Funders in two Working Groups at the Exchange engage collaboratively in the activities of building a new Scaling Marketplace that enables growth funding to flow more efficiently to high-impact nonprofits. As part of its work, each group identifies evidence-based nonprofits they feel should move to the next level of scale, and provides a portion of growth funding needed for each investment (“lead funding”) before distributing the opportunities to broader networks of potential funders who complete the amount needed. Cynthia Massarsky spoke with Education Working Group member Jennifer Hoos Rothberg (Einhorn Family Charitable Trust) and Health Working Group member Christopher Langston (The John A. Hartford Foundation) about their experiences in working with the collaboratives and their thoughts on the new Scaling Marketplace.
Jenn and Chris, both of you have been involved in the Social Impact Exchange’s Working Groups from the beginning. What distinguishes this funder collaborative from others you know about or have participated in?
Rothberg: We have a shared purpose in coming together – to look at outstanding organizations with the ability to scale and take them out to market, so that not only those at the table but others too can invest and know what they will get from their investments. Helping an organization to scale is costly – we can’t provide all the support needed on our own. This collaboration gives us great partners and the ability to leverage all our resources to get exponential results.
Langston: There are two things here – first is the ability of the participants to bring opportunities to the group, as opposed to groups that come into being to advance one specific thing. And second is the quality of due diligence that the Exchange provides. Exchange staff review each organization’s plan, financial model, evidence of impact, and more. Even though we could do that same level of work at the foundation, it is a great benefit to have that analysis done across an array of opportunities. It’s really a significant difference in distinguishing this collaborative.
Would you tell us more about what are or have been the specific benefits of this funder collaborative to you and your foundation? What do you expect going forward?
Rothberg: It’s very exciting to get together, either in person or on conference calls, to have conversations about what we’re looking for and what we’re seeing out there. These conversations often take our own thinking to the next level. The collaboration helps us learn from others and build relationships with colleagues in our field. It also allows us to fuel our pipeline of opportunities with organizations in which we can have great confidence as a result of what other funders have to say and the due diligence that’s been done on them. Perhaps most important, we are able to sit at the table with more traditional funders and have deep conversations about our findings and theories of change in education, which normally wouldn’t happen otherwise. And as a result, we’ve already seen our Working Group colleagues receptive to the idea that they can still meet their priorities and get the outcomes they seek by considering less traditional strategies as part of overall education reform.
Langston: Yes, this is the case for our foundation as well. We’ve had the opportunity to bring forward a number of projects that our foundation has been engaged with and are really pleased with the reception from other members of the Working Group. We also appreciate the ability to get involved with nonprofits we weren’t aware of. The other really important aspect for us is the process we go through as a group in selecting nonprofits to take out to the marketplace. We set for ourselves the ground rules of due diligence, for example, and the number of funders and dollar amount required to support a scaling initiative that we’re taking out to market. So we have a self-governance structure that has no ambiguities.
The new Scaling Marketplace is a structure and system for aggregating capital from dozens of funders to finance the scale of highly effective nonprofits. Based on your experience as a grantmaker, how does this benefit nonprofits?
Rothberg: Our nonprofit partners have proven their effectiveness and they have solid plans for growth. Now they need the resources to do their work better. It is imperative as investors that we serve as their champions and showcase them as great funding opportunities by taking their work to market. Fundraising is challenging and resource intensive for nonprofits so it makes a huge difference for them to have funder partners that share their work with funder colleagues. That is what true collaboration looks like. It is also particularly challenging to fundraise for growth capital, which demands significant general operating dollars for capacity building and initiatives that can be seen as higher risk. Bringing their growth plans to funders that have already expressed a willingness to make these major investments is a huge benefit to nonprofit partners.
Langston: Yes, the fundamental observation shared by a lot of people is that bringing programs to everyone who can benefit from them requires much greater access to financial capital than is normally available to these nonprofits. We are talking about hundreds of thousands, if not millions, of people who need to be better served. Only through a system like the Scaling Marketplace can we have any hope of scaling up programs that have the ability to meet the needs of people who could benefit.
And for funders, what is unique and valuable about the Scaling Marketplace? Why is it important for funders and the sector?
Rothberg: We are hearing a lot about return on investment – about ensuring that you make high-impact investments that really move the needle on solving our toughest social problems. With the due diligence provided through the Scaling Marketplace, funders can really count on the amount of back-end work that’s taken place at the Social Impact Exchange, know their dollars will make a difference, and that they’re true partners in achieving impact. And it’s not only the institutional funder that can benefit from the Scaling Marketplace. There are individual donors that don’t operate through a foundation but want to make strategic investments with their philanthropy too. The Scaling Marketplace becomes a resource for those seeking great philanthropic investments – which means it’s a resource for funders of all kinds.
Langston: What’s unique and valuable about this effort is that it forces the question of what we’re really trying to do. As a funder, do you want to ‘buy’ things that are just yours or buy impact on important social problems – which will require collaborative funding and a focus on contribution rather than attribution? If you think about other marketplaces that exist for things like commodities and consumer services, as a buyer you are looking for product or service quality, as well as other aspects like relationships. You’re not looking to enhance your reputation, for example, based on the type of flour you buy. You want the best flour that will help you bake the best bread. So the Scaling Marketplace strips away some of the pretense that blinds us from what will have the most impact, because the opportunities have been proven to work and we can be confident in our involvement.
If you are a funder interested in joining the Health or Education Working Group, please contact Monica Ward at firstname.lastname@example.org. Sign up to become a member of the Scaling Marketplace at www.scalingmarketplace.org.