Something Ventured, Something Gained

September 20, 2013

Sixteen years ago, William P. Ryan, a philanthropy scholar and consultant, wrote an epochally influential article in the Harvard Business Review, with co-authors Christine W. Letts and Alan Grossman, called “Virtuous Capital: What Foundations Can Learn from Venture Capitalists.” One early and enthusiastic reader of that article was Michael Bailin, then president of the Edna McConnell Clark Foundation. He conferred with Bill Ryan and invited Chris Letts to speak to the Foundation Trustees, and within a couple of years, EMCF was putting many of the article’s tenets into dramatic effect.

 

Plenty of foundations talk about the venture capital model, but very few have truly adopted it. (In the meantime, sadly, the phrase “venture philanthropy” has become an industry cliché, honored more by ponderous utterances than actual practice. But don’t blame the authors: They never used that phrase.) Edna McConnell Clark did adopt the model, however, and eventually converted its entire grant portfolio to the venture capital approach — while scrupulously never referring to it as “venture philanthropy.”

 

The foundation concentrated its work on just one field, youth development. It chose that field because Mike Bailin and the Trustees believed it had many successful models that needed only to be tested and proven, and then could be expanded to serve many times more kids. A year or two later, Mike spoke about the foundation’s transformation at a session of the Foundation Impact Research Group here at the Sanford School.

 

In the ensuing years, Bill Ryan, with his colleague Barbara E. Taylor, has been documenting the effects of that transformation. Under a contract with EMCF, they interviewed grantees and monitored the foundation’s performance data, and now after ten years, the results are in (pdf). Among other things, EMCF grantees have increased the number of kids they serve by an average of 19 percent a year. Their revenues have shot up 23 percent a year, on average, while expenses have increased just 17 percent a year, suggesting a marked increase in productivity. The quality of these services, meanwhile, has increasingly been proven — largely because Edna McConnell Clark has invested in sophisticated evaluations for many of the organizations it supports.

 

The report details how the foundation achieved these results, under its current president, Nancy Roob, and what it and its grantees have learned along the way. One thing it doesn’t examine is whether any of the services EMCF supported became more effective than they were before. That’s understandable: tinkering with the grantees’ models was not the foundation’s purpose. Still, it would be interesting to know if the venture model had effects on quality as well as on performance-tracking, evaluation, and scale.

 

Maybe for the next report. For now, this is a genuinely important story, engagingly told by someone who was there from the beginning.

 

(Find the report, “The Edna McConnell Clark Foundation’s Youth Development Fund: Results and Lessons from the First Ten Years,” at http://www.emcf.org/fileadmin/media/PDFs/EMCF_ResultsandLessonsReport_20...)

 

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