3 Twin Cities foundations are experimenting with radically different forms of philanthropic giving – Twin Cities
When the Venn Foundation funds access to extracurricular music lessons, medical technology research at the University of Minnesota, or traveling exhibits at the Minnesota Children’s Museum, it expects the money to be returned. The St. Paul-based charity lender specializes in issuing low-interest, interest-free loans, among other “programme-linked investments” or PRIs – below-market-rate financial obligations that are intended to continue to give to other worthy initiatives because they are paid.
It’s a different approach than that led by Andrew Dayton at the Constellation Fund, where an economist, evaluator and research associate made direct service philanthropic giving an analytical science. Working with advisers such as the Federal Reserve Bank of Minneapolis, the Constellation team evaluates grant applicants based on some 200 metrics before issuing the nonprofit checks for up to $200,000 to fight the poverty.
“A lot of philanthropy is really rooted in relationships and getting access to people with resources, frankly people like me,” said Dayton, son of former Minnesota Governor Mark Dayton, whose family was once known for its department stores such as Dayton’s, Champs Marshall and Target. “And my perspective is that I’m not the best person to make a decision on how to tackle poverty,” he said. “I have never known poverty. (Our assessment is) rooted in evidence, the best we have, as opposed to my preferences or predilections as a donor.
The Venn Foundation and Constellation Fund are two of the Twin Cities’ youngest philanthropic foundations, where Minnesotans — including the wealthiest — have turned charitable giving into an art form.
Their approaches, heavy with financial analysis, differ significantly from that of the John and Denise Graves Foundation, an emerging Minneapolis-based family foundation that has shown a growing interest in unproven ventures, even if that means starting a new organization in non-profit organization and to select its personnel.
“New ideas need time and space to form,” said Bill Graves, who runs the foundation on behalf of his parents. “Graves Ventures is really focused on incubating new ideas, new businesses, new products, new campaigns that weren’t there before, and helping them grow towards sustainability.”
DIFFERENT APPROACHES TO GIVING
For 20 years or more, foundations and other major donors to charitable causes have been calling for nonprofits to be run more like businesses, with data-driven strategies that deliver measurable ROI. The pushback has been palpable, with some frontline workers noting it’s hard to measure the tangible impact of mentoring young people, erecting public art, feeding the hungry or coaching a little league.
Even some major donors have found that the philanthropic world has become too cautious and disinterested in experimenting with new, promising but unproven solutions to old problems.
Others see data-driven analytics as a key lens through which to help small, emerging nonprofits scale their operations and grow sustainably, much like a start-up looking to grow. develop.
In the Twin Cities, three foundations dedicated to fighting poverty and launching new initiatives have taken widely divergent paths on the continuum, each focusing, at least in part, on helping start-ups grow through very different ways.
THE GRAVES FOUNDATION SUPPORTS YOUTH HOUSING BY HIRING ITS STAFF
Working out of his garage, John Graves founded a computer software company in the mid-1980s, gradually transforming Convey Compliance Systems into a tax compliance software company that would net his family a multi-million dollar profit when he started it. sold in 2014. His son, Bill Graves, was then tasked with spending much of the family fortune on worthy causes, to the tune of $3 million a year for 30 years.
How best to direct the roughly $47 million in John and Denise Graves Foundation funds? Circa 2017, the foundation made its first major gift to a housing development project in the Lowry Hill neighborhood of Minneapolis, centered in part on aging youth out of foster care.
To open the Peris Hill affordable housing development in Minneapolis last year, the Graves Foundation hired an executive director specific to the 45-unit housing project, with the hope that after two years of fundraising and applications for low-income housing tax credits, the director would no longer be an employee of the foundation and would continue the project independently. Peris Hill now has its own non-profit board of directors.
“We were new to philanthropy and didn’t realize what we were doing was different,” said Bill Graves. “Now we realize that philanthropy most often takes the form of grants to organizations that already exist, that have already proven themselves doing good works.”
Through the foundation’s Graves Ventures unit, Bill Graves seeks to reverse that trend and fully engage in what some might call the startup world of nonprofit ventures, even if that means selecting their staff.
“We were basically the philanthropic developer,” said Graves, who worked with Volunteers of America to manage the Peris Hill property. “We have a long-term commitment to providing finance services for young people in construction. We fund an organization called LINK that provides the services. They were a (Peris Hill) supporter all along and remained committed to us.
Working out of the Midtown Exchange building in south Minneapolis, Graves plans to dedicate about $2 million a year to established youth, education, and anti-poverty initiatives in Minneapolis and its inner suburbs, and the less than $1 million a year to new, less proven initiatives. by Graves Ventures.
“They interest us as much as a foundation,” said Bill Graves.
Among its grantees, the foundation has funded the Minneapolis Educator Leadership Awards, a project with Achieve Twin Cities to recognize outstanding educators, and Close Knit, a nonprofit that invests in existing “chosen family” arrangements to prevent child abuse. youth homelessness. Other grants, in the areas of housing and community building, will be awarded by invitation only.
While working in the office of the mayor of San Francisco, Dayton became familiar with a foundation called Tipping Point, which seeks to alleviate poverty in the Bay Area by helping small organizations expand their services. He was so impressed that he decided to start a similar effort in Minneapolis.
With grants ranging from $75,000 to $200,000, the Constellation Fund has supported more than 25 grantees since its launch in 2018. The goal is to fight poverty in the Twin Cities by supporting direct service organizations, but recipients are all offered – and almost all accept – “Beyond Dollar Benefits that go beyond a one-time financial donation.
This includes pitching grant winners to private companies that can provide volunteer hours, advice, technology assistance, and other expertise.
Even nonprofit applicants who don’t receive funding but pass a comprehensive review come away with an in-depth, data-driven assessment of their organization, the kind of report a private-sector firm could handsomely pay consultants for. .
“We do a benefit-cost analysis on every organization we fund,” said Rose Carr, Constellation Fund’s director of impact. “We also provide these analyzes to organizations that do not receive funding. They provide us with data and we want them to come away with something useful. … We look specifically at the people organizations serve.
Through the Constellation Fund, the Ostara Initiative, which oversees the Minnesota Prison Doula Project, partnered with Piper Sandler, an investment bank and financial services firm, which helped them rethink their business model. , from building their employee base to exploring new options for earned income.
“Most nonprofits don’t have those kinds of skills in-house,” Dayton said.
Other recipients include the new Dougherty Family College, which offers a two-year associate degree at the University of St. Thomas, Lutheran Social Service work on youth homelessness, YWCA of St. Paul and the Family Tree Clinic in Minneapolis.
For 50 years or more, leading foundations have provided low- or interest-free loans, equity, and other forms of capital investment for unproven orphan drugs, seed technologies, and other young risky initiatives.
Since 2018, Jeff Ochs and two partners have attempted to connect individual, socially responsible investors with similar opportunities, whether or not they have the capital to lend that a larger foundation might have.
Based in St. Paul’s Highland Park, The Venn Foundation pools funds from philanthropists in some 80 donor-advised accounts and counting. The accounts have issued 30 program-related investments to date, totaling some $16 million in donations. These financial bonds, offered at below-market rates, are expected to be repaid in funds to support more good works down the line.
Recipients range from a baker opening her first commercial space to helping researchers at the University of Minnesota develop a prognostic test for osteosarcoma, the most common form of bone cancer in children.
“Our goal as a public charity is to bring a very powerful but underutilized tool into philanthropy,” Ochs said. “We’re trying to really unleash the power for maximum impact.”
For example, many low-income families don’t take advantage of Minnesota’s $1,000 per child education tax credit to pay for after-school music lessons, tutoring, and other tuition because they don’t can’t afford to pay the money and wait until April for a tax refund.
To better connect families eligible for the tax credit, The Venn Foundation is working with nonprofit organization Youthprise to provide zero percent, low-cost loans to pay for after-school learning, at provided that the tax credit of each beneficiary family is automatically retroceded to the foundation.
“We will do over $1 million this year to over 1,000 families statewide through this program, and we are looking to expand this program,” Ochs said. “This is an interest-free, no-fee, unsecured loan that is repaid only through a tax credit.”
Ochs added: “If I am a philanthropist, I give once and it helps a child during that year. You have to find a way to maintain this. The PRI recycles dollars that could be used more than once.