Foundation Hopes to Make a Bigger Contribution by Narrowing Its Focus

The Northwest Area Foundation has scuttled its longstanding grant-making programs to devote most of its resources to comprehensive long-term efforts to improve a few poor communities.

“We are getting out of the project-by-project, grant-request-by-grant-request business,” says Karl N. Stauber, the fund’s president. Instead, the foundation plans to spend $180-million in the next decade “to work in communities with the greatest need and the greatest opportunity.”

The overall amount it anticipates spending on charitable activities during that period — around $200-million — is the same as what it would have paid in grants under previous guidelines.

But the foundation will no longer limit its role to making grants to non-profit organizations. It expects to work closely with — and perhaps make grants to — businesses, churches, government agencies, and informal citizens groups, and to play a more activist role in holding conferences, co-sponsoring activities, and even operating some programs itself.

Such a fundamental shift in approach is necessary, the foundation believes, because the traditional role many philanthropies have played is decreasingly effective in tackling contemporary economic, social, and environmental problems, which tend to be complex and intertwined.

The foundation, based in St. Paul, makes grants in eight states stretching from Iowa and Minnesota to Oregon and Washington. Since its founding in 1934, it has spent $263-million to support programs in such fields as economic development, low-cost housing, environmental conservation, health care, and the arts. It is among the 100 wealthiest foundations in the United States, according to the Foundation Center.

The change follows a year-long review conducted by the board and by Mr. Stauber, the foundation’s former vice-president, who returned last year as president after a three-year stint as an Under Secretary of Agriculture in the Clinton Administration. The foundation, which suspended its consideration of grant applications during that review, plans to resume accepting them after it has prepared its new guidelines — probably by next spring. The new strategy is intended to guide its operations for the next 25 years.

That new strategy reflects Mr. Stauber’s belief that philanthropy must rethink its role in an era when the state and federal governments are cutting back on existing programs rather than adopting new ones pioneered by non-profit organizations.

“In the past, like a lot of other progressive foundations, the Northwest Area Foundation primarily focused its activity on making grants to benefit disadvantaged communities through trying to get federal and state government to change their policies” or to adopt innovative projects started by non-profit groups, he says.

But with government increasingly unable or unwilling to tackle difficult social problems, and with poverty and other social ills growing among millions of people in inner cities and isolated rural areas whom the booming economy has left behind, the foundation decided that new approaches were needed.

After consulting with scores of grantees, grant makers, and other people, the foundation’s board “came to the conclusion that we could have the greatest potential impact by focusing quite narrowly on a small number of communities,” says Mr. Stauber. By focusing its attention over long periods on the problems of a handful of communities, the foundation expects to make a significant contribution to bettering people’s lives.

Mr. Stauber says that many of the people he spoke with in the past year expressed growing skepticism about society’s ability to solve its problems. “There’s a lot of evidence that people are losing hope,” he says.

The foundation defines community quite broadly to include geographic or political areas (a town, county, or watershed, for example) as well as “communities of interest” whose members might come from a wide geographic area, such as American Indians or migrant farm workers.

Its new approach has three major elements:

* The foundation plans to work intensively with about 10 communities for at least 10 years. The communities, in consultation with the foundation, will determine their priorities for improving their economic, social, and environmental health. The foundation expects to select the communities over the next five years, and to spend $125-million on those projects during the next decade.

* The foundation will also support an array of two- to five-year programs and services to help a wider range of communities, for which it plans to spend about $25-million over 10 years.

* In rural areas, where population and jobs have been dwindling for decades, the foundation plans to spend some $25-million over 10 years helping selected communities develop and retain teams of leaders committed to reversing those declines. The foundation says it is likely to operate that program itself, starting in 2001.

While the foundation expects to continue to collaborate with some of the non-profit organizations it has previously supported, it predicts that other grantees will no longer meet its new guidelines.

As a result, the foundation has been making multi-year “termination grants” to many of those grantees to give them a chance to develop other sources of support.

About 10 per cent of the foundation’s grant money will be reserved for compelling programs that fall outside the new mission’s criteria. “There always will be some ideas that come in the door that are not related to our strategic mission,” Mr. Stauber notes.

Many of the details are still being worked out, as the foundation solicits suggestions. But some grant recipients are hopeful that the new effort will succeed.

“I believe it could be wonderful,” says Kay Gudmestad, president of WomenVenture, a St. Paul organization that helps women find jobs and start businesses. “There need to be concentrated efforts to really make a difference — and it has to be over the long term.”

Previous efforts to fight poverty, create jobs, and protect the environment have often been piecemeal and contradictory, observes Chuck Hassebrook, who directs the Center for Rural Affairs in Walthill, Neb., which has also received the foundation’s support. “You end up with a whole that is less than the sum of its parts,” he says. “It’s good to see the Northwest Area Foundation trying to craft cohesive strategies to deal with those fundamental issues.”

Ms. Gudmestad acknowledges that she fears losing the foundation’s support, which amounts to 13 per cent of her group’s revenue from corporate and foundation grants — which in turn form nearly half of its $1.72-million budget.

But Mr. Hassebrook is philosophical about the prospect of losing a supporter. “I always assume that every funder we have we’re going to lose someday,” he says. “Preparing for the day when a funder leaves has got to be part of your organizational strategy.”

Making a 10- to 25-year commitment to a community is very liberating, Mr. Stauber says, because it allows the foundation to focus on results over the long term rather than fixate on the success of any particular grant or project. The foundation will have a chance to make mistakes, learn from them, and modify its actions accordingly.

Too few private foundations take full advantage of their privileged circumstance, says Mr. Stauber, free as they are from the burden of having to sell a product, raise money, or run for re-election.

“We have freedom to take on the tough issues and to stay for the long term,” he says. “We haven’t done that. Now we’re going to try.”

Marina Dundjerski contributed to this article.