Billions Flood Into Blue Meridian as It Seeks to Help Innovative Nonprofits

Media June 22, 2021

Originally published by The Chronicle of Philanthropy 

 

Blue Meridian is big money.

In 2018 when the Edna McConnell Clark Foundation spun off the donor collaborative as a separate nonprofit, its president, Nancy Roob, thought she might be able to attract $1 billion in commitments in a decade. Three years later, Blue Meridian Partners has amassed $2.5 billion in pledges, all of which will go in the form of large, unrestricted grants to groups working to help people escape poverty.

New donors include MacKenzie Scott and the Valhalla and Zoom foundations, which each pledged at least $50 million, making them general partners. Longer-term general partners include the Duke Endowment and the Sergey Brin Family Foundation. Also, the JPB Foundation and Charles and Lynn Schusterman Family Philanthropies recently increased their commitments to become general partners.

The Bill & Melinda Gates Foundation, Eugene and Marilyn Stein Family, and Aviv foundations have made smaller commitments.

Blue Meridian has allocated about three-quarters of its funding and is still looking to add new partners. However, the billions controlled by the group is only a small portion of the private support needed to help millions of Americans improve their economic situation, Roob says. She notes that far more money is “sitting on the sidelines in this country that needs to be put to work to actually solve problems.”

Aggregating huge amounts of cash is key to Blue Meridian’s plan. The group works to identify nonprofits that have developed promising ways to solve social problems but need coaching and guidance — and especially money — to take those approaches national and help a greater number of people. Blue Meridian promises patience, few restrictions, and a group of megadonors who provide advice and connections with other donors outside the collaborative.

The huge amount of cash the donor pool has gathered will allow it to focus more than $100 million on a single approach. Grantees include Youth Villages, which is working to support children transitioning out of foster care, and the Social Finance UP Fund, which provides low-income people with job training.

Heather Grady, a vice president at Rockefeller Philanthropy Advisors, credits Blue Meridian with being one of the first donor collaborations to compile huge amounts of money to reduce poverty. And while other pooled funds have emerged to address the root causes of poverty, Grady says Blue Meridian operates on a longer time horizon than most.

“They make really big investments and think in a 10- to 12-year timeline. And that’s still pretty rare in philanthropy,” she says. “Even funders who say they support systems change may only [provide] funding for three or four years.”

 

New Strategy

When the pandemic hit, Blue Meridian was in the early stages of a new strategy that introduced two new programs. In one of them, called Place Matters, Blue Meridian built on its experience investing in regional projects in Tulsa, Okla., and Guilford County, N.C., to invest in other specific locations. Key funding and strategic guidance were provided by the Ballmer Group, a Blue Meridian general partner.

The place-based program will support things like data collection and analysis, policy analysis, and technology that can assist a network of organizations taking a coordinated approach to things like childhood poverty. In North Carolina, for instance, Blue Meridian committed $32 million over three years to help local early-childhood-care organizations handle larger caseloads and use an integrated data system.

The other, Studio @ Blue Meridian, provides support and connections with experts for nonprofits, particularly those led by people of color, that are looking to generate ideas for how to expand. The studio grantees receive coaching and smaller grants than the tens of millions of dollars that full-fledged grantees receive.

The Studio @ Blue Meridian grantees secure access to the network of donors and grantees that the philanthropy supports, but there is no guarantee that they will emerge from the experience with a larger grant in hand.

 

Direct Payments

During the early months of the pandemic, the philanthropy deviated from its usual practice and put together a $100 million rapid-response fund, a significant portion of which went to providing direct cash assistance to people in need. The move marked a change from Blue Meridian’s normal practice of deeply vetting organizations and treating programs it supports like investments to be cultivated over time.

Blue Meridian’s entry into giving money directly to people in need relied on groups like UpTogether, formerly known as the Family Independence Initiative. The nonprofit was using a $5.5 million grant it received as a member of the Studio @ Blue Meridian to try to expand its community-based approach to economic mobility when the pandemic hit. That work became a lower priority as it became clear millions of Americans needed direct, immediate help.

Working with longtime partner Stand Together, a network of donors led by the Charles Koch Institute, UpTogether realized that its technology platform, which allows people to make donations to trusted recipients, could be used to accept and disperse a huge amount cash to needy recipients. Blue Meridian chipped in $20 million from its pandemic-response fund.

All told, the effort, called #GiveTogetherNow, had dispersed more than $125 million by the end of last year. The people who received $500 gifts through the process were often living hand-to-mouth, says Jesús Gerena, UpTogether’s chief executive. An unexpected cash gift, Gerena says, can be a powerful stabilizing force for people and families on the economic brink.

UpTogether didn’t have to provide a foolproof plan to get its grant. Gerena wasn’t asked to “fill in the blanks” of an approach styled by the wealthy group of donors, and his only marching orders were to “go and create something that was of value.”

As Gerena and his staff ponder how to increase the scale of their operations, they have a cadre of experts supplied by Blue Meridian to draw upon and handfuls of cash that reduce the urgency of UpTogether’s fundraising.

“It frees your mind,” Gerena says.

 

Prisons and Pediatric Care

Meanwhile, Blue Meridian’s work with its general partners continues. For instance HealthySteps, which has received $39 million from Blue Meridian, has doubled its network of pediatric-care sites to 180 over the past seven years. Last year, as pediatric-care practices were closing down nationwide, the network added 18 new sites.

In the past few years, the Center for Employment Opportunities, which provides employment placement for people who are exiting prison, has gone from one site to 30 and has provided assistance to 10,000 people. Blue Meridian provided $12.5 million to the nonprofit to help it plan for more growth. The cash gave the center the ability to pause and consider changes to its operations that would make it more effective, says Sam Schaeffer, the center’s chief executive.

Schaeffer’s staff discovered that they needed to build stronger relationships with housing authorities and other government agencies nationwide, and the group needed to beef up its policy and marketing teams. Schaeffer’s experience in the pandemic helped him make other discoveries. He realized that the nonprofit’s use of a pay card for its trainees could be repurposed as a conduit for direct support payments. An additional $25 million in support from Blue Meridian helped attract a total of $6 million more in grants from the Agnes Gund Foundation and Robin Hood, the George Kaiser Family Foundation, the Chan Zuckerberg Initiative, and other donors, turning the center’s direct cash response on full blast.

Schaeffer said the experience made him hopeful that philanthropy will more actively help people who have been incarcerated.

“We’ve never seen more money come in so quickly,” he says. “Despite lots of enthusiasm around justice reform in the last five to 10 years and the growing acceptance of doing better by people when they return home, there’s still a paucity of services.”

 

Peers in Giving

Some of Blue Meridian’s new partners likely joined because of the catastrophic health and economic fallout from the coronavirus pandemic. But others have been sold on sitting around a virtual table with other wealthy peers who are determined to combine their vast resources and make a big impact, says Stan Druckenmiller, a Blue Meridian general partner and chairman of the nonprofit’s board.

Potential donors are attracted to the fund’s savvy partners, says Druckenmiller, an investor who worked under George Soros for more than a decade starting in the late 1980s.

Uniting a group of donors behind a common purpose can be a challenge in any circumstance, says Rockefeller Philanthropy Advisors’ Grady. When the group includes a mix of highly successful businesspeople, large philanthropic institutions, and family foundations, the organization managing the fund has to be seen as a real authority to bring the partners in line behind each grant.

“You have to compromise,” she says. “You have to negotiate, and it has to be done very constructively so you can tell individual funders ‘I know you think you’re right about this, but we’re going to have to work on this together and find some common ground.’”

The partners at Blue Meridian want to be seen as collaborators, not “overlords,” Druckenmiller says. He says that last year he helped persuade two Giving Pledge signatories to join Blue Meridian as general partners. One of the biggest draws when he cultivates new partners, he says, is the feeling of joy giving on a major scale provides, a lesson he says he learned directly from Soros.

For Druckenmiller, the feeling goes beyond the surge of adrenaline a hedge-fund manager gets when he makes the right market call.

“I really like the emotional response I get when I get a big win, and this is so much more emotionally satisfying than beating some guy on the other side of a trade,” he says. “Believe me, I like to win, and that’s fun. But I’m not going to lie to you — this is deeper.”

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