Category Archives: Investing in Networks

Investing in Networks , The Network Building Field

Proliferation of Network Building

Peter Plastrik

“There’s something happening here…”

When Madeleine Taylor and I started to study social-impact networks about 10 years ago it wasn’t easy to find very many of them. Over the years, as we wrote about and consulted with start-ups, we (along with coauthor John Cleveland) gradually connected with some 30 or so networks, and used what we learned from them to develop the frameworks and advice in Connecting to Change the World. That seemed like a pretty good sample size, and many other networks, such as those using a “collective impact” approach, were also emerging.

What was a trickle is becoming a proliferation. In just the past year, I’ve had some involvement with 9 more social-impact networks, most of which didn’t exist when we wrote Connecting . They are tackling a diversity of complex problems/opportunities:

  • reducing carbon emissions in cities;
  • making cities safer for pedestrians and drivers;
  • getting water utilities in the U.S. West to adopt sustainability practices;
  • helping commercial property owners in central cities reduce their buildings’ consumption of energy and water;
  • supporting innovation in America’s post-secondary education institutions;
  • reinventing public libraries so they serve as “engines” for community development;
  • spreading the idea of a “two generation” approach to human services for low-income families;
  • and more.

And almost every one of these networks has been able to line up sufficient start-up or continuing funding from foundations and other sources.

It’s still a relatively small sample size, not an exhaustive accounting of network building. And some who have watched funders closely might wonder if this isn’t just the latest fad rippling through philanthropy.

What’s clear from being in touch with the people building and funding these networks is that they are convinced that building networks is a new and potentially useful path to having the kind of impact they can’t get any other way.

Of course a proliferation is not a proof. It’s a step on the way: first a concept, then experimentation, then proliferation. Next comes determining best practice–what really works under what conditions.

Investing in Networks , Network Case Study , The Network Building Field

Investing in Networks Grows Funder’s Impact

Madeleine Taylor

In a blog for Stanford Social Innovation Review , Madeleine Taylor uses the case of the RE-AMP network to examine how participation in a network allows foundations to leverage their individual investment by surfacing multiple, ongoing opportunities for collaborative grant making.

W hile still an emergent grantmaking strategy, more foundations are investing in network building as an effective tool for achieving their goals and leveraging their dollars. Even so, network investing is not for the faint of heart. Foundations must consider the scope of resources required to initiate a network approach, and support the infrastructure and collaborative projects needed to produce results. Yet we see cases where foundations with modest corpuses have leveraged their charitable dollars many times over by engaging other funders as network partners, significantly increasing the pool of funding for a change initiative over time.

The team at Network Impact is interested in understanding the resource benefits and other kinds of value created through a network approach to network funding. To that end, the Garfield Foundation —a mid-sized philanthropy—kindly offered to share financial data related to its 10-plus year investment in RE-AMP .

Read the blog.

Investing in Networks

Uncertain Problems and Solutions: A Reason to Invest in Generative Networks (4)

Peter Plastrik

Fourth in a series about investing strategically in generative networks.

In earlier blogs  we described three conditions for a funder to decide to  invest in a generative network approach:

  1. The funder’s goal is system change.
  2. The funder is simultaneously pursuing multiple challenging strategies for achieving system change.
  3. The system’s situation involves a great deal of uncertainty, and solutions are not known.

In this blog we focus on the third condition: t he system’s situation involves a great deal of uncertainty, and solutions are not known.

Generative networks are especially useful in tackling complex, unpredictable, large-scale, “wicked” problems like climate change, homelessness, or education-system performance, which won’t yield to a “silver-bullet” solution. In these kinds of problems, there is great uncertainty about what the solutions are and/or how to implement solutions, often because they require many people to change their minds and behaviors and even to resolve polarizing conflicts. The problem itself can be a “moving target” that changes over time and only reveals its nature as you come to understand more about it. The problem is systemic, meaning it involves working with multiple elements that interact with and affect each other as they produce an outcome.

Not all problems look like this. Some yield to a solution that is simple and easily replicated. Some require more complicated solutions—multi-step processes or blueprints, for instance—and involve special expertise. But they are not complex and wicked. They don’t require many different approaches and adaptation as you work with them. They don’t require many years, or even decades, of collective work.

Not all funders have the patience and risk-tolerance for investing in situations with high levels of uncertainty, but when they do, investment will most likely benefit from the flexibility and creativity of a generative network.

In general, when pursuing system change, the greater the situation’s uncertainty and risk and the greater the number and difficulty of strategies, the more a funder may find that a generative network is an effective model of collective action in which to invest. Other models—associations, membership-based organizations, and communities of practice—are likely to be better investments when there is greater certainty about what to do. Coalitions and alliances are likely to be better investments when there is a particular solution and/or strategy to implement, probably over the shorter term. On the other hand, investing in a movement—a less coherent, focused, and coordinated model than a generative network—makes investment sense when the situation requires more and more people/organizations to demand change and solutions.

Investing in Networks

Strategic Complexity: A Reason to Invest in Generative Networks (3)

Peter Plastrik

Third in a series about investing strategically in generative networks.

In earlier blogs  we described three conditions for a funder to decide to  invest in a generative network approach:

  1. The funder’s goal is system change.
  2. The funder is simultaneously pursuing multiple challenging strategies for achieving system change.
  3. The system’s situation involves a great deal of uncertainty, and solutions are not known.

In this blog we focus on the second condition.

The funder is simultaneously pursuing multiple challenging strategies for achieving the system-change goal. When it comes to large-scale system change, funders’ strategies tend to fall into one or more of five strategy pathways.

Five Basic Strategy Pathways for Systems Change

Strategy Description
Enact Public Policies Develop, advocate for, and implement new or revised government policies—laws, regulations, mandates, taxes and fees, appropriations, tax incentives, and more—that affect the behaviors of individuals and organizations.
Foster and Sustain Communities of Practice Assemble and mobilize practitioners to develop innovations and best practices that improve the performance of their organizations and profession.
Promote Behavior-Changing Information Support research and develop and distribute information that will lead people to change their behaviors or take certain preventative actions in certain situations.
Tap Markets Develop and take to market products and services that enable people to undertake activities that promote a social goal.
Restructure Decision-Making Authority Change in the public, private, or nonprofit sectors who is involved in decision making. (In many cases, this may involve public policy change.)

Any one of these strategies can be quite complicated to design and implement and typically will play out over many years. Quite often more than one strategy will be used to achieve significant change in a system.

Not all funders engage in system-change with multiple strategies such as these, but when they do, investment will most likely benefit from access to and alignment of the novel capacities of a generative network.

Investing in Networks

System Change: A Reason to Invest in Networks (2)

John Cleveland

Second in a series on investing strategically in generative networks.

In an earlier blog we described three conditions for a funder to decide to  invest in a generative network approach:

  1. The funder’s goal is system change.
  2. The funder is simultaneously pursuing multiple challenging strategies for achieving system change.
  3. The system’s situation involves a great deal of uncertainty, and solutions are not known.

In this blog we focus on the first condition.

The funder’s goal is system change. There are many types of large-scale systems. Place-based foundations, for instance, may focus on local systems (e.g., affordable housing, education, human services) and develop strategies for improving the system’s performance, especially in how well it helps low-income members of the community. National-scale funders often focus on broad social issues, such as poverty or environmental protection, and develop strategies for affecting policies and practices at national or regional scales. Often, these issues are embedded in multiple and complex social systems. Other funders seek to change professional practice fields, such as community development, human services, or public education. Some engage with the way markets (large, complex economic systems) perform, while others invest in large organizations (nonprofits, community-based organizations, government agencies), which also are systems.

Not all funders seek system-change, but when they do, investment will most likely benefit from the adaptive and sustainable capacity of a generative network.

Investing in Networks , The Network Building Field

Investing Strategically in Generative Networks (1)

Peter Plastrik

First in a series

We’re often asked by funders and network builders whether investing in a generative network, instead of any of the other models for collective action–coalitions, associations, movements, for example–will best fit with their goals and strategies. How can they know?

With support from the Kresge Foundation we’ve been developing some strategic guidance for funders, based in part on real-world analysis we’re doing for Kresge in analyzing the potential of networks in the field of urban resilience. By drawing on this work-in-progress, we’re putting together a series of blogs that focus on particular aspects of investing strategically in generative networks. In this blog we briefly preview a key framework that we’ll fill in with subsequent blogs.

A funder’s judgment about whether or not to invest in a generative network approach depends on a blend of conditions:

  • The funder’s goal is system change .
  • The funder is simultaneously pursuing multiple challenging strategies for achieving system change.
  • The system’s situation involves a great deal of uncertainty , and solutions are not known.
Investing in Networks

Bringing in Other Funders to Invest in a Network

Peter Plastrik

A funder of a network has several ways to help the network connect with other philanthropic funders, right from the start of its engagement with the network:

  • Provide technical assistance for fundraising. As a part of investing in the network’s capacity, provide funding and advice the network can use to obtain technical assistance—consultant time, for example—to organize its fundraising outreach. Support can include drafting of case statements to give to potential funders, scanning for potential funders, and coaching on how to engage with funders.
  • Open doors to funders. A funder can introduce network leaders to other funders, using its social capital to get the network in front of potentially receptive foundations. In opening doors, funders can “prep” the network for its discussions with funders, sharing what they know about their interests, understanding of network investing, and more. Taking another approach, a funder can invite other funders to observe the network at work, for instance, by attending the network’s annual meeting or other major activity.
  • Invest in the network’s capacity, so other funders can target grants for projects with impact. By investing substantially in a network’s operational capacities, a funder can “make room” for other funders to consider funding network projects with potential impacts, rather than also funding capacity. Committing, for example, to fully fund a network’s operations for three to five years would not only make room for project funding, but also demonstrates the funder’s confidence in the network.
  • Offer the network a challenge grant that would provide other funders with leverage for their own investment. Providing a challenge grant that requires matching resources from other sources can help a network attract other funders to its cause. This can be done in combination with technical assistance that beefs up the network’s ability to organize a high-quality fundraising effort.

Investing in Networks , Network Startup

When Networks and Funders Meet

Peter Plastrik

Lessons for Funders Investing in Networks

A funder’s money is a powerful force for controlling the people or organizations building a network. There’s a natural tendency for network builders to defer to the source of money. So the funder may have the power to dictate the design—purpose, membership, governance, and other elements—of the network. And the reasons to exercise this power may be reinforced by the funder’s desire to claim credit for whatever the network achieves. But sooner or later, control and credit have to become more distributed among the network’s members. As the authors of “Cracking the Network Code: Four Principles for Grantmakers” noted: “ Funders succeed with networks by providing sufficient resources to support the network without overpowering it.”

From our work with networks and funders, here are a few do’s and don’ts for funders, in particular when starting up a network:

  1. Don’t dictate the network’s purpose; co-create it with potential and existing partners. If a funder directs a network’s purpose and activities, network members may comply to get the funder’s money, but they wont feel committed. As a result, the network may not perform well and it’s not likely to be generative. Better to develop things in consultation with network members so it meets their needs too.
  1. Be open to surprises; don’t try to pin everything down. Early in a network’s life, it’s unwise to put its development on a production schedule and to commit the network to specific outcomes and timelines. Funders have to be patient enough with the network to invest in its front-end collaborative capacity and allow it to forge its own direction.
  1. Let network membership expand naturally through members’ connections, not through funder dictates. When a funder determines a network’s membership, several things can go wrong. It may assemble members who are not personally committed to the network or are not ready to collaborate effectively. Their primary relationship will be with the funder that selected them. The funder may manage the addition of members to suit its needs, rather than allowing expansion to occur naturally based on the members’ desires to add connections that create value.
  1. Intentionally dilute the funder’s power over time. Instead of maintaining control over a network, a funder should help develop a network governance structure in which it is just one of many decision-makers, but still can provide leadership.
  1. Don’t override network members’ concerns or interests. It’s natural for network members to defer to a funder, especially when the funder is being insistent on something. Instead of pre-empting challenges to their thinking, funders should participate in the network’s decision-making process and learn what others are thinking, without forcing others to acquiesce to their wishes.
  1. Patience is essential and will be rewarded. Building a high-performing network is a marathon, not a sprint. It takes time to get started well, to build capacity, and then produce impact. Funders have to be willing to support the underlying capacity and operations of a network before expecting results.

There’s more advice and more detail in Connecting to Change the World , the “Bonus Track” section.

Investing in Networks , Network Development , The Network Building Field

Collaboration? Grantmakers Love It, But Most Don’t Fund It

Peter Plastrik

Most grantmakers believe it’s important for funders to coordinate funding and actions with each other, but when it comes to supporting collaborations by their grantees a majority of funders acknowledge that they never or rarely do. That’s the conclusion from a new study of funders by Grantmakers for Effective Organizations (GEO). For several years GEO has promoted the idea that funders can use collaborations of nonprofit organizations–networks, in particular–to achieve greater impact.

In chapter 2 of Connecting to Change the World: Harnessing the Power of Networks for Social Impact , we describe some of the reasons that funders are wary of investing in networks even if they are intrigued by the idea. For instance, they may wonder precisely how a network will get anything done, who in a network can be held accountable for results, and how to evaluate a network’s performance. As some grant makers have grown comfortable with investing in networks, they have supported the development of tools for other funders, such as a framework for evaluating networks produced by the Center for Evaluation Innovation and Network Impact .

But it’s also up to network builders to help potential funders understand more about the case for investing in networks and how to overcome reasonable concerns. In chapter 2, we offer several tips for doing this in addition to providing a brief scan of revenue sources for networks:

  • Pitch the potential impacts of your network, not just its network-building processes.
  • Anticipate funders’ many questions about networks–and be ready to answer them.
  • Show funders the value of the network members’ voluntary effort.