From Infrastructure to Structure – Part 2: Some Illustrations

thinkerMy recent post “From Overhead to Infrastructure to Structure” has elicited a very flattering amount of attention, but also some questions and challenges. To all, thanks.

The questions and challenges fit into two categories:

One set was from those on the nonprofit side of the table who wondered how they could convince their funders of the indispensability of infrastructure support as a superior funding strategy. They felt that, even though I intimated that it is now widely accepted among funders, their own experience differs and they are still finding it difficult to persuade their funders of its wisdom.

My response to them is that all I can do is write, teach, and espouse what I consider to be good practice and strategy. Hopefully, as the consensus grows, their funders will fund accordingly. Unless they choose to be clients or take courses for funders that I teach, I am not sure I can do more to make the case.

The other set of responses was from fellow funders who asked me to expand on the concluding part of the post, the need to address the structural systems that underlie the work that all of us do. They asked, in essence “Ok, how does that really work?”

The answer is the remainder of this post.

To understand how the funding pieces fit together, let us recall that there are three levels to funding: Compassion: addressing immediate human needs; strategy: providing these services efficiently and effectively; systemic/structure: addressing underlying issues to eliminate or reduce the cause of the needs in the first place.

Perhaps the following 3 illustrations will help. The first is an example almost any organization can emulate or apply to its own situation. The structural changes are internal to the workings of an organization. The subsequent two require not only systemic thinking but also mobilization of sectors working in sync. They are macro challenges that no one funder can solve alone, but require funder involvement at every level.

1. Talent management:

Perhaps it would be helpful to start with a paradigm where structural change can readily make a real difference within lots of organizations, can be implemented by a single organization, and very quickly at that.

Let us take the example of “talent management” to use the currently popular nomenclature. Though much of the recent public literature on this has focused on “millennials,” these thoughts apply to any and all work places.

The most typical case of dysfunction is when a corporate culture gives mixed and mutually competing messages: “we have empowered you to make decisions but, as your supervisor, of course I can overrule those decisions;” “we have told you how much we value your commitment to our organization, but, don’t forget, you can be fired at will;” “we brag about the expertise all of you bring to our system, but we think an outsider will be a better choice” in every c-suite search. All too often corporate culture is un-addressed in a strategic plan, and even when it is, the difficult challenge of implementing a more coherent environment is often undervalued. As Jim Collins has said, “Culture eats strategy for lunch.”

Let’s see how this can be applied to the matter of training and succession. There has been a lot of hand wringing recently about the dearth of a succession talent pool in the nonprofit sector. That is, about the apparent lack of an adequate critical mass of those able to fill the vacancies that the imminent surge of ceo retirements will yield. Groups such as Talent Philanthropy have set an admirable goal of encouraging the nonprofit and funding sectors to invest heavily in professional training, articulate more perceptible career paths, and eliciting external targeted funding to allow that to happen.

But, even so, all too often staff training is no more than a distinct budget line – easily cut or reduced as budget pressures take hold. Or, in those unusual circumstances where restricted funding comes from a foundation for the purpose of staff capacity building, this entire area is too often viewed as just another soft-money project, disposable as the grant expires.

We have all heard the arguments of why this is a low priority: junior staff don’t have long-term commitments; why should we pay for their next employer’s benefit? Training and conference attendance should be an earned perk, not an automatic benefit. There are so many pressures on our budget; it is hard to justify to our funders/board all of this staff travel and time away from the office.

But none of those are credible excuses if an organization truly believes that investing in staff makes both short and long-term sense, and an awful lot of research says that it does. There is, in fact, a simple structural way to address this: instead of having staff training as a vulnerable budget line that has to be defended each year, and which then can set up an uncomfortable tension and competition among staff, why not simply consider staff training as one of the essential personnel expenses and include that in the personnel package and personnel line for every employee? If an organization does so, it affirms that staff excellence, growth, stability, and respect are a core cost of doing business.

This approach may be less sexy than emulating the tech sector by offering free snacks all day. Moreover, staff training will never make an employee more loyal to an organization that doesn’t demonstrate respect for his or her work the rest of the time. But everything else being equal, an organization that makes this simple structural budgeting change is much more likely to convey to all staff, yes, even millennials, that they really do matter. And, as every study of organizational effectiveness has shown, they really do.

2. Food insecurity:

One example mentioned in the previous post had to do with hunger and food insecurity. Hunger, malnutrition, and all of the derivative maladies are present in all too many societies around the world, including, sad to say, in the United States. Churches, synagogues, community centers, even some businesses try to do their part to reflect their compassion by collecting cans and volunteering at soup kitchens and pantries. In many communities, this goes one step further by encouraging restaurants, shops, catering establishments, even grocery stores, to make all appropriate leftovers available to those pantries every day.

Yet most know that, while this does address immediate pangs – of both hunger and guilt – it is a very inefficient way to address food insecurity. It does little to guarantee that the food is where it is needed and when it is needed; it is very reactive – depending totally on the good will of people to bring that food and to volunteer their time; and it is predictably unpredictable: will that restaurant be open that day or have leftovers? Will volunteers brave a thunderstorm? Will the church gather enough cans to feed those who arrive at the shelter?

Of course, experienced funders and pantries adjust for all of this through a more strategic and planful approach to their support. Send food and money where the needs are most predictable and where the providers are most reliable. It feeds more people more consistently. But it does not eliminate the reactive nature of this kind of voluntaristic approach. And it clearly is not addressing any underlying issues or even providing a broad-based strategic overlay to the problem.

A more broad-based strategic response is to expand the scope of societally sponsored food programs: SNAP, school based meals, etc. These programs address the issues of distribution, dignity, and predictability. In order to do that requires advocacy at every level of government. Even a decimal point adjustment in federal, state, and local support can far exceed the monies raised by private donations, and certainly is a far more efficient method than dozens and dozens of small nonprofit struggles. One would hope that every funding body concerned with hunger and food insecurity has an assertive approach to advocacy.

Yet we know that there will still be those who fall between the cracks, where public funding doesn’t quite reach everyone in the family or to the end of the month, or their homelessness makes them elusive to public support, and more. Sadly there will still be needs for the neighborhood-based pantries

But, all of this only models the strategic. Many will be fed consistently, efficiently, and humanely. However, none of this addresses the true underlying causes of food insecurity: inequitable access to education and social mobility, economic instability and racism, inadequate healthcare and employment.

The dilemma for a funder is how to divide one’s resources. To only support the local pantry is compassionate but not strategic. Supporting advocacy for better public support and policies is strategic and longer term, but requires patience and political acumen, and in the meantime, lots of folks are still hungry. And even healthy and consistent public support is only a necessary but insufficient palliative for underlying causes that are hard, elusive, complex, and resistant to simple solutions. But unless one is prepared to address those underlying systemic causes, all of the best and proven strategy will simply be a Sisyphean struggle of which we are all too aware.

3. Human Trafficking:

This case is different than the first two. It starts with a systemic/structural approach and then tries to calculate what would be necessary to implement on the grass roots and strategy levels.

A few years ago, a very wealthy philanthropist from a non-US part of the world attended one of our advanced funder education courses. All of the participants were expected to present a challenging case study from their own funding portfolio. This philanthropist presented a case about a $20B effort to combat human trafficking in which he was taking a lead role.

The case was wonderfully illustrative of how no one sector alone can solve a systemic problem such as this. As the layers of challenge and potential solutions were peeled away, it was evident that, of course, human trafficking cannot be solved without international inter-governmental cooperation. Public policy and commitment to those policies is the sine qua non for beginning the conversation.

But even with those, admittedly challenging, agreements, that would only be the beginning of a solution. After all, private sector employers are often the ones who provide the cover for the entrapment of trafficked workers or who turn a blind eye to what they know to be true. We are well aware of trafficking in unlawful areas such as prostitution, or grey areas such as textile factory workers, but it might be overlooked in food service or mall workers.

And even if that were resolved, there is a need for a robust social service network for re-education, re-integration, and safe havens. Without the NGO/NFP sector, those services could rarely be offered in a consistent, professional, and non-judgmental way.

The philanthropy world is a crucial player at every layer: advocates for policy change, moral suasion to the for-profit industries, funding for the NGO/NFP worlds.

Addressing human trafficking is a paradigmatic case of the need for inter-sector collaboration, and the impossibility of making any lasting systemic difference at all without deep-seated structural change.

These examples each illustrate that structural thinking has a place at every level. And at every level, there is a role for funders with varying scope of interest, focus, and resources. Some challenges call for stretching our influence, resources, and political will to the limit. Others are no further than the nonprofit we fund every year. Thinking about structural and systemic change can be a helpful tool for aligning our resources, and keeping our eyes on the impact we truly desire.

Richard Marker advises funders and foundations on their philanthropy strategy through Wise Philanthropy, and teaches philanthropists and foundation professionals at both Penn’s Center for High Impact Philanthropy and NYU Academy for Funder Education.