Accelerating Impact Through Strategic Incubation
Enterprising philanthropists increasingly go beyond grant making by partnering closely with intermediaries who have the expertise to launch and accelerate their visions.
Sophisticated funders and changemakers increasingly come to us with deep knowledge of an issue, a clear understanding of gaps in their fields, and an awareness of short-term opportunities to drive needed change. They know that launching a new initiative could achieve the change they seek, but they also want to be smart about using their resources—recognizing that creating an effort from the ground up requires significant labor, time, and expertise. The answer, in many cases, is working with an intermediary that can provide fiscal sponsorship, which enables a new initiative to function as a nonprofit entity without first going through the trouble of establishing itself as an independent public charity. More and more, though, funders and social entrepreneurs are looking for intermediaries whose support goes beyond the transactional nature of fiscal sponsorship and moves into the realm of strategic partnership. They look for fiscal sponsors that can serve as incubators and acceleration partners.
Over the last nine years, Arabella has worked closely with nonprofit intermediaries to implement funders’ and changemakers’ visions. Fiscal sponsors can increase efficiency, ensure compliance, and enhance effectiveness by providing the fundamentals of nonprofit administration—such as managing sub-granting, contracting, and providing human resources support for project staff. Increasingly, though, funders have the opportunity to draw on the knowledge and expertise their intermediary partners have accumulated through hosting multiple social change initiatives. Such fiscal sponsors can guide donors and social entrepreneurs through choices that can make or break a program, such as governance and decision-making structures, staffing plans, budget scenarios, and which consultants or technology solutions to engage. They can also provide projects with “accordion capacity” to think through challenges, serve as an extra pair of hands during a staff transition or busy period, and even manage a project’s spinoff into an independent organization if and when the time is right. A few examples from recent work we’ve supported through the New Venture Fund (NVF), a 501(c)(3) public charity managed by Arabella,* illustrate some of the ways in which this strategic partnership can take shape.
Rapid start-up, ramp-up, and spinoff. We worked closely with the Bill & Melinda Gates Foundation to launch and incubate a new organization—the Literacy Design Collaborative (LDC)—which is creating a community of practice to share knowledge, improve literacy instruction, and provide professional development resources for tens of thousands of teachers across the country. LDC had an ambitious vision with regard to its operations: it planned to launch, scale quickly, and become independent within one year. After onboarding the executive director, we worked closely with him to develop a business plan for the organization and to recruit critical LDC staff. Even as we launched the initiative, we were planning for its spinoff to a stand-alone organization, which included building the capacity of LDC’s new staff to manage their own operations by sharing best practices in grants management, contract administration, and human resources. LDC looked to its fiscal sponsor both to help the initiative hit the ground running during an accelerated start-up phase and to prepare it for a sustainable future.
Increasingly effective collaboration. Arabella supports another project in which a number of donors pooled financial and other resources at the New Venture Fund to advance state policies that strengthen public education in the United States. In addition to administering the pooled donor fund by issuing sub-grants and contracts to state partners, we helped develop a tool to enable the project’s staff, donors, and stakeholders to work together more efficiently and navigate an ever-shifting state policy landscape. Our team is developing a set of common metrics and data points across each of the project’s funding streams and gathering them into an impact dashboard, enabling project staff and funders to analyze data and recommend changes to their plans as they go. This tool is already allowing funding partners to collaborate more fluidly, keep their own staffs and boards apprised of the work, and make complementary investments.
Better alignment through strategic design. We also helped to launch and incubate the We Mean Business campaign at the New Venture Fund, which seeks to increase corporate leadership on climate change around the world. Drawing together seven of the world’s leading corporate networks on climate, We Mean Business is driving bold action on climate in the run-up to the next United Nations Climate Change Conference in 2015. While working closely with the program’s director and lead donor to establish a fiscally sponsored project at NVF, Arabella drew upon our knowledge of the field’s existing efforts in climate change, our work implementing a range of environmental advocacy strategies, and our program design experience to help refine the logic model, budget, and key performance indicators (KPIs) for the effort. We helped to incorporate these into the program’s strategy, which resulted in a more impactful campaign that enabled it to secure the public endorsements of Ban Ki-Moon, Richard Branson, and the CEOs of Apple and IKEA when it launched during Climate Week in New York last September.
In each of these cases, the value of the intermediary extended far beyond providing basic fiscal sponsorship to relieve administrative burdens. It also included the team’s ability to deeply understand the project’s needs and share insights gained from incubating other social change initiatives. Going forward, we expect even more funders to go beyond grant making to launch new initiatives—and in doing so, to partner with fiscal sponsors with the expertise and capacity to incubate and accelerate solutions that work. Doing so can enable them to achieve impact and scale more efficiently, effectively, and quickly.
* The New Venture Fund is an independent public charity that employs program staff and subject matter experts to further its charitable work, but relies on Arabella Advisors to provide administrative, finance, human resources, compliance, and other specialized project support. Operational efficiency, economies of scale, and rapid responsiveness to dynamic capacity needs are just a few of the benefits of this staffing structure.
Katrina Briddell is a director at Arabella, where she helps to manage several nonprofits, including the New Venture Fund, a 501(c)(3), and the Sixteen Thirty Fund, a separate 501(c)(4). Both organizations serve as fiscal sponsors and incubators for new public interest projects, donor collaboratives, and grant-making programs.
Chris Hobbs is a senior director who oversees Arabella’s management of several nonprofits, including the New Venture Fund and the Sixteen Thirty Fund. Chris helps donors and social entrepreneurs turn their philanthropic visions into reality by implementing innovative donor collaboratives, campaigns, and grant-making initiatives that help them achieve concrete goals.