Should SVP Encourage Competition or Collaboration?

My take away from the Kania & Kramer article is that more ALIGNMENT is needed, not less competition. Competition keeps organizations strong and innovative. You don't have to stop competing in order to collaborate; the ability to collaborate meaningfully should be part of the competition. To promote collective impact, evaluate an organization's ability to widen its individual agenda to encompass larger goals when making funding decisions.

I agree that alignment and collaboration are key. Competition can be good and bad. Good for innovation as you say. But bad when organizations go outside of their core competencies to be eligible for limited funding.

What do you think SVP can do to promote alignment and collaboration?

SVP already does such great work helping good organizations become great! Perhaps SVP could promote alignment and collaboration by supporting the 5 elements Kania & Kramer discussed: encourage grantees to do the first 4 and consider funding agencies that provide services described in 5 (the backbone services).

Should we change our grantmaking to make grants to collaborative projects? Do you think it would work?

It takes more than one funder to create the collective impact described in the article, but a widely respected grant-maker like SVP could make a big difference by evaluating the "collective impact collaboration potential" of potential grantees. Or you could go further and actually select a collaborative project to fund and support with "backbone" services. This kind of aligning comes with risks, but also greater potential for bold change.

Anyone else want to weigh in?

Collaboration is Essential... Create new models.

In my experience as a social entrepreneur, I've found that many institutional forms and funding models that were successful in the last century (a) are not the right measures for success in this one; and (b) are increasingly ineffective even at serving the prior understandings of success (e.g. ROI doesn't account for externalized harms that deteriorate the wealth-generating capacity of larger systems).

I strongly encourage the cultivation of collaborative funding models that promote active engagement with crowds and that are framed around SROI through a variety of interconnected metrics.

I've started having early success in this area in my own small effort to build capacity for the progressive political movement in the U.S., where the ROI incentive structures of prior institutional forms preclude long-term investments. So I bypassed those outdated structures by launching a crowdfunding campaign and raised enough money to write a strategy handbook that is about to unfold as an open source collaborative project.

There's a lot that SVP could do to pave the way forward on innovative models like this one. I'd be happy to share my knowledge and experience if there are local gatherings in Seattle to discuss collaborative funding models.

Joe-I am very intrigued and would love to know more. If we call any meetings on this topic, we'll definitely bring you in. In the meantime, have you seen the new Next Level Impact Group that we are starting next week? This is not necessarily part of the goal, but it is a topic that could be examined in that setting.

Hey Janet,

I'm not aware of the Next Level Impact Group. Please feel free to email me directly about it (and other activities around collaborative funding models).

Thanks,

Joe

I don't have your email address -- can you send it?

Sure Thing! Its brewer@cognitivepolicyworks.com.

@Joe RE "larger systems"

RE: "ROI doesn't account for externalized harms that deteriorate the wealth-generating capacity of larger systems"

Are you thinking primarily of the tragedy of the commons, free-market degradation of environmental systems, here? Or are there other wealth-generating systems you have in mind too?

@Brad, Yes...

Those are the higher-level conceptual issues that I am referring to. At a more concrete level, there are also problems with several key metaphors that shape how these systems are understood and operated:

"Money as Wealth" where things that are valued must be quantifiable and equated with a monetary currency. This forces all forms of value to be treated conceptually as money, and those forms of value that don't easily compare with one another are prone to be overlooked or marginalized.

"Investment as Monetary Exchange" where the "Money as Wealth" metaphor maps onto the Investment Frame to give financial capital primacy in the discussion of investment. This often draws attention away from various vital commons that must be present for human communities to survive and thrive. This frame can be replaced by other notions of value, including the social capital that grows larger as people have more trusting relationships with one another and provide supports to help each other learn, grow, and prosper.

I've been interested for some time now in what Peter Barnes calls "commons-based capitalism" where economic value is given to each commons and financial/business models are developed to protect and expand these commons. A great example is community-supported agriculture, where the value of the crop is combined with the commons of shared relationships and trust within the community. An economic benefit of this model is that the community commons is monetized. Another is that risk is mitigated across the community, creating greater robustness and resilience for both the business and the community it serves.

There are other models as well, including the various structures that promote collaborative consumption. But this is notion of monetizing the commons and expanding what we value is fundamental to creating financial systems that work for the long haul.

@ Joe - explain this to the property rights folks...

I think you are asking the right questions.
But its a hard sell to our brothers and sisters on the right.
Free market fundamentalists believe they have a universal algorithm to resolve all risk and resource allocation issues.
Just ask anyone who has been making the case for environmental regulation to protect our natural capital.
It seems to me that many of the political issues that are so contentious now basically revolve around how manage risk and sustainability and that our conceptions of property rights tend to frame this debate.
I have been taking more of a historical approach to these issues recently, having studied economic history many years ago as an Oxford undergraduate. Great work new is being done on the connection between how property rights are conceived and ecomonies prosperity. For example, turns out the received view (endorsed most recently by the *new* institutional economists Douglass North an Barry Weingast)that has been a pillar of the Industrial Revolution in Britain was the increased sanctitiy of property after the Glorious Revolution is quite wrong. Parliamentiary expropriation increased after the GR and was critcal to Britain's economic development. For the argument and references, see Past & Present, no, 210 (Feb. 2011) "Compulsion, Compensation, and Porperty Rights in Britain 1688-1833".
Just a fragment of a recent approach on my part. OK, I have a day job... lucky for you, huh? Good luck with your approach. It seems to me like it addresses the big issue facing us in the right way.
Cheers, Brad

I have been a partner for several years and became the ED of an SVP grantee last year. My perspective is SVP might foster competition but it is more from an operational perspective than a program perspective. The two are very different.

It's clear that SVP evaluates program effectiveness as part of the grant process. The questions asked, materials requested, etc. during a grant cycle give a strong impression, however, that the competition is about which org has the best ideas for increasing internal capacity and improving operational effectiveness. This fosters a unique “operational and capacity” competition that I think is healthy.

The current funding environment more broadly is, of course, different than SVP and is mostly program focused. Grant processes, funding mechanisms, and foundation risk-mitigation strategies all work against collaboration and true innovation while creating many challenges and obstacles.

Short grant cycles, for example, foster short-term thinking and do not drive the kind of long-term strategic focus that is needed for most of today’s incredibly complex problems. Short grant cycles are coming back as foundations fear the risk of being committed to nonprofits during economic downturns.

The short-term culture is also reinforced by the fact that the guarantee of funding does not come with success. Nonprofits, therefore, must continually create the illusion of innovation in order to attract new funding. Innovation is good but not just for the sake of innovation or for the sake of money.

It is also interesting to see that new nonprofits get funding while new ideas in existing nonprofits must wait for the next grant cycle. I think it is imperative that we stop creating new nonprofits and find ways for existing nonprofits to absorb, fund, and incubate new ideas no matter what time of year they come up. I think size does matter to a degree and that we need to be encouraging growth and not fragmentation.

I think a lot about solutions too. The basis for my ideas comes from the perspective that we need to create more velocity not more change.

Velocity is defined by magnitude and direction. The change in velocity is acceleration. The problems of today require all three.

Magnitude can be created by providing more funding to fewer nonprofits and by foundations developing deep, lasting relationships with them. Requiring nonprofits to constantly pursue new money in order to prevent building a dependent relationship with a foundation creates fragmentation, diffuses energy, and works against all the principles nonprofit work needs to be successful. It is incredibly difficult to achieve long-term success when you live by short-term relationships.

Foundations do a pretty good job of setting Direction but they are missing an opportunity. Program officers are often quite knowledgeable and experienced on their particular content areas. They also have an incredible view of what’s going on and what’s needed. But they always seem stressed trying to manage the grant process and far too many grantees. More foundations should create projects, build collaborations, and drive change directly and not just through their allocation of money. Could we get more velocity of a foundation picked a project, formed a collaboration, and drove for change directly instead of trying to just influence change through its allocation of money? I think so.

Acceleration can happen by creating more stability in the nonprofit world. Stability gives nonprofits security which lead to getting more traction. Closer, deeper relationships, more guaranteed (or nearly guaranteed) funding, and assurances from foundations that they’ll be there during the tough times creates stability.

Finally, at a macro level, we need fewer nonprofits, not more of them. We need velocity and acceleration, not just change. It’s possible and maybe it’s coming. Thanks for asking the question!

Neal:
Good thoughts. I've also felt that Foundations need to step back and examine the impact of their practices. I've seen organizations I work wtih modify effective programs so that they better match what a foundation will fund. I've also seen them struggle to find funding for extremely effective programs -- and the uncertainty hurts both the organization and the ultimate recipient.

I also strongly agree that we don't need more nonprofits -- each with separate administration, finance, databases, etc. We lose any economies of scale. Though we don't want to lose nimbleness either.

SVP already makes long-term commitments. And we do encourage other funders to do the same and to give unrestricted funds. Is there anything else you think we should be doing differently?

As SVP Seattle examines the criteria and messaging to potential investees, an organization's willingness to engage in collaboration should be a factor within the criteria for selection. Our investees often are at a size that is barely sustainable. They need to be open to collaborating in a variety of ways, which may range from informal alliances to considering mergers. Once an organization is selected as an investee, we need to think about capacity building as including a range of collaborative activity.

Two Ideas

SVP has a great model because it does invest over multiple years. It would be interesting to talk about doing prescriptive capacity building models - one for example, could lead to stability and another could position them for growth (where SVP could shop them around to funders like an investment banker shops an org planning for an IPO). A prescriptive model means when investees are accepted into the SVP "program" they would be lead through a series of capacity building steps that build on each other. This mitigates a little risk in the current model where the EDs are largely responsible for diagnosing and prescribing their own improvements (granted with the help of a lead partner).

It might also be interesting for the APCs to think about forming (key word) and supporting collaborations instead of funding/supporting just one org.

I like Lisa's idea of including an openness to collaboration in our grant committee guidelines. I'll forward that idea to Mike.

While the idea of shopping around an investee sounds interesting, I don't know if we have the expertise in that area. So we should consider developing it. Certainly we should make clear to all past and current investees -- and the broader nonprofit community? -- that if they are interested in merging or collaborating, we are interesting in talking to them about how we can help.

And the Early Learning APC has worked on how to build and strengthen the statewide early learning network, though we are doing that work through our investee Thrive by Five. Again, I like the idea of making clear that we are open to broker, help fund, convene, etc. if our investees are interested.

I am with Ashoka and see examples of citizen sector collaboration emerging locally and globally that SVP can leverage. Our social entrepreneurs (Ashoka Fellows) are involved in Venture Collaborative Entrepreneurship (VCE)and we are supporting Seattle in becoming the first an Everyone a Changemaker city by supporting cross sector collaboration among nonprofits, business, government and education. SVP partners are involved in this. 501 commons was recently launched with special attention to organizations that can have an impact and are sustainable. SVP has been involved in this. Over 60 King County Youth Development organizations have been meeting during the past few months to explore collaboration. A smaller group of science and technology oriented nonprofits have been exploring how to work together to get young people excited about these fields and enhance STEM classroom work.

The work of Ashoka is great and certainly aligns with what SVP does. I am glad to hear that we are working with you. The big questions are 1) how can SVP encourage its partners to encourage collaboration in their work and philanthropy, 2)how can SVP in its role as a funder encourage its investees to collaborate, and 3) how can SVP itself work with other funders to align funding and collaborate.

The operative word to me in SVP is "Venture." We are trying to break glass, take risks, and find new solutions to solve large scale problems. I give a lot of money to the United Way, which attempts to address large scale problems in a more collaborative way. But the appeal of sVp to me and many others is the willingness to try new ideas (which collaborators like established non-profits might see as threat).
I worked in the federal govt for many years, and while alignment of goals was near perfect, there was a lot of wasted effort, redundant programs, established fiefdoms, and the result was misallocation of resources. In my entrepreneuerial adventures, I observed a meritocracy of ideas, where the willingness to try and fail allowed the best ideas to benefit the greatest number of people. You will note many businesses compete but also form alliances to collaborate in order to rationalize resources and maximize the leverage of their intended impact. While serving on several non-profit boards I argued for focus on core competencies and not trying to boil the ocean. Collaboration can work when different strengths are recognized, but often collaboration is a means to avoid the harsh recognition that management is poor or the ideas are substandard relative to peers. Competition often results in the best ideas getting funded, and the best managers applying their skills to address problems. Competition allows for nimbleness and concentration, while collaboration is often belabored and unwilling to confront the truth on performance. We work too hard to squander precious resources, despite the nobleness of cause, I think impact of our dollars matters most. There are many other organizations devoted to improving society, and I desire their success, but the differentiator of the "Venture" component of sVp ought to prevail - a willingness to risk and to fail, to seek innovative solutions which haven't been tried by the establishment (collaborators).

Collaboration can certainly be used as an excuse and end up with poor results. Competition can be good for nimbleness and encouraging best practices. On the other hand, with a focus on competition and not collaboration, we can end up with lots of organizations, each supported by key founders or friends, which are trying to do the same thing and wasting resources. Because hte organizations are supported by friendly funders, market forces don't allow one organization to fail. This results in confusion amongst propective donors who cannot differentiate between them and resources that are spread thin instead of concentrated.

Being able to take risks and invest in innovative solutions is key to any funder. I think SVP does this in some cases but not all since the grant committees decide which organizations to fund and the people on grant committees have varying amounts of risk aversion.

Do you think SVP should push more into the area of funding new and innovative as opposed to supporting and building the capacity of established and evidence based solutions?

Although I agree w/ much of the commentary here that there are benefits to collaboration, I would suggest there is also much to be gained by combinations of organizations. In the for profit world, it would be called mergers and acquisitions. But organizations that go after the same solutions could often be more effective it there were merged into the same organization. There are many reasons why this generally doesn't happen in the non profit world. No one gets rich, how to handle board of directors in a combination, who is the surviving entity, etc. But the efficiences would be there and it is something SVP could encourage.

Very good points. I've thought that there are too many nonprofits as well. Whenever anyone tells me that they want to start a new nonprofit, I always suggest they find a way to work with an existing organization. As a fairly visible donor in our community, we get asked for money all the time. I see organizations with very similar missions asking me for money. How efficient can it be to have multiple administrative organizations and fund raising organizations?

Do you think SVP should develop the skills to be an M&A broker for nonprofits? Do you think we should encourage this proactively or just help out reactively?

Yes, I think that SVP should at least reactively work in this area, but it may also make sense to do it proactively. There clearly are too many non profits and when you think that a good non profit has 15% overhead and bad ones have ones much higher than that, there is clearly money to be saved by combining them.

I know the staff are monitoring these blogs for good ideas, but I will pass this idea on as we plan for the future. Keep the ideas coming!

SVP Partners and nonprofit leaders and donors: first thank you for all of your interesting comments and wisdom in these posts! It’s great to see our community consider the role of competition vs. collaboration and the role SVP plays in the process.

You are not alone in thinking this topic is interesting and wondering how SVP could apply a more “collective impact” approach. As an SVP staff member, I’m looking forward to meeting with other SVP staff and partners from across our SVPI network around this topic at the upcoming “Collective Impact: Creating Large-Scale Social Change” conference hosted by FSG and Stanford Social Innovation Review.

From my vantage point, I see signs of collective impact in our work here at SVP Seattle. For example:

•SVP is one of 9 philanthropic grant makers who have come together to propel the capacity of nonprofits across the state after funding "An Assessment of Capaicty Building in Washington State" and now workin in collaboration to follow up on recommendations made in the report. We recognize the need to share capacity building definitions and tools with regions, support community foundations and rural initiatives and maintain a dialogue with other capacity building funders about collaboration and best practices. If we expect our investees to consider collaboration, we must do so as well!

•As Janet mentioned in this thread, the Early Learning Advocacy and Policy Committee was receptive to the need of the Early Learning community and is providing capacity building dollars to help with training, connecting and supporting the EL coalitions across the state. As Brian mentioned- we at SVP do like to try new things, and while helping an investee with a unique need, we as Partners are learning more about networking ourselves.

•The Environment Advocacy and Policy Committee is currently educating themselves in preparation for administering a grant cycle. In creating goals for the work the group is heavily considering how can we push the needle forward, how can we support and link current efforts, and who is missing at the table around an environmental topic/effort. Many of their questions hit at how can the group strengthen the environmental sector through collaboration while not denying that grant cycles in themselves are a competitive process.

We know we have just scratched the surface, and look forward to many more rich conversations both online and in person. In particular, collective impact will be a prominent theme at our upcoming Spring Meeting, where we will further explore your ideas for shaping SVP. Thanks for getting the ball rolling!