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Foundations sharpen focus, collaborate to increase impact


1/30/2018

This article by Lisa Bertagnoli originally appeared on Crain's Chicago Business on January 26, 2018.

For the last four decades, Chicago-based Terra Foundation has quietly gone about its business of supporting American art locally and globally. This year, it's making a bigger splash.

Terra is spending $6.5 million on Art Design Chicago, a yearlong celebration of American art and design taking place at 60 cultural organizations around the city. Art Design Chicago took five years to pull together and has a total cost of about $8 million. It has connected Terra with about 15 new organizations, among them the South Side Community Art Center, which received a $50,000 grant from Terra for "Change the Canvas, Change the World: A Landscape of Cultural Discovery," opening at the Bronzeville center Nov. 3. Masequa Myers, executive director, calls the grant "big money" for the center and adds that the collaboration with Terra carries considerable marketing potential. "It really raises the bar for us," she says.

"It is a new way of working," Terra CEO Elizabeth Glassman says of Art Design Chicago. "We decided we could make more of an impact if we did something to aggregate this energy."

Traditionally behind-the-scenes entities with a whiff of ivory-tower remove, foundations are stepping out. They're sharpening their focus, dedicating their considerable resources—the country's 86,000 foundations boasted collective assets of $865 billion at the end of 2014—to bigger projects and collaborating more.

Foundations "want to go deeper instead of more broad," says Julia McGuire, executive vice president at Campbell & Co., a Chicago-based consultant to nonprofits. "They're redefining themselves to really try to make systemic change."

"It's not enough for foundations to be merely grant-makers," says Daniel Ash, chief marketing officer at the Chicago Community Trust, which, with its donor-advised funds, granted $236.5 million in fiscal 2016 and ended that year with $2.5 billion in assets. "We have to address the needs that make philanthropy necessary in the first place."

One example: MacArthur Foundation's 100&Change competition, which grants $100 million to a project it deems has a strong solution to one of the world's critical problems. On Dec. 20, MacArthur awarded the first 100&Change grant to Sesame Workshop and International Rescue Committee, a global humanitarian aid organization that helps 26 million people a year. It also awarded $15 million to each of the competition's three runners-up.

"What you're seeing is a sense on the part of philanthropists the need to really focus on impact," says Julia Stasch, president of Chicago-based MacArthur Foundation, which has assets of $6.2 billion and in 2016 awarded $273.5 million in grants and impact investments. "There's something about the convergence of the size, the complexity, the urgency of problems that our cities and people and the country face that is making philanthropy say, 'This is not the time to be timid, this is not the time to feel your way,' " Stasch says.

Foundations without billions of dollars in assets find that working together can create a stronger impact. It's not easy, due to differences in grant cycles and approaches to funding, but it's necessary, says Gillian Darlow, CEO of Chicago-based Polk Bros. Foundation, which has assets of about $435 million and granted $27.7 million in fiscal 2017. "People feel a sense of urgency around a lot of issues," Darlow says. "This is absolutely about the urgency, the sense that we needed to find a way to work together."

Polk Bros. Foundation is involved in 20 collaborations with other foundations. Examples include the Partnership for Safe & Peaceful Communities, a group of 30-plus funders that has pledged $40 million to support a variety of violence intervention programs, and the Chicagoland Workforce Funder Alliance, which supports nonprofits that engage in workforce development.

The Illinois Manufacturing Excellence Center, a Peoria-based workforce and economic development nonprofit, has received $1.2 million in funding over four years from the Chicagoland Workforce Funder Alliance. "They have done a phenomenal job of simplifying the grant process," says David Boulay, IMEC president, noting that the center's annual budget is about $10 million. The center has also benefited from the expertise and guidance of funders participating in the alliance. "It becomes extremely powerful," he says.

Joyce Foundation in Chicago has traditionally concentrated on employment, education and the environment in the six Great Lakes states. Now it has honed the focus to increasing racial equity and economic mobility among young people of color.

One example is water, a longtime interest of the foundation. Future funding will focus on policies that ensure access to clean, affordable drinking water, in addition to environmental concerns. The foundation is also devoting $14 million to a new education and economic mobility program to help people ages 5 to 24 move up the economic ladder. As new programs emerge, Joyce is trimming some areas, for instance phasing out about $1.1 million in funding of early childhood education research.

The sharper focus comes after Joyce research showed that children of color will lead Great Lakes states' population increases in the coming years. "If you want to bend the curve on that and figure out the things we can do now to have a positive impact over the next 20 years, it's focusing on young people," says Joyce CEO Ellen Alberding. The foundation closed 2016 with assets of $934 million and made grants of $34 million that year. It funds basic research, advocacy and similar initiatives, but not direct services.

Alberding calls the shift a "20 to 30 percent" departure from business as usual and says her desire to be disciplined about Joyce's work sparked the change. "Discipline in philanthropy is entirely self-imposed," she says, explaining that aside from IRS rules about how much foundations must grant, the foundation world is unregulated. "It's too easy to drift," she says. "You have to have internal discipline to make the best use of resources you have available."