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PEAK Grantmaking

No More Band-Aids: How Funders Can Advance Systems Change

Philanthropic organizations contribute to a better world by supporting a wide variety of important issues, from hunger alleviation to college-readiness to better access to healthcare providers. But are funders supporting these issues in the most effective way that will create the most positive outcome? Will they create change? Those are different questions altogether, and funders will define ‘change’ in different ways. There is no doubt, however, that more funders are starting to look more intently at how they can support underlying change, and do more than provide Band-Aids to remedy deep social issues.

Why should foundations support systems change?

Using a systems change lens acknowledges that society’s issues are complex and interconnected, rather than isolated problems. Despite approximately $350 billion being given to one million public charities each year, foundations and the nonprofits they support know that the issues persist. In many cases, there are structural dysfunctions that are the root causes of these issues, and funding models that have been used for decades is not changing this- nor has that been the goal.1 While different organizations will undoubtedly define systems change differently, it generally requires taking an expanded big picture perspective, and looking at how causes and effects from various components of a system have worked to cause dysfunction and even failure. Rather than acting in isolation and applying topical remedies to urgent issues in a piecemeal way, though well-intentioned, it is worth stepping back and applying resources in a more systemic way, really targeting those root causes. Many funders and other nonprofit players are adopting more systemic approaches to their work to create a more just and equitable world.

How can Foundations advance systemic change?

Foundations can do a variety of things to support systems change work. This can span from devoting one grantmaking program to systems change in one issue area, to orienting the foundation’s mission to systems change and using that lens in all its work, to utilizing a more broad-spanning framework across organizations that provides a point of engagement for more than one funder at once. A shared framework will include the priorities of each player, establish shared goals and metrics, and outline opportunities for collective investment.2 Funders can bring together partners across sectors to coordinate support for existing social justice movements. Taking it full circle, philanthropy can even organize itself in a given geographic area toward a common vision for change.

Grantmakers can specifically support activities such as advocacy, policy and practice change work, community organizing, and movement building, along with more traditional support of immediate needs with direct programs and service. Foundations can support individual organizations engaging in various advocacy activities including public education, issue education for policymakers, policy research and analysis, policy implementation, canvassing, story banking, voter education, candidate forums, etc. They can even support lobbying, ballot initiatives, and support both legislative and appropriations advocacy. Supporting organizations in their work to protect good policies, prevent the passage of damaging policies, and implement those that have passed is important in the current political climate as well. Foundations can even engage in advocacy directly, depending on the type of foundation.

Can foundations really support advocacy and policy change?

Yes. Bolder Advocacy of the Alliance for Justice is a valuable resource for foundations interested in knowing what they can do to support advocacy work and quelling any anxieties about moving in that direction. Nonprofit organizations and philanthropic institutions such as foundations can all legally engage in advocacy and policy work.

Both public and private foundations can fund nonprofits that advocate and lobby. Private foundations can only support lobbying through general support and specific project grants that include lobbying, however.3 Both public and private foundations may also strengthen democracy by supporting nonpartisan election-related activities. Some of these include voter engagement training, hosting a candidate forum, canvassing the public, and funding ballot measure campaigns with general support or specific project grants.4

Foundations can advocate directly as well. Public foundations can even lobby within limits, measuring its lobbying activity with one of two standards tests. More lobbying is generally possible when measuring it by the “501(h) expenditure test”, under Section 501(h) of the tax code. If private foundations lobby, they incur a prohibitive tax on the expenditure.5 Acceptable advocacy activities include: building relationships with legislators and meeting with them to educate them on the issues (without referencing a specific piece of legislation), educating the public on the issues (without calls to action), convening stakeholders to discuss broad topics, creating policy analyses, briefs or research reports, influencing agency regulations, influencing school board policies, and more.6

What efforts are currently happening in the field?

There are several philanthropic entities and support organizations that are currently working in this way. A few notable national examples include CHANGE Philanthropy, National Committee for Responsive Philanthropy (NCRP), Funders for Justice, Emerging Practitioners in Philanthropy, the Robert Wood Johnson Foundation, and the Annie E. Casey Foundation. Some philanthropies funding locally include the Hyams Foundation in Boston, the Joyce Foundation in Chicago, and the Deaconess Foundation in St. Louis. There are also regional efforts of grantmakers organizing themselves to advance systems change, including a group of Missouri funders. Funders in these efforts can pool funds to resource change work as part of a broader, more collaborative approach to changing systems. You can learn more about these kinds of philanthropic efforts in The Role of Philanthropy in Systems Change by the Putnam Consulting Group.

Are you tired of treating the symptoms of complex societal issues and want to address the root causes? There are many different approaches you and your foundation can take to get involved in a more impactful way, or even plug into existing efforts in your area. Together, we may just find a cure.

1Breakthrough Philanthropy: Getting at the Roots of Change, Morgan Stanley Voice, Capital Creates Change, ForbesBrandVoice
2Three Ways Funders Can Change Systems and Drive Impact, Kris Putnam-Walkerly, Forbes
3Private and Public Foundations May Fund Charities that Lobby, Bolder Advocacy
4Foundation Support for Election-Related Activities, Bolder Advocacy
5Public Foundations Can Lobby, Bolder Advocacy
6Private Foundations May Advocate, Bolder Advocacy