Venture Philanthropy Partners: Investing in Social Change.


The New Normal: Thoughts for Funders Supporting Scale

November 2010
Carol Thompson ColeMuch has been said of late regarding partnerships between the federal government and private philanthropy.  VPP Board Member, Institutional Investor, and Annie E. Casey Executive Vice President Ralph Smith led an informative dialogue at the Washington Regional Association of Grantmakers in September on what new federal innovation programs mean for local funders. The discussion explored the many potential benefits of the Social Innovation Fund and other new federal partnership programs like Investing in Innovation, Race to the Top, and Promise Neighborhoods for the philanthropic sector. Smith said that by bringing funders to the table early on, the federal government is elevating philanthropic institutions to the level of true partner. Smith pointed out that we have the potential to create a mutually beneficial relationship and have our voice and needs heard, and more importantly, the needs of those whom we support, at the highest levels of the government. The more stable funding source the government provides gives us a unique opportunity to scale up high performing nonprofits at unprecedented levels and provides more opportunity for sustainability.

Smith also spoke about how critical local partnerships and collaborations are to attracting federal funding and noted that the multitude of federal innovation awards in the greater DC area were a “tribute to the donors and funders across this region.” He said that without local collaboration, the National Capital Region would not have been as strong of a contender.

Smith’s remarks reminded me of another kind of partnership that has been a critical component to the success of many past VPP investments: local public private partnerships.
We are deeply enthusiastic about working with the federal government through our Social Innovation Fund initiative, youthCONNECT, but we know that for this collaborative effort to be fully realized and change the lives of 20,000 young people in our region, coordination with local public officials and agencies will be essential, just as it was in many of our previous investments. 

Local public private partnerships take time and effort to establish, but they create the environment that enables and sustains scaling effective programs. This is true not only for the National Capital Region, but for every metropolitan area where nonprofits are attempting to scale regionally. As the federal government continues to partner with local funders to expand programs, we must pay special attention to developments in local communities.

VPP learned the value of partnering with local government as it helped nonprofits in its first portfolio grow to reach new areas of need in the National Capital Region. Five of the 12 investment partners from our first fund took on the monumental task of expanding into Maryland from the District of Columbia. Last month, VPP organized a discussion on the suburbanization of poverty as a part of the Grantmakers for Children, Youth and Families National Conference, and nonprofit participants shared how navigating expansion in Maryland suburbs is not the same as expanding within the District.  These organizations would not have succeeded and taken root in this new jurisdiction without forging multiple relationships and deep connections with the public agencies and officials in their new home. (To learn more about the efforts of expanding in Maryland, read the case studies on our investment partnerships with College Summit, Mary’s Center, CentroNía, and AALEAD. Also see our reports on our results from this expansion, released in partnership with Brookings: Greater Than the Sum of Its Parts; Part I and Part II.)

We at VPP still have much to learn about partnering with the public sector at all levels, but from our first decade of experience, I have a number of recommendations for anyone contemplating or engaged in this work:

  1. Forge New Ground

    Innovation is key to all successful partnerships, and local initiatives are no exception. Public private partnerships need to arise from some sort of shared goal or mutually beneficial agreement to effectively help the communities in need. Keep an eye out for creative solutions and do not be afraid to approach the appropriate government officials or agencies with your ideas.

    One VPP investment partner, the See Forever Foundation (SFF), was able to forge a breakthrough partnership with  DC Public Schools that eventually saved them more than $9 million in capital expenses. Brokered by former VPP Partner Steve Seleznow, who had extensive experience in the public school system, SFF was able to obtain unused school buildings for their charter school system, significantly decreasing their start-up costs. This innovative partnership has paved the way for similar initiatives, like the Building Hope Charter School Incubator Initiative.

  2. Find the Champions and Connectors

    Finding the people within the system who understand your goals and the public environment in which you are working or plan to enter can make all the difference in your expansion strategy. Having someone from within the local government system on your side is essential as you navigate new terrain. Change agents and innovators exist in all sectors and developing relationships with those inside the public sector will help you avoid major pitfalls and save you endless amounts of time and effort. It is important that your connector understand not only your objectives and mission, but also your model in the context of the community you hope to serve.

    VPP was fortunate to be assisted by many people along our journey.  For example, one of our champions and connectors during the Maryland expansion of many first portfolio investment partners was Chuck Short, Special Assistant to the Montgomery County Executive. Chuck knew what VPP and its nonprofit partners wanted to do and he wanted us to succeed—a champion—he also had strong relationships with most people in the new areas we were moving into—a connector. His contributions to our efforts were invaluable.

  3. Know Your Ecosystem

    As the saying goes: “You don’t know what you don’t know.” Make sure that you understand not only the populations you are serving, but also the policy and regulation changes and shifts that could affect your areas of work.

    To keep track of the changing demographics and needs in the region, VPP has worked with the Brookings Institute over the years to analyze the most current data on children and youth of low-income families in the National Capital Region.  We most recently commissioned a report in 2009 to help us track the shifts and trends in our communities.

    On the policy side of our ecosystem, we made a concerted effort to get out and listen to policy makers and public servants in the jurisdictions in which we work. Last month, I met with the Maryland Children’s Cabinet, an innovative body made up of all the department heads of agencies that deal with children’s issues in the state, to have a dialogue about our approach to helping nonprofits serve children and youth and explore how we could coordinate our efforts in the future. VPP Partner Shirley Marcus Allen has also convened roundtable discussions of representatives from key health and human services agencies from around the entire region in order to help break down silos and get a broader, regional perspective on the challenges facing our target population. In Northern Virginia, former Deputy County Executive for Health and Human Services in Fairfax County, Verdia Haywood, was instrumental in helping us understand the community and its needs.  He even organized an incredible field trip for our team to one of the more impoverished areas of Northern Virginia.

    You must also build relationships with community and civic leaders. Ultimately, public officials represent the public and their first priority is to respond to the needs and issues presented by their local constituencies. Building partnerships with local government is contingent upon understanding the pressures they are under from their communities and aligning your solutions to help them respond to those needs. Close ties with community leaders will allow you to understand the perspectives they will be bringing to their elected and appointed officials.

    Most importantly, you must never forget you are working in an ecosystem, which means all parts of the whole are connected and that things are always changing. You need to be in touch with those closest to the “pulse points” so you can see trends and major changes coming and be nimble enough to get ahead of them.

  4. Build Capacity of Partners

    As VPP has reached out to local government, we have also helped our investment partners discover new opportunities in public funding. When we first began our work, we were surprised to find many of our nonprofit partners had only one or two steady sources of public funding. An early analysis showed there were other streams of public funding they could pursue. VPP connected its IPs with Patton Boggs, a public policy law firm, to help identify new sources of funding. After Patton Boggs’ assessed the opportunities in the region, collectively our investment partners obtained $600,000 of new funding and had greatly deepened their own ability to identify such funding streams in the future.

  5. Pave the Way for New Growth

    We also learned how important it is to think ahead when developing relationships at the local level when you support scale.  You need to reach out to the public officials and agencies in the locations where your partners will be, well before they get there.

    This is a continual process and VPP is always introducing itself to new stakeholders. When going out to Maryland, we met with all of the county council representatives and other community leaders. It is important not to overlook anyone: meet with neighborhood and county officials, school boards, PTAs, anyone you think has a voice that needs to be heard and information to share. Of course, never forget the other nonprofit leaders and advocates in the area, as they could be your biggest allies or opponents in the expansion. As new administrations take hold in our region, we are reminded again of the need to get to know our newest public leaders. We look forward to building partnerships with the new executive level elected and appointed public officials and legislators at all governmental levels.

  6. Build the Talent on Your Team

    This whole expansion process cannot happen without the right people on your staff to see it through. We have found it invaluable to bring on team members with deep knowledge of the local public sector, strong, diverse networks in the region across all sectors, and a high level of cultural competence. Their experience with how to get things done, in a system that can sometimes feel inexplicable or overwhelming, has made all the difference in the successful scaling of our investment partners.

While VPP has learned much about public private partnerships while working with its first portfolio, I have had similar experiences throughout my career in government, business, and the nonprofit sector.  I first began to see the complexity of the interchange between policy, government services, and the community when I shifted from work in the federal government to local government many years ago. I learned early on that as much as one knows about a subject or issue, and the policies related to it, to be successful at a local level, you need to understand how a policy or program will work at the point of delivery. In order to understand that, you must reach out to and learn from those who are directly affected by the issue.  A critical component of this learning is to listen and hear from a diverse group of stakeholders, particularly the population to be served.  They know more about the issue than you will probably ever know.

Another major lesson from my career was in the mid-eighties when we talked a lot about public private partnerships and tried to create them.  Unfortunately, many did not succeed because it was harder work than any of us believed.  While both sides had good intentions and shared big picture goals, usually our language was not the same and we did not understand the cultural differences between government and business.  Therefore, either the results were slower than anyone wanted, or the effort was aborted before we could reach the goals.

My experience in the philanthropic sector with VPP has only confirmed what the public and private sector taught me:

  • It is all about relationships;
  • It always takes longer to build trusted relationships than anticipated;
  • Without a trusted relationship you will never achieve real partnership;
  • You must be sure expectations of all parties are aligned; and
  • A real partnership will not stay static; it will require adjustments along the way.

Despite the difficulties and challenges in working across sectors, I am more convinced than ever that it is the only way we can truly move the needle on our most urgent societal issues.  In a time of constrained resources, leveraging and aligning efforts is the only way we can hope to have any real impact.  It is clearly one piece of the “new normal”, despite the fact that public private partnerships are not a new idea.  Perhaps the “new” will be partnerships between government, philanthropy, and nonprofits that flourish and function to achieve lasting, measurable change for the communities we are trying to serve.

- Carol Thompson Cole