Los Angeles Shines in Collaboration for Capacity Building

Foundations are more consciously getting into the business of nonprofit capacity building. One influential article recently argued that if foundations want their grantees to thrive beyond the nonprofit starvation cycle, they must “take the lead” in investing in their grantees’ marketing, fundraising, management, IT, and other nuts-and-bolts operations.

My consulting firm has partnered with foundations on capacity-building projects across the country, and especially in California. Among the regions where we operate, the Bay Area tends to hold the reputation for innovation: it is home to huge, thought-leading institutions such as Hewlett, Packard, Silicon Valley Community Foundation, and high-profile newcomers like Skoll and Tipping Point. But if I had to pick the region that most impresses me with new advances in the field, I would choose its less sexy (philanthropically speaking) and financially weaker cousin, Los Angeles.

The reason for Los Angeles’s quiet but notable pace of innovation? One word: collaboration. When it comes to how foundations work together to build capacity in their grantees, the region is breaking new ground. Here are three examples.

Constructing a marketplace for capacity-building services

In 2010, the Weingart Foundation (one of the largest foundations in the region) commissioned a landmark study on the issue of capacity building for local nonprofits. Among its many findings, the report documented how nonprofit leaders simply didn’t know how to locate valued service providers—and neither did anyone else.  As a result of the findings, 10 foundations each pooled $10,000 to develop an online marketplace where service providers and nonprofits can match up. The project is currently underway.

Getting a planned giving department ready to go

According to the California Community Foundation, Los Angeles (like many metropolitan areas) will undergo a massive intergenerational transfer of wealth in the next decade. Planned giving programs—where donors designate funds for particular nonprofits upon their death—are an important way that nonprofits can connect to families undergoing that transfer, but they require that a certain financial and legal infrastructure is in place. The Community Foundation’s Executive Vice President John Kobara offered his institution’s resources to set up these planned giving programs for its grantees at essentially no cost. Nonprofits unfortunately are slow to recognize the value of this offer, but the experiment represents a very strategic expression of a key concept: a foundation recognizing that it can multiply its grantees resources by helping them draw in new donors.

Growing the board development pie

Another expression of collaboration is in the Los Angeles foundation world’s emerging involvement in nonprofit board development. In recent years, large corporations have been leaving Los Angeles, taking with them a large number of business executives who served as “rain-making” board members, raising large sums for local nonprofits. The Annenberg Foundation recognized this critical deficit and embarked on a multi-year journey of experimentation and innovation. The result is Annenberg Alchemy, a series of training programs in board recruitment and fundraising that executive directors and board members attend together. Especially fascinating to me is the program’s reward system: graduating organizations receive $10,000 each—sums donated by 18 different foundations. In essence, the donating foundations collaborate to incentivize nonprofits to widen their donor bases beyond institutional grants. Annenberg Los Angeles’s Director of Operations Sylia Obagi believes this encouragement is one of the most helpful roles that her foundation can play. In the Alchemy program, these same 18 foundations also meet regularly to share best practices in capacity building.

Why is this happening in Los Angeles?

There are other interesting initiatives too, such as the effort of the Conrad N. Hilton foundation and partner funders to build a shared marketing capacity of Catholic schools. Taken as a whole, these initiatives demonstrate an unmatched depth and variety of philanthropic collaboration around capacity building in the region. I am not aware of any other region that is currently home to not just one, but two collaborations where double digit numbers of foundations are each pooling $10,000 into a common capacity-building project.

Three main factors are feeding into in this emergence:

Factor #1: A Crisis

“As foundations, we traditionally preach collaboration to our grantees,” said Wendy Chang, program director of the city’s Dwight Stuart Youth Fund, “but we’re the worst offenders.” Collaboration requires compromising one’s own ways, and foundations can easily get entrenched in their ways, with little external pressure to change.”

But there’s nothing like a crisis to throw people together and force change. The financial meltdown of 2008 rocked the foundation world generally by wiping out large chunks of endowments. But the scale of the crisis was and is especially overwhelming in Los Angeles due to a combination of California’s government deficit, the sheer number and diversity of vulnerable populations in the city, and the city’s unrivaled geographic sprawl. Nike Irvin, vice president of the California Community Foundation, believes that the combination “makes it difficult to hold to any illusion that one foundation can go it alone and make a dent in the crisis.”

The crisis also underscored the need for capacity building. Wendy Garen, president and CEO of the Ralph M. Parsons Foundation said that Los Angeles foundations didn’t talk that much about capacity building ten years ago. But when they lost 30 percent of their own assets—as her foundation did—while witnessing an unprecedented level of financial fragility in their grantees, she said, “Everyone starts to recognize how much they have to work together.”

Factor #2: Trust

Collaboration requires personal trust between leaders. And trust happens only when there is a context for building new relationships. I am struck by the number of formal and informal gatherings in the sector, and by how consciously people have pursued them. For instance, the collaboration to build a marketplace for capacity-building services can trace its roots to the Nonprofit Capacity Building Roundtable (funded by the Annenberg Foundation and facilitated by the USC Center on Philanthropy and Public Policy). The roundtable did not formally accomplish anything, but several participants I interviewed felt that the relationships fostered there were absolutely essential to the eventual initiative. Other convening bodies such as Southern California Grantmakers also contribute to the density of relationships in the region.

Factor #3: Peer leadership

A successful collaboration requires someone to step forward—but not too far forward. It needs someone to own the effort—but not exclusively. It takes someone who’s willing to take the risk—but who won’t give themselves full credit. Belen Vargas, vice president at The Weingart Foundation, described to me how carefully and intentionally her foundation—led especially by foundation President Fred Ali—tuned into the responses of peer foundations.

To execute this kind of subtle balancing act, peer leaders have to share a similar enough cultural background that they can read cues, anticipate feelings, and cultivate cooperative behavior. Trent Stamp, executive director of The Eisner Foundation, believes that the smallness of the Los Angeles foundation world is an advantage in building a sense of collegiality.

What is also striking about this small world is how many of the individuals crossed over from “the other side” of the grantor-grantee relationship. In other parts of the country where philanthropy has deeper tradition (such as the East Coast and even the Bay Area), foundation executives tend to have worked only at foundations. Los Angeles hasn’t had time to develop such a tradition; many foundation executives have worked as leaders of local nonprofits.  This crossover seems to lead to stronger peer relationships. When interviewed, several foundation executives described their relationship with their peers with phrases such as “He and I both came from the trenches.”

What about your region?

• What is the big crisis that could potentially compel people to work together?
• How can you invest in the necessary groundwork of personal trust between the key parties?
• Who can act as the peer leaders in the collaboration?

Read more stories by Curtis Chang.