July 26, 2011

How Funders Can Support the Leap of Reason

Bridgespan Manager Matt Forti invites Leap of Reason: Managing to Outcomes in an Era of Scarcity author Mario Morino to the "Measuring to Improve" blog, where he shares his thoughts on the important topic of how funders and grantees can work together as the latter pursue "measuring to improve," or as Mario calls it, "managing to outcomes."

By: Matthew Forti

This week Matt Forti is excited to welcome Mario Morino, chairman of Venture Philanthropy Partners and author of the recently published Leap of Reason: Managing to Outcomes in an Era of Scarcity to the "Measuring to Improve" blog. In this guest post, Mario writes about the important topic of how funders and grantees can work together as the latter pursue "measuring to improve," or as Mario calls it, "managing to outcomes."

In May, Venture Philanthropy Partners released Leap of Reason: Managing to Outcomes in an Era of Scarcity, a book I wrote with a dozen leaders who have direct, hands-on experience implementing the management disciplines we highlight.

Since the book's central topic, "managing to outcomes," comes perilously close to sounding like nothing more than a piece of unfortunate jargon, let me start with a definition. Managing to outcomes means building an organizational culture that focuses on doing meaningful, measurable good for those we serve—and learning constantly about how we can get even better over time. Whether it's in a for-profit, public, or nonprofit setting, it means gaining the benefit of good information and disciplined approaches to determine where we're headed, chart a logical course, and course-correct when we’re off. It means navigating with more than good intuition and good intentions.

Funders generally don't provide the kind of financial support and strategic assistance that nonprofits need to make the leap to managing to outcomes. While a lack of funding is by no means the only barrier, I know many nonprofit leaders who would take up the challenge in a heartbeat if funding, advice, and encouragement were available. The hard truth is that far too many funders have been conditioned to insist that every dollar "support the cause" through funding for programs. They don't want "overhead" to dilute their grants.

Similarly, few foundations have staff or engage consultants with the type of managerial talent and understanding that can support sound organization-building and management. Funders generally don’t appreciate just how valuable this bought or borrowed talent can be and what kind of dividends these investments can pay year after year if these talented managers succeed in helping grantees transition to an outcomes focus. This, too, feels like unnecessary "overhead."

Unfortunately, this understandable desire to be careful about costs can deeply undermine the pursuit of impact. As Tom Tierney and Joel Fleishman argue in their book, Give Smart, not all overhead is created equal. If funders don’t appreciate that there’s such a thing as “good overhead,” they miss a huge opportunity to help their grantees make the leap to managing to outcomes—in my view, the clearest pathway to impact.

To make the leap to managing to outcomes, nonprofits need creative funders, like the Edna McConnell Clark Foundation, that are willing to help them manage smarter through greater use of information on performance and impact—rather than forcing them to meet myriad evaluation and reporting requirements that too often do little to help the organization learn and improve. They need funders who understand that making the leap requires more than program funding, and more than the typical "capacity-building" grant. They need funders who are willing to make multi-year investments and offer strategic assistance to help nonprofit leaders strengthen their management muscle and rigor.

To cultivate this type of long-term thinking, we have to show funders the "value proposition" for supporting the leap of reason. We must shine a bright spotlight on the wonderful nonprofit innovators who are showing that investing in managing to outcomes—driven by mission and applied with judgment and a supportive culture—yields disproportionate returns. We tried to start that process in Leap of Reason, with stories and results from such innovators as the Friendship Public Charter School, Latin American Youth Center, Year Up, Cleveland Clinic, Harlem Children’s Zone, Youth Villages, and others.

If you're a nonprofit leader who has led the transition to managing to outcomes or a funder who has supported it, we'd love to hear from you. Write to us at [email protected] or www.facebook.com/leapofreason.

Mario Morino, a former software entrepreneur, is the chairman of Venture Philanthropy Partners and the author of Leap of Reason: Managing to Outcomes in an Era of Scarcity.

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