In 2018, the Arizona Community Foundation (ACF) decided to redefine how they measured impact. The foundation, which focuses on mobilizing philanthropy throughout the state of Arizona, had been successful by standard measures. Over 10 years, their assets under management had grown from $400 million to just over $1 billion. But beyond dollars, they needed a clearer and more nuanced picture of their impact on donors, nonprofits, and communities. In partnership with Community Wealth Partners, ACF created a new impact model and vison for building a culture of philanthropy. In this vision, donors, grantees, and community foundations work in collaboration to contribute to greater impact for each of them individually. Since then, the foundation has found early evidence of a culture of philanthropy and affirmed their unique value proposition amid an environment in which commercial financial institutions were threatening their sustainability and, more recently, as COVID-19 heightened and increased community needs.
In May 2020, Sara Brenner (president of Community Wealth Partners) sat down with Steve Seleznow (president and CEO of ACF) through a virtual interview to discuss ACF’s view on impact, how they engage donors, their response to COVID-19, and more. This interview was edited for brevity and clarity, and below are the highlights. You can also watch a series of one-minute excerpts from the conversation here.
Sara Brenner: A couple of years ago, your team decided to redefine what impact means for your work. I’d love to start there and hear why that was important for the foundation and what challenges you wanted to address.
Steve Seleznow: I found the existing tools and methods wholly inadequate to measure how we were supporting our donors, what donors were doing through grantmaking, and the tangible results in supporting our communities across Arizona. Every time I tried to apply models that I’d learned from private philanthropy or nimble venture philanthropy, I came up short. I had seen plenty of false precision being used to define the impact of grants, and I wanted none of it. I was challenged to find a better way for measuring impact for our community foundation.
Working together with Community Wealth Partners, we discussed the donor relationships we created and how that develops and grows over time. What we decided to test was whether or not ACF could support a culture of philanthropy through the work of relationship managers and donors. Could we move donors from transactional to transformational? It was an amazing journey, and we learned a great deal about our expertise and connectivity within the community and how it supported our donors’ ability to be more connected to the causes they were passionate about, increasing impact for both our donors and the nonprofits they support.
Brenner: Through our early work together, part of what we began to explore was how donors changed through the work with ACF in their knowledge, actions, and behavior. I wonder if you could share a little about what you learned about donors.
Seleznow: We’re a very donor-centric community foundation. At the heart of what we do is engage directly with donors, understand their charitable goals, and help them become more effective philanthropists. What this journey clarified for us was that the way we engage donors is core to what we do, our growth, and our ability to have positive impact in the community. Donors have many choices – they could work with Fidelity, Vanguard, Schwab, or J.P. Morgan Chase, and they don’t. They choose us because they want that personal relationship. They believe there’s value in our ability to share our community knowledge and help them achieve what they want for their community.
“Donors choose us because they want that personal relationship. They believe there’s value in our ability to share our community knowledge and help them achieve what they want for their community.”
Brenner: Through this process, we worked together to identify three archetypes of ACF donors. How do you understand those archetypes, and how does the foundation work differently with those donors now?
Seleznow: We crystalized three archetypes. No one archetype is better than the other; they’re three different types of donor. There are donors who have a very clear idea of who they want to give to and how much they want to give, and they rarely veer from that. They’re what we call supporters. They support a nonprofit or group of nonprofits, and their support endures through time. The nonprofits tell us those supporters are essential because they offer a sustainable form of capital that nonprofits count on year after year. So we place great value on that type of supporter giving. There are some donors who stay there and some who morph into something we define as an investor. An investor is the donor who sees their donation as an investment in a nonprofit or a small group of nonprofits where they want to get really engaged and make a difference for the cause. They want to sit on the board, know the CEO, know the board of directors, visit, and sometimes volunteer. They invest their time and charitable dollars in supporting and growing that organization. They typically give larger grants. The third category is the multiplier, the person interested in leverage. “I’m going to put up $100,000 to invest in this organization that I love, but I want to find five other donors who will do it with me, and I want to multiply my donation of $100,000 by five. Can you help me find five other donors?” They want to multiply everything they do. They’re very entrepreneurial and believe their talent is best used engaging with a nonprofit and getting others to invest along with them. This results in multiplying their investments. Multipliers often engage in bigger systems change because they are more invested individually and through the people they have recruited to support the cause.
“Donor archetypes help us know who we’re working with and how we can help them achieve their philanthropic goals.”
What that means is we now have a lens to filter and use to define as we begin working with donors or bringing in new donors. Who seems to lean toward being a multiplier? Who’s an investor? Who’s a supporter? We now use those lenses to assess where we think a donors is. A donor can change, but it helps us know who we’re working with and how we can help them achieve their philanthropic goals.
Brenner: Are there moments you’re seeing the community at large work differently and in greater collaboration because of COVID-19?
Seleznow: It was almost immediate that the philanthropic sector in Arizona came together to unify our efforts. We didn’t want donors to have to decide between response efforts, and we wanted to centralize grantmaking so we could be more efficient and timely in getting immediate relief funding out to the nonprofits.
The Valley of the Sun United Way serves the greater Phoenix region and works with an identified group of about 60-80 partner nonprofits. The Arizona Community Foundation serves every county in Arizona. So we decided to set up two platforms – one with Valley of the Sun United Way and one with ACF. They would generate funding from their donor base, and we, from ours. The corporate sector could choose to support the funds based on where they wanted their dollars to go (local or statewide). We agreed to review all grants for the greater Phoenix region together to make sure there was no duplication and ensure we both could respond quickly with the needed support.
The other part that I think advanced philanthropic collaboration was the grants review panel we put in place. We didn’t want the nonprofit sector to think favoritism existed in the grantmaking process. The review panel consisted of ACF staff, nonprofit leaders, corporate contributors, and a few individual donors. We invited the major funders to have a representative on the review team, and we included the president and CEO of the Alliance of Arizona Nonprofits on the review team. These representatives could see every nonprofit that applied, who got grants, and how much they received. The process was transparent and inclusive. That made a huge difference, advanced our relationships, led to greater trust within the nonprofit sector, and provided full transparency for all of the dollars contributed by donors and corporate and philanthropic partners.
Brenner: We know that small, grassroots organizations often led by leaders of color can be left out of funding. I’m curious how equity played out in decision making for the rapid response fund and how you think it should play out in the future?
Seleznow: We put together a diverse group of people to review the grants. The panel had to include the community and reflect the diversity of the community – diversity in terms of region, race, gender, identity, and sector. Because we widely marketed the fund – and thanks to the Arizona Republic which ran three full-page ads in the newspaper announcing the fund – we were able to identify dozens of nonprofits we didn’t know. There are about 22,000 nonprofits in Arizona. Through this process, many nonprofits we had not previously worked with were identified and provided grants. And we’ve been cataloguing these nonprofits so that whatever the new normal is, we have a more inclusive catalogue of nonprofits doing amazing work and a new opportunity to achieve greater equity in our grantmaking.
COVID-19 has also brought to light issues of inequity. When schools closed, we saw the digital divide. Everybody could see that not all kids had computers or reliable internet service. So when schools went online, that meant a large numbers of kids – kids who are poor, kids of color – were not getting educated. Then we saw the data on who’s getting COVID-19 – by race, by community. Here in Arizona, Navajo Nation is suffering tremendously. Historically – for centuries – that community’s health needs have not been properly addressed. We’ve seen large numbers of African American and Latino families impacted. We saw who got laid off first and who is being hardest hit by the loss of a paycheck. If you look at the numbers, you see that this crisis is disproportionately hitting people of color and people without economic means. If this is not the time to aggressively address these issues, then when will we?
“If this is not the time to aggressively address inequity, then when will we?”
Brenner: You’ve talked about two phases to this crisis: emergency response and reconstruction. As we move toward reconstruction, what is the role of community foundations and how do you see that changing?
“When our community is suffering, we have to be nimble. We have to respond to what the community tells us. We need to be willing to do things we’ve never done.”
Seleznow: At the heart of a community foundation is in the name: community. When our community is suffering, we have to be nimble. We have to respond to what the community tells us. We need to be willing to do things we’ve never done. I’ll give you an example. We work with a corporate partner that wanted to create a relief fund for small businesses that were serving low-income neighborhoods and employing members of that community. We checked with our lawyers, and we could very clearly define a public benefit. If those small businesses went out of business, those communities would suffer from the loss of jobs, income, and the essential services provided by those businesses. While we’ve never done anything like it before, we said yes. The community needed this service, it clearly has a public benefit, so we’re taking it on.
Brenner: What ideas do you have for engaging donors in ways that keep equity at the center?
Seleznow: If we see inequity in our community and we’re talking to a donor about education grants they want to make, then we have an obligation to say that achieving educational equity is an important part of what they achieve for their grantmaking. It’s our obligation to make sure donors are informed and educated on the inequities that exist and have the data behind it to understand the proven set of facts. If you want this community to offer a better quality of life for all, you’ve got to find out who has been left behind because of inequity. Maybe you’ll want to invest in this, and here’s how you can do it.
Brenner: What closing advice do you have for other community foundations trying to understand their impact in new ways?
Seleznow: I hesitate to tell my colleagues how they should think, but I would say: I had to do a lot of self-examination to be really honest with myself about impact. Take a hard look at your ego and how you define your impact – “We’ve changed our city.” “We’ve changed our state.” There are certain things we can measure from our grantmaking, and there are many things creating a positive impact that I don’t think we can measure. Be honest about that. Don’t say, “Because I can’t measure it, it’s not worthwhile,” but don’t go down the path of not measuring anything either. Figure out what you’re really about, how to measure that, and where you should pivot to create the most impact.