New Report Details the Pros and Cons of Hands-On Philanthropy

A new report seeks to shed light on the successes and failures of a recent trend in grant making, often referred to as venture or high-engagement philanthropy, which emphasizes long-term grants that help nonprofit organizations strengthen their management as well as rigorous assessments of a project’s results. Grant makers who use that approach often want to give plenty of advice about a charity’s operations, in addition to money.

The report, produced by Venture Philanthropy Partners, an organization that supports groups in the Washington metropolitan area, and Community Wealth Ventures, a consulting group in Washington, consists of six long conversations between such grant makers and the nonprofit organizations they support.

Charity officials say their relationships with the hands-on grant makers have been successful, but they also raise several concerns. Meanwhile, some of the grant makers concede they’ve made missteps in the way they have approached charities, and say that they have gained greater respect for the give-and-take of the donor-grantee relationship.

One big concern for charities is whether they can remain autonomous when a donor comes in with a generous grant and lots of advice. That question weighed on the mind of Geoffrey Canada, president of Harlem Children’s Zone, when it received a large, multiple-year grant in 2001 from the Edna McConnell Clark Foundation.

In a moderated conversation with top officials from the Clark Foundation, a transcript of which appears in the report, Mr. Canada acknowledged a fear, not uncommon among charities, that the “foundation will play the bully.” The Clark Foundation brought in several consultants to work with Harlem Children’s Zone during the first few years of the grant. Mr. Canada generally found them to be unhelpful, and when he relayed that information to Clark officials, he worried about how the foundation would respond.

“My question was always whether we could have tough conversations where we would say, ‘No, I’m not doing that,’ and still have an engaged, respectful relationship with folks feeling good about where the organization is heading,” Mr. Canada said. “The answer here was yes, over and over again.”

The report also makes clear that it takes more than just a storied business career (many venture philanthropists are also successful entrepreneurs) to earn the right to meddle in a charity’s business — it also takes some serious cash.

In one conversation, Vincent Pan, the former executive director of Heads Up, a charity in Washington that provides tutors and mentors to students from needy families, recalled how the charity halted negotiations for a grant from Venture Philanthropy Partners until the grant maker gave some sense of how much money it was prepared to commit. Venture Philanthropy Partners’ standard procedure is to develop a plan with a potential grantee before announcing the size of its gift.

“We couldn’t afford to chase a mirage because there was so much to do to keep things running” at the charity, Mr. Pan said.

Mario Morino, the chairman of Venture Philanthropy Partners, conceded that the grant maker’s initial approach backfired (though the two groups eventually worked out a deal). “We came on too strong,” said Mr. Morino, also a special partner with the private-equity firm General Atlantic Partners. “We compounded this by trying to use a formal, very detailed agreement that was filled with legalese. This only fueled the lack of trust between us.”

In a separate conversation, Michael Park, director of management assistance at the Robin Hood Foundation, in New York, suggested that hands-on grant making should be used only by foundations that are prepared to make very large gifts.

“Some of the work in the field of engaged philanthropy has been about more and more time spent on not a lot more money,” Mr. Park said. “The worst outcome for a nonprofit could be if many other funders who were accustomed to giving grants in the low five-figure range started to try and become more engaged. That’s just multiplying headaches, and it doesn’t provide resources.”

Focus on Results

High-engagement grant makers like charities to set goals that can be measured statistically, which isn’t always easy for social-services organizations.

In one conversation, officials at the Robin Hood Foundation talked about how they helped HOPE, a Brooklyn charity, sharpen its focus on raising the job-placement rate for people who complete the program.

Barbara Edwards Delsman, executive director of HOPE, said she’s grateful to Robin Hood for helping the charity narrow its focus, but she noted that some tension remains over the emphasis on job-placement rates. “For example, we might be working with a woman who comes to us with no teeth, who’s living in a shelter, and who does not have custody of her child,” Ms. Delsman said. “If, at the end of our training, she has teeth, has an apartment, and has custody of her child, then we believe she has made significant progress” — even if she hasn’t found a job.

Racial Divides

The conversation that includes Harlem Children’s Zone gets at a very real — but often unspoken — challenge for grant makers: race. It’s often white people coming in with the advice, and minority charity workers on the receiving end.

The Clark Foundation’s funds allowed Harlem Children’s Zone to hire new executives to oversee evaluation and communications — which angered some members of the existing staff. “People ask now why Geoff suddenly wants to be surrounded by a lot of white folks who have graduate degrees, and are we still a black agency?” Mr. Canada said. “We are always looking at the balance. But people wonder if your heart and soul are in the same playing field.”

Free copies of the report, “High-Engagement Philanthropy: A Bridge to a More Effective Social Sector,” are available at http://www.vppartners.org.