Comments prepared for the 2014 Thrive Network conference “Bold Strategies for Accelerating Impact,” featuring Foundation President Lauren B. Dachs.
1. Why did the S. D. Bechtel Jr. Foundation decide on a limited-life strategy vs. perpetuity? How was that decision made? Was it a difficult decision?
The original intention was for the Foundation to be perpetual.
Beginning in 2000, we made a concerted effort to engage the next generation in foundation leadership. We caught the grandchildren at a time in their lives when they were pursuing their careers and, in many cases, starting families. Their attention was understandably elsewhere. At the same time, there were some big issues that my father cared about and wanted to be significantly engaged in– which would mean spending much more than the mandated 5% of the Foundation’s endowment. His commitment to address a few big issues and his concern about whether future Foundation leaders would stay true to his intent led him to write a letter to the Board. Here is an excerpt:
Each of my children and grandchildren has their own charitable foundation from which they each can select charitable needs as they see fit… I prefer that they each use their own foundations to support causes they think are most important, rather than being saddled with trying to manage my foundation.
Non-family administrators in the longer term future are much less likely to be able to interpret and convert my interests into long-term future goals and interests responsive to the needs of their time.
In the near term it is difficult, if not impossible, for the leadership of the S. D. Bechtel, Jr. Foundation to determine the highest priority charitable needs out in the long-term future.
I believe it is more important for the Foundation to focus on the contributions that we see as the highest priority near-term charitable needs, and let future generations of charitable contributors determine, in the future, the greatest needs of their time.
The decision was made in 2009 to spend down, and the Foundation will sunset in 2020. This time will allow us to take a more systemic view of the issues we are tackling, to build important partnerships, and to wind down some lines of work slowly and – we hope – responsibly. Over the next years, we will take on some pretty big issues – integrated water management for the state of California, STEM education, building character in our young people, and helping our state parks to name a few.
2. What is it about the spend-down context that offers the potential for accelerated impact?
Before the decision to spend down, the Foundation was making $10-$15 million in grants each year. This year we expect to commit $155 million. The big question we work on day in and day out is how: how to approach the issues; how to get the results we want. There are three things that the spend-down context offers us:
- The urgency of a real deadline is a great way to galvanize commitment to act.
- The opportunity to invest so much more in the issues and organizations we care about means we can take on bigger challenges and act faster when we spot windows of opportunity.
- And, in many cases, the work will not be done when we close our doors. We hope we will advance the fields we’re working in, but others will have work to do to sustain the gains or take on new challenges. All this means that working with partners is critical. At the same time, partnering requires patience and we don’t have much time, so building strong enduring partnerships is an ambitious goal. Nevertheless, the imminent deadline for our exit means that we are highly motivated to work with funder-partners.
3. What are you doing to take maximum advantage of the urgency and scale of resources available to you in spend down mode?
For us, it’s all about striking a balance between focus and flexibility.
Focus: Within the areas my father cares so much about, our staff-led strategy process helped us focus in on a small number of issues where we believe we can make a significant difference in the time remaining. We looked for opportunities where the stars are aligned. By that I mean where there is a need for leadership and resources but also where there is momentum. We simply don’t have 10 or 20 years to slowly chip away at change.
One example is our education work related to implementation of Common Core Math Standards. We have a long-standing commitment to STEM Education and have been funding in the area for decades. But this is a critical moment in time. At no time in the past several decades has there been such a potential to reform the system. If Common Core succeeds, our schools will truly be preparing the next generation of citizens and leaders with 21st century skills through inquiry-based, experiential learning. The policy is in place, the standards have been adopted, but success depends on re-training teachers in a new pedagogy.
Some states are struggling with this and even backing away from Common Core because of the challenges of implementation. But in California, where there are well over 6 million children and youth in our public schools, policy makers and education leaders are committed to the transformation. Our Foundation is investing $45 million over 5 years to support a diverse cohort of school districts to train teachers, test a range of approaches, evaluate and document the successes and challenges of the models, and share those broadly with the field to support successful Common Core Math implementation statewide. This is bigger and bolder than anything we were able to do before the spend down, and we think the risks – though high – are well worth the potential rewards if we succeed.
Flexibility is the other hallmark of our spend-down. Our goals relate to issues and approaches. We are not wedded to plans that we will implement mechanically. Too many things change too quickly in the external policy environment for us to be able to rely on linear logic models or three-year plans to manage our work. But we do have outcomes in mind and we believe in the leadership of our grantees.
In some cases we are testing (and hopefully proving) models. This model-building work is essentially experimental and – as with laboratory science – we need to be actively learning and adjusting our approach based on what we are learning.
There is another way in which flexibility is important to us. There will be opportunities over the next 6+ years that we cannot foresee. And my father will continue to bring us interesting projects that he cares about. Our financial projections include a significant set-aside for these purposes so that we can seize good opportunities that present themselves without affecting program budgets.
4. Can you discuss an example of a lesson learned the hard way? What about a success or a big bet that is particularly promising? What are the early results?
Lesson learned the hard way:
I can answer this question in three words: partnering is hard. We have a very real deadline and a pretty high tolerance for risk. We are also very thinly staffed given the number and size of grants we’re making as compared to the norms in the field. Of course we use consultants but still, we’re all pressed for time. At the same time, working respectfully with other funders means respecting their culture and decision-making parameters. There’s a dynamic tension in this. We need to be patient in building strong relationships with other funders, and we sincerely hope our grantees will be able to replace our funding when we’re gone. And, we need to move quickly to seize opportunities. We’ve had a few funder partnerships that we thought were promising but broke down. We’re trying now to develop some criteria for assessing the potential of a funder partnership so we pursue the high potential opportunities.
Another challenge full of lessons learned is around the talent we need in order to get this work done. We have a great team but it wasn’t always obvious what kind of experience we needed in our staff. Over the last few years, when we’ve grown from a staff of 9 to nearly 40, we’ve learned that the kind of grantmaking that will result in systems change requires a very different orientation and skill set than responsive, community grantmaking. We’ve learned that we need excellent project management skills on our staff. We want them to lead in the field. And we don’t really have time to develop the talent ourselves. We need folks who come in and hit the ground running. That means they come with a combination of experience, intelligence, commitment to the issues, leadership skills, AND field expertise.
Improving water management for the state of California is one of our Foundation’s big issues. Groundwater is a key piece of the water puzzle, particularly in droughts. In this critically dry year, groundwater is supplying 60% of California’s water.
The problem is that, for a long time, California has been the only western state without a groundwater management system. As a result, we are using much more groundwater than is replenished. We are mining this resource… Wells are running dry, land is sinking and water contamination is intensifying.
Despite (or perhaps because of) systemic challenges like this, the philanthropic community has largely shied away from the issue of California water. Over the past five years, we have worked to build the water field. We helped launch the California Water Foundation in 2011 to be an advocate for better water management and an anchor for the water field. And we supported research – such as that done by the Public Policy Institute of California and by those here at Stanford – to inform better water policy.
Since its founding, the Water Foundation has worked to build, nurture, and lead an increasingly broad coalition of interests working in support of better water management. In 2014, at Governor Brown’s request, the Water Foundation led a stakeholder process and developed a comprehensive groundwater reform proposal. The Water Foundation also nurtured and led a diverse coalition in a campaign to support better groundwater management.
This campaign was remarkably successful, and defying water’s reputation for intractability, a week and a half ago, the governor signed a package of reforms, for the first time establishing a comprehensive framework for managing our groundwater.
Of course there are miles to go before we rest, but this is an area where I know our support mattered and will continue to matter. We will continue to work with the California Water Foundation and other grantees to ensure successful implementation of these reforms and to further improve our water system. We are also encouraged that with the current momentum and this important milestone, we are seeing increased philanthropic interest in water and hope to continue our efforts in partnership with a broader community of funder partners.
5. What is the role of evaluation in accelerating impact during spend-down?
I suspect that learning – and that includes the lessons of evaluation – can be among the most important legacies of spend-down foundations generally. We are making significant investments in evaluating our major initiatives, and we are committed to sharing the results publically so that others can build on what we’ve learned.
For example, with our Math in Common Initiative, we’ve engaged WestEd to do a formative and summative evaluation and to offer TA on measurement to the participating districts. Their work is complemented by the work of California Education Partners that facilitates a community of practice among the district leadership and teachers to see that lessons learned are shared, and to accelerate the spread of innovative and promising practices.
In other cases, we are looking for partners in learning, and even hope to co-design and co-fund some evaluation with Atlantic Philanthropies and others to ensure that the new knowledge we build has champions when we’re no longer here to share our experiences directly.
But there are tensions and competing priorities when it comes to evaluation. It can be hard to focus the attention of staff in looking back when the forward momentum is so strong and there is so much yet to do to make good grants and move the needle on our big issues. It takes leadership from the top to keep the team focused on reflection and evaluation.
6. How are you thinking about life after your foundation closes? For the foundation’s legacy? For you and your team? For grantees who relied on your resources and leadership?
In terms of the grantees, we’ve already moved away from direct service grantmaking. We’re offering final grants – often with a capacity-building component – to ease grantees’ transitions. We had 400 grantees in 2012. This year, we are working with about 300 and next year it will be about 100.
We are making big investments in professional development for our staff. In fact, I see our people as part of the Foundation’s legacy. We hope they will continue to lead in their chosen fields. In a sense, they will be keeping the work alive from their next positions.
And we’re creating a kind of kitchen cabinet of grantees and colleagues in the funding community that we are reaching out to for ideas about how to exit responsibly. We know we need to get regular input and fresh ideas.
7. What prepares a funder to pursue spend down? What do we have to be prepared for?
This work is hard. We’re trying to catalyze change, not just give money away. I think it helps that we’re comfortable with a pretty high degree of risk and with the fact that the work will not be finished when we depart the scene. In some cases, we just won’t know how the story ends.
We know we’re making big bets with imperfect information.
Tolerance for risk is in the Bechtel DNA. My father is bold and fearless. He has often taken on seemingly impossible tasks and figured it out along the way.
I’m fond of the Will Rogers quote, “You’ve got to go out on a limb sometimes because that’s where the fruit is.”
In addition to tolerance for risk and ambiguity, I think it helps to be curious and reflective. That way you can hope to get better along the way.
And it really helps to have a sense of humor.
8. What role does building your grantees’ capacity play in your spend-down plans?
We are deeply committed to building the capacity and resiliency of our grantees so that they can carry on their important work long after the Foundation exits the field. In fact, leaving strong organizations in place to anchor the fields we work in is a fundamental goal of our work for the next six years.
We are now regularly discussing resiliency with our grantees and offering support for capacity-building that will enhance that resiliency.
9. Do you have any final reflections?
At the S. D. Bechtel, Jr. Foundation, we’ve been learning from Atlantic Philanthropies for years. The regular progress reports that are published by Atlantic are devoured by our team. So even though the issues we are working on and the geographies are quite different, we are learning from Atlantic Philanthropies’ example:
- We learned that there will be an arc to the work. We will need to use different approaches for different stages of the spend down journey.
- We also learned about the critical importance of talented staff and of developing them and caring for them to encourage them to stay until the work is done.
- And we learned about the importance of fiscal flexibility to allow us to be both strategic and opportunistic along the way.
We’re very grateful that Atlantic has pioneered and been so transparent about their challenges and hope we can keep learning from them and with them.