Q&A on the True North Fund

Dan Cardinali, president of Communities In Schools.

On May 11, 2012, the Edna McConnell Clark Foundation (EMCF) announced that 12 co-investors had joined the True North Fund, a public/private partnership created to leverage the federal resources of the Social Innovation Fund (SIF). This new network of co-investors includes several IS members (including the Kresge, Hewlett and Wallace foundations) and has committed $55 million to expand evidence-based programs that make a significant impact on the lives of vulnerable youth throughout the United States. EMCF President Nancy Roob and Dan Cardinali, president of Communities In Schools, share their thoughts about the True North Fund.

IS: EMCF created the True North Fund back in March 2011, when you announced you had selected nine organizations to receive SIF grants. What's been accomplished so far?

Nancy Roob: We’re encouraged by the signs of success we are seeing on two levels. First, and most important, the nine exemplary nonprofits supported by the True North Fund, one of which is Communities In Schools, have served nearly 21,000 additional youth since July 2011, and are on track to reach tens of thousands more young people by 2014. New programs have been launched in New York City, Tulsa, Baltimore, Dallas, San Diego and elsewhere across the country. The Social Innovation Fund was created to expand some of our most promising nonprofits with evidence that their programs have a positive impact on the lives of people in low-income communities. With the need for effective solutions growing in this difficult and increasingly constrained economic climate, I’m grateful our co-investors and we are in a position to help meet this challenge.

In addition, the True North Fund is fostering a very different type of community for co-investors. What unites this diverse group of national, regional and family foundations is our shared belief that it is possible and urgent to lift the life trajectories of many of America's most disadvantaged young people. Though the way funding flows to grantees may vary, we and our co-investors see the True North Fund as a portfolio of promising programs that address in different ways some of the major obstacles low-income youth face today.

IS: How does the True North Fund fit into the picture of what the Edna McConnell Clark Foundation is seeking to achieve?

Nancy: EMCF, over the past decade, has focused our resources on nonprofits with a commitment to growth and compelling evidence that their programs help youth at greatest risk of failing to reach successful adulthood–so these organizations can make a real and enduring difference in the lives in far greater numbers of young people. But we know EMCF’s resources alone are not sufficient to help these nonprofits realize their potential. For example, imagine the impact these True North Fund grantees, like Communities In Schools, could have if they were able to reach a scale that could meet young people’s needs in hundreds more communities!

The True North Fund is the next step in our work to direct greater amounts of growth capital to nonprofits much more efficiently and effectively.  In this effort, we’re drawing on the resources of the federal government and private philanthropy and crossing the lines that define the typical partnerships that exist today. For example, among our 12 co-investors are regional funders and individual philanthropists who traditionally haven’t worked in close partnership with large national foundations – or the federal government. In addition, we’re excited that our co-investors, who see the True North Fund as a portfolio of effective solutions, are embracing different ways to coordinate their investments that give EMCF and the fund the flexibility to direct resources where they can make the greatest impact.

IS: Dan, Communities In Schools (CIS) is one of the nine organizations supported by the True North Fund. What does this Fund enable practitioners on the ground, like CIS, to do?

Dan Cardinali: Our association with the Social Innovation Fund has greatly elevated our national visibility, and helped build credibility with local school districts about the potential the CIS model has for lowering dropout rates and increasing graduation rates for our nation’s youth.

I see growth investments, like those from the SIF and the True North Fund, as smart ways to help organizations like CIS achieve a broader impact. With the resources of the True North Fund, CIS can now reach an additional 44,000 young people in California, North Carolina and South Carolina. And this investment enables us to further evaluate our model to better understand what works best to keep young people in school and on the path to graduation.  What we learn from this research will help us advance our practice and improve our programs across our entire network of over 1.3 million students.

IS: Nancy, what lessons does the True North Fund offer for IS members and others?

Nancy: I think the field as a whole can do a much better job of supporting the growth of our most promising nonprofits. Today, nonprofit capital flows from donors to grantees in an incredibly cumbersome and ineffectual manner. Every donor has its own requirements and reporting demands, and generally provides too little capital for a nonprofit to deliver on its growth plans.

We’re excited to report that the True North Fund has committed upfront all the capital that our nine Social Innovation Fund grantees need to fully execute their three-year SIF growth plans and meet their federal matching requirements. Providing growth capital upfront, in our experience, reduces the pressure of incessant fundraising and frees grantees to focus on growth and quality so they can maximize their impact.

The structure of the True North Fund also makes it possible to align the interests of grantees and co-investors, so we’re all striving to meet the same milestones and achieve the same goals together. We do this, in part, by establishing a single set of performance metrics that all the funders share, and a uniform reporting structure that eases the administrative burden on grantees and on donors, for that matter. For example, we now work very closely with the Wallace Foundation to advance the work of Dan Cardinali and Communities In Schools. 
 
IS: Dan, what challenges has CIS faced as you ramped up this work? What lessons could other IS members take away from your experience working in a unique public/private collaborative?

Dan: While the Social Innovation Fund provides additional resources to help organizations like CIS grow, it’s important for nonprofits to understand the political and regulatory considerations public funding brings with it. I encourage nonprofits interested in accessing public funding to acquire a comprehensive understanding of the implementation and regulatory requirements, and to be prepared to manage the multiple stakeholders that are involved in such funding. For example, we had to re-examine and revise our budgets three or four times before we were comfortable that we met the federal requirements for this effort.

Finally, because the SIF is a bold new initiative, the increased attention brings the potential for greater scrutiny. So you have to be prepared for critical examination. For CIS, I think our results to date, including our robust base of evidence and the latest findings by EMSI about our return on investment for communities and government, has helped us make a strong case that CIS is, and continues to be, a wise investment.