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The Leadership Model of Philanthropy

“Philanthropy is focused, not on symptoms, but on root causes. It is systemic, not episodic; proactive rather than reactive. In short, the goal of philanthropy is not so much to provide assistance or service; rather, it seeks to permanently alter the conditions that make assistance necessary. What this means is that to effect significant and lasting change, a philanthropic organization must be a leadership organization.”

With these words, the Lumina Foundation’s President and CEO, Jamie Merisotis, makes a compelling case for foundations to embrace the Leadership Model of PhilanthropyFounded in 2000 with a current endowment of $1+ billion, the Lumina Foundation aims to increase high-quality post-secondary educational attainment in the United States. Their work is driven by a flagship target – Goal 2025 – which, if accomplished, would see 60 percent of Americans achieving high-quality degrees, certificates, or other post-secondary credentials by 2025.

Lumina Foundation’s Leadership Model of Philanthropy

Although the Leadership Model of Philanthropy is not a new concept and has been labelled and applied differently in the past, Lumina’s Leadership Model of Philanthropy is distinctive and can be characterized by three key attributes: focus, flexibility, and fortitude.

1) Focus – The Lumina Foundation has chosen to focus its resources to redress a single issue: college access and success among low-income, first generation and underserved populations. Foundations, especially those with large endowments, do not always restrict their aspirations to a singular mission, opting instead to divide their attention to multiple causes.

The Lumina Foundation champions the pursuit of one objective because it compels transparency, emphasizes scale, mandates measurement, and encourages refinement. The idea of not spreading oneself too thin should serve as a model for smaller philanthropic organizations that do not have the financial prowess of mega-foundations such as Ford, Carnegie, or Rockefeller or whose assets are dwarfed by the endowment sizes of new mega-philanthropies, such the Bill and Melinda Gates Foundation.

2) Flexibility – This second attribute of the Leadership Model of Philanthropy enables the Lunima Foundation to engender meaningful change. For the Lumina Foundation, flexibility means a myriad of actions ranging from encouraging and facilitating multi-stakeholder dialogue, fostering out-of-the-box thinking, allowing staff to share expertise, and ensuring the CEO actively participates in spreading the Foundation’s mission.

Though setting a single goal may seem static from the outside, it permits the Lumina Foundation a greater degree of flexibility within a well-defined operational framework. It is important to note that for the Lumina Foundation, the definition of flexibility goes beyond traditional boundaries of the foundation as the wealthy financier dictating solutions. Flexibility should be accompanied by a healthy dose of self-awareness that guides a foundation’s understanding of knowing when to lead, and when to follow. Strength in numbers, rather than leadership for leadership’s sake, has been proven to be an effective accelerator for achieving philanthropic goals.

3) Fortitude –  Lastly, foundations must possess fortitude. The Leadership Model of Philanthropy reminds the philanthropic community that foundations operate within a “privileged space” and that this privilege ought not to be taken lightly. The Lumina Foundation makes an impassioned call to action for foundations to be proactive, to effect systemic change, and to take risks.

S. Sutton & Associates Inc. helps navigate through potential pitfalls

While there is much to celebrate about Lumina’s back-to-basics stance on philanthropy, foundations would be wise not to let their mission statements or goals turn into dogma.

S. Sutton & Associates Inc. can help philanthropic organizations navigate the potential pitfalls of a well-meaning strategy that may not always address the root cause of the solution they are seeking. In Lumina’s case, the pursuit of a single, measurable goal is not without negative historical precedents. Similar cases of single-minded pursuits gone awry are not infrequent, but transformative philanthropy is rooted in taking risks.

Expertise in Philanthropic Governance

With its deep expertise in philanthropic governance issues, S. Sutton & Associates Inc. reminds philanthropists that the leadership concept of being first among equals should not come at the cost of continued and enhanced collaboration with other funders in the field, especially in the pursuit of meeting a challenging goal.

Forward-thinking

To be successful, philanthropy has to look at the present as well as the future. Forward-thinking is especially important in retaining talent and making prudent investment decisions. S. Sutton & Associates Inc. advises philanthropists and their charitable vehicles regarding strategic planning and effective social and financial impact to enable them to find and implement their next significant, path-breaking objective.

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Emerging Trends Shape the Donor’s Perception and Approach

The changing philanthropic landscape affects the way donors perceive and approach giving. The Future of Philanthropy, a report based on a survey of more than 3,200 people who itemized charitable giving for tax purposes, explores how personal giving has evolved and how the future of philanthropy may evolve based on changing perceptions and generational shifts.

Key findings of the report include that donors identify a wide range of social problems, particularly health and hunger, as key social priorities. Giving, however, is seen as just one element in solving these persistent problems. Only three-quarters are somewhat optimistic that their giving can solve the issues most important to them. This tempered response reflects donors’ motivations for giving as well as their perceptions of the complex framework required for social change.

Trends Shaping Donor Giving

Trends shaping donors’ approaches to giving include transparency, technology and evolving attitudes toward wealth. Donors have a more results-focused approach to philanthropy with 41% saying they have changed their giving due to increased knowledge about nonprofit effectiveness. Technological advances that provide tools for researching and funding charitable projects have influenced 27% of donors to change their approach to giving. A smaller, but still significant, number indicates that trends related to charitable planning, such as donating one’s wealth to charity rather than passing it down to family, have affected their giving.

Who do donors see as key changemakers in society? Nonprofits and public-private partnerships are seen as the most likely to develop real solutions. But donors also believe that religious institutions, universities, businesses and social enterprises have a role to play in solving society’s challenges. Business and individual donors are the two groups that donors think should do more to promote change.

Comparing Generational Differences Transforming Philanthropy

From the table below, you will notice that Millennials share opinions with Baby Boomers on the greatest society challenges (also the top three issues based on the report), but they differ in almost every other respect.

Millennials
Born 1981 – 2000
Baby Boomers
Born 1946 – 1964

Most are at early stages in their careers or still at school
 
Most are approaching or in retirement
 
Est. median charitable giving:$1000
 
Est. median charitable giving:
$2000
 
56% say their giving is
more spontaneous
 
72% say their giving is
more planned
 
Millennials are likely to say their
giving offers a meaningful difference
 
Baby Boomers are likely to say
giving is part of their personal values or the organization is important to them
 
43% say trends (three or more)
influence giving
 
23% say trends (three or more)
influence giving
 
Millennials will take a global approach
as they grew up in an interconnected
world of travel and global awareness
 
Baby Boomers are likely to focus
on domestic issues more than international
 
Top 3 issuesAccess to basic health services (35%)Developing treatment or cures for a disease (34%)Hunger and access to nutritious food (33%)
Top 3 issuesHunger and access to nutritious food (42%)Developing treatment or cures for a disease (40%)Access to basic health services (33%)

Look for the next email from S. Sutton & Associates Inc. in two weeks’ time for more updates and information about philanthropy. We look forward to staying connected and would also love to hear from you! Get in touch and let’s see how we can work together to realize your philanthropic potential.

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Lessons learned from early-stage grantmaking organizations.

“After conducting extensive interviews, the Center for Effective Philanthropy has thoughtfully distilled an insightful guide that offers advice on leadership; on approaching work alongside board members, staff, and grantees; and on the importance of taking risks and orienting all of our organizations toward continuous learning and improvement.”

These words of praise mark the foreword to “Greater Good: Lessons from Those Who Have Started Major Grantmaking Organizations,” a substantive report on the opportunities and challenges facing early-stage grantmaking organizations. The trustees of The Leona M. and Harry B. Hemsley Charitable Trust offered the above quote and provided research funding for the report’s authors, Ellie Buteau, Charis Loh, and Hannah Martin. The report reflects intensive research to determine how grantmaking organizations can achieve short and long-term success.

“After conducting extensive interviews…”

What was once a topic reserved for specialist conferences, the world of big data forces organizations – especially nonprofit organizations – to engage more deliberately with research methods and methodologies. Under the auspices of The Center for Effective Philanthropy, the authors opted for a qualitative data strategy. Over the course of 2018, the authors interviewed 35 leaders from 14 grantmaking organizations with each interview lasting 60-90 minutes. The authors introduced several control variables to ensure that their findings were valid, relevant to the subjects of their study, and enticing to practitioners, scholars, and interested observers alike. To that effect, the selected interviewees represented organizations that ranged between approximately $9 million to $300 million in recorded giving (median value of approximately $40 million); had assets between approximately $400 million to $6.4 billion (median value of approximately $550 million); and had been in operation for less than five years to less than 20 years.

“…the Center for Effective Philanthropy has thoughtfully distilled an insightful guide that offers advice…”

By distilling the experiences of leaders from early-stage grantmaking organizations, the authors were able to achieve something with this guide that eludes most researchers: they made knowledge accessible and tangible. What may have easily been discarded as interviewees’ nostalgic memories found new meaning and utility within the framework of the authors’ study. With their sights set firmly on improving the present and future of philanthropic operations, the authors transcended the genre of an academic study, and were able to create “an insightful guide.”

“…on leadership…”

The first element – “Leadership characterized by humility, courage, and resourcefulness” –encourages leaders of emerging philanthropic organizations to cultivate and embrace the maxims of the Third Sector: “Be Humble,”; “Be Bold”; and “Learn the Basics From Others.” While risk-taking and setting a strategic direction have a familiar ring to aspiring philanthropists hailing from the private sector, humility and turning to others for advice may not be as natural. What’s more, the authors stress the importance of hiring the rightpeopleduring the early organization-building phases. There was agreement among the interviewees to hire professionals who can cope with the ambiguity and all-hands-on-deck mentality of early-stage organizations.

“…on approaching work alongside board members, staff, and grantees…”

The second element – “Shared understanding among donors, board, staff, and grantees about how the organization will approach its work” – concentrates on the relationship-building and maintenance processes at all levels of the grantmaking organization. The authors shed light on some of the most significant types of relationships: the donor/donor family–grantmaking organization relationship; the funder-grantee relationship; the board-staff relationship; the staff-grantmaking organization relationship (vis-à-vis the organization’s culture and values); and, the prospective employee–grantmaking organization relationship. By relying on interviewee insights, the authors demonstrate the importance of transparency, trust, and clear communications in managing these relationships successfully.

 â€śâ€¦and on the importance of taking risks and orienting all of our organizations toward continuous learning and improvement…”

The third and final element – “An organization with a sense of what success is and an orientation towards learning” – deals with a more theoretical and future-oriented approach. The interviewees urge early-stage organizations to ask tough questions and have difficult conversations not just initially, but throughout the organization’s existence. A clear definition of what success means to the organizations and its members is as important initially as it is in the future. It is equally important for organizations to find meaningful ways, both at the start of their operations and after they have matured, to measure their impact on society, and, if necessary, recalibrate. The guide, in other words, concludes with the most valuable piece of advice. Organizations are not static entities; they evolve, often according to their individualized trajectories.

Even a quick skim of “Greater Good” leaves the reader convinced of one incontestable fact: early-stage grantmaking organizations will struggle to leave their mark in this crowded philanthropic ecosystem of the 21st century without outside help.

As philanthropic organizations progress through different stages of maturity, their needs evolve, as well. The authors of “Greater Good” make a case for relying on external expertise during the nascent stages of an organization’s life cycle. S. Sutton & Associates Inc. offers that external expertise that can add value to your organization at various stages during your organizational life cycle.

Whether it involves designing communications to advance donor and constituent engagement, developing strategic planning, or evaluating fundraising and development practices, many philanthropic organizations don’t have the in-house capacities to deal with these issues effectively and sustainably, which is how and where S. Sutton & Associates Inc. can provide value.

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Three contemporary concepts, New Power, Next-Generation Enterprise and Blitzscaling create a “Trifecta” maximizing your impact.

Old Power, New Power

Understanding “New Power” by Jeremy Heimans and Henry Timms, which appeared in the December 2014 issue of the Harvard Business Review, describes an interesting, complex and transformational shift of power in the world. The concept of Old Power, (held by a few, jealously guarded, well stocked, closed, inaccessible and leader-driven) and New Power (made by many, open, participatory and peer driven) are positioned as mutually exclusive. That said, the shift to New Power is on a continuum, picking up pace, influencing and informing virtually every aspect of our contemporary lives and changing the landscape of philanthropy.

Next – Generation Enterprise

Four years after Understanding â€śNew Power” was published, Peter Weill, chairman of the MIT Sloan Center for Information Systems Research, and Stephanie Woerner, a research scientist at the Sloan Center, explained the concepts behind their new book What’s Your Digital Business Model?: Six Questions to Help You Build the Next-Generation Enterprise. Their book zeroed in on understanding what makes top-performing companies thrive in the digital era.

The authors posit that customers now look for opportunities to engage, participate and solve life events. To be successful, business must move to a knowledge-based information economy and digital business model that tries to meet the life event needs of customers.

Not surprisingly, the “New Power” paradigm informs key concepts suggested by the authors to help successfully transform organizations, providing a Digital Proficiency Checklist to amplify the customer’s voice, and guiding organizations on how to thrive in the “New Power” and Next-Generation Enterprise world.

Key points to consider:

-Once digital threats and opportunities are identified, harness digital competitive advantages to make the most of them.

-Move to a digital model that reflects and meets the life event needs of the customer. As examples, Staples’ new tag line is Work, Learn, Grow. Weight Watchers looked at how customer preferences are changing, their perspectives on what a great experience is, how they are interfacing with technology and their expectations for personalization. Their new strategy includes integrating online social media community groups, audio music, meditation content and workouts throughout its app, and provides personalized ratings and rewards for healthily choices.

-Set vision, draw on analytics, integrate data, and consolidate organizational silos to create a knowledge-based information company.

-Connect customers and put them in control using technologies like mobile or the Internet of Things, an extension of Internet connectivity into physical devices and everyday objects. Embedded with electronics, Internet connectivity, and other forms of hardware, these devices can communicate and interact with others over the Internet, and they can be remotely monitored and controlled. As an example, Weight Watchers is adding its services to digital personal assistants such as Amazon’s Alexa.

Blizscaling 

In their book Blitzscaling, pioneering entrepreneurs and New York Times bestselling authors Reid Hoffman (co-founder of LinkedIn), and Chris Yeh, draw on their experiences scaling startups into billion-dollar businesses, offering a framework easily replicated in any region or industry. Reid believes strongly in the ability of entrepreneurship and technology to improve the world. Yeh, has founded, advised or invested in over 100 tech startups since 1995, helping them plan for and achieve “hypergrowth.”

Blitzscaling articulates a specific set of practices for igniting and managing dizzying growth; an accelerated path to the stage in a startup’s life cycle where the most value is created. It prioritizes speed over efficiency in an environment of uncertainty and allows a company to go from “startup” to “scale up” at a furious pace that captures the market.

New Power, Digital Business and Blitzscaling: The Contemporary Trifecta to Achieve Social Impact

Beyond their application in the for-profit sector, New Power, Next -Generation Enterprise and Blitzscaling provide powerful tools for social impact. Dress for Success and the Obama Campaign provide two examples of the power of “The Trifecta” applying key principles such as the Network Effect, leveraging contributions of a community or another existing network, and innovative Distribution Models, to manage the strains of rapid growth and maximize impact.

Dress for Success

Dress for Success (DFS) was able to get around the limitations of manpower and circumvent the challenges of operational scalability without consuming cash by partnering with organizations serving the same clients. In exchange for DFS accepting clients of other organizations, partners were required to provide volunteers. This use of the Network Effect allowed DFS to scale the number of people it served in the workforce needing their service, all without consuming their financial resources. DFS also leveraged the power of an innovative Distribution Model, inviting anyone who wanted to open a DFS shop to New York “to sleep on their futon” so they could be trained and return to their hometown to start up the new DFS shop.

Obama Campaign

In 2008, the presidential campaign of Barack Obama used the power of “The Trifecta” to catapult a little-known first-time Senator from Illinois to the White House.

Through unprecedented use of connectivity, the campaign was able to coordinate a decentralized movement. The key was the use of technology to leverage existing networks and achieve powerful distribution. Their focus on small donations from individuals via internet rather than large donations allowed a new campaign business model, raising more money than any previous candidate: $650 Million in campaign contributions. Over half that amount came from donations of less than $200. In contrast, only 27% of the money raised during the 2004 election came from low dollar donors.

The Obama campaign also utilized technology to build and manage an army of volunteers to get out the vote. They created three key tools that leveraged growth factors to help Obama win the election.

The first, my.barackobama.com (MyBO) was a social network that leveraged existing networks of Obama supporters, allowing them to connect with one another, as well as create groups, plan events and raise funds.

The second tool, Neighbor-to-Neighbor was a canvassing tool. When MyBO users logged in, Neighbor-to-Neighbor provided a list of undecided voters they could call on or visit. Neighbor-to Neighbor tapped into online databases to match volunteers with people they would likely connect with, considering factors like age, profession, languages spoken, and military service. This enabled the campaign to generate 8 million calls and tremendous word of mouth.

The final tool, Vote for Change was a voter registration site, which automatically sorted voter registration rules to help potential Obama voters register correctly. During the campaign, Vote for Change helped one million people register to vote—-roughly the same number as two thousand paid staff could handle using the door-to door-method. Obama received over sixty-nine million votes, still a record for any US presidential candidate.

The power and principles of “The Trifecta”, New Power, Next-Generation Enterprise and Blitzscaling apply to any organization, of any size. Customers, constituents, prospects and doors want to interface with technology, desire a great experience, and have expectations of personalization. Fundraising strategy, constituent mobilization, resource allocation, strategic and campaign planning, how gift pyramids are structured, gifts are made, and success is achieved, has entered a new dimension. S. Sutton & Associates Inc. is poised to assist you and/or your organization as you apply “The Trifecta” and maximize the impact you have upon the world.

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Philanthropy Redux

Many donors we work with, are open to early-stage funding, anchor gifts and gifts in support of capacity building for nonprofit organizations that have ambitious goals. S. Sutton and Associates Inc. prides itself on identifying unique opportunities for collaboration and creative partnerships between donors and nonprofit organizations.

While this applies to major and principal gifts, whether local or global, donors at every level seek unique opportunities for impact, and ease of giving and inspiration are critical factors, as depicted by the following illustration.

Joining our online community keeps you connected with S. Sutton and Associates Inc. and our suite of services. Whether you need help with planning a fundraising campaign, engaging donors and constituents, or managing multiple projects, we can get you there.

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