January 10, 2008 | Read Time: 4 minutes
A foundation known for encouraging its most-successful grantees to think bigger is now helping those organizations raise “growth capital” from other foundations so that the charities can carry out aggressive expansion plans.
The Edna McConnell Clark Foundation, which focuses on charities that serve youths, has committed $39-million of its own money to a new fund it has set up that will help three charities expand rapidly.
Other foundations and individuals have already contributed an additional $49-million to the fund, including multimillion-dollar grants from Atlantic Philanthropies, the Bill & Melinda Gates Foundation, and the Robert Wood Johnson Foundation. Together, the $88-million puts the Clark foundation on track to meet its goal of raising $120-million for the three charities by June 2008.
The Clark foundation, which is calling the fund a pilot, will provide regular updates to its “co-investors” about how the charities are doing, and post publicly available updates about the charities’ performance on its Web site.
“This is a test to see whether capital can be aggregated in a more productive way to really help our organizations,” says Nancy Roob, the Clark foundation’s president.
Collaborative Effort
The new fund is among the biggest attempts ever at collaborative grant-making, although such ideas have been gaining steam for more than a decade.
In the 1990s, “venture philanthropy” funds like New Profit began pooling money from individuals to support fast-growing charities. In the past year or so, nonprofit groups like SeaChange Capital Partners and NFF Capital Partners (a division of the Nonprofit Finance Fund), both headed by former corporate executives, have started helping charities raise money for growth the way for-profit companies do, through “rounds of financing” in which donors agree to support sophisticated growth plans.
The three charities that will receive support through the new Clark fund are Nurse Family Partnership, based in Denver, which sends nurses to make home visits to low-income, first-time mothers; Youth Villages, based in Memphis, which works with troubled youths and their families; and Citizen Schools, based in Boston, a provider of after-school programs.
Each has already received millions of dollars from Clark for the past three years or longer. Ms. Roob says Clark chose the three charities for participation in the fund because they have all undergone independent studies that prove their programs work.
Nurse Family Partnership, which has three decades of independent data showing that its program works, has drawn the greatest interest so far. The charity has raised $43-million of the $50-million goal that it jointly set with the Clark foundation.
The Clark foundation will give $12-million, and the Gates and Robert Wood Johnson foundations will each contribute $10-million.
It is rare for a foundation to invest through another foundation, in part because the grant maker organizing the effort is the one most likely to win praise if the charities successfully carry out their growth plans.
Allan C. Golston, president of the Gates foundation’s U.S. program, says Nurse Family Partnership had already been on the grant maker’s radar screen. It now can put trust in Clark to keep tabs on the charity. “There’s no way one institution can solve the inequities in this country alone,” Mr. Golston says. “Partnering with government, other nonprofits, and other foundations is essential for achieving long-term sustainable impact. Getting credit isn’t a goal for us — it’s impact.”
Over the next decade, Nurse Family Partnership plans to expand the number of its sites tenfold, from 96 to 950, while increasing the number of families it serves from 13,000 to 100,000.
Avoiding Foster Care
Youth Villages, which believes too many children are placed in foster care, and operates programs to help children stay with their birth families, may be the least known of the three charities that will benefit from the fund.
Clark awarded Youth Villages a $250,000 business-planning grant three years ago. Since then. Clark has committed a total of $21-million to the charity, including $15-million through the new fund, more than a third of the $40-million Youth Villages is raising to support its growth plan. The Day Foundation, in Memphis, has contributed $2.5-million, but the charity still needs to raise another $20-million to meet its goal.
Part of the appeal of the new fund is the prospect that a generous grant will eventually lead governments to put more dollars into the programs foundations say are effective. Nurse Family Partnership, for example, hopes to receive $1.9-billion in government support over its 10-year growth plan.
Clark is asking board members at the charities it supports to give more. At Citizen Schools, for example, three trustees have given a total of $5-million toward the $30-million the charity is seeking to raise for a six-year growth plan. Previously, the biggest gift from a trustee had been $100,000, according to Eric Schwarz, the charity’s president.
“There was a healthy conversation between our board and Clark,” which will give Citizen Schools $12-million through the new fund, Mr. Schwarz says. “The board asked Clark to step up and Clark asked the board to step up, and both have done so tremendously.”
