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Leveraging Systems for Sustainability and Opportunity with Jim Shelton

This week on the Nonprofit Build Up, we’re talking Jim Shelton. Jim is the Chief Impact and Investment Officer at Blue Meridian Partners, a philanthropic vehicle that identifies and scales solutions to the problems trapping youth and their families in poverty. He also serves as a Senior Advisor to KKR Global Impact and is a nonresident Fellow at the Brookings Institute.

Jim was the co-founder of Amandla Enterprises and the former Deputy Secretary of Education and founding Executive Director of My Brother’s Keeper under President Barack Obama. He also worked in business, government, and the non-profit sectors as an operator, investor, and entrepreneur. In these roles, Jim has utilized management, policy, and programmatic innovations to increase access to opportunity.

Listen to the podcast here:

Resources:

About Jim Shelton

Jim Shelton, is the Chief Impact and Investment Officer at Blue Meridian Partners a philanthropic vehicle to identify and scale solutions to the problems trapping youth and their families in poverty. He also serves as a Senior Advisor to KKR Global Impact and is a nonresident Fellow at the Brookings Institute.

Jim was the co-founder of Amandla Enterprises and the former Deputy Secretary of Education and founding Executive Director of My Brother’s Keeper under President Barack Obama. He also worked in business, government, and the non-profit sectors as an operator, investor, and entrepreneur. In these roles, he has utilized management, policy, and programmatic innovations to increase access to opportunity.

Jim holds a bachelor’s degree in Computer Science from Morehouse College and Master’s degrees in both Business Administration and Education from Stanford University. He lives in his hometown – Washington, DC – with his wife and two sons.

Read the podcast transcription below:

-Upbeat Intro Music-

Nic Campbell: 

You’re listening to the Nonprofit Build Up Podcast and I’m your host, Nic Campbell. I want to support movements that can interrupt cycles of injustice and inequity, and shift power towards vulnerable and marginalized communities. I’ve spent years working in and with nonprofits and philanthropies, and I know how important infrastructure is to outcomes. On this show, we’ll talk about how to build capacity to transform the way you and your organization work.

Nic Campbell: 

Hi, everyone. This week on the Nonprofit Build Up, we’re talking Jim Shelton. Jim is the Chief Impact and Investment Officer at Blue Meridian Partners, a philanthropic vehicle that identifies and scales solutions to the problems trapping youth and their families in poverty. He also serves as a Senior Advisor to KKR Global Impact and is a nonresident Fellow at the Brookings Institute.

Nic Campbell: 

Jim was the co-founder of Amandla Enterprises and the former Deputy Secretary of Education and founding Executive Director of My Brother’s Keeper under President Barack Obama. He also worked in business, government, and the non-profit sectors as an operator, investor, and entrepreneur.

Nic Campbell: 

In these roles, Jim has utilized management, policy, and programmatic innovations to increase access to opportunity. He holds a bachelor’s degree in Computer Science from Morehouse College and Master’s degrees in both Business Administration and Education from Stanford University.

And with that, here is Jim Shelton.

Nic Campbell:

Hi, Jim. I am really excited to have you joining us for our Fast Build Leader Series and to get us started, can you tell us about Blue Meridian Partners, your role there, and Blue Meridian’s immediate priority?

Jim Shelton:

Sure. So Blue Meridian Partners is a pretty unique non-profit vehicle where high net worth individuals and foundations come together to invest at scale and solutions that take people out of poverty. In recent days, we’ve made sure that our work focuses in two areas. One is accelerating and improving economic and social mobility. And the second is centering on the issues and the systems and structures that will allow for greater racial equity. Those two things go together as you well know.

Nic Campbell:

And can you talk about what you do there and…

Jim Shelton:

Sure. So I’m, what’s called the Chief Investment and Impact Officer. So I help with setting strategy across all of our investment areas. We invest in solutions that work on national scaling. We have a place-based portfolio, we have a portfolio that’s focused on, we call it justice and mobility. So not only focusing on getting people out of the criminal justice system, but if you are involved in criminal justice system or impacted by it, how do you actually get a real second chance and get mobile. So involved in each of those strategies, as well as working across the strategies to look for alignment and ways to get maximize our impact?

Nic Campbell:

When I think about the structure of Blue Meridian, what should come to mind for me? Is it similar to a donor collaborative, a giving circle, or is it something else?

Jim Shelton:

Yeah, I think that for folks who are familiar, it is a lot like a giving circle, right? There’s a set of folks who have committed to working together to invest. The thing that is distinct is that there is a professional staff that’s in place to source new opportunities, to bet the opportunities, to frame up the investment in a way that will drive the kind of improvement in organizations’ impact, and reach, and influence that they aspire to most importantly, but also that the philanthropic investors would aspire to. And so if you think about it almost like a private investment firm for impact, right, but where the investment committee is made up of the partners who are the largest investors.

Nic Campbell:

And given the time that we’re in, Jim, I know you talked about the two focus areas for Blue Meridian, how is that showing up in terms of the work that you’re doing now?

Jim Shelton:

Sure. So it was really interesting is like we had, in 2019, we had actually made applications to our strategy to kind of make these adjustments to the overall strategy, to move from youth development to broader focus on economic mobility, understanding of racial equity. So what’s really interesting about it is, is we had COVID and everything else, taking a hard look to say, so what needs to change about the core of our strategy? And the reality is the core of remaining the same, right? Like economic and social mobility still remains critically important. It is actually, in many ways, the issue of the day when you get past the fundamental rights of human beings and taking a systemic look at that is also critical, which is the way we tend to approach the work. And then what we’ve seen is both for COVID and through the racial unrest that has come after the deaths of Breonna Taylor and George Floyd Mathers is that our country was just showing us the fault lines that we already had around inequity and that the work that we were doing to lean in to the criminal justice system to lean in on economic mobility was more important.

Jim Shelton:

What we did was we took a hard look on what would be immediately relevant, right? What kinds of things could had a special need right now? So we had a set of relatively early stage organizations for Blue Meridian that we had invested in. And we decided to say, not only what we helped stabilize our overall portfolio, but were there any that, because of the context, might have a real opportunity to expand to meet need. And so, for example, you may have heard of the Family Independence Initiative, that is one of our investees. And we had the opportunity to help invest in scaling their infrastructure, as well as doing some emergency response, to pass through some additional dollars to families that might need some crisis intervention. Again, the bulk of our work basically remained the same, right? We’re trying to build solutions to the problems that actually getting the people’s a way to coming up really mobile and then having more power in their lives.

Nic Campbell:

Jim, I like how you phrased it, right? Which is this, this pandemic, this unrest, is just showing us the fault lines in our system. And we were talking about Blue Meridian and saying, okay, what is immediately relevant to us? And what should we be focused on? And along those lines, I’m wondering if you could tell me what kind of advice would you share with nonprofits that fundraise as part of generating revenue during this time, when you’re thinking we need to focus on things that are immediately relevant, look at the fault lines to really instruct us where we need to go. But you have organizations that are trying to raise money during this time as well. So how do they prioritize and what should they be prioritizing?

Jim Shelton:

Yeah. So I think that it’s important to remember that people have now gotten clear that this is not going to be quick, that even the health crisis has been protracted, the economic impact is going to be protracted. The racial issues that we have to address are not going to resolve quickly. So while people are still…philanthropists in particular, are still interested in being responsive to the need. People are also starting to think, okay, how do I make sure that what I’m doing today is going to have a lasting impact? How do I make sure that it doesn’t…there’s not just one time aid, but it’s something that can go a bit further. There is still an interest in emergency relief and things like that, but people are saying, how does this set up someone to make it to the next run? As opposed to there was, I think, early on, Hey, people are going to be hurting, let’s just get more resources in their hands.

Jim Shelton:

And so for the nonprofits, what I would say is, I think that you wanna keep yourself in that context of saying, here’s how we’re being responsive, but here’s why we were a part of the recovery. And frankly, here’s why we’re important to the systems in the long-term. Relevance in this near-term, the medium-term, and in the long-term, is I think still one of the most compelling arguments. And I think that there’s going to be too, did you have a compelling value proposition that you bring it to the folks that are going to be most impacted. Or at least your particular population, wherever that might be.

Nic Campbell:

Right, and just really looking at it in terms of sustainability at the end of the day. Like when you’re thinking about what’s relevant now, what’s relevant in the immediate future, and then what’s relevant longer term. You’re thinking about how can you yourself as an organization be sustained throughout those periods, as well as the communities that you’re working with. Right? And then trying to really show your value proposition to donors or partners or other stakeholders. So that makes sense to me. Now, if I’m a funder and I’m receiving that message, you know, it’s still COVID, we still have all these issues happening around us. What advice are you giving me? I’m having a lot of these conversations. I’m getting a lot of these inquiries. What do I need to do during this time?

Jim Shelton:

So one, I’d say there’s no cookie cutter answer because a lot of philanthropic investing is tied to both the values and the preferences of the folks who you are representing. And also whatever particular mission you set out, with the funding that you may have access to. And what I mean by that is that there are still going to be pressing needs, right? And it is not in Blue Meridian’s history that we would invest in short-term meat. But when COVID hit, we set up a hundred million dollar emergency relief fund and a little bit more than half of that went to ways of providing aid to people who might not get it otherwise. And so leaning into domestic workers, leaning into restaurant workers, leaning in African-American communities around the country that were particularly hard hit. And so I think that for folks for whom that opportunity is something that fits within their value set, either in the long-term or in the shor- term, that there’s a critical role for them to play in doing that in ways that are strategic and that leverage the resources and infrastructure that exists out there.

Jim Shelton:

So we were really excited to partner with organizations like Propel to get dollars out or CDO, which works with folks who’ve recently been incarcerated, to get…they’re not eligible for lots of benefits, so we were able to utilize them to get dollars using their pay card system out to folks who were not going to be employed in this current context. So use the infrastructure that’s there to reach the target populations that are most in need and maybe frankly, hard to reach otherwise. Look for those efficiencies to look for scale. Then there is the opportunity to really think about how you are leveraging this opportunity, for lack of a better word to describe it, where people are suspending their belief about how things have to work. Whether you’re an education person and now, all of a sudden, online learning has been off the table, off the table, off the table for many, many people for a long time, not it is required in many contexts.

Jim Shelton:

And so how do you make sure that you’re not just enabling that, you know…a quick patchwork effort to get people online, but you’re starting to say, what would it look like to help us get much better at understanding what it looks like to use online learning where it could actually have a real benefit to the students. Where it can provide greater access or can provide better use of tools and resources to meet student needs? I mean, how do I use this as an opportunity to have people to experience that in a way that can shift mindsets about what’s possible? And the third thing is how do I do that in ways that builds an infrastructure that I can leverage later and that is sustainable, to your point, over time, right? It’s really important that, for example, we’ve made an investment through Code for America and trying to get the…there’s normally a very robust infrastructure of people who do with tax preparation for low income people.

Jim Shelton:

And that’s what you basically had to do to get access to your stimulus check. Well, what we realized is that that infrastructure was broken down at the time because the centers were closed. And so a lot of the people who needed the money most were not going to get access to those supports and services. So we worked with a nonprofit called Code for America to develop the online platform to work with those providers to be able to do their work, even though their offices were closed. We hope to reach scale, reach millions of people with it. Actually, didn’t reach millions of people with that, but it doesn’t…it’s two things. One is that infrastructure is going to be there no matter what. Now people who are amending their taxes, people who filed tax extensions to October 15th next year, that infrastructure is going to be amortized over many, many years.

Jim Shelton:

And by the way, like we made a very relatively small grant we already got, that looks like three to four X just on that part of the investment. And there’s another small investment alongside it. We invested in something called Pandemic PBT Infrastructure, which is context. It basically is, they allowed the dollars for free and reduced lunch to go home to the parents. And so they had to put together a plan, the state had to put together a plan, for how the dollars would get there. The first thing that Code of America did was partnered with states to figure out a better way to match parents with their kids. And so I’ll give you an example of California, in California there were like 3 million kids in this category. The algorithm got them to half of them without ever having parents have to apply separately. And then…but that still leaves like 1.7 million kids and families without having been connected.

Jim Shelton:

So they built their quick application online that allow people to sign up for the benefits. Let’s put it up on a Friday morning at eight o’clock and by three o’clock, there were 200,000 plus signed up, by the end of the weekend, Sunday night, close to a million people had already signed up. Two weeks later, 1.5 million people had signed up. So very quickly, like tens of millions, like 50 X on the investment, 50, 75 X on the investment was able to be returned and an infrastructure that now when they do to the stimulus round two, it’s going to be used again. So those are the kinds of things that if we’re thoughtful about the ways in which infrastructure, the ways in which organizations that are doing smart work can do this work. It’d be great. And the last thing I’ll say is notion of providing access to benefits and making it easier for folks to get the things to which they’re already entitled is the high leverage infrastructure investment. People don’t usually love plumbing, but that you couldn’t make last for a long time.

Nic Campbell:

Wow. So, you know, Jim, from everything that you just described, I think at the core I’m hearing, you know, be thoughtful, understand the environment in which you’re, you’re operating so that you know who’s out there to inform the kind of infrastructure you can build to start to be able to be responsive to the needs of the communities that you’re working with. Right? So you’re talking about looking for efficiencies and then looking also with an eye towards scaling and in the midst of all of this that, you know, central to it, is innovation, right? Like thinking creatively about how you can put together solutions. So I’m hearing all of these things and I want to ask a pretty technical question around if I’m a funder and I start to think, okay, I have all of these things in my mind. What does the grant look like? Can I do that through general support? Can I do that through capacity building? I’d love to hear how you’re thinking of then getting the funding to groups ands individuals that do the work.

Jim Shelton:

Lots of people have lots of perspectives on this. I’ll give you mine. Mine is, in particular, when you’re trying to do work that is innovative, I think that providing funds that are more flexible, donor operating support grants, if possible, where the folks who are closest to trying to solve the problem have the flexibility to move at the pace that they’re learning is one of the best things you can do if you really want to invest in innovation. And that’s particularly true when you’re trying to work on problems where there is no roadmap already, right? Because there’s the more framework you put around it, the more constraints you put on the organization and the leaders trying to do the work. The second thing is that frankly, there’s a level of trust that you ought to have in the folks that you’re betting on, that providing that kind of flexibility gives you a really good opportunity to see if you made a smart decision.

Jim Shelton:

If you give that flexibility and it’s not rewarded with the responsible investment and impact, then you don’t need to make that investment anymore. But to be honest, you actually can’t hold your grantee accountable if you prescribed what they’re going to do, and they feel like they are negotiating their strategy with you, as opposed to actually having the autonomy to actually go into the rest of it, I think is best. So I know people have different points of view on that, especially when they work with innovation. I’ve just always found that being over prescribed is a recipe for a suboptimal solution. The last thing I’ll say, because I want to blend these two things together, is you want to find mechanisms for finding the folks who you don’t already know about. And what I find in philanthropy is that our referral networks are usually really small and that being more open, even when you’re in a hurry about the process, by which you identify folks tapping other people’s networks, opening up prizes, short windows, things like that. So that leaders and organizations and solutions that you might not be familiar with at the table is really important.

Jim Shelton:

If you want to do things that give you a different view into what’s possible. And that’s something that they’re in the crisis period, it’s kind of hard to do, but as time goes on, I think we are going to be looking for more and more creative ways to become aware of other parts of the solution space. And frankly, that is going to create more opportunities for investing in leaders of color and others who normally might not be in the channels. Those referral networks turn out to be kind of excluding a lot of leaders who were approximate to the work.

Nic Campbell:

We’re talking about these tenants that underline all of this funding, you’ve mentioned being flexible, having trust, and then just being inclusive at the end of the day, right, in order to create the best solution. And I think they all resonate with me. And I wanted to ask you about the sector generally, right? And maybe some of your, what you’re going to say, builds on the flexibility, trust, and inclusiveness that we’re talking about. What does the sector do you wish we were doing less of and what do you think we should be doing more?

Jim Shelton:

Yeah. So these two things go hand in hand for me, I wish we were doing more collaborative work in a way that reduces the fragmentation and incoherence of which both the field at large, meaning the social sector, operates. But in particular, the way that the organizations that we fund have to respond to all the different funders in their demands. And so to the extent that we can come together to use common reporting to reduce common metrics, to get behind the plan of the grantee, as opposed to each of us having our own special project that we want them to do to get our money. the more impactful and strategic and innovative every organization we invest in is going to be. That’s number one on my list. And number two is I wish that we lived into our rhetoric of investing in the things that work and really starting to ask our questions.

Jim Shelton:

One, to have a robust definition of what success looks like. So we’re not looking at very narrow metrics to define these things, but also that we’re really being clear about what does success look like at every stage of development. And that might not mean that you produce the outcome you were looking for, but you have to produce the learning that you were looking for and then a path to the next level of output or outcome. And I think that people talk a big game about doing that, but the reality is it gets really easy to keep giving money to the same people, whether they’re producing or not, or get people to the folks that everybody’s excited about, whether or not they’re producing outcomes or not. And if we just all were much more disciplined about saying, what are we hoping that this produces for the world and for the people we’re trying to serve, and then being really hard nosed about saying this either it looks like it’s going to do it or it doesn’t, or it is doing it, or it’s not, I think the deal will move much more quickly.

Nic Campbell:

Yeah. And I think it’s about developing that discipline to ask that question, right. Does this work, will this solution be viable? And really holding ourselves accountable to doing that. Because I think it has implications as we think about evaluation, right? Like that then provides the framework and all the fundamentals for how we then go about evaluating.

Jim Shelton:

Yes. And it also requires that we all have a more shared perspective about what does evidence or rigor look like at every stage of development. So my evaluation framework for the at-scale organization with tons of resources and a model that’s been demonstrated over and over again, that they use in lots of places, it should be very different than the way I think about what rigor looks like for a relatively new organization, with a relatively different model that others are taking that shows tremendous promise. We should know what rigor looks like at that stage of development, but know that it’s not going to look like the evidence that these more mature organizations are producing. And we can get clearer about how we think about that collectively. And then frankly, it’d be crucially invest in organizations being able to produce that kind of rigor, which means adequate investing, flexible investing, so technical assistance and support that will allow us to build a field that is many other sectors, especially [inaudible], like they have natural mechanisms by which the things that are better products, quote, unquote, ultimately win. Doesn’t always work that way, but there’s definitely a feedback loop that says resources flow to things that people are saying are better than the others in our sector, because we don’t track outcomes against the things that are happening. Resources can flow for a whole lot of different reasons. And if we don’t begin to fix that basic mechanism in our ability to get the things that work to the most people and give them a scale is also going to suffer.

Nic Campbell:

You’re talking about things like less fragmentation, so encouraging more collaborative work, really having that kind of rigor to approach the kind of impact we want to have. And these were, you know, in many cases, seismic shifts, right? So it makes me start to think about the infrastructure of organizations and what needs to be in place to make sure that you have an environment where you can start to make these shifts and start to get more collaborative and develop that rigor at Blue Meridian. I’d love to hear how you all are thinking about infrastructure capacity of organizations and, you know, the sector generally, to be able to do their best work. What are you focusing on when it comes to, for example, boards, governance, the way they’re set up, the vehicles that they’re using, and even how they’re organized internally?

Jim Shelton:

Yeah. So I think for us, we’re on a learning journey on this ourselves, in some ways I think our founding principles was about investing in organizations to give them the assistance and competence and infrastructure to actually scale, right; give them enough capital and then allow them to invest in the things that are going to allow to provide that, as you described, core infrastructure, so that they’re not just growing, they’re growing with quality and in a way that will be able to be sustained over time. Earlier stage organizations have an even more challenging thing where they need to figure out what the infrastructure needs to look like to scale and increase their impact on the ground. And so we have to be willing to invest in them, both in what I’ll call more bespoke ways, so, Hey, we’re not ready to give you a big, giant, scaling grant, but it seems like you really need to build out your capability around measuring and evaluation, or you really are trying to figure out new ways of applying technology to your work.

Jim Shelton:

And so where can we do some selective investment to help you get to that next stage? And then once you’re there, we can come back and say, Hey, you look like you might be ready for a real scaling opportunity. So I think we have to be let the grantees do their best work, provide our perspective about where we might be able to assist them on things where it looks like they’ve gotten to the kind of capability that they will need to go to scale and be willing to fill those gaps and then to tie opportunities for more scaling, to having those gaps filled.

Nic Campbell:

That approach really requires, you know, a thoughtfulness; being analytical, but also empathetic, right? And trusting your grantees, the organizations that you’re working with. You know, Jim, your responses have been so incredibly thoughtful and relevant and insightful. And I want to ask you a question to help us continue to build knowledge through books and people we should learn from or about to close this out. What do you think we should read next? Or what artists do you think we should be paying attention to?

Jim Shelton:

So I would say that anyone who has not read ‘Biased’ by Jennifer Eberhardt needs to read it. I read a bunch of books on race, but the intersection that she brings between history and neuroscience does two things. One is, it just makes plain the issues that we’re all feeling. And it’s really interesting because she started her work in criminal justice. So a lot of the examples are really relevant that way. The other thing it does is it makes it clear how hard this work ultimately is going to be for us to shift the way we actually behave as individuals. And as a country, it gives you a sense of possibility because there are things to be done, even though they’re hard, we don’t know all the answers, but there are things to be done. And to start, we have to actually look at like how difficult it’s really going to be.

Nic Campbell:

Thanks so much for that recommendation, ‘Biased’. I will put the information about the book and its author in the show notes. So everyone will be able to have access to that. You have shared so much knowledge and have been so insightful so that leaders can practically use the information that you have shared in their own organizations to help them build bravely and think about how they can collaborate with others. So I just want to thank you so much again for joining us today, Jim.

Jim Shelton:

Nicole, thanks so much for what you’re doing. And for the work you put into supporting so many organizations, it makes a huge difference. Not everybody likes plumbing, but everybody knows when plumbing breaks down. And so, just really appreciate you leaning in on it.

Lawrence Mendenhall:

Nicole, thank you for all the work here, and it’s a pleasure and a privilege. Thank you.

-Upbeat Outro Music-

Nic Campbell:

Thank you for listening to this episode of Nonprofit Build Up. To access the show notes, additional resources, and information on how you can work with us, please visit our website at buildupadvisory.com. We invite you to listen again next week as we share another episode about scaling impact by building infrastructure and capacity in the nonprofit sector. Keep building bravely.

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Investment and Innovation for Impact with Lawrence Mendenhall

This week on the Nonprofit Build Up, we’re talking with Lawrence Mendenhall. Lawrence is the Chief Operating Officer of the American Academy of Ophthalmology, the 32,000-member association for America’s eye surgeons, where he leads the Academy’s communications, memberships, marketing, finance, technology, facilities, security, and corporate services functions.

Lawrence has held operational and legal leadership roles for philanthropies ranging from the William and Flora Hewlett Foundation to Humanity United, a startup human rights foundation created by eBay’s founder. Earlier in his career, he spearheaded The Pew Trusts’ change from domestic grantmaking foundation to international operating nonprofit as well as its successful effort to save Philadelphia’s Barnes Foundation.

Listen to the podcast here:

Resources:

About Lawrence Mendenhall

Lawrence Mendenhall, MBA, JD, is COO of the American Academy of Ophthalmology, the 32,000-member association for America’s eye surgeons, where he leads the Academy’s communications, memberships, marketing, finance, technology, facilities, security and corporate services functions. He also oversees the Academy’s affiliated foundation, with programs that range from EyeCare America, which has served over 2 million patients free of charge, to the newly founded Museum of the Eye.

He has held operational and legal leadership roles for philanthropies ranging from the William and Flora Hewlett Foundation to Humanity United, a startup human rights foundation created by eBay’s billionaire founder.  Earlier in his career he spearheaded The Pew Trusts’ change from domestic grantmaking foundation to international operating nonprofit as well as its successful effort to save Philadelphia’s Barnes Foundation.

He attended the University of Colorado at Boulder, New York University School of Law, and The Wharton School of the University of Pennsylvania.

Read the podcast transcription below:

-Upbeat Intro Music-

Nic Campbell: 

You’re listening to the Nonprofit Build Up Podcast and I’m your host, Nic Campbell. I want to support movements that can interrupt cycles of injustice and inequity, and shift power towards vulnerable and marginalized communities. I’ve spent years working in and with nonprofits and philanthropies, and I know how important infrastructure is to outcomes. On this show, we’ll talk about how to build capacity to transform the way you and your organization work.

Nic Campbell: 

Hi, everyone. This week on the Nonprofit Build Up, we’re talking with Lawrence Mendenhall. Lawrence is the Chief Operating Officer of the American Academy of Ophthalmology, the 32,000-member association for America’s eye surgeons, where he leads the Academy’s communications, memberships, marketing, finance, technology, facilities, security, and corporate services functions. He also oversees the Academy’s affiliated foundation, with programs that range from EyeCare America, which has served over 2 million patients free of charge, to the newly founded Museum of the Eye.

Nic Campbell: 

Lawrence has held operational and legal leadership roles for philanthropies ranging from the William and Flora Hewlett Foundation to Humanity United, a startup human rights foundation created by eBay’s founder.  Earlier in his career, he spearheaded The Pew Trusts’ change from domestic grantmaking foundation to international operating nonprofit as well as its successful effort to save Philadelphia’s Barnes Foundation.

Nic Campbell: 

He attended the University of Colorado at Boulder, New York University School of Law, and The Wharton School of the University of Pennsylvania. And with that, here is Lawrence Mendenhall.

Nicole Campbell:

Hi, Lawrence. I’m so excited to have you joining us for our Fast Build Leader series.

Lawrence Mendenhall:

Thank you, Nicole, for having me. I’m excited to talk with you.

Nicole Campbell:

I am looking forward to it. So to get us started, can you tell us about the American Academy of Ophthalmology, your role there and the Academy’s immediate priorities?

Lawrence Mendenhall:

Sure. My organization AAO, the American Academy of Ophthalmology is the association for America’s 32,000 eye surgeons. And it also has a related foundation where I am COO and CFO for these orgs. Our group also includes a related management company that provides that operational infrastructure to other nonprofits, as well as a political action committee and a state legislative advocacy fund. Now the immediate priority for our group is ensuring that we’re serving our members, right? They include not just the USI surgeons, but surgeons from around the globe who have been hard hit by the pandemic. What many people don’t know, Nic, is that the first victim of COVID-19 was a Chinese ophthalmologist at Wuhan Central Hospital. He was one of the first to raise warnings about the virus in China. He was condemned as a whistleblower, and then he later died. Now he’s since been exonerated, but he really just illustrates the risks for our members.

Lawrence Mendenhall:

Some of whom have given their lives, working on the front lines to fight COVID-19. And now treating injuries in the wake of George Floyd’s killing by police. Eye injuries are one of the most common injuries from the rubber bullets and tear gas that are often police responses to the protests. And we’ve spoken up before around gun violence because they also result in a lot of eye injuries. And we’re also one of a handful of medical orgs that publicly condemned the recent killing. So ensuring that our member safety and livelihoods are protected are our top priorities so they can continue to serve the community of patients. And another high court priority, I would just say for me, is ensuring that our org, which is responsible for one of the largest in-person meetings in medicine ,is coping with the financial impact of the virus. I mean, how do we ensure the safety of our meeting and the viability of what we offer to our members and their patient is really what I’m spending a lot of my time on.

Nicole Campbell:

Wow, that’s a really wide remit, Lawrence. Thank you for that background. You mentioned that you were both CFO and COO and that is fascinating. So can you talk a little bit more about those roles and how they play out essentially within that network, you named a few entities that you are also responsible for.

Lawrence Mendenhall:

Sure. So I was using the little shorthand, I’m the COO for the Academy and then the CFO for the Foundation, as well as the Executive Director of the foundation reports to me. Really what it is, I feel very blessed to work with such an incredible team and incredible CEO, David Park, who’s been our CEO for 10 years and has been involved with the Academy for decades. But essentially I am responsible for harmonizing our very diverse operations here. We go from membership and meetings to patient education, to member education, continuing medical certification, a real range, to public serving programs like Eye Care America, which has provided over 2 million exams for free to the public, to a museum of the eye that we’re trying to launch. So you can imagine trying to launch a new public museum in the middle of the pandemic. So it really is that harmonizing role. It was brought in because so often we see in not-for-profits, whether it’s funders or NGOs, just too many direct reports to the CEO, right? They need to be able to be out in the world and to advance the mission with the public and with the members, if you have members, but then someone needs to really be translating and making sure that that vision is moving forward internally. And it’s harmonized, especially when you’ve got a large team, we’re lucky to have a large team.

Nicole Campbell:

I just think it’s great that your organization and the work that you’re doing is really showing up for everyone during such a tense time for our country. So I appreciate that. And you are a nonprofit and I would love to hear just how you would talk to other nonprofits who fundraise as a significant part of their budget. In other words, what do you think should be top of mind for these organizations, particularly now during this time of uncertainty? We’ve got so much unrest, we’ve got the pandemic, what should they be concentrating on? What should they be doing?

Lawrence Mendenhall:

Sure. You know, my top advice for others who are fundraising at this difficult moment is don’t give up. Your donors are still out there and many are looking for ways to help even more. Now I know that’s easy to say right? Going to our experience, the key has been to divide the donors into segments, which is of course a good practice generally, but it’s critical right now. If you have a strong market segmentation in place, you’re ahead of the game, but you probably need to go through the steps again, re-segment based on how COVID is impacting it. Who is going to go into your stewardship category? This isn’t the right time to be asking them they’re going through a lot. This isn’t the right time to approach them with big aks. And then who can you approach? So even though there are some who aren’t going to be able to help now.

Lawrence Mendenhall:

So for example, at my organization, our average donor member have been hard hit. I sort of alluded to before by COVID-19 they stopped seeing non-emergency patients and the impact has been severe. So they’re focused on protecting their patients and their staff and their community. So it’s not the time to go to them for money, but there are others for us, and I think for many other not-for-profits, there are significant segments, particularly corporate sponsors and other corporate partners in our space, for example, that are eager to help. They want to create that goodwill with members in the community, especially now. Their budgets weren’t necessarily impacted, or they’re not being impacted as quickly. So they’ve still got money for this year, right? And they’re eager to support long standing partners and highly visible challenges at a time like this. And so for us, it’s been large pharmaceutical and medical device companies that have stepped up to fund additional education for doctors and patients around say telemedicine, at a time when in-person visits are only for urgent cases. We do also have some high net-worth donors who’ve been able to contribute.

Lawrence Mendenhall:

You know, they’re not suffering from this. And I think there is a significant set out there. The second thing I would just mention, it’s similar, is that there’s a significant funding available specifically for COVID response and COVID responders, or for people who are impacted by COVID. Sometimes it’s an embarrassing amount of funding, including government funding, there’s money that’s just looking for a home, for a place to be effective. So for example, medical societies we’ve found that are focused on emergency care or emergency providers and emergency service for the indigent. Those societies are in short supply and they’re incredibly popular donors. Of course, they’ve, don’t always have the infrastructure yet to deploy that money effectively, but they’re very popular with donors. So what I would say is any of your programs that directly benefit impacted communities are uniquely positioned to succeed with the funders. And I would say, depending on your capacity and others in your space, even if you don’t have a program in place, if you can quickly ramp up and make a difference with integrity, the dollars may be there to support your efforts. And that’s what I’m seeing. Nicole.

Nicole Campbell:

That makes sense, because essentially you’re saying, well, be strategic about your outreach. Also look in different places, right? Not just keep tapping the same sources for funding, because there might be additional funding sources out there, particularly around COVID or around funds that are working with impacted communities. And so that really makes a lot of sense. And so if you were to look at the other side of the conversation and look at the funders who are providing these resources to nonprofit organizations, beyond the advice of give more money, what advice would you provide to funders to support nonprofits sustainability, both within the moment that we’re in and to get us past it, and when you are past it, what does that look like? And I know that you are experienced, you know, you’ve been with funders. So you have that really unique perspective of not only having a leadership role within a nonprofit organization currently, but also haven’t had leadership roles within philanthropy, as well as I would love to hear what your advice would be to funders.

Lawrence Mendenhall:

Well, it’s a terrific question and sort of looking at it from both sides. Unfortunately I think the answer, for the donor mindset, the answer isn’t funders just need to provide more advice. You need to provide more thought partnership. I think that’s what a lot of funders think, but that’s not going to be enough standing alone. Like I said, it’s off in the view of these smart well-meaning funders and program officers who say, well, our thought leadership is more valuable than our funding. There’s a point in there, but for true sustainability, I think that funders need to be willing to be thought partners and to support the infrastructure and health of the org beyond the short term, not just a particular program that is of interest to that funder. Now I’m not saying that funders should embrace, you know, 50% overhead rates, but they should be willing to pay reasonable overhead.

Lawrence Mendenhall:

Yes. But to go further to support those specific organization strengthening initiatives and work, whether it’s developing fundraising expertise, recruiting board leadership, and putting in place strong work practices, creating compliance infrastructure, building tech platforms, they need to be willing to support those things that benefit the whole organization and not just a slice of it. So that’s the first piece of advice. And of course, many funders say they’ve made a shift, but in reality, I think there’s still a long way to go. The second piece of advice I would say to funders is to make longer term investments, not one to two or even three to five years, but 10 year plus investment. I think the larger your investment is the more true this is. So what’s large? Well, that’s going to be determined by the funding that already exists in the space, but large short term investments, they can really distort the mission of the organization in the field. When they end, they may have co-opted the direction of the org and the space and leading other funders to that source to bow out. So then the org in that field can end up diminished, which harms the exact community that you intended to help.

Nicole Campbell:

You are definitely speaking my language because I’m hearing you say, you know, support infrastructure needs beyond the immediate needs that are cropping up. And I liked when you said support the whole organization, not just the flight, because it really resonates with me. I talk a lot about just making longer term investment in an organization, not in deliverables, right? So that makes complete sense to me. I’m going to ask you a question about this overhead support. Talk to me about why you think there are so many organizations, so many funders out there who are saying, well, we’ve determined that you can’t spend more than 25% or 10%, whatever their percentage. Why do you think that those percentages are introduced if they are, as you put in that language, like if they decide to make longer term investments in an organization for their sustainability, how do we reconcile the percentages of overhead?

Lawrence Mendenhall:

Right. Sure. I think what’s happening and want to really give credit to funders. I think they want to be responsible. I think they want to share that they are delivering on their mission and that they’re supporting the mission of the organization. But what I think has happened is it’s become misguided. It’s become a rule of thumb. Say we’re not going to go beyond this percentage because somehow that signals that this isn’t a responsible investment. And I think what’s happened over the last 20 years. We had some very visible scandals at hundred million dollar organizations, billion dollar organizations, the Stanfords of the world. Now there is a question, how do I, as a funder, for example, in the social justice space, do I want to place a project at Stanford or another large university, which may have a 30% overhead rate? I think that question is very different than whether for this small 10 person not-for-profit, which may be in South Sudan, which may be a couple of people in Northern Nepal.

Lawrence Mendenhall:

I think the question would be it’s a very different issue. And unfortunately it becomes sort of one size fits all. This is our policy and we don’t fund beyond this amount. And so I think it really is a desire to be accountable, but I think there has to be a built-in flexibility there. And it’s hard though. It’s hard because a lot of the funders they’ve gotten larger, they’re bigger. They need to have sort of…I know this from the operational perspective, black and white rules are always easier to implement than sort of, it depends. And so I think that’s part of the challenge that also is another aspect for philanthropy. Philanthropies themselves, they say, well, we want to stay small. We don’t want to get too large. That’s their idea of humility, but if you need to grow to do your work well, I think that for philanthropies themselves is an investment that’s worthwhile. So this obsession with overhead comes from a good place, but I think it needs to be examined in specific cases.

Nicole Campbell:

Right. And just be tailored to the organization that the funder is investing in. We’ve talked about the advice that you would provide to nonprofits, the advice that you would provide to funders, with all of that in mind, what do you wish we did less of as a sector? And what do you think we should be doing more of?

Lawrence Mendenhall:

Sure. And here I’m putting my kind of funder hat on. I know what I’d like to see less of is really honestly, less self-reflection and more other reflection. You know, I look across the philanthropic sectors, funders are often incredibly skilled at looking inward, at examining their own notice and practices, and there’s a place for that. This is a good thing, but listening to you and reflecting the grantees and NGOs that they’re supporting is the number one job for me. It’s similar to the conversation my team and others are having around privilege and around race for folks who are part of a dominant culture that’s the funder culture in this case, they need to be listeners and to not expect to be catered to. They need to open up space for others to be heard, take the time, to educate themselves to the extent possible, and then still be willing to defer to the expertise and these lived experiences of others. Now, in some ways, it’s the exact opposite of the strategic and venture philanthropy models that many funders have cycled through or are still in. But that’s what I wish we would do less of as a sector.

Nicole Campbell:

Well, how do you think this shows up from an infrastructure perspective? So you’re a funder and now they listen to you and they say, okay, well, we’ll do less self-Reflection, we’ll listen, we’ll let our grantees be the experts. How does that show up in terms of a funders grant making? And I’m speaking in terms of infrastructure, like the type of award, type of monitoring evaluation, like what could we be looking for to say that is a funder who is listening to their grantees?

Lawrence Mendenhall:

I think some terrific practices are to fund group of grantees with general operating support, working in an ecosystem where you are hoping to see systemic change, opening the spaces for them. So whether that’s hosting a monthly call, whether that’s actually giving them financial support, coordinate advocacy, public education efforts, it’s supporting that without tons of strains, perhaps providing staff support for those meetings, introducing the systems that will allow them to create sort of a shared portfolio. Or do you begin to think about it? Right? I think so often we jump to that, we’ve done the mapping, we know what needs to happen, and now let’s just plug it in. And I think funders have tried to get away from that, but it’s that, I think that hangover of that approach is it’s still very much out there.

Nicole Campbell:

And remove the strains. What do you think then we should be doing more of?

Lawrence Mendenhall:

Well, of course, through the flip side of that is the listening. And it’s also what I would love to see. And I’ve not seen a lot of this. I know, Nic, you’re so deeply involved in these conversations, but there is some great writing in philanthropy. The state of the art and best practices continues to evolve. But I also think there is a, and this is from part of my work here, there’s a communication aspect to helping the rest of the world understand the various ways that effective philanthropy can show up. And sometimes it is just opening the space. It is writing that check. That doesn’t mean that we’re not effective philanthropists. It doesn’t mean that we’re not going to eventually create the change that we all want to see. It’s just that we’re committed to a longer timeframe. We’re committed to doing it in this more collaborative way.

Lawrence Mendenhall:

Take the focus off of wow, who pays for 30% overhead versus 15% overhead. And can you believe X large foundation funded this work, helping the public and helping our policymakers understand that this is not a command and control economy. We are putting the dollars out there to let this work bubble up, to let these good ideas and these movements advance. We are not controlling them. So there’s a role for communications and messaging to change from that strategic philanthropy model, where it’s my funding, I’m responsible for it. It’s like if I’m funding it, I’m trying to open a space.

Nicole Campbell:

And so getting out of your own bubble your own way and using communications to fully integrate within the world, right within the economy in which philanthropy is trying to make a difference. And that resonates. And so I know that the focus of many nonprofits is often on programmatic strategy and their own development needs and fundraising apps, which makes sense because fundraising is a large part of their budget and their app and what they’re doing to get money into their work and to support their operations. Is the Academy thinking about building infrastructure during this time? I know you talked about how you were being responsive to your members and showing up to support communities in need. Are you thinking about how you were building your own organizational infrastructure? And if so, how is that showing up and how are you thinking about this beyond the moment that we’re in?

Lawrence Mendenhall:

Sure. You know, we are a hundred year old organization that really reinvented itself in the eighties, nineties. And so we do have a lot of infrastructure in place. And I would just make one point as I go into this, it’s often harder to change existing infrastructure, strong infrastructure, than it is as I’ve been, for example, in a philanthropic startup environment, where if you had a system for three years, it’s not really hard to get rid of it. But if you had a system, whether it’s technology, whether it’s a process, that’s grown up over decades, it’s more challenging. So for us in the short term, we’ve had to get comfortable in some cases with really quickly assemble infrastructure, for example, holding a dozen webinars a week, educate our members of the public on COVID-19. When we would normally host a fraction of that number for a fraction of the viewers. When we’re doing that, responding to this immediate need, how do we right-size our investment? They’re urgent needs, but they may not be permanent.

Lawrence Mendenhall:

So that’s one of the things so lowering our standards, being willing to say, Hey, you know what? Some of this is going to happen quickly and we’re going to test it and we’re going to decide then what we do next. But looking at the longer term, we are asking ourselves daily, how will the needs of the communities we’re serving be different after COVID-19? How do we build the infrastructure we’ll need to respond to those needs? Then the reality is that in this fiscal environment, though, we also have to ask, what are we going to stop doing so that we can meet the new reality? You know, in my humble view, every org, whether it has sufficient reserves or a deep pocketed funder who can help plug the current funding gap, I think every org should be asking the strategic question about the long-term. What’s changed permanently and what hasn’t changed. And why do they have to ask this?

Lawrence Mendenhall:

I think it’s because the reality is that we don’t know what the new normal will be after this period we’re in. And we want to be prepared to continue to serve our communities, the ones that rely on us, even if our funding model turns out to be very different. So for us, for example, as I said, we hold one of the largest meetings in medicine. Well, what is that going to look like? Right. Are folks going to be comfortable going to meetings in the future? Is the whole world going to permanently go more virtual? We don’t know, but we need to be asking those questions so we’re ready.

Nicole Campbell:

It’s such an interesting perspective, right? Because you are within an organization that has a tremendous amount of infrastructure. And your view is that even within that infrastructure, you want to continue to innovate so that you are responsive to the needs of the community that you are serving and you’re working with. And I really appreciate how you’re saying changing an infrastructure that already exists is a lot harder than, you know, just creating one. And I understand there are a lot of considerations around why you…convincing someone to create infrastructure in the first place. But I agree with you, I think changing that infrastructure that has been hardwired, not only into the processes and the policies, but into the people, because people are a large part of that infrastructure. And it’s like, how do you not only change the policies and change the processes, but then change the people and have them be innovative in that way.

Nicole Campbell:

So I really appreciate that observation, Lawrence. And you know, your responses, I appreciate them a great deal, particularly because they’re coming from a COO who has that programmatic vision, has the organizational vision, but is also able to think about the details within the infrastructure to hold up those visions. And I think that your advice has been so thoughtful and so practical and just powerful. And I want to ask you a question to help us continue to build knowledge through books and people we should learn from or about to close us out. What books do you think we should read next? Or what artists, the think we should be paying attention to?

Lawrence Mendenhall:

Well, I thought hard about this. I was thinking about what I’ve been reading lately. I’ve been rereading though, what’s really impacted me, is I’ve been rereading ‘I Will Bear Witness’ which was written by Victor Klemperer as a diary of his experience of one of a handful of Jews who was able to survive in Nazi Germany through the entire prewar and world war II period, right through Germany’s liberation. He was this accomplished professor, married to a Christian woman, the cousin of a famous conductor, some folks know Otto Klemperer, and he kept a daily diary of his experience beginning in 1933. Now there’s so many comparisons, you know, folks drop between the 1930s and our present era, including global trends toward populism, potentially fast fascism, but to see his daily count of how’s German society, you know, this fame cosmopolitan, at that time, society that would produce an erudite converted Jewish professional like him, to see how that imploded and almost brought the entire world down with it. It’s just incredibly powerful. What I find is that it’s a reminder that our engagement as individuals, as not for profit leaders, and as funders, that our engagement just isn’t negotiable. You know, it’s easier, and the risk is, it’s easier for the world around us to change us than for us to change it. And we really need to fight for what we value. That’s not hot off the presses, but it is one that I think is worth a read.

Nicole Campbell:

So ‘I Will Bear Witness’ by Victor Klemperer. Thank you for sharing that, Lawrence, fight for what you value. You have shared such knowledge and insights that I think leaders, as I mentioned, can practically use in their own organizations to help them build bravely. And I think that that’s, what’s really important that we’re not only sharing our thoughts and our insights and talking in cliches, but actually saying here’s what I think. And here’s what I think you can do next. Here’s what I think we can do next. So I want to thank you for sharing that level of insight, that level of practice, just how practical your suggestions and recommendations are. And I want to thank you for joining us today, Lawrence.

Lawrence Mendenhall:

Nicole, thank you for all the work here, and it’s a pleasure and a privilege. Thank you.

-Upbeat Outro Music-

Nic Campbell:

Thank you for listening to this episode of Nonprofit Build Up. To access the show notes, additional resources, and information on how you can work with us, please visit our website at buildupadvisory.com. We invite you to listen again next week as we share another episode about scaling impact by building infrastructure and capacity in the nonprofit sector. Keep building bravely.

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