When Good Isn't Good Enough: The Building Blocks of Innovation for Philanthropic Organizations

“Whether you work at a Foundation or another aspect of the non-profit sector, we are all about executing philanthropy… to provide capital to drive innovation. But are we innovative?”

Thus began the remarks by Tonya Allen, President and CEO of the Skillman Foundation as she addressed attendees at the May session of the Plante Moran-sponsored Executive-to-Executive Leadership Development Series for Nonprofit Leaders. Allen said Skillman, which is committed to improving meaningful graduation rates in the Detroit region so kids are ready for college, career and life, uses an innovation ready, child-focused ecosystem that invests in community leadership, neighborhoods, safety initiatives, high-quality schools, social innovation and youth development rather than a traditional school reform model to create an environment that can speed innovation and improve education.

As an example, Allen explained the Skillman Foundation’s neighborhood-based children’s change effort launched in 2006 called “Good Neighborhoods”. The 10-year, $100 million commitment to six Detroit neighborhoods, selected specifically for the approximately 60,000 children that reside there, is the largest program of its kind in the U.S. and uses a tailored approach in each neighborhood so that children have clear pathways to graduating from high school and leading successful adult lives. Through partnerships with 93 youth organizations, Skillman closed or redesigned 16 of the 23 public high schools deemed drop-out factories and increased graduation rates 15%.

“Despite our success, incremental change was not going to get us to our 2016 goals,” said Allen. “That scared the hell out of me because our accomplishments weren’t transformational; I had to tell a group of successful, motivated people that they have to do something different - that good isn’t good enough. We were not accepting the notion that the city of Detroit was different from 8 years ago (when “Good Neighborhoods” began) and were too busy responding to change to create change.”

At a crossroads, Allen noted they changed paths and embraced organizational innovation to move the “Good Neighborhoods” project forward. She encouraged the audience to follow what she refers to as the ABC building blocks of innovation for philanthropic organizations:

• A - Alignment and Action – Encourage leaders to work together to establish common goals and achieve shared results. “We sometimes have alignment and we sometimes have action, but we rarely have both. Alignment occurs when leaders work together to achieve a common goal that can’t be achieved alone.” Allen added that context, history and place still matter when considering collective impact in the community and that such realities need to be considered in any action plan.
• B - Being Bold – Leaders need to be bold enough to make a declarative statement about the impact they hope to achieve. Allen urged the audience to focus on impact first and strategy second. Don’t be wedded to the strategy, be nimble and responsive and increase risk. “Foundations don’t have a natural source of accountability so we need to be public about our goals and objectives in order to increase accountability – and our boards need to hold us to that.”
• C - Capital – “Capital is King. Cash is King. But so are balance sheets!” Maximize and grow syndicated capital through offerings like low interest loans and mission-related investment. Allen also noted that while business experts encourage non-profits to act like a real business, they also need to consider how hard it is to change lives versus making a profit.
• D - Data – Aggregate and analyze "big" data to better understand trends. “More isn’t always better. Data helps us see that sometimes the issue isn’t that we don’t have enough, it’s that we don’t have cohesion.” Allen offered as an example a Detroit public school where the principal spent so much time managing the many adult volunteers in the school, her efforts were directed away from the students. More wasn’t the issue, cohesion was. “Using an analytic view, you can derive solutions from big data. The non-profit sector often adopts best practices 20-30 years late when it could be helpful to us now. We can’t wait to master the data.”
• E - Everybody – Capture talent and people with differing viewpoints and ideas and embrace democratic engagement. “Diversity is counting the people, inclusion is making sure the people count.” Allen noted that diversity and inclusion give philanthropies a competitive advantage, as is borne out in such successful endowment programs as those at the University of Michigan and Smith College, both of which have a diverse staff. She continued, “The Skillman Foundation is liberal, so we brought some conservative thinkers on board to foster the best solutions for the work we all care about. This helped me change the narrative (from a financial perspective) when talking to bankers and business leaders. We (Detroit) can’t be an oligarchy as a region, and philanthropy has to do the same. We need to include more voices in our solutions if we are going to resolve anything.”
• F - Failure – Encourage more risk taking and learn from mistakes. Allen spoke of the need to fail fast and small, and then move forward. “We need to effectively infuse more risk into our work…and be responsive to the change around us so we can change fast…so we can innovate. You can’t innovate or learn if you don’t address failure. Failure needs to move you forward.” To reinforce the point, Allen noted that she writes an often funny and embarrassing internal failure blog to talk about areas where she believes she has failed, not just to learn from it, but also to get her staff comfortable with failure. She added that non-profits need to let go of what no longer works, asking, “What are we holding onto that we should let go of? Organizations should not continue to put their name on a program or strategy that no longer matters, in doing so, non-profits gain an edge, a perspective and freedom to focus on results.”

Allen encouraged attendees to be intentional about partnerships to help achieve success.

“Foundations use only one type of capital – grant capital – yet we have other forms of capital, including the ability to convene and to influence, especially through our respective board members.”

Allen continued that non-profits don’t always “…use the talent around the table…Boards should be influencers for the organization but they need to know what and whom they should be influencing and the outcomes expected of them.”

Allen also noted that foundations and non-profits often have highly educated and accomplished staffs and that leaders should maximize the full depth and breadth of the organization to accomplish change, offering professional development opportunities and competitive salaries.

“We find the best people and we pay them the least,” said Allen. “We’re only as good externally as we are internally. With the number of non-profit leaders in our community set to retire soon, we don’t have the talent developed to take over. We need to invest in our staff.”

Tonya Allen’s address was given at Lawrence Technological University in Southfield, Michigan, on May 20 as part of Plante Moran’s series on Executive-to-Executive Leadership Development for current and future not-for-profit leaders and board members. For more information about the Skillman Foundation, visit http://www.skillman.org/.