Funder Collaboratives: Avoiding the Potential Pitfalls of Partnerships
Our board has recently been asked by a local group of funders to join a funder collaborative designed to help revitalize a troubled neighborhood in our community. What advice do you have for how to respond to this invitation? What are the advantages of funder collaborations, and what red flags should we be aware of? And how difficult is it typically to exit a collaboration of this kind, if needed?
[Editor’s Note: This month’s edition of “Ask the Center” features the perspectives and advice of Richard Marker. Richard is Co-Principal of Wise Philanthropy™ and founder of the NYU Academy for Grantmaking and Funder Education.]
There are many reasons that family funders enter into funder collaboratives and partnerships, including leveraging dollars, accessing and sharing expertise, community leadership, and peer engagement. Typical reasons that families may find partnerships of this kind difficult are that a successful collaborative requires setting aside individual grantmaking processes, sharing decisions with those who may have different styles and inclinations, and may also require the long term commitment of a fixed dollar amount.
As a family funder, former foundation CEO, foundation trustee, and advisor to funders, I have been directly involved in many funding partnerships and collaboratives over the last 20+ years. There are funders for whom these collaborations are among the highlights of their philanthropic experience; others walk away swearing that they will never enter into a partnership of this kind again.
The story of a national collaborative project of 12 family funders seeking to identify new approaches for recruiting and training high-quality teachers illustrates both the potential successes and pitfalls of these partnerships. The project itself has been described in journals, and were that the only part, I would gladly share the name of the lead, quite prominent, family who are legitimately proud of their role. But, as you will see below, that would be less fair to others.
A family with deep philanthropic roots became quite involved in a new private school. In attending a national education conference, they became aware of the need for recruiting and retaining good quality educators, especially among those for whom a commitment to education is not yet certain. While they respected existing programs, such as Teach for America, they wanted to recruit and train those with a longer-term outlook.
The family developed a cutting edge educational program and invited fellow funders to join them. Within a few months 11 other funders – some of whom had foundations, others that were families without a formal giving structure – joined in and, within a year, the project was up and running. This early and significant success at partnership was due largely to the innovative nature of the project, but also to the charismatic character of the lead partner. Contracts were signed with two universities, one on the East Coast and one on the West Coast, to implement the program. It was an immediate success and for the first 2 1/2 years the lead funder [note that while all of the partners put in the same dollar amount, the original convener was fully recognized as the lead funder] and all of the others were more than pleased and satisfied that they were involved in something good and real.
A key problem arose on the occasion of the graduation of the first cohort – 2 ½ years after the inception of the idea. After the graduation ceremony, a very moving event, the lead funder and I met for dinner and, much to my surprise, she was somewhat down. Why? Because she explained, as proud as she continued to be of the project, she didn’t anticipate having to have such a significant ongoing role for this long. [Did I mention that they were venture capitalists?]
The short story part of this is that a “decision” was made that evening to develop an exit strategy by “selling” the project to another institution or organization. And sure enough, by the next morning, the lead funder sent an email to the other 11 partners announcing that that is what was going to happen.
Most of the partners agreed that this was an elegant solution to what do with a successful start-up – but this announcement really bothered one of the partners. This family had only just established its foundation, and this partnership was its first foray into any collaboration, to say nothing of a national one with a group of very prominent national funders. Emotionally, for many reasons, this project mattered to them. And thus they resented receiving an email announcing the destiny of a project in which they thought they were equals. They might or might not have been persuaded that this exit strategy was the right one but they deeply resented the process – or absence thereof. So, after fulfilling their initial three-year commitment, they withdrew. And, since this family continues to be personal friends, I can attest that they have chosen to enter no other national partnership.
The Story Continues
Miraculously, the two universities chose to “buy” the project. The agreement between the universities and the remaining 11 funders was to provide three years of transition funding, conditional upon the universities’ guarantee to sustain the program for at least an additional three years thereafter. [Full disclosure: By that time, the foundation I was heading no longer was in existence but its principal had maintained the commitment to this project. Independently, the partners asked me to chair the board during its last three years and to oversee the transition.]
The story could end here as a model of how one creates, sustains, and exits from a high impact and well funded collaborative. But that would be omitting one internal challenge during the concluding three years.
One of the partner family foundations had elected a new chair who had not been a part of the original agreement of process and procedure. And this person wanted their family to establish more accountability and rigor to their systems applicable to all of their grantees. Thus, they imposed a series of proposal preparation, timelines, and reporting which were inconsistent with those to which all the other partners had agreed. The two universities were in a quandary since they had been told that there would be a single reporting, review, and accounting method for all through the partnership, and they were now being bombarded with new requests which were inconsistent with the agreement. It fell to me, as chair, to meet with this partner funder to help them accept that they were a part of a prior agreement. They acceded, but unhappily. And while I do not believe that this partnership was the cause, this foundation, as the one mentioned above, has gradually extricated itself from a whole series of collaborations that their own administration had agreed to only a few years earlier.
Lessons: A Look in the Mirror
The overall story of this project is one of great success. It has been written about as a model of impactful venture philanthropy, of the effective use of a partnership, and of creative development of an exit strategy. And I am pleased to say that this project, only last year, received a $10m endowment from a new foundation which was not even one of the original partners.
But the story was less satisfactory for at least two of the original partner families – each of whom ended up resenting a process they could not control or procedures at odds with ones they wished to implement.
Partnerships and collaborations can accomplish wonderful philanthropy, achieve goals which individual families could never do alone, and bring great gratification to all involved. But it is also clear that not every family is temperamentally or ideologically suited to participate. Before entering into one, it is worth a good look in the mirror.
For those who are interested, a PowerPoint check list which can help make this decision is available upon request to email@example.com. See also our list of additional reading on collaborative grantmaking and nonprofit mergers.