Reflections on “Working with Intermediaries Strategically”

A Report for Robert Wood Johnson Foundation

By Cynthia Gibson and Maria Mottola

Michele: First of all, I’m grateful to the Robert Wood Johnson Foundation for their own appreciation of the need for funders to better understand the value of philanthropic intermediaries and I’m appreciative of Cynthia and Maria who conducted the interviews, including with both Magui and myself, and put together a comprehensive and thoughtful report. 

Magui: Yes, my thanks as well. I think it’s valuable given the role that intermediaries play in the sector to better understand how those of us in this space are different, with unique skills and strengths. As a starting point, I think the report is a good synopsis of why foundations need intermediaries. 

Michele: Both of us have been working in the intermediary sector for some time now, but let’s talk about the report’s highlighting of why this is a moment suited for intermediaries and why we think that is. 

Magui:  I would start by saying that program staff at foundations find their way to intermediaries when they recognize that they want to do something that they can’t do at their own institutions. 

Michele: And what we have seen recently is that the scale of philanthropy has increased so significantly. The bigger the volume and the size of the grants, the harder it is to get the money out the door without using an intermediary. There’s also a greater understanding in how donor collaboratives are an excellent pathway to get connected to the communities that funders are trying to engage with and work with. 

Magui: It’s not just that the money needs to get out the door, but how it gets out the door and to whom. There’s a greater focus on equity and an awareness of the need to support “constituency-led groups” which are groups that are run and led by the constituents they serve.  It can be harder for mainstream philanthropy to do these things on their own. They should, but sometimes intermediaries can be the bridge to help them start to do so. 

Michele: I want to underscore that as well because one misconception is that the work of intermediaries is just transactional, but especially at NEO, it’s really rare that we’re just doing transactional stuff for movement building groups that we fiscally sponsor.

Magui: That’s right. There’s a lot that goes into supporting a project: budgeting, managing people, HR, legal, for example. I’m glad this provides a window for people to understand the complete role that we play and the responsibility and risk that we take on. 

Michele: A part of the work is the actual grant craft and working with the program officers so they understand how to work with us strategically and what value we bring to the entire process. And on the flip side, we can be a sounding board for leaders of grantees to help them navigate some difficult challenges that they may not want to share directly with the funder. In those honest conversations we help them to understand philanthropy and serve as that bridge to ensure critical information is being communicated in real time. 

Magui: It is also important to highlight grantmaking as a function – so many funders have burdensome practices that are the antithesis of trust-based! In many ways, we are the ones that are organizing everyone to a common goal. We are very collaborative and can move quickly. We can make rapid response grants a lot faster than many foundations because of the way we’re set up. There’s less paperwork, fewer strings attached, the strong networks that we have, and ultimately that’s why we have earned the trust from both the funders and those receiving the grants. We do ask for reports, but we’re flexible in how we get that information: For some, they do it verbally instead of in writing. We don’t want to be a hindrance to the meaningful work that needs to get done by putting so many restrictions on how groups spend the grant dollars. 

Michele: And part of it definitely is our values and the fact that whether it’s our work with donors, where our grantees are important to us, or in our fiscal sponsorship, where our projects are as important to us, we see our values in the work and are passionate about the issues. We are invested in these movements. The leaders in these movements know that’s true and understand we will move heaven and earth in order to help them fulfill their vision of a more just world. 

Magui: Trust is something that needs to be built, both when we are a funder to a grantee, as well as when we are providing infrastructure to support our fiscally sponsored projects. We have to trust that the grantees know what they need and have the solutions for the communities that they’re working in more than we do. We really want to be as minimally intrusive as possible. That’s why we favor general operating support, flexible reporting, and capacity building. It’s a balance. Similarly, on the fiscal sponsorship side, our core support teams—meaning legal, HR, finance, operations—are experts in compliance and organizational best practices, while the leaders of our fiscally-sponsored projects  are experts in their program strategy and know what their communities need. We work together in a way that puts them in the driver’s seat.  What we’re saying is: “we trust you to know what your community needs and that you have the best solution for the problem you are trying to solve.”

Michele: That’s very important. In and of itself that’s a big departure from some foundations thinking that they already have the solutions and are trying to get people to fit into them. From experience, we know that type of approach doesn’t work as well. And that’s why given how important the success of these movements are, we are glad to see a trend line toward trust-based philanthropy. 

Magui: One key takeaway from the report is that funders should think about what they need before they engage an intermediary. There’s a tool in the report that can help tee up the right questions to ask and to get a sense of the types of specialty services they may need. There isn’t ever just one path toward a strong, healthy intermediary relationship; it’s worth spending some time getting a sense of what path is best for you.

Michele: The same can be said for movement building groups looking for a fiscal sponsor. In a lot of instances, we are the launching pad for these fiscally-sponsored projects to achieve their independence. A lot of fiscally sponsored projects eventually become independent 501(c)(3) organizations. What’s beneficial is that we help these projects grow without all of the organizational growing pains that would happen if you had to do this on your own. By allowing our infrastructure to serve them and their purpose, we free them up to focus on what they’re passionate about. But I also see that by working, engaging with some of our requirements, our process, the budget process, they do learn skills which will serve them well for the long term. And this is also true for those movement building groups that have decided they don’t want to become separate institutions, but want to stay within NEO’s organizational umbrella.  

Magui: The report also highlights the lack of capacity provided to intermediaries to do everything we are asked to do. Because we are structured as a “fee for service” organization, we can only pay for what we charge for and there is so much more we could do if funders could help us build our own institutional capacity to be in service of our grantees and projects. It would be a win-win if funders provided intermediaries organizational development support, for staffing and operations costs (all of which are increasing exponentially), because our interests are intertwined. Funders seem to recognize if a project is having trouble or going through a difficult period. What I don’t see is a recognition of the consequences if intermediaries are understaffed or underfunded.

Michele: I agree with you, Magui. I think this report can help to shed light on this and I look forward to continuing these conversations with other philanthropic intermediaries because we all see it. The lack of investment translates to a lack of acknowledgment on things like what it means in terms of risk and costs, whether it’s various insurance increases and other causes, which might add to the vulnerability, not only to our own organization, but all the groups we support, as well as the sector at large. We’ve fallen into a bit of a trap in not talking about true costs and only talking about fees. And this is a good time to talk about that because if we don’t get the funds we need, we can’t really operate at the scale that’s being demanded. And if we absorb costs, invariably those costs get passed on to projects on our fiscal sponsorship side and it’s unsustainable for them. 

Magui: The best part of this report is that it is opening up a conversation and shedding  light on what makes intermediaries unique and critical.  It also offers clarity to funders as to some of our pain points and how they could be addressed. 

LINK TO FULL REPORT

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