$60 Million in New Grants Help Nonprofits Innovate Rapidly to Close Financial Equity Gaps

Media July 21, 2021

Originally published by The Chronicle of Philanthropy

 

Grameen America, a nonprofit that provides loans to help low-income entrepreneurs, is doing all it can to aid Black women whose businesses have been hurt by the pandemic. Its goal is to help 80,000 women by 2030. But it faces a major obstacle: The women it wants to help don’t always trust lenders so even though plenty of money is available, it doesn’t have enough borrowers.

To curb that distrust and meet its ambitious goal for the next decade Grameen America knows it needs to move fast to figure out what works best to overcome the skepticism.

With the help of a $9.5 million grant, it plans to do a series of quick tests to figure out what approaches work best to connect it to Black women, such as collaborating with churches, advocacy groups, or local governments.

Grameen’s grant is part of a $60 million effort by Blue Meridian, a collaborative that amasses money from wealthy foundations and individuals, including the Duke Endowment, MacKenzie Scott, and the JPB Foundation.

The new grants to Grameen and seven other nonprofits are all focused on ways to help people who have long been marginalized benefit as the economy recovers after Covid. They also reject the traditional approaches to fueling growth embraced by philanthropy in favor of a process that focuses on speedy testing of innovations rather than lengthy research projects. What’s more, all eight groups were vetted to ensure their commitment to racial equity was a core part of their operations.

Too often foundation money is targeted specifically at start-ups or to fuel nonprofit growth without adequate support of research and testing of potential strategies, says Alethia Mendez, a division president at Grameen America. And when nonprofits get precious grant money to experiment with new approaches, they are under great pressure not to fail, she says.

“Like many nonprofits, we want to be able to deliver on any types of investments that we have. And so you’re always looking to create the most perfect model — right now,” she says “Before we’ve actually tried something, we’ve run all of these design iterations in our heads.”

Instead of designing an elaborate formula for growth, the “lean testing” method Grameen America learned working with the staff at Blue Meridian will allow it to try several approaches over the next three years.

Mendez hopes to learn enough through testing and retesting different ways to attract and provide financial services to Black women entrepreneurs that it will eventually no longer need philanthropy to support that work; instead the repayments of the loans will cover future rounds of loans.

 

Quick Results

Grameen America and the seven other nonprofits have been receiving coaching from Blue Meridian’s staff and outside advisers since late last year as part of the donor collaborative’s “The Studio @ Blue Meridian” program.

Nonprofits that participate in the program don’t necessarily receive the long commitment that can total tens of millions in grant dollars that other Blue Meridian grantees receive. But by designing ways to rapidly deploy services and quickly test results, Blue Meridian hopes to help established nonprofits grow even larger so their work benefits tens of thousands of people.

The grant recipients announced today include nonprofits that have developed technology to deliver government benefits to hard-to-reach people and designed technology training for Black and Latino students and workers and programs to help elementary-school students improve in math. Those groups were picked because they are designed specifically to respond to problems exacerbated by the pandemic, including the financial struggles of entrepreneurs and low-wage workers and the difficulty students have retaining knowledge during long school breaks or periods of online learning.

Months of working with Blue Meridian staff and outside advisers, and the grant money that followed, helped the nonprofits design ways to quickly test a variety of growth strategies tailored to specific regions or beneficiaries. Much of the approach was modeled after Anne Mei Chang’s book Lean Impact: How to Innovate for Radically Greater Social Good. Mei Chang also participated in the Studio workshops.

The key thrust is to adopt new approaches without a lengthy period of planning, rapidly test results from those operations, and quickly discard things that don’t seem to work, says Lizz Pawlson, a managing director at Blue Meridian.

“The old saying ‘measure twice and cut once’ doesn’t actually work in the real world,” she says. “The context is always changing. The environment is changing. What you need to do is employ the scientific method and do short cycles of testing and learning.”

 

Racial-Equity Focus

Starting last fall, Blue Meridian gathered an initial list of about 300 potential grantees by talking to outside experts and Blue Meridian staff who regularly vet nonprofits. Then it worked with the consulting group Equity Lab to winnow the list to organizations that had taken steps to make racial equity a key focus of their work.

Blue Meridian itself is in the process of undergoing such a transition, explains Jim Shelton, the donor collaborative’s chief investment and impact officer and former deputy secretary of the U.S. Department of Education. In doing so, Shelton says, it is using its Studio program to more aggressively test how the broader organization might ensure it is not allowing its own internal biases to steer its grant making.

The process didn’t just push Blue Meridian to focus on including organizations led by people of color, says Shelton, who was a longtime program officer at the Bill & Melinda Gates Foundation before serving in the Obama administration. It also pushed the donor collaborative to ask deeper questions about potential grantees’ commitment to racial equity.

“Do they actually understand the racial context of their work? Do they understand how racial equity and issues around race center in the work that they’re doing? Do they take seriously the work that they need to do internally for themselves to create a culture where there are not issues of bias and or a lack of inclusion?” Shelton says, ticking off a series of queries meant to sharpen Blue Meridian’s understanding of a grantee’s motivation. “It is meant to be sweeping, not just isolated to counting heads.”

For Per Scholas, it was a “long, slow slog” over 25 years attracting money to help it grow from an organization that refurbished computers at a single Bronx location to a nonprofit with technology training centers in 17 cities, says its chief executive, Plinio Ayala. He thinks an equitable recover is only possible if nonprofits like his, which already have a proven model and a growing footprint, are given the ability to devise ways to grow even further.

With the $8 million it has received as a member of the Studio @ Blue Meridian, Ayala wants to fine-tune the virtual training program it used during the pandemic. In doing so, he expects to grow from serving 3,000 people this year to 50,000 annually by 2035, with a specific focus on diversifying the technology work force.

“We’re changing the face of technology,” he says.

To accomplish that goal, Ayala and his team will test a number of strategies. Per Scholas will test success rates in areas where the nonprofit has a brick-and-mortar presence versus where it doesn’t. It will test different ways of contacting graduates of the program to help them gain certifications in new technologies. In certain cities, Per Scholas will test to what extent some of the 650 companies it sends graduates to will shoulder the cost of training, and it will expand its sales staff to market its services to those companies.

The approach is a departure from the randomized, controlled trials Per Scholas has done in the past and, in Ayala’s view, helped attract the support from Blue Meridian. Randomized, controlled trials, considered the gold standard in evaluation, can be expensive and take a lot of time. But they allow researchers to apply statistical formulas to generate results with a known degree of confidence. With the quick tests he’ll employ as a Blue Meridian grantee, Ayala says the idea is to try things out and quickly move on if they don’t work.

“You don’t have to go full bore on an idea,” he says. “You sort of do it in stages, fail fast, and course correct as you go along before you’re ready to commit.”

 

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