Advocacy is a team sport . . . and a request.

Advocacy is a team sport . . . and a request.

We are pleased that two of our reports—on contract delays and on early childhood fundingended up being an important part of broader advocacy efforts that led to a greater public focus on contract issues and to a promise of pay-parity for nonprofits providing Pre-K under city contracts. SeaChange is not an advocacy organization but we remain on the lookout for opportunities to add helpful analysis into the mix.

Last month, we presented as part of a panel on “intermediaries” at the Center for Effective Philanthropy annual conference. The presentation was well received so we are thinking of turning it into an article. But before we do it would be helpful to get feedback. Below is the text. Comments are welcome.

Finally, have a good summer; there is unlikely to be another post until September . . . though there have been a few philanthropy-related posts on my personal blog at Forbes.

CEP Intermediary Panel Remarks:

I’m suspicious of nonprofit intermediaries. In heaven, there are few middle-men with the temerity to stand between funders and nonprofits. Despite this, SeaChange currently plays six intermediary roles; we have gotten out of one; are considering two and have poked at, but ultimately abandoned, several others.

But we try to temper our natural enthusiasm for increasing our impact by expanding into new, unfilled, intermediary roles by asking ourselves some tough questions. And we try to periodically re-ask them about the roles we are already playing:

  • Cost: What are the long-run, fully-loaded costs – which usually means staffing model – of the activity? How much are fixed, semi-variable and variable? How much might we get pro-bono or low-bono from consultants/stringers? Would SeaChange enjoy any benefits of scale/scope given the other things we are already doing? How would our costs compare to those of the funders if they did it themselves? Do we have a process advantage over them? Do the costs seem reasonable in absolute terms? Are there other nonprofits with a cost or process advantage over us?
  • Information: What information is involved? How do we get it and when? To what degree can we piggyback on information already being created or collected by others? (Information creation is expensive relative to synthesizing what people we know already know) To what degree does the network we would need to do the work overlap with the one we already have? What confidentiality issues might preclude people sharing information with us or our sharing information with others?
  • Risk: How can we spread/allocate the financial, legal, reputational, and emotional risks of the activity to best satisfy the appetites of the participants? (When intermediaries say they are “reducing risk” they are just moving it around; there is no place outside the system – the moon? – to send it.) For example, when SeaChange took over a bankrupt nonprofit a few years back the actual risk was no lower than if one of our funders had done it themselves. But our understanding of the risk was greater and our tolerance for it was higher.
  • Conflict and Governance: How will decisions get made? Who can make things happen? Who can stop things from happening? What conflicts of interest are inherent in the work? The power imbalance between funders and nonprofits means they need help managing conflict so the potential for conflict is an opportunity for us to add value. (As the old joke goes, “no conflict, no interest.”) Like most intermediaries, our hearts are with nonprofits but our bread is buttered by funders so it can be tricky speaking truth to power. We’ve tried to make this easier by maintaining a diversified group of funders and by keeping a reserve of “courage money” in the bank. We’ve also codified and published our evolving approach to managing conflicts of interest so we – and everybody else – knows how we’ll approach conflicts when they arise.
  • Exit: What time frame is involved in the work? Under what circumstances would we decide to stop doing the work? What would it involve to exit in a professional manner? How can we be sure that we can stop anything we start?

These first five are pretty standard and well explored in the literature on financial intermediation of any type (e.g. for profit); but then we have a final, critical issue which is more specifically a nonprofit issue:

  • Measurement: It’s daunting to think about how to measure the value-added (or destroyed) by an intermediary in creating a portfolio of grants, loans and advisory assignments each of which is individually difficult to measure. The good news is that almost all our funders are directly involved in the work so we don’t need to report to them about it as if they were third-parties whose only connection to us was a disembodied grant report. In fact, I get very nervous when we start spending time talking/writing/tweeting to third-parties about the work rather than just doing it. (Time-sheets have proven helpful in reducing the ratio of talk-to-action but the struggle is real.)

* * *

John Maynard Keynes – himself an economist – famously said: “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.” I feel much the same way about intermediaries. “If we could just think of ourselves as humble, competent and hardworking – almost philanthropic-plumbers – that would be splendid too.”

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