Be Bold, Be Strong, Be Big and Be Known

By Travis Green

Solutions Consultant, LOCUS Impact Investing

The staff of the Ann Arbor Area Community Foundation(AAACF) has taken to calling their foundation “a community impact engine” where the whole staff – finance, administration, development, program – works in service of impact. “It’s a virtuous cycle… create impact, build endowment, create more impact, build more endowment,” said Jillian Rosen, the foundation’s Vice President for Community Investment.

It’s not just a good marketing line, either. In the last three years, the foundation has witnessed remarkable growth even when adjusted for market performance. Assets of the foundation have grown 80%, and, as a result, the foundation’s grantmaking has almost doubled. The success came after a process where the foundation asked, “How are we contributing to the overall wellness of Washtenaw County?” Rosen said, “Endowment came as the answer.”

From AAACF's 2017 Annual Community Meeting, where President & CEO, Neel Hajra, announced donor's gifts that made impact investing possible in the form of a nonprofit loan program. Pictured left to right: Brian Campbell, AAACF Board Treasurer, Tim Wadhams, current Board Chair, Michelle Crumm, current Immediate Past Chair, and Neel Hajra.

In 2015, the foundation embarked on three-pronged, data-driven assessment of their work. First, with help from the Center for Effective Philanthropy, they conducted a survey to gather candid feedback from the foundation’s donors. Second, they interviewed professional advisors to see how they viewed the foundation and to ask how they could be a better service in the community. Finally, working with CF Insights, they identified six “aspirational peers” or foundations from similar communities that had experienced remarkable growth, and spoke with them about their work and their approaches to asset development.

The result of their analysis was a 50-page briefing book that was shared with the foundation’s board. “It gave our board confidence to be bold and make change,” said Shelley Strickland, the foundation’s Vice President for Development. To discuss strategic direction, board members and staff had two “mini-retreats” with outside facilitators and eventually committed on an internal four-part strategic framework that guides all work at the foundation. Neel Hajra, the President & CEO, summarizes the framework as an appeal to “Be bold, be strong, be big and be known.”

Rather than replacing the foundation’s previously articulated community leadership goals of human services, education, and cultural economic development, this new strategic framework was used to guide the foundation on how it would do its work. The result: it’s moved the foundation from being primarily donor driven to being primarily community impact driven. “Something we do routinely, with every decision we make, we run it through our strategic framework and look for impact first,” said Rosen.

Take the foundation’s work with scholarships as an example. Washtenaw County is home to five institutions of higher learning and exceeds the state and national rates of population with advanced degrees. But when it came to helping kids in the community access those institutions, the foundation’s existing scholarship funds were too tailored and small. For the most part, they didn’t help the most at risk populations get to and through college.

In response, the foundation launched the Community Scholarship Program for local first-generation, youth of color, and  low-income families, and the board agreed to limit future scholarship giving to focus specifically on the new fund. With that bold decision, a community member approached the foundation and committed $1 million and another $250,000 in matches came in making it the largest scholarship fund at the foundation. Current donors have supported the new scholarship program and “we even had current donors convert existing scholarship funds,” said Strickland.

AAACF board and staff now see their unique value being permanent flexible community endowment. “Our flexibility is the most critical asset we have,” said Rosen. “That was the largest culture shift that came out of our process.”

“We may not be the right solution for everyone. If a donor has something very specific they want to accomplish, we may provide the donor service by helping them connect directly with another organization that fits their strategy better. We take great pride in that,” said Strickland.

Motivated by their strategic framework, AAACF is now exploring new tools to advance community impact. Supported by a new donor, the foundation now offers loans to nonprofits that have moved their endowments to the foundation. “We want to continue to add value with our philanthropic capital,” said Strickland. The “Be Bold” step means that the foundation is becoming a local investor, and the foundation is now exploring other local investment opportunities.

The movement of foundations from being donor driven to impact driven is a common trend among community foundations exploring and adopting local impact investing. It makes a foundation more likely to reach for the appropriate tool – whether it be endowment building, grantmaking, convening, educating or investing – to address a specific community challenge. Making that culture change, like in Ann Arbor, is most successful when it includes foundation staff, the board, donors and community partners. For more information about the work of Ann Arbor Area Community Foundation visit AAACF.org. To learn how LOCUS Impact Investing can support your foundation with culture change as a prerequisite to local impact investing, contact Sydney England.

- Travis Green is part of the Local Impact Strategy Solutions team at LOCUS, helping place-focused foundations create greater impact through mission-aligned local investing.