Established in 1992, the San Francisco-based McKay Foundation supported organizations that addressed income inequality and poverty. The McKay Foundation focused on developing long-term, community-based solutions to social and economic problems. Robert McKay Jr. provided the philanthropic vision for the foundation and served as its executive director.
In 1998, the McKay Foundation formed and funded the Living Wage Coalition in San Francisco. In its effort to change public policy, the McKay Foundation had to operate within a series of regulatory constraints imposed as a condition of its tax-exempt status.
The Tax Reform Act of 1969 restricted foundations from: (a) making lobbying statements to a legislator or legislative staff member that contained both a reference to specific legislation and a point of view on that legislation, and (b) engaging in communication with the public that referred to specific legislation, reflected a view on that legislation, and included a call to action. However, foundations still had wide latitude to educate legislators and the public on issues relevant to proposed legislation, referenda, and ballot measures.
The McKay Foundation played a key role in convening the diverse constituencies that had a stake in the living wage issue, while navigating within the lobbying restrictions placed on private foundations. After a two-year effort, Mayor Willie Brown signed the San Francisco Minimum Compensation Ordinance on November 1, 2000, and more than 20,000 low-income workers received pay increases.
After the ordinance had been signed, McKay considered how to sustain the energy and momentum he had helped to mobilize. McKay wondered whether the living wage community could reorient its focus to address other important problems for San Francisco’s low-income residents or whether the fight for a living wage had been so focused that it could not be sustained beyond the coalition’s recent victory.
Case No: SI68/PM59
Late Palo Alto industrialist William R. Hewlett and his wife, Flora Lamson Hewlett, and their eldest son, Walter B. Hewlett, established the William and Flora Hewlett Foundation in 1966. The Foundation’s guiding principle, as stated by the board of directors, was to “promote the well-being of humanity by focusing on the most serious problems facing society, where risk capital, responsibly invested, may make a difference over time, and on sustaining and improving institutions that make positive contributions to society.”
By 2003, the Foundation was focused on conflict resolution, education, environment, family and community development, performing arts, population, and U.S.-Latin American relations. The Foundation’s assets fluctuated based on market factors but were approximately $5 billion in 2002, with grant awards totaling over $200 million.
Under the direction of President Paul Brest, the Foundation assumed a leadership role in advocating that mission-based organizations, including foundations themselves, make a more conscious effort to articulate the causal theories that guided their work. To do so, they suggested that foundations and grantees use a theory of change, also known as a causal theory or logic model, to structure their strategic planning and evaluation efforts.
In its simplest form, a causal theory took the following form: inputs, which lead to activities, and outputs, which in turn lead to outcomes. The process of designing a causal theory began with establishing desired outcomes and then determining what inputs and activities were necessary to produce them.
The Hewlett Foundation utilized a theory-of-change model to develop its own internal programs, such as the environment program’s off-road vehicle-use initiative. The theory-of-change model informed every aspect of the Foundation’s work, from grantmaking strategies to grantee selection to program performance evaluations.
As the Foundation shifted its grantmaking to align with a theory-of-change approach during 2001 and 2002, Brest and the program staff endeavored to increase the Foundation’s effectiveness and accountability by formalizing their planning and assessment practices.
Case No: SI63
The Global Fund for Women was a funding intermediary that made grants to seed, support, and strengthen women’s rights groups outside the United States. These groups worked to provide women with economic opportunities and independence, improve their health and reproductive rights, increase girls’ access to education, and stop violence against females. Since its first year of grantmaking in 1988, the Global Fund had grown rapidly, awarding more than $26.8 million to over 2,500 women’s rights groups in 160 countries as of 2002.
The Global Fund’s style of fundraising and grantmaking reflected its belief that local women could best determine their own needs and create solutions for lasting change. Kavita Ramdas joined the Global Fund in 1996 as its second president and CEO, succeeding cofounder Anne Firth Murray.
In her new role, Ramdas instituted a number of strategic, organizational, cultural, and process changes, while seeking to preserve the mission and values of the organization.
Organizational changes aimed at professionalizing the work of the Global Fund included recognizing the current staff’s contributions, expanding the staff in underrepresented knowledge areas, and creating a more defined structure and hierarchy.
Strategic changes in grantmaking included proactively involving external advisors from the field, giving larger and multiyear grants, and shifting to a discretionary grant-review timeline that would better meet the needs of potential grantees.
In the area of fundraising, the Global Fund embarked on the first phase of building a permanent endowment fund that would provide grantees and the organization with more security and longevity.
Looking ahead, Ramdas’ priorities included examining how to guide the Fund’s growth without losing the organization’s unique connections with donors, grantees, and staff. In addition, she hoped the Fund could do a better job of assessing grant outcomes and sharing success stories. Ramdas also wondered how the Fund could better influence critical policy-related decisions made in the broader external environment that affected important women’s rights issues.
Case No: SI62
The case highlights a broad overview of a nonprofit media services organization, BAVC, with a strong track record and solid market position in the regional market for media technology training (for professionals and amateurs) and workforce development (for low-income groups), as well as the national noncommercial (not-for-profit) market for creative media services.
The recent history of the organization is one of entrepreneurial dedication, strong leadership, and a dynamic culture of varied constituencies, leading to tremendous growth. In many ways, BAVC has behaved like a high-tech business, utilizing cutting-edge technology to deliver innovative services to the marketplace and constantly innovating to remain at the forefront of the high-end market.
As a nonprofit in this sector, BAVC faces unique challenges and opportunities, relative to both traditional nonprofit organizations and for-profit businesses, making it an interesting comparison to a media company (Disney?) or to another nonprofit organization. Teaching Note available.
Case No: SI6
Susan Ford served as the president and cofounder of the Sand Hill Foundation, a family foundation that made grants to organizations that benefited people on the San Francisco Peninsula. The foundation was established by Tom and Susan Ford in 1995, emerging from the Fords’ shared passion for giving and community development. The foundation focused on the environment, education, preservation of open space, youth development, and job training.
The Fords were among the original donors of the Teen Success Program, a support group for teen mothers launched in 1990 by Planned Parenthood Mar Monte (PPMM). The program encouraged teens not to have a second child and to stay in school, in exchange for $10 per week and $100 for every 25 weeks of attendance. Facilitator-led Teen Success groups of up to 12 teen mothers met weekly. Childcare was provided during meetings, and participants could remain in the groups until they turned 18 or completed high school.
After investing more than $200,000 in the initiative, Susan Ford decided to measure the effectiveness of the Teen Success Program. Her intention was to validate the program’s results and identify its strengths and opportunities in an effort to help it grow further. Yet, even though Ford had developed a positive relationship with Linda Williams, the head of PPMM, she worried that Williams might feel threatened by her proposal for an assessment of the program’s impact. The evaluation process resulted in tensions that caused both Ford and Williams to reflect upon the dynamics of the grantor-grantee relationship, as well as the role of evaluation in their future work.
By 2002, the Teen Success program was operating in over 20 communities in California and Nevada and had served 625 teen mothers. That year, PPMM won the Planned Parenthood Affiliate Excellence Award for services to teens. In mid-2002, PPMM was seeking funding for another comprehensive evaluation of the Teen Success Program so that other Planned Parenthood chapters could potentially replicate the initiative.
Looking forward, Williams, Ford, and others involved in the Teen Success Program hoped to capitalize on their learning to more constructively engage all stakeholders in the evaluation process, effectively monitor the program’s impact, and take action on evaluation results.
Case No: SI56
This case explores the economic growth issues of Bozeman, Mont., and the role that a new nonprofit organization, the Yellowstone Business Partnership (YBP), could have in directing Bozeman’s future. Bozeman’s economy had grown rapidly, but with growth came concerns over development of environmentally sensitive areas, impact on local businesses, and affordability.
YBP was formed to bolster the Yellowstone–Teton region’s economy and environment by seeking solutions, innovations, and inclusion from all sectors of the economy. As the location of the organization’s headquarters and largest chapter, Bozeman’s growth was particularly important to YBP for identifying programmatic objectives and growth implications for the region.
Case No: SI54
TransFair USA, the U.S. fair trade labeling arm of the Fair Trade Labeling Organization (FLO), faced strategic challenges in 2003. The Fair Trade label denoted coffee (and other products) sold at a price high enough to allow small certified farmers to earn a living wage.
TransFair, like the other fair trade organizations worldwide, enjoyed an exclusive niche status in the United States. In 2003 Fair Trade Certified™ coffee accounted for 3-5 percent of all coffee sold in the United States, a substantial accomplishment given that TransFair was founded in 1998.
Paul Rice, founder, president, and chief executive of TransFair USA, wanted to push Fair Trade Certified™ coffee beyond its niche status, into the mainstream. In doing so he faced the challenge of convincing uninformed mainstream consumers and skeptical large-scale coffee roasters to buy Fair Trade Certified™ coffee, and FLO to allow TransFair to certify large coffee-growing estates.
Case No: SI39
Seattle’s theatre industry had a rich, 38-year history of producing top-quality plays and musicals. In a typical year, the theatres collectively sold over a million tickets and pumped over $8 million into the local economy.
Historically, the five major theatre companies—Seattle Repertory Theatre, A Contemporary Theatre, The Empty Space Theatre, Intiman Theatre, and Seattle Children's Theatre—each had a clearly defined mission statement and unique artistic focus. However, by the close of the 2001 season, the theatres’ strategic and artistic identities had blurred as each company pursued growth.
Some attributed theatregoers' and donors' waning interest and declining support to this homogenization in addition to the slumping U.S. economy. Others argued that there was too much capacity in the industry and that, in order to survive, the stronger theatres had to expand their niches and even drive smaller, weaker players out of business.
The vibrant Seattle Theatre Industry appeared to face monumental challenges to remaining both critically acclaimed and financially sound.
Case No: SI37
In early 2003, Reverend Doctor Dieter Kays, the CEO of Lutherwood-CODA, was, by his own account, “worried and spending a lot of time in prayer.” The subject of Kays’ spiritual reflection was Luther Village, the Canadian nonprofit’s bold, three-phase, 12-year, $75 million real estate project to develop a sprawling, high-end, 20-acre, 750-member retirement community in downtown Waterloo.
With the first two phases of the project complete, Luther Village had accumulated $4.5 million of profit from construction. Phases I and II of the Luther Village had sold out with some headaches, but fairly quickly nonetheless. At the time, Lutherwood-CODA had brought to market a new concept in elderly residential services.
But Phase III, a $20 million assisted living center serving individuals with daily service and care needs, would be completed in a much more competitive market. Now, there were many competitors for assisted living services in the region, and early indications were that demand for the new facility was lower than it had been for Phases I and II.
Moreover, Lutherwood had assumed substantial debt to finance Phase III. All of the equity generated during Phases I and II had been reinvested into Phase III. Kays knew that the organization’s ability to service its obligations depended on being able to market and fill the new assisted living facility as quickly as possible.
Could Lutherwood-CODA tolerate this new level of financial risk? Would market and economic conditions allow Phase III to execute its aggressive marketing program? Could the project really generate sufficient funds for Lutherwood-CODA’s social programs to make all the work and stress worthwhile? Was the development and operation of Luther Village consistent with Lutherwood’s social mission?
Case No: SI35
For nearly 50 years, the Korean peninsula has been separated by a band, 2½ miles wide, which has divided the land into North and South. Heavily armed on both sides, the Demilitarized Zone itself has become an environmental haven. Since the end of the Korean War, this land has been virtually untouched by humans. Surrounded by tanks and electrified fences, cranes, egrets, and bears roam free.
A three-hour drive to the south is Seoul, one of Asia’s most important cities. With 20 million residents, Seoul is the home of South Korea’s government, largest businesses, and thought leaders. There, a small, grass-roots group of affluent, well-connected, self-described “housewives” struggle with some of the key issues of South Korea’s future. Their group is called Mirae, meaning “future” in Korean. They work to prepare for what almost all South Koreans see as the inevitable reunification of North and South.
As they raise and use funds, their challenges are myriad: How to best create a nonprofit in a society that has traditionally thought of charity as an intrafamily issue, whether they should limit their giving to people in their own country, and how to support the North Korean people while not supporting the oppressive North Korean government.
Case No: SI33