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Check-Up Clinic: Advice from a Foundation Leader

Posted: 5/16/2020

Click here to access the interview on philanthropy.com

Strategy and Reinvention Are Key to Staying Alive for Nonprofits, Leading Grant Maker Says

by Dan Parks

Jim Bildner has some tough advice for nonprofits: Adapt or face extinction. That message is not just for the short-term, he says. Many nonprofits will have to fundamentally change their operations even after the current crisis eases to remain relevant and attractive to grant makers in the future.

Bildner, who has served as CEO of two companies, heads the Draper Richards Kaplan Foundation, which was founded by two prominent Silicon Valley venture capitalists and later got an infusion from a former vice chairman of the Goldman Sachs Group.

The foundation has built a reputation as a savvy judge of fledgling organizations when it made early bets on nonprofits like Kiva, the One Acre Fund, and Room to Read, which quickly grew to prominence.

In an interview, Bildner explained how nonprofits can make smart financial choices and why this is the moment to think not just about dollars and budgets but also about strategy and reinvention.

When reports of coronavirus spreading took off, many nonprofits seemed to make decisions slowly. Now looking back, some of the choices seem obvious.

Exactly. It's the inability in the moment to understand the magnitude of what's really going to happen. The biggest risk is not understanding how the future will evolve. We know there'll be an end of this, but is it 2021 or is it sometime later than that?

Every institution is going to be profoundly changed. Is virtual learning going to be the principle way folks learn in the future? There's a lot of hope that schools will return, but I don't have any clarity as to how that will take place, when that will take place.

Even food distribution is fundamentally changed. We have an organization in Texas where we work to get the price of produce down for food banks. The produce waste that's taking place on farms is astronomical. How do we get food from farms directly to beneficiaries?

Going through the usual distribution doesn't solve the problem. There are not as many volunteers. There isn't as much capacity. So everything we thought we had figured out has to be rethought.

There's a misconception that the only thing you can do in this moment is triage your economic resources and human resources. But equally important is triaging the strategy and trying to figure out how you might be able to do something consistent with your mission in a completely different way with the resources you have.

What traits do you see among nonprofits that are likely to be successful over the long term?

The first thing we did in March as the coronavirus crisis worsened was go through our current portfolio. The biggest challenge to nonprofits is that the distribution models that many of them have relied on are no longer relevant. For example, if you were doing in-school training, that's now irrelevant because education is not taking place in schools. Or if your nonprofit depended on air travel, those distribution models have been disrupted. And it's not clear that they're just temporarily stopped.

So organizations have to look at themselves today and understand whether their missions still can be delivered. They also need to look ahead six months and try to imagine what the world will look like, whether their missions can be executed.

We will look to fund organizations that are tackling complex societal issues that aren't being taken on by somebody else, with long-lasting solutions.

Organizations also must have viability, and not just financial viability. They must be able to attract and retain the kind of human capital they need.

They also need persistent, tenacious leaders who can scale and replicate solutions.

Where should nonprofits focus their energy?

First, give all of your employees permission take care of themselves and their families; that's the first and foremost priority.

Second, drop everything that's irrelevant. Focus on the most important things where you can make a difference in this moment.

Third and most important, allow people to figure out what's going to be on the other side of this crisis. It's a mistake for organizations to hunker down and weather the storm. That is insufficient to assure that the mission that they're trying to deliver can be delivered at scale when the crisis is over

Tell me about an organization that's making itself relevant in the moment.

EducationSuperHighway spent eight years connecting 47 million students to broadband in schools. It was getting ready to wind down when the coronavirus hit. Confronted with the reality that education is not taking place in schools, it partnered with the 1Million Project to create Digital Bridge K-12. The organization went to Sprint and got Wi-Fi units deployed in communities around San Francisco to connect tens of thousands of students. They were instantly able to raise approximately $600,000 because of what they were trying to do — very relevant, very needed.

Every organization has the potential of finding that mission moment to be relevant, and there is funding for that. It's a very different strategy than going to your core donor base to ask for funding for a mission that has to be set aside just so you can weather the storm.

What kind of tough measures should nonprofits consider to stay alive when their funding is drying up?

Nonprofits can go to their landlords and talk about deferring rent. We're working hard to try to get software providers to waive license fees. They've reduced them, but a lot of organizations are still paying a lot for license fees because their usage has gone up. I don't see a reason why these companies wouldn't provide relief for nonprofits.

For example, Kinvolved is a service that connects parents and guardians real time with teachers to reduce absenteeism. Now with schools remote, it has become a principal platform for communication between the schools and the students and their parents. Their volume has gone astronomically high. So the fees they are paying for software services has gone astronomically high.

There are only a few places where you can cut expenses so you may have to look at your work force. Under the Cares Act, there are enhanced unemployment benefits. There are ways to furlough employees while they still receive health benefits.

So talk to your landlord. See if you can waive licensing fees for software and other types of services. And in some cases, you may have to look at furloughing your work force in a way that they can keep their health benefits and apply for unemployment benefits.

Are any of your grantees taking those kinds of steps right now?

This is super painful for organizations, but they have to do it. There's not a lot of choice, and every leader struggles with it because they don't want to inflict pain on anybody, particularly in a moment like this. But it's more important than ever to make the right choices.

The thing they have to keep in mind — and it's the hardest to do when confronted with these terrible choices — is the mission. All nonprofits exist for the public good. That's the driving force for them. To preserve their mission for the public good, they have to take actions that will allow them to continue to provide services.

Are you concerned that some nonprofits may wait too long to make tough choices?

Yes, absolutely. I don't think I've ever seen any organization act too quickly. It's just not human nature. If there's a bias, it's going to be to act too slowly. Think about what you were thinking about five weeks ago. I never thought we would be here. I was debating whether we were holding our retreat for 250 people in Menlo Park. So the speed of what's occurring and its broad, ubiquitous impact demands now more than ever that folks act quickly.

This interview was edited for brevity and clarity.

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