other, and make a difference as a community working toward the common good | 13Source: organization websites
  14. 14. Support can be targeted based on which levers XXX wants to PRELIMINARYpull to add value given a particular situation ▪ The situation surrounding the identified problem will help determine R&D Demonstrate Scale which combination Foster innovation for Try different Support scale-up of of levers is most effective, sustainable models out proven solutions models appropriate ▪ Based on its own Educate the user/community expertise and capabilities, XXX will determine its Advocate to government for policy changes approach to each lever, i.e. how to best deploy XXX investments to achieve objectives1 Brief profiles on following pagesSOURCE: Organization websites; | 14
  15. 15. Contents • Grant making processes • Performance management processes | 15
  16. 16. XXX should follow six steps to develop a best practice PRELIMINARYperformance management process Best practice Recommendations1 ▪ Determine clear and ▪ Set specific end-state objectives for focus programs, Set objectives specific performance e.g., for healthcare: Establish high quality, low cost, objectives for high throughput healthcare services such that maternal programs and projects and perinatal mortality declines by x% and XXX’s rank allowing continuous in global rankings should rise by xpts in 10 years” follow-up ▪ Also ensure clarity of objectives for individual in team, e.g. for head of vocational project team, “Establish vocational school in time to enroll first batch of students in x months”2 ▪ Crystallize small ▪ Uses a select set of key metrics from the areas of Establish metrics number of key metrics impact, influence and leverage to measure that are clearly linked performance of grantees and own programs – as well to desired impact as management team. Avoid multitude of poorly defined criteria ▪ Select metrics and set targets, at grantee and foundation level, in consultation with global authorities on respective topics (e.g., WHO, JCI, Harvard Medical3 School for healthcare) to ensure XXX sets its sights on ▪ Set clear and criteria that are compelling for long term story Set targets consistent targets (desired level of ▪ Set annual and long term goals for grantees and XXX results) with timelines operating projects to enable ongoing performance and share with tracking as well clear vision for long term, systemic stakeholders change; agree individual performance contracts with XXX team | 16
  17. 17. XXX should follow six steps to develop a best practice PRELIMINARYperformance management process Best practice Recommendations4 Track metrics and ▪ Use project ▪ Create simple tracking tools (e.g., excel templates) for disseminate results milestones for regular collecting data. Design templates at the outset in a follow-ups, share manner that makes the output amenable for direct use findings with in internal and external communications – and ask stakeholders grantees to use the same templates as far as possible - to reduce overhead burden ▪ Foster regular communication and transparency by establishing standard management updates for stakeholders (e.g., BOT, external research partner) ▪ Collaborate with external research organisations for complex, costly or specialized tracking of outcomes and impact (e.g., Agha Khan or Johns Hopkins) and external auditors for validation of financial activity5 Conduct perform- ▪ Consistently review ▪ Analyze and aggregate data from templates to ance reviews and performance and generate learnings and insights leading to early take action engage partner corrective actions, for example change in project tactics organizations in or intensified support for a project performance dialogue ▪ Convene grantees regularly to address common striving for continuous challenges and share possible solutions; ensure learning capacity building and encourage sharing of best practices ▪ Have quarterly performance conversations and annual formal reviews for XXX team; compare performance against goals, identify strengths / developments needs | 17
  18. 18. XXX should follow six steps to develop a best practice PRELIMINARYperformance management process Best practice Recommendations6 Enact rewards and ▪ Use lessons learned ▪ Link grantee performance and lessons learnt back to implement lessons and follow-up results grantmaking processes and direct future grantmaking learned in future decision and investment activity accordingly making ▪ Engage external experts (e.g., medical research organisations) to review results and devise improvements to initiatives to achieve program objectives ▪ Link XXX team performance conversations to future rewards, development goals and career plans | 18
  19. 19. XXX should implement performance evaluation processeson foundation, program area and grant level Level of evaluation Rationale Foundation Level ▪ Ensure an adequate and balanced portfolio for maximum impact towards goals of the foundation ▪ Support the development of a learning network and creation of a “platform” for XXX social sector by tracking impact and establishing a fact-base for external communications Program level ▪ Ensure that grants match the goals of the respective program area Link to ▪ Allows for a grouping of grants into individual program areas so decision- making grants can benefit from each other and lessons learned can be integrated on above-grant level Grant level ▪ Ensures that applications received and selected have appropriate quality and fit with the foundations mission ▪ Supports efficient and effective grant management and optimal coaching of grantees. Helps capture lessons learned to facilitate a continuous learning process Performance criteria should be selected in consultation with sector experts for each focus area to ensure a meaningful story of impact emerges a few years down the line | 19
  20. 20. …And across the grant-making lifecycle Intermediate Input Activity Output Impact Outcome Foundation ▪ XXX should determine results criteria on foundation level which are applicable across most/all grants ▪ Criteria should support consistent reporting across grants as well as tracking of overall foundation effectiveness at international standards Measured by foun- Program ▪ XXX should determine results criteria per program area to ensure dation maximum alignment of grants towards desired outcomes ▪ Results criteria at program level should be set in consultation with credible international authorities within program area Grant level ▪ Grantees should determine results criteria on grant level using Measured information and guidelines from the foundation on how to set criteria by and how to integrate criteria into the application grantee ▪ There is no single answer solving the difficulties of measuring results ▪ Advantages and disadvantages of the different types of criteria need to be considered when setting up an evaluation system ▪ Establishing a well-grounded theory of change and theory of action can at least partly even out some of the problems with measuring resultsSOURCE: Internal Analysis | 20
  21. 21. Evaluation system can measure project success through processas well as results criteria Process criteria Results criteria ▪ Refer to how work is done or how the ▪ Refer to what is accomplished defined process steps on grant level and foundation level are executed ▪ Measure the quality of activities ▪ Measure activities, achievements, and implemented by the foundation and results can be tracked either during grant administration or at the end of a grant ▪ Can be defined based on grant-making ▪ Can be defined along the impact value cycle: create, manage, capture value chain: Input/activities, output, outcome, impact ▪ Allow for continuous monitoring of ▪ Ensure that projects are aligned with processes, ensure adherence to best the desired project portfolio and practice standards and enhance the advance mission and effectiveness efficiency of processes of the foundation Criteria should be measurable, feasible, affordable, and meaningful and include quantitative as well as qualitative aspects SOURCE: Internal Analysis | 21
  22. 22. Results criteria help gear project activities towards desiredoutcomes and impact Intermediate Input/Activities Output Ultimate Impact Outcome ▪ Resources to ▪ Direct products of ▪ Specific changes ▪ Fundamental execute activities activities that show if happening due to changes in society ▪ Activities imple- activity is completed successful output describing if long- mented as planned term intention is achieved ▪ High control of ▪ Direct result, easy ▪ Good proxy for ▪ Tightly aligned foundation, easy to to measure impact, good link to mission measure to project ▪ Poor proxy of ▪ Poor proxy of ▪ More difficult to ▪ Very difficult to impact impact measure, stronger measure, strong influence of influence of exogenous factors exogenous factors, takes time to showSample ▪ What is the budget ▪ How and to whom ▪ Did the project ▪ What is the overallcriteria required by grantee? have the results influence policy? impact of the been disseminated? project?Impor- Grant leveltance Program area/foundation levelSOURCE: Internal Analysis | 22
  23. 23. Quality monitoring and evaluation metrics share fourcharacteristics Metrics can be both qualitative and quantitative, and must be tailored to the program’s objective, sector and geography Characteristics of good metrics: Measurable ▪ Elements selected for evaluation should be truly observable; inputs, activities and outputs are measured more easily than outcomes and impact ▪ It should be possible to access and capture the information in question when Feasible practical constraints like geography, population and technology are considered ▪ Metrics address the goal of the grantee and funder, provide insights on the Meaningful successes and gaps of a program, guide management and inform mid-course corrections ▪ Costs of monitoring and evaluation for the grantee and the foundation should be Affordable reasonable relative to the budget of the program and the funding provided Criteria should be measurable, feasible, affordable, and meaningful and include quantitative as well as qualitative aspectsSOURCE: Internal Analysis | 23
  24. 24. Metrics will vary across the stages of the lifecycle… Dimension Example metrics Human, financial, and capital ▪ Money Input resources dedicated to the ▪ Staff time/expertise program ▪ Equipment Activity What the program does to fulfill ▪ Training/teaching its aims ▪ Preparing meals ▪ Organize community health workers The direct product of program ▪ Number of classes taught activities and inputs ▪ Number of meals served Output ▪ Number of ambulance runs Intermediate Metrics used to measure ▪ Students graduating from vocational outcomes school Outcomes ▪ Children fed ▪ Children immunized The benefit to an individual, ▪ Average salary of graduating student Ultimate community, or society as a result and FX remittances home Impact of program output and activities ▪ Disease profile of XXXSource: “Measuring Program Outcomes,” by United Way; “Evaluation Handbook,” by Kellogg Foundation; “Prove It,” by NEF; “Grant Winners | 24 Toolkit,” by Wiley; U.S. Aid;
  25. 25. …And across the dimensions of foundation, program and grants Detail follows on EMS KPIs in healthcare program area Primary questions addressed Example KPIs Foundation Level ▪ Are the activities of the XXX aligned ▪ Mission and goal clarity with its goals? ▪ Grant alignment with goals ▪ Is the foundation deploying its ▪ Staff satisfaction and retention financial resources appropriately to ▪ Outreach and grantee selection achieve its goals? ▪ Investment performance ▪ Administrative expense Program level ▪ What is the impact of the XXXs ▪ Healthcare ecosystem interventions in its focus areas? – Decline in disease incidence ▪ Food and nutrition – Increase in school enrolment and attendance relative to control ▪ Vocational training – Number of individuals enrolled – Number graduated – Number placed overseas Grant level ▪ What is the impact of XXX ▪ Grant evaluations foundation’s grantees in its – Grantee assessments areas of focus? – Stakeholder assessments ▪ Impact assessment – Identifying tracking indicators – Potential economic impact | 25
  26. 26. Performance measures example – EMS (1/4) Objective High level proposal Detailed Recommendations Recognize the Categorize1 incidents ▪ Adopt the UK system differences according to their severity – Category A: immediately life between threatening incidents – Category B: serious but not immediately life threatening – Category C: neither serious nor life threatening Track the time Set targets around: taken through ▪ Response time for the call ▪ Answer 95% of calls to the call the process centre to answer the phone centre within 5 seconds and set ▪ Time before the ambulance ▪ Use UK target response times as internal targets reaches the patient a basis for determining local ▪ Time that the ambulance is at targets the emergency site2 – Category A: respond to 75% of ▪ Time taken for the ambulance calls within 8 minutes or less to reach the hospital2 – Category : respond to 95% of ▪ Time taken before the calls within 14 minutes or less ambulance is able to leave – Category C: determined at the the hospital2 local level in the UK1 Proposal based on the UK grading system2 These targets are typically set at the local level | 26
  27. 27. Performance measures example – EMS (2/4) Issue Measures to be tracked ▪ Number of calls received per month, by category “Workload” ▪ Timing of calls by category – time of day, day of week, day of month ▪ Number of calls attended to per month, by category ▪ Case mix per month, by category ▪ Number of incidents where multiple ambulances came to the scene ▪ Number of hoax calls received ▪ Source of calls coming into the call centre – Police services, medical practitioners, patients who are at their homes, hospitals, passers-by Utilization of ▪ Percentage of time that the ambulance is in active service out of ambulances total possible available time ▪ Percentage of time that the ambulance is not available for active service (undergoing repairs, etc.) Interventions ▪ Number of patients receiving: whilst on route – Oxygen support – Pain management – Stabilisation of fractures – Defibrillation for cardiac arrest – Other . . . | 27
  28. 28. Performance measures example – EMS (3/4) Issue Measures to be tracked Lives saved ▪ Number of patients who have cardiac arrest but who are revived and lives lost ▪ Number of patients who die on route to the hospital Receiving ▪ Name of hospitals to which patients are taken by category hospitals ▪ List of hospitals which refused to accept patients and reasons why they refused to accept patients Financial ▪ Value of bills sent out measures ▪ Payment received and sources of payments ▪ Debts written-off | 28
  29. 29. Performance measures example – EMS (4/4)Issue Measures to be tracked ▪ Measure on a five-point scale the satisfaction of patients and Patient families who receive ambulance care satisfaction Satisfaction of ER ▪ Measure on a five-point scale the satisfaction of ER doctors doctors in the regarding the quality and appropriateness of care delivered to the receiving hospital patients whilst in the ambulance ▪ Track the improvements in confidence of the communities which we Community serve around their ability to receive emergency ambulance care confidence ▪ Measure on a five-point scale the satisfaction of employees Employee ▪ Measure absentee rates of staff satisfaction | 29
  30. 30. XXX can also continue to leverage the social impact model to ILLUSTRATIVEmeasure and track impact relative to its investments 5-yr XXX 5-yr 5-yr activity and Economic investment XXX impact1 human outcomes value drivers $ millions multiplier $ millions • 5M+ XXX residents • Longer, more Healthcare impacted productive lives ecosystem • 10M+ interventions • Ability to work ~$25-30 X 9 = ~$225-270 reducing disease and generate and injury related income mortality/disability • 5-15K+ XXX • Increase in Vocational residents trained exportable talent training (30-100% grads ~35 X 7-13 = ~$250-450 placed overseas) • 1.5-10x increase in earning power • 2M+ meals fed to • Improvement in Other 2K school kids school outcomes • Xx kids provided and long term ~30-35 X 1.5-10+ = ~$300-350 access to play earning potential grounds • Productivity at • 30MW of power work… Total impact = ~$775-1,100 supplied to xx HH Additionally, there would be multiplier effect of economic value generated as well as social impact of healthier, more economically secure communitiesSOURCE: Team analysis | 30
  31. 31. XXX can learn from foundation monitoring and evaluation best practices Best practice Grantees1 Clarify Goals ▪ Foundation works with grantees to determine clear performance objectives and timelines for programs2 Measure Progress ▪ Foundation and grantees together crystallize a small number of key metrics that are clearly linked to desired impact, and measure progress against them. Both qualitative and quantitative metrics should be included3 Interpret and Apply ▪ Foundation consistently reviews progress and engages grantees in performance Evidence dialogues, striving for continuous learning. Information gathered should inform management decisions and help achieve successful outcomes for the programs Programs and the Foundation1 Clarify Goals ▪ Foundation identifies both short and long-term goals for each of its program area strategies and the foundation as a whole2 Measure Progress ▪ Foundation establishes metrics to measure progress for each program area and the foundation as a whole. Metrics should be feasible, measurable, meaningful and affordable to collect3 Interpret and Apply ▪ Foundation aggregates learning from grantees by program area. Additional information is Evidence collected to assess program area efforts and the foundation as a while. Performance results inform the foundation’s decisions on strategy and tactics4 Invite Stakeholder ▪ Foundation solicits feedback on foundation performance from grantees, peer foundations, Feedback and other stakeholders in the sector. This information helps the foundation improve organizational effectiveness and further its social impact5 Fill Knowledge Gaps on ▪ Foundation designs future evaluations and studies to fill the gaps encountered in its work to Social Problems date in order to successfully build social impact | 31Source: “A Road to Results, A Performance Measurement Guidebook for the Annie E. Casey Foundation’s Education Program”;
  32. 32. Data should be collected from three different sources for performanceassessment on foundation level to ensure a balanced perspective Evaluation data from grant Internal foundation-wide External foundation-wide management process evaluation evaluationWhat? ▪ Data that has already been ▪ Data measuring performance ▪ Data measuring perfor- gathered during grant on foundation level from an mance on foundation level administration process internal perspective from an external perspectiveWhy? ▪ Establish an integrated view ▪ Understand aspects of ▪ Complement internal data across projects foundation performance of foundation performance ▪ Develop lessons learned for beyond grant management with external viewpoint program areas or the ▪ Develop learnings on ▪ Develop learnings on overall foundation foundation level foundation level ▪ Link strategic decision ▪ Outsource time-consuming making on foundation level and difficult measurements to past experiences Internal and external foundation-wide evaluation both measure foundation performance; however, the measurement of time-consuming and difficult performance indicators should be outsourced to external evaluators such as specialized research organizationsSOURCE: Internal Analysis | 32
  33. 33. Foundation performance should be measured based on ILLUSTRATIVEinternal and external criteriaSelection of suggested criteria on foundation level Internal foundation-wide evaluation External foundation-wide evaluation Alignment of grants with program areas Outreach to the field ▪ Number of grants executed aligned with program areas ▪ Media coverage ▪ Percentage of grants executed aligned with program areas ▪ Stakeholder survey (e.g., experts, beneficiaries) ▪ Percentage of money spent used for program areas ▪ Quantity and quality of publications Outreach to the field Changes in the field ▪ Number of proposals which have passed checklist A ▪ Relevant local indicators per program area and ▪ Percentage of grants solicited geographic area ▪ Web site hits/year ▪ Number of policies changed ▪ Downloads of electronic publications/year Dealing with grantees Staff satisfaction ▪ Comprehensive grantee survey ▪ My work contributes to significant positive impact ▪ Rejected applicants survey ▪ Overall, I am satisfied with my work ▪ Team and work processes are efficient and effective Sustainability and strengthening grantees ▪ Our foundation learns from challenges and successes ▪ Number of projects continued beyond foundations ▪ I am satisfied with the leadership of the foundation funding ▪ There is a clear sense of direction from the Board ▪ Number of new initiatives building on activities previously supported by the foundation Administrative expenses ▪ Other funding attracted by foundations funding ▪ Percentage of administrative expenses of total expenses Aggregation of data from grant management ▪ Average rating of goal achievement ▪ Compliance with defined process steps across projectsSOURCE: Internal Analysis | 33
  34. 34. Backup Global best practices • Grant making ▪ Processes ▪ Levers ▪ Venture philanthropy • Performance management processes • Foundation management processes | 34
  35. 35. The grant making process follows a seven stage life-cycle 1 Setting 2 Guidelines Application 7 Renewal or Tie-Off and Learnings Capture Due Diligence 3 Portfolio 6 Management Portfolio Selection Contract Negotiation 4 5 | 35
  36. 36. 1 Grant making starts with developing and communicating the foundation’s guidelinesGuidelines codify and communicate the decisions that the foundation has made about its fundingpriorities to all stakeholders Example: The Ford Foundation grant inquiry website communicates’ the foundation’s guidelines Guidelines can stipulate: ▪ The foundation’s current funding priorities ▪ Type of organizations/individuals eligible or ineligible for grants ▪ Types of funding the foundation makes ▪ How the foundation accepts grant proposals ▪ Provides easily accessible details on the foundation’s funding priorities, its programs, and specific guidelines on what it will and will not fund before applicants submit a grant inquirySOURCE: The Foundation Center | 36
  37. 37. 1 Multiple factors influence the foundation’s grant making guidelines Grant vs. Operate Grant maker Operator ▪ Foundations may exclusively make grants to support the work of nonprofit organizations, or may run their own charitable programs, for example a think tank (Carnegie Endowment for International Peace) or an art museum (Getty Trust) Concentration Focus in a few areas Diverse projects ▪ Foundations often focus their grants on a few grantees or program areas in an effort to make a meaningful difference and build expertise ▪ Alternatively, foundations may choose to support a range of grantees in diverse program areas to implement a broad mission or discourage grantee financial dependence Support for individuals and Grantee type Support institutions only social entrepreneurs ▪ Foundations typically make grants to institutions, but may support individuals through scholarships and awards Risk appetite Scaling proven methods Supporting innovation ▪ Foundations often focus on a specific stage of development for projects and organizations ▪ Start-up activities require a different approach than scale-up activities Use of capital Traditional grants Program-related investments ▪ Foundations are increasingly experimenting with tools and techniques from the private sector such as mission-based investing, program related investments and social venture capital in addition to traditional grants Grant selection Internal decision making Participant philanthropy ▪ Recently, foundations have started to experiment with ways to engage the public in their grant making decisions, democratizing a process which many view as exclusive and elitist Grant sourcing Reactive Proactive ▪ While some foundations try to be inclusive and accessible with an open submission policy, it can quickly become expensive and time consuming to process unsolicited proposals. Foundations frequently accept proposals by invitation only to focus on projects and organizations most closely aligned with their Theory of Change | 37
  38. 38. 1 Leading foundations vary widely across several grant making parameters Assets 2007 Giving, 2006 Number of Application Grant review Foundation $ Billions $ Millions grants approach cycleLargest Gates Foundation 39.0 2,012 653 Open online LOI* Ongoingfoundations and by invitationby grant size The Ford Foundation 13.8 584 950 Open online LOI Ongoing The Duke Endowment 3.0 141 909 Open LOI BiannualLargest MacArthur Foundation 6.2 217 1,778 Open LOI Ongoingfoundationsby number ofgrants made The California 4.8 147 1,639 Open LOI Bimonthly Endowment The Hewlett Foundation 9.3 421 1,400 Open LOI and Ongoing by invitationCorporate The Goldman Sachs 0.3 13 74 Open LOI Quarterlyfoundations Foundation BP Foundation 0.2 57 275 Pre-selects orgs QuarterlyCommunity The New York 166 1,221 Open online LOI Ongoing 2.1foundations Community Trust Silicon Valley 182 1,745 Staggered Ongoing 1.9 Foundation RFPs1 Letter of inquiry | 38
  39. 39. 1 Leading foundations vary widely across several grant making parameters Avg grant Time to Foundation $ ‘000 Sector focus Eligibility review Largest Gates Foundation 3,081 Global health, global Organizations 10-12 weeks foundations development only by grant size The Ford Foundation 615 Community Organizations 6 weeks development, peace only and social justice The Duke Endowment 155 Higher education, Organizations 2-6 months healthcare in NC and SC Largest MacArthur Foundation 528 Human rights, global Organizations 8-10 weeks foundations conservation and individual by number of scholarships grants made The California 90 Access to health, Non-profit 4 months Endowment community healthcare organizations The Hewlett Foundation 301 Education, Organizations 2-3 months environment, global in CA only development Corporate The Goldman Sachs 176 Youth development, Organizations 2-3 months foundations Foundation business education only BP Foundation 207 Youth development, Organizations 2-3 months business education only Community The New York 50 Preventive healthcare, Organizations 4 months foundations Community Trust health resources and individual scholarships Silicon Valley 3 Economic security, Organizations 4 months Foundation immigrant integration and1 Letter of inquiry individuals | 39
  40. 40. 1 The foundation’s guidelines ultimately determine the breadth of focus of its grant making Narrow Guidelines definition Broad ▪ Strict guidelines dictate narrow focus on ▪ Broad guidelines can allow grants of aDescription a small number of issue areas, grant variety of types on wide range of issue types, and/or geographic regions areas, in broad geographic areas ▪ Allows for development of deep ▪ Allows for broad impactStrategic knowledge and expertise ▪ Provides flexibility to engage on new,advantages ▪ Concentrates resources for significant emerging issues impact ▪ Encourages holistic perspective on issues ▪ Too narrow focus may lead to ▪ Difficult and resource-intensive toPotential obsolescence develop expertise on very broad rangepitfalls ▪ If all foundations become highly of issues focused, may create funding gaps ▪ May tend to scatter funding, prohibiting deep impact in any single area To deliver maximum impact, XXX should focus its grants in the areas of health and vocational training where it has ongoing programs | 40
  41. 41. 1 Examples of foundation grant making guidelines Narrow Guidelines definition Broad J. Paul Getty Trust Ford Foundation • Funding Priorities ▪ Funding Priorities – Programs: – Programs: ▫ Visual arts, arts education, and arts ▫ Asset building and community development conservation ▫ Knowledge, creativity, and freedom – Geographies: ▫ Peace and social justice ▫ Giving on a national and international basis, – Geographies: with emphasis on Los Angeles and Southern ▫ Giving on a national and international basis, California including some countries in Africa and the Middle East, Asia, Russia, Latin America and the Caribbean ▪ Exclusions ▪ Exclusions – No grants for operating or endowment – No support for religious sectarian activities purposes, start-up, construction or maintenance – No grants for routine operating costs of buildings, or acquisition of works of art – No grants for purely personal or local needs ▪ Types of Finance Available ▪ Types of Finance Available – Project support – General/operating support – Grants to individuals – Project support – Capital project and endowment support – Program-related investments/loans ▪ Initial application approach ▪ Initial application approach – Applicants submit a letter of inquiry – Applicants file letter of inquiry online, and program officers respond within 6 weeks to either decline or request a full proposalSOURCE: Organization websites | 41
  42. 42. 1 Foundations make grants for different purposesFoundations and grantees agree on how grant funds will be used ▪ Available for any purpose, either programmatic or General support/ administrative / operating unrestricted ▪ The most flexible form of funding; allowing the grantee to allocate as needed ▪ Supports a prescribed set of activities to achieve a Project support/ defined outcome restricted ▪ Targeted funding linked to specific grantee deliverables ▪ Funding to build the long-term health and capacity of the Capital projects and grantee endowment ▪ Supports the purchase of land or equipment, construction of facilities, or investment to produce an annual return ▪ Funding for small organizations/entrepreneurs in setting Seed Money/ up innovative social ventures Venture Philanthropy ▪ Funding can encompass broad range of goals, including capital projects, investments and general supportSource: Council on Foundations, Internal Analysis | 42
  43. 43. 2 Foundations adopt different approaches in seeking grant applications How foundations invite grant applications sets the tone for the entire grant making process. The demands of the application process should be calibrated to the potential size of the grant. Approaches to soliciting applications ▪ Many foundations accept applications by invitation- ▪ XXX should seek Invitation-only only in order to focus on projects most closely grant applications aligned with their Theory of Change, and to contain closely aligned with the expensive and time -consuming process of its objectives responding to unsolicited proposals ▪ Another option foundations use to solicit targeted ▪ Processing overhead Request for grant applications is to publish requests for can also be reduced Proposal (RFP) proposals for specific programs or issues by partnering with organizations like Common ▪ Some foundations accept a common grant Acumen application application form, which is intended to streamline form grantee administrative efforts allowing them to use one form to apply to multiple foundations ▪ Other foundations have a pre-screening process Pre-screening through their websites which allows all to apply, but via website quickly selects those projects most relevant to the foundation’s goalsSOURCE: Internal Analysis | 43
  44. 44. 2 Foundations choose application methods matching their desired degree of initiative in proposal generation Reactive Degree of initiative Proactive ▪ Choose best of submitted proposals for ▪ Identify narrow fields of activity andDescription funding; may or may not have stated concentrate efforts there; actively seek priorities good grantees (may issue RFPs)Options ▪ Open applications ▪ Invitation-only ▪ Common application form ▪ Request for proposals ▪ Open to new, unique ideas ▪ Allows for more strategic investmentStrategic ▪ Responsive to grass roots interests ▪ Focus on projects most closely alignedadvantages ▪ Streamline grantee administrative with their Theory of Change, and efforts allowing them to use one form to contain the expensive and time- apply to multiple foundations consuming process of responding to unsolicited proposals ▪ Requires review of large number of ▪ Limited by imagination of foundationPotential proposals ▪ May not reflect true social needs or truepitfalls ▪ May result in scattershot, unstrategic capacity of organizations investments | 44
  45. 45. 2 Examples of proposal generation Reactive Degree of initiative Proactive Ford Foundation New Profit Inc.• The Ford Foundation invites all applicants that ▪ New Profit is a venture philanthropy fund that identifies believe their projects falls within its guidelines successful social enterprises and invests in their long term success through providing funding, technical• After carefully reviewing the foundation’s guidelines, support, and mentorship as they grow to scale applicants submit a brief letter of inquiry or online submission via website ▪ New Profit does extensive background research on• Ford makes 950 grants a year and reviews about potential grantees—getting to know their leadership 40,000, with a total staff of ~600 and tracking their progress over time—before inviting them to join the New Profit portfolio ▪ New Profit currently manages a portfolio of 16 nonprofit organizations, with a staff of ~30 peopleThe William & Flora Hewlett Foundation• The Hewlett Foundation concentrates its grant making around its core program areas: education, environment, global development, performing arts, philanthropy, and population• The Foundation solicits proposals for some programs, and accepts unsolicited letters of inquiry for others, depending on its grant making priorities at the time and the capacity of its programs to take on new grantees• The Hewlett Foundation makes ~ 1,400 grants a year. | 45
  46. 46. 3 The grant due diligence and approval process should consist of several stages and build on close interaction with grantee Create Manage Capture value Recommendations Expected benefits ▪ Implement a staged selection process ▪ Continuous improvement by incorporating ▪ Use a consistent and limited set of criteria as well lessons learned from previous grants as lessons learned from previous grants for selection ▪ Efficient funding process with consistent ▪ Provide grantee with information on how to apply and comparable funding decisions and work with the foundation and engage in close ▪ Higher-quality applications interaction and joint problem-solving ▪ More transparent and efficient interactions ▪ Conduct additional external evaluation for relatively with grantee as well as capability-building large and important grants Scan pre- Reject or Yes Review Reject or Yes Coach during Review full Reject or Yes Suggest for liminary accept preliminary accept preparation of proposal accept unconditional vs. proposal proposal full proposal conditional funding Review grantee Agree on Conduct reporting external procedures evaluation No No No Reject Reject Reject Joint problem-solving with partner organization/interaction in personSOURCE: Internal Analysis | 46
  47. 47. 3 An increasing level of detail supports an efficient and effective 3-step selection process Proposals Preliminary forwarded proposals for final received funding decision A B C Process ▪ Scan of ▪ Review of ▪ Review of step preliminary preliminary full proposal proposal proposal Responsible ▪ Administration ▪ Program Officer ▪ Program Officer/CEO Criteria ▪ Formal exclusion ▪ Fit with mission ▪ Quality of proposal ▪ Quality of proposal categories and eligibility and basic ▪ Quality of grantee criteria content quality ▪ Communication potential1 Type of ▪ Proposals posing a ▪ "Out of scope" ▪ Proposals not aligned with ▪ Proposals not ful- application risk to reputation proposals not aligned program strategy and not filling comprehensive sorted out ▪ Proposals in areas with mission meeting quality standards quality requirements generally not funded ▪ Proposals not meeting ▪ Grantees not meeting basic quality standards quality standards1 Should be considered, but not determine decision | 47
  48. 48. 3 Selection criteria, application forms, and funding Filled by grantee Filled by foundation recommendations to board should be harmonized A B C ProposalsPreliminary forwarded forproposals final funding received decision Preliminary Proposal Full Proposal Funding recommendation ▪ Summary of most relevant information ▪ Extensive and detailed ▪ Summary of the most relevant avoiding extensive reporting description of the evaluation information requirements project approach ▪ Assessment of different ▪ Short description of project and grantee components as strengths and background weaknesses  Templates are based on identical categories of  Consistent and comparable funding due to criteria grouped along the dimensions "quality harmonization across projects of proposal" quality of grantee" and  Higher efficiency of decision-making due to "communication potential" harmonization across templates A, B and C | 48
  49. 49. 3 Proposals are analyzed on increasingly rigorous criteria depending on the stage of evaluationProposals can be evaluated against well-defined criteria in addition to individual reviews to assure quality control Proposal Criteria categories Criteria components Yes No Quality of ▪ Fit with exclusion/eligibility criteria A proposal ▪ Fit with mission ▪ Basic content quality Strength Weakness Not applicable Preliminary Quality of ▪ Fit with program areas proposal proposal ▪ Relevance to the foundation ▪ Long-term sustainability B ▪ Innovativeness Quality of grantee ▪ Experience and knowledge ▪ Reputation Quality of ▪ Fit with program areas Assessing criteria as strengths and proposal ▪ Relevance to the foundation weaknesses instead of using a scoring ▪ Long-term sustainability ▪ Innovativeness system steers the focus of the analysis ▪ Adequate budgeting towards identifying measures for Full ▪ Replicable by other organization strengthening success factors and proposal ▪ Design of proposal and project mitigating risks C Quality of ▪ Experience and knowledge grantee ▪ Reputation ▪ Capabilities ▪ Network access ▪ Financial robustness of the organizationSOURCE: Internal analysis | 49

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