What does it take to assemble and manage a successful collaboration among philanthropic funders? It’s a timely question as more funders pursue collaboration to address complex social problems. The “good governance” agenda pursued by California Forward and ClimateWorks’ emphasis on collective action to address climate change are just two examples.   

As the David and Lucile Packard Foundation celebrated 50 years of grantmaking last year, it set out to assess its own collaboration track record, which today includes more than 60 engagements across five program areas. Those investments range from hundreds of thousands to millions of dollars. “Collaboration has been one way to take on large social agendas, tough issues, and long-term challenges while knowing we are in deliberate coordination with others,” says president and CEO Carol Larson.

But saying “yes” isn’t always the right answer. Larson says, “When people approach us about collaborating, I have to ask: Is this a truly strategic use of collaboration? There’s a need to be clear about the opportunity, because it involves a lot of time and grant dollars. We also think about how to say ‘no’ when the collaboration doesn’t add up, while still maintaining our relationships with other funders.”

We recently worked with Packard to develop a report that identified five types of collaboration (from simple to complex), and a number of factors necessary for decision-making and success. The lessons that emerged were consistent with our previous work on funder collaboration and boil down to five rules of the road for any funder thinking about collaborative ventures:

1. Pick the right collaborative structure to align with your foundation’s goals.

Packard’s collaborations included: knowledge exchange; coordination of funding, with each partner retaining individual grant making rights; coinvesting in an existing entity, which involves a common objective and pooled resources, networks, and knowledge; creating a new entity, with an acknowledged leader whom others can learn from; and funding existing funders, which requires a shared strategy and authority for a lead organization to re-grant pooled money. The latter three categories represent so-called high-stakes collaborations that should mostly be reserved for very strategic undertakings.

Packard leadership has begun using these five categories as it considers collaborative opportunities and whether the structure fits the purpose envisioned. Matching the right structure with the proposed collaborative has helped Packard get more quickly to conversations about governance and operations.

2. Weigh the cost-benefit carefully when the collaboration is not central to your strategy.

The bar for cost-benefit decisions should be much higher when an opportunity falls outside of strategic or program areas. The Packard Foundation, for example, made the decision to invest in the California Forward collaborative even though advocating for process changes to improve California government fell outside its stated goals. But it also felt that the opportunity to strengthen California’s democracy could benefit areas in which the foundation has a long-term interest, such as access to quality learning opportunities for children in California.  Although this was a high-stakes investment, the foundation reduced its risk by working with funders that had significant relevant experience and with whom the foundation had strong working relationships.

3. Even when you and your partners are aligned on goals, you may still want to preserve decision-making flexibility.

Collaborative structures need to be adaptable and flexible. NGO ClimateWorks began with a structure that required all the contributing funders to agree on investment decisions. Over time, the foundation and other funders advocated for more flexibility. While the collaborating partners wanted to continue to align their climate commitments, they also wanted the flexibility to deploy some of their funds directly. The 2.0 incarnation of Climate Works has shifted toward a model of joint and individual funding decisions. The new structure has also attracted additional funders to join the effort.

4. Get clear about time requirements and the roles various collaborating partners will play.

Some collaborations that entail relatively small financial commitments require significant time from program staff. The Packard Foundation is not unusual in having underestimated the amount of staff time required to facilitate a successful collaboration.

One big decision is whether to initiate and lead a collaboration or follow others. Packard Foundation’s program staff makes these decisions based on several factors, including the foundation’s level of expertise, the ability of program staff to dedicate time, and the degree to which the foundation has an interest in steering strategy. Many of the collaborations the Packard Foundation participates in make decisions by consensus. Even in these cases, it’s important to identify distinct roles for each funder. Often, it’s more efficient to ask one funder to take the lead. The group can also assign other roles; for example, one may manage scheduling and setting meeting agendas, another communications, and another evaluation and learning. This allows funders to balance their contributions and focus on their strengths.

5. Set the exit strategy up front to reduce friction later.

It’s good to clarify at the start how much time everyone wants to commit and how each partner can leave with minimal friction. The Packard Foundation’s collaborations have mixed approaches to exit planning. In all cases where exit planning took place up front, the added transparency played a useful part in subsequent investment decisions and conversations with other funders. Specifying an exit strategy up front also allows any partner to leave with minimal friction, and allows partners to discuss the topic without fear of signaling a lack of support to other funders or to program beneficiaries. The Packard Foundation recently benefited from this approach as it exited from California Forward.

Collaboration done well is a powerful means for funders to amplify their resources and impact. While every collaboration is different, these decision-making guidelines can help steer funders in the right direction to achieve success.