Less Than We Thought
At a Glance
Benjamen Douglas & Rusty Stahl
A New Analysis of Foundation Investment in the Nonprofit Workforce
The central narrative about the nonprofit workforce since the early 2000s focused on a “deficit of leaders.” This discourse gained traction after the publication of a Bridgespan Group report entitled The Nonprofit Sector’s Leadership Deficit. Fund the People has argued since 2013 that there is not a lack of leaders in the nonprofit sector; rather, the problem is a dearth of investment in nonprofit leaders and the entire nonprofit workforce. In 2015, Bridgespan published new research clarifying and updating their prior research, and reframing the issue as the nonprofit leadership development deficit.
This deficit of investment in nonprofit people has created an enduring bottleneck on the nonprofit leadership highway. The roadway is inaccessible and unaffordable to diverse potential leaders, people stagnate and burnout along the way, and long-serving leaders cannot easily transition or retire in a dignified and productive fashion. This status quo is detrimental to the performance, impact, and sustainability of nonprofit organizations and their supporters. This problem is complex, and it has roots in problematic attitudes about the merits and nature of nonprofit work.
Responsibility lies with all stakeholders—boards, executives, fundraising professionals, line-staff, government, donors, foundations, and other groups. Each can help increase investment in nonprofit people through what we call talent-investing. We argue that foundations must play a central role in jump-starting this change. Unlike nonprofits, grantmakers have the power to shape the intentions and restrictions of financial capital flowing into the sector. Unlike most governmental entities and major donors, organized philanthropy combines outsized power and influence in the sector, unique flexibility in how they deploy capital, and a serious stake in the effectiveness of their grantees and causes.
Fund the People was formed to advance the change of attitudes and behaviors that can lead to expansive investment in the nonprofit workforce. In 2013 we worked with the Foundation Center to understand the scope and scale of foundation funding for nonprofit staff development in recent history. We found that only 1 percent of foundation grants went to nonprofit talent. But because the concept of investing in the nonprofit workforce is relatively new to most of the foundation community, the ways grants are summarized and labeled made us question the data. In this report, we share exactly what is included in that 1 percent of grants and why our previous finding was overly optimistic.
- Of the 1% of foundation grants previously believed to be investments in nonprofit talent, only 65% can accurately be classified as such
- Of the grants in the initial data set, our analysis disqualified several of them. For example, we judged 17.5% were not investments in talent, 14.5% were not applicable, and 2.7% were unclear
- The median size of grants we categorized as talent-investments are in the range of $40,000-$50,000
Several years ago, two simultaneous studies reported that only 1 percent of foundation grants are used to develop nonprofit leaders and employees. Laura Callanan, then a Senior Fellow at the Foundation Center and affiliated with McKinsey & Company, published scholarship on the subject. In a similar endeavor, Rusty Stahl of Fund the People (then Talent Philanthropy Project) produced an article entitled “Defining Talent Philanthropy.” Callanan and Stahl queried the same Foundation Center database with slightly different search parameters, and reached the same conclusion: an investigation of the veracity and stewardship of investment in nonprofit leadership by foundations is essential to the sector’s survival.
To understand what lays beneath these numbers, in 2016, Fund the People completed a detailed statistical analysis of the grant files that comprised the Foundation Center data set’s 1 percent. Our goal was to determine which grants fully or partially offered a talent-investment in support of the recipient organization’s staff, board, or volunteers. We included investments in planning or evaluation for such investments. This research brief shares the results of our analysis.
Fund the People worked with the Foundation Center to create a custom, query to identify grants that could be defined as talent-investments. Our data is based on a set of grant records pulled from the Foundation Center’s grants database, which includes all grants of $10,000 or more awarded to organizations by private and community foundations between 1992 and 2011. The database consists of grant records from approximately 1,000 of the largest private and community foundations. Among community foundations, only discretionary and donor-advised grants are included.
We recognize there are limitations to this data set, and we believe it is important to consider within these limits. Because this data set is composed only of grants, it does not include fellowships, trainings, awards, and other leadership development activities paid for and managed directly by foundations for the benefit of their grantees. We recognize that foundation-administered programs are one of the ways foundations invest in nonprofit people; however the Foundation Center does not track them, and we are not aware of a centralized data source for such activities. Moreover, we are interested in how foundations use grants to enable grantee organizations to support their staff, beyond when foundations create their own branded programs and trainings. (For more on the dynamic tension of who controls the focus of talent-investments, check out Talent-Investment Menu.)
Fund the People conducted two related analyses of the data:
We coded a randomized sample of 641 grants made during 1992-2011, plus every grant in the data set awarded during 2009-2011. Our coding system determined whether a grant was:
- Fully or partially a talent-investment in a US nonprofit or school
- Not a talent-investment
- Not applicable, because they funded a non-US nonprofit or school
- Not clear whether it provided a talent-investment
Findings for 2009-2011
When counted by the number of grants awarded:
- 68.3% were talent-investment
- 16.5% were not talent-investment
- 11.1% were not applicable
- 4.1% were unclear
What this means: 31.7% of the grants we previously identified as talent-investments were not, or could not be, verified as such.
When counted by the dollar amount of grants awarded:
- 66.2% of dollars were talent-investments
- 19.6% of dollars were not applicable
- 11.7% of dollars were not talent-investments
- 2.6% of dollars were unclear
This means: 33.9% of dollars previously identified as talent-investments were not, or could not be verified as such.
Findings for 1992-2011
When counted by the number of grants awarded:
- 58.3% were talent-investments
- 25.4% were not talent-investments
- 14.4% were not applicable
- 1.9% were unclear
This means 41.7% of grants previously identified as talent-investments were not, or could not be verified.
When counted by the dollar amount of grants awarded:
- 68.6% of dollars were talent-investments
- 12.9% of dollars were not applicable
- 16.4% of dollars were not talent-investments
- 2.0% were unclear
This means 31.3% of dollars previously identified as talent-investments were not, or could not be verified.
Variations Between 2009-2011 and 1992-2011 Results
Regardless of whether you analyze every single grant, or a random sample—or whether you calculate grants based upon the number awarded or dollar amount—it is fair to say that only 65 percent of grants that were previously considered to be talent-investments can accurately be classified as such. This means that rather than representing 1 percent of grants, talent-investments constitute only slightly more than one-half of 1 percent of total foundation grantmaking. The hole is deeper than we thought. The call for foundations and their grantees to maximize investment in the nonprofit workforce could not be more urgent.
Appendices: Talent-Investment by the Numbers
Top Funders of Talent by Dollar Amount or Number, 2009-2011:
What’s in the Data? Top Five Largest Grants, 2009-2011:
|Bill & Melinda Gates Foundation||Atlanta Public Schools||$10,000,000||To build the necessary capacity, processes, and tools that will lay a strong foundation to accelerate the district’s human capital reform work|
|Bill & Melinda Gates Foundation||Denver Public Schools||$10,000,000||To accelerate the district’s human capital reform by implementing a teacher performance management system with student achievement and growth at its core|
|The Duke Endowment||Duke University Health System||$9,000,000||To assist with neuroscience faculty recruitment|
|Bill & Melinda Gates Foundation||DC Public Education Fund||$4,038,768||For continued development of Teacher Data and Professional Development Platform|
|Bill & Melinda Gates Foundation||Teach Plus||$4,010,611||For program expansion and to create a national network of informed teachers, through an intensive training program for teaching fellows and less intensive network-building activities for additional teachers|
|F.M. Kirby Foundation||Wake Forest University||$2,025,000||For Wake Forest Fund-$25,000; toward Office of Personal and Career Development (OPCD) program-$1,000,000; to name and endow F.M. Kirby Foundation Chair of Leadership Development within the Office of Personal and Career Development (OPCD)-$1,000,000|
|The John D. and Catherine T. MacArthur Foundation||National Juvenile Detention Center||$1,425,000||For training and technical assistance to state and local juvenile justice professionals and agencies in Models for Change states, and to launch the Models for Change Juvenile Court Curriculum nationwide|
|W.K. Kellogg Foundation||Connecticut Commission on Children||$1,200,000||To strengthen civic engagement skills of parents by supporting the national expansion of the Parent Leadership Training Institute|
|Ford Foundation||Mexican American Legal Defense and Educational Fund||$1,000,000||To strengthen financial base; expand regional reach; and focus litigation, public policy, and community leadership development around immigration, language, education, and related issues|
|The Robert Wood Johnson Foundation||The University of North Carolina||$801,175||To enable young physicians committed to clinical medicine to acquire new skills and training in nonbiological sciences important to medical care systems|
|Bill & Melinda Gates Foundation||Ministry of Culture of the Republic of Bulgaria||$14,999,853||To implement programs to increase access to computers and the internet in Bulgarian public libraries, and provide training and support services for librarians and library users|
|Doris Duke Charitable Foundation||Health Alliance International||$10,000,000||For Strengthening Integrated Primary Health Care and Workforce Training in Sofala Province, Mozambique|
|Bill & Melinda Gates Foundation||Association for Aid with Preventive Medicine||$4,315,471||For development of health logistics as a profession in developing African countries through establishment of training program and centers for government logisticians in vaccine logistics and supply chain management|
|Conrad N. Hilton Foundation||Marywood University||$2,000,000||To extend Sisters Leadership Development Initiative to increase technical, management, and leadership skills for female students ministering in Africa|
|Omidyar Network||MicroSave India||$2,000,000||For research, toolkit, curriculum development, extensive information dissemination, and training service providers|
|The John D. and Catherine T. MacArthur Foundation||Policy Research||$1,275,000||For training and technical assistance to the Models for Change states|
|Ewing Marion Kauffman Foundation||KIPP Foundation||$500,000||To support KIPP with matching funds for the Department of Education’s i3 grant to the KIPP Foundation, the consortium of KIPP schools, and regional organizations in support of KIPP’s leadership development programs and network growth efforts|
|Robert W. Woodruff Foundation, Inc.||American Foundation for the Blind||$500,000||For training resources on the Low Vision Technology initiative as part of the 90th anniversary campaign|
|The John D. and Catherine T. MacArthur Foundation||Massachusetts Institute of Technology||$500,000||For interdisciplinary program of research and training to strengthen scientific advice on international security policy|
|Meyer Memorial Trust||Blue Mountain Community College||$400,000||For matching grant to build Eastern Oregon Higher Education Center in Hermiston to support workforce training, and undergraduate, and graduate-level degree programs|
As we analyzed the data, we found several categories of grants that we did not anticipate. Examples of these outliers include grants for:
- Training doctors in various scientific skills
- Teacher development in school systems
- Skills trainings for grassroots community members
- Student leadership programs
- Government employees, including training for police and justice personnel
- Capital campaigns to fund training centers
- Workforce training
- Clergy and lay leadership training