Conceived in 2000 and officially opening in 2001, the Foundation Incubator (TFI) can be seen as an alternative to traditional donor education. Based largely on the business incubation model, TFI assumes that emerging philanthropic organizations will benefit from shared resources, common meeting space and opportunities for shared learning.

Its primary value is continuous learning – using information to build better practice. From the start, TFI entered into a partnership with BTW Consultants to continually assess its development. What has TFI learned from this and how has it changed its way of operating?

The idea of TFI came from a small group of foundation leaders and donors at a time of unprecedented growth and change in philanthropy in the US. While there was a general surge in the number and size of charitable foundations, the rate of foundation formation in California surpassed the national average (in numbers, assets and giving).[1] The field was growing ‘younger’ due to the emergence of ‘next generation philanthropists’ and growing wealth among young high-tech entrepreneurs. It was also increasingly interested in and comfortable with the language and strategies of business (venture philanthropy, social capital, etc) and very confident about technology and its application to the sector (e-philanthropy).

With more and more grantmakers’ associations and support networks emerging, TFI grew naturally out of these trends. It would be a residency-based incubator for philanthropy with the mission of stimulating collaborative, innovative, strategic and effective giving. It would be located in Palo Alto, which was not only the epicentre of Silicon Valley and the ‘new economy’ but an area lacking in philanthropic services.

TFI was envisioned as a place that would make foundation development less complicated and less expensive. It would maximize efficiency, improve productivity and support entrepreneurial spirit. In addition, TFI held values that defined its development, notably its commitment to continuous learning. This was given practical expression in the partnership with Berkeley-based BTW Consultants, who undertook to conduct an ongoing strategic assessment of TFI’s development.

This article looks at the work of BTW and TFI in the past three years – what has been learned and what change has resulted. It also presents a case study of how evaluation can be incorporated into programme design at such a fundamental level that it becomes an essential ingredient of successful execution.

The TFI experiment

At its heart, TFI was an experiment, a research and development undertaking designed to test theory, document lessons and learn from practice. After two years of practice, it is a recognized entity in the philanthropic landscape, sharing the knowledge it has acquired and having a real impact on the art and craft of philanthropy.

Since philanthropy began, there has been a need for high quality donor education – to help donors and giving institutions learn best practices in the field. TFI represents an entirely new approach. The conventional approach tends to be oriented towards organized philanthropy with a focus on the vehicle by which philanthropy occurs. TFI focuses largely on philanthropic organizations in the early stages of development and assumes that they will benefit from shared resources, common meeting space and opportunities for shared learning.

So how different is TFI? How is the experiment faring?

Progress in the first two years

BTW began work with TFI in November 2000 and presented its first report, Early Reflections on the Foundation Incubator, to the board in May 2001. The report documented the accomplishments of TFI’s first year of development, such as generating interest in the model, securing financial support, leasing real estate and adopting policies and a governance structure. As TFI entered its second year, it was moving from concept to organizational start-up and implementation. The strategic assessment process was of critical importance during this period: it was the source of ongoing feedback to the board and staff about how the organization was faring, and was an outside perspective on the ‘inside intention’.

In the second year, the process included monthly interviews with the President. Progress on one level was good: TFI had developed an active and engaged board, and was growing a small group of satisfied residents. But it had begun to confront significant challenges associated with a failing financial model that relied in large part on residency and a programme model that depended on having a critical mass of residents. Like many Silicon Valley businesses after the boom years, TFI found itself with too much space at too high a price. TFI needed to change its business model to engage a larger customer base.

From residency to affiliation

TFI is moving from a model of residency to one of affiliation, shifting its focus from ‘incubating’ new philanthropic organizations to incubating strategies, ideas and collaborations. TFI found its value was not tied to sharing premises but to creating community. It maintained its mission-related focus on supporting the effective development of new and emerging philanthropy (including giving circles and donors), but also embraced more established and innovative foundations. A key lesson from the second year was that insufficient market research, combined with a sagging economy, rendered the residency model, for purposes of community-building, unsustainable.

The story continues

The recently completed Year Three Assessment focuses primarily on TFI’s impact since inception. At this stage, TFI confronts four key questions that will determine the health of its future. The first three questions form the organizational framework for the Year Three Assessment. The findings are good:
· Is TFI meeting a need? Yes, evidenced by a 90 per cent retention and renewal rate among affiliates and a very high rate of overall satisfaction with programmes and services among affiliates and programme participants.
· What distinguishes TFI’s services and approach from those of other philanthropic support organizations? TFI is distinguished by its emphasis on new and emerging philanthropy, and by its approach to programmes and services. Its hallmark is to be agile and responsive, developing programmes and learning exchanges requested by affiliate members and offering one-to-one coaching sessions to support the organizational development needs of its new and emerging affiliates. TFI builds programmes with an intention to cultivate a community of learners that supports collaborative action.
· Is TFI making progress in cultivating more strategic and effective grantmaking among new and emerging donors and philanthropic organizations? Yes, using information to continuously refine and improve its approach.

A new business plan

Can TFI  build a sustainable economic model? This is the fourth question. TFI’s recently revised business plan outlines a vision for how it will achieve long-term impact in the field of philanthropy and incorporates a new revenue model with a diverse mix of earned income and contributed revenue  in the form of grants.

The new business plan incorporates many of the lessons that have been learned in the strategic assessment process, including the need to clearly define the primary audience; improve internal and external communications to assure consistency in message and practice; and articulate and adhere to a theory of change that binds the mission of the organization with the programmes and services it provides.

Growing up …

TFI is in its third year of life – a toddler by any developmental standard – and only in its second year of implementation. Whether it survives may depend on factors beyond its control: will funders see fit to continue to support it? Will it continue to effectively align itself with market needs? Will it resolve its real estate challenge?

But beyond survival is success. And success lies in TFI’s ability to respond quickly and ably to a changing environment, and to make use of the new information it is continuously garnering to modify its programme and practice in order to promote strategic and collaborative grantmaking among new and emerging donors.

1 California Foundations: Trends and Patterns, The University of California with The Foundation Center, 2002.

Jill Blair is Principal, BTW Consultants – informing change. She can be contacted at JBlair@informingchange.com
Elizabeth Bremner is President of The Foundation Incubator. She can be contacted at l.bremner@foundationincubator.org

For more information
http://www.foundationincubator.org
http://www.informingchange.com