Philantrhopy Class: Hal Harvey (11/2/2004)

Hal Harvey, program director of the Hewlett Foundation spoke mostly about the strategy behind effecting change by looking for key leverage points. Although I'm pretty familiar with decision analysis and some game theory, Hal's talk was still something of a wake-up call: it's every bit as important, perhaps more so, in the non-profit world as it is in thinking about corporate strategy. A quick re-cap of some of the techniques of decision analysis, as presented by Hal:

• Venue Analysis: Consider the following questions:
  
  • Who are the decision makers?
    
  • Who do they listen to? (for expert advice)
    
  • What are the rules (of the decision making process)?
    
  • What are the external and internal constraints that the decision makers are operating under?
    
  • Who are the consitutencies the decision makers need to answer to?
  
  
• Opposition Research: What are the interests preserving the status quo?
  
• Resource Analysis: What is the package of grants that you can apply for? How can you layer them over time to ensure continued access to resources?
  

Two other principles:

1. Get close to the decision makers at the time of the decision
   
2. Think about end-run possibilities.
   

Hal talked a bit about applying these procedures in his own area (energy policy) where the US energy spending is about $600B, but philanthropic efforts are less than $60M (10,000 : 1). By focusing on Public Utility Commissions (PUC's), his organization was able to influence in some cases $2B worth of new projects through $1M in briefs to the PUC. Over a portfolio of 15 "key" states (looking at benefit X likelihood = expected value), they were able to achieve a 1,000:1 return on their resources.

A second example was the improvement in public education in Chicago. The Commerce Club's Civic Committee took on the issue, which CEO's transformed into a business issue, saying they were unable to hire a qualified workforce. The MacArthur Foundation lended support to get more CEO's on board, and that started an avalanche.

A third example was the Joyce Mertz-Gilmore Foundation which was interested in advancing gay rights. They went to community foundations around the country, offering a 2:1 matching program for any new program established at that community fund. The lure of the multiplier encouraged several to move ahead, and the process of looking for organizations to fund in the community, meeting the leaders of the gay community and educating the board members of the community fund (by "forcing" them to read the grant recommendations) made a substantial change over time. The community funds were newly sensitized to the issue, they connected with a new set of donors who were looking for an outlet, and programs that were established in the first year continued even as the matching funds dropped to 1:1 and then 1:2 over the second and third years of the grant.

A fourth example showed that you also need to know when to stop: In the effort to reduce CO2 emissions, the International Energy Fund worked with a number of major companies (IBM, BP, Shell) to set targets to reduce emissions. Each one met the goal, and savings more than covered the costs. Momentum was picking up, with about 1 company per month joining the program. Then, in 2000, George Bush was elected, and the program hit a wall. With no risk of government action, companies chose not to get involved. After 6 months of no additional enrollees, the Fund changed directions and tried to work at the state level instead.

Other interesting thoughts from Hal:

• Philanthropic capital is the ultimate risk capital of society: It's long term, no strings attached. As the rarest form of capital, we should also have the highest expectations for it.
  
• BUT, philanthropy is the last bastion of the unaccountable. If the typical watchdogs are investors, media, and voters, none of these groups has power over the distribution of funds.
  
• Most philanthropic money is given away by generalists, making decisions about technical specifics.
  
• Encouraging donors to give to leveraged activity is hard, because the emotional connection is more tenuous (giving to lobbyists, not street children, e.g.) and it's harder to show the causal effect (since there are so many higher level potential impacts).
  
• Most people answer that their change will come through "public education." Almost certainly it won't. The public is bombarded with too many messages. Non-profits need to follow the lesson of direct marketers and segment their markets, communicating different messages to each. Create a complete communication change that's credible: message, messenger and medium.
  
• Most grant applications don't tell you what success is. The "workshops" they promise are outputs, not outcomes. What change will tell you that the program has been a success?