FIRG Seminar – Mario Morino

FIRG Seminar – Mario Morino

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(enlightening piano music) – Well, welcome everybody. It’s an honor to have you all here. Thank you for coming. It’s a special privilege to have Mario Morino here with us. And his, he would describe it as his, I guess chief writer, thinker, translator. (laughs) – [Man] Translator. – And all of it. So it’s Mario and Lowell Weiss. Mario, as you know from the
leaders that we’ve circulated, has done some things that
nobody else has ever done. Mario came to the conclusion
that he wanted to create a place-based organization that focused on the problems of young people basically. Well, now that he decided to do that, he made his money in tech,
the tech industry basically, and he was very close to
Atlantic Philanthropies, and I think a partner in
Atlantic Philanthropies at one point, right, yes? – Well yeah, with GA, yeah. – General, yeah, sorry General Atlantic. And he started Venture
Philanthropy Partners focused entirely on the
Northern Virginia area, and it was to work on, he raised the money, pretty
much locally actually. – Yeah, all of it. – All from Northern Virginia primarily, with District of Columbia maybe, Southern Maryland, I’m not sure. But anyway, he’s now raised a total of about $100 million that is financing the functioning of the
Venture Philanthropy Partners, and created the Morino Institute, which has been very much
involved in philanthropic questions in the Washington area. But the focus is really
on Northern Virginia, including the District of Columbia. And he’ll tell us more about what he did. But it’s very hard, when you have place-based
community foundations, but there are not many examples of place-based entities that have been, where the money has been provided locally, and the money is to be used locally on solving critical problems. And so I think of the Robin
Hood Foundation in New York, which because of the New
York financial community is able to raise a couple of hundred million dollars a year, basically. I think the Tipping Point
Community in San Francisco, where a younger organization, where the guy trained I
heard him say a Duke alumnus, who has now had founded
the Tipping Point Community after working at Robin Hood. But the model is really unusual. An individual who cares about a locality, who creates a nest of people, who are willing to put up money that can go for the benefit
of people in that community, targeted in areas, and
in case Mario and Lowell, it’s been really focusing
on youth development, broadly defined, right? So that’s the background,
and so it’s a tribute, it’s a privilege to have
Mario here since he’s unique. Say nobody has done what he’s done under those circumstances. And the model is one which
we could all learn from because most of us have affiliations with and dedications to particular
places where we were born, or we lived, what have you, but nobody, that not many people, of the number of people that
I’ve told you about already, is the number that I
know about in any event, the people who’ve done
the same kind of thing that Mario has done. And so it’s an inspiring story, and it’s an honor for us to have him here. Lowell Weiss, I met when he was working at the Gates Foundation, which he worked at for a number of years before deciding he would
really rather do something more in connection with
grantees and with donors than the Gates Foundation had need of. I’m not gonna tell you any more than that. (laughs) In any event, he was very
successful at the Gates Foundation and Mario snatched him up, and said, “Come and work for me.” And he has been working
for Mario ever since. How many years? – Oh, we’ve been working together in one capacity or another for about 20 years.
– 20 years. – 20 years, very good.
– Yeah. – It’s a great partnership. – I know where all the
skeletons are buried. – Oh yeah (laughs), a lot of them. – And now, it’s up to Mario and Lowell. – Well, I’ll kick off. Thank you, Joel. When you’re in philanthropy, and someone like Joel begins to give you any kind of praises, it’s equivalent of being a top prospect in basketball and having Coach K said, “This is a pretty good ball player.” So, I really appreciate your comments, but the comments are due to you. Joel, I’ve had the pleasure of knowing since the early ’90s. And through affiliations
with the Lifelines, who is now alive. But I don’t know of anybody who has the connections and the influence on donors in the country, in the world, like Lowell, I mean like Joel. He’s passionate, he teaches it, he writes about it. But what you don’t see are the numerous meetings with luminaries, regular individuals, where
he has enormous influence. He’s influenced my life
in a number of ways. I’ll explain how we met, and what a trajectory change it was for me in the ’90s because of the advice. And I’ve been privileged
to have his inspiration and drive in my life too. Two things, when we first met, we just touched on it. It was somewhere I think
just before the mid ’90s. And it was because of
a close friend of mine, Steve Denning, a very dear friend, and a friend of Joel’s. – [Joel] Does it with warning. (Mario and Lowell laugh) – So Steve was the chairman of a firm called General Atlantic LLC. And I was still in my
second investment, 1983. Steve and I sort of evolved together, still are close friends today. And he said, “There’s these two guys “that you gotta talk to.” And then, Steve never
gave me a directive ever. But he said, “You go and talk. “You gotta call him.” And so I did. It was Joel and another
person, Harvey Dale, who were at Atlantic Phil, Atlantic Phil, he’s at the time. And at that point, it was
still a stealth organization. And I was surprised I
didn’t know much about him. But I met and the first project that he’d asked me something about, and I can go in detail. I’m not gonna bore you here with this to look at how to explore
changes in the internet, believe it, that thing. So they’re worried about how it would have an impact on society. It shows the level of their
thinking at that time. But what really came out of it is the relationship came out it. I had the opportunity to go to New York, and I have the chance to see, Harvey and Joel, and
I met number of times. And yet imagine, somebody new to the field like myself having the
opportunity to go to Mecca. And it’s having, you
have these conversations, and you’re saying, I’m
thinking about this, and you get this sort of, well, that’s probably not a great idea. But it was invaluable advice and counsel to go through that period. I have to share one moment. I talked about his remarkable connections. He won’t remember this moment, ’cause I’m sure it’s one of a million. But I was sitting in the office with Joel, and we were talking, I was talking. It has to be before ’95. And I’m talking about the internet. Because of the product story then, I’m going on and on and wax something, like I usually do, and Joel says, “You know, Al Gore has to hear this.” And I’m thinking like, “Oh, you’re right.” And he’s still my friend. And he says, I’m gonna call him. And he’s reaching for the phone. Now I said, “No, I’m not ready yet.” But I mean that is welcome to the life of Joel Fleishman. I call it the Ah-ha Al
Gore Moment in life, you know what I mean? This is an example. But Joel was, and when Joel
ask you to do something, you typically, you jump and you do it. And I was ready for it ’cause when the Center for the Advancement
of Social Entrepreneurship was created here, I was a big fan of Greg Decent or Greg Well. Joel said, “Would you be
a founding advisor to it?” Which I did, and I love coming down. I spent a number of years
here working with Greg. But unfortunately, even
when Greg, when he passed. And the other thing, I’m involved in was the Partnership of Public Service. It was a remarkable organization that celebrates the innovation in greatness of our government, which you don’t hear often in today’s age. And the same promise was come in as a help as an initial advisor. And it was Max Stier. And this was an effort that Joel did with Sandra Heyman, which is still a remarkable program today, and that name is still in here, but. And I’m still involved with the Partnership of Public
Service to this day. In fact, we we saw each
other at the gala in October. So these are really close ties, and I’m remarkably grateful for Joel on the advice and for these connections ’cause they mean a lot
to me in the process. – Mario, if I can just. Those of you who don’t know, the Center for the Advancement
of Social Entrepreneurship in the Fuqua School was
started by Greg Dees, a wonderful scholar and a wonderful man, who led until he died a few years ago. But it was Greg Dees’s availability. – Yeah.
– That enabled us to create that center. And his willingness to come here from he’d been to Harvard, at
the Harvard Business School, and at Stanford.
– Stanford. – And he decided to come here. And it’s a very important part of the social entrepreneurship and philanthropic landscape of Duke. – Yeah, that’s right, exactly. So again and again, just for
those friends from years past and recently, thank you for being here. It’s very nice to see you. We all owe McCormick. Today, our focus, our topic, is grounded in what Joel’s trying to, his Venture Philanthropy Partners, but a subject that’s really
near and dear to my heart, which is basically how one builds high-performing strong organizations that have great impact. I’ve been living, learning, experiencing this phenomena since the very first day I joined General Motors in 1964. Installing up management in those years, by the way, and just
as a learning student, just observing good leaders, bad leaders, good processes, bad processes
to try to absorb that, and what does it mean? And it’s transferred to what we do today in the nonprofit sector. I’ll share what I learned. And I don’t mean that’s good or bad. I’m not trying to, not to give advice, but they’re opinionated, highly opinionated oftentimes. And as Lowell described, we’ll discuss what we call the good, bad, and the ugly and we don’t, a lot of times, the best lessons are things the mistakes you’ve made. And you’ll hear, share those probably. He’ll probably pull somebody out today as we go through it. My great frustration is that and this may or may not resonate with you, but one of my big frustrations that don’t come out in our discussions is basically the art and science of good management is
simply not appreciated in the social sector. I can’t say it any clearer than that. It’s giving lip service. We don’t invest in it. We don’t encourage people
to be great leaders, we don’t equip them to be great leaders. And then, we wonder why we don’t get great performance. It’s really it’s, and I’ll get into my own belief of what the problem is or at least my view of
what that problem is. And I believe this is an Achilles heel to many of the efforts we
have in our sector today. When we see, we want to get to this point, for some reason, we come
up short at that point, and we’re wondering why. And I think you get
back to the fundamentals of management and execution. Because you don’t hear a lot of people funding execution. You heard other things that
are funding at this stage. Now, in the spirit of the
good, bad and the ugly, I have to make a point, when I talk and those from my past know this all too well, I get talking fast, and I mumble, I run my senses off. And especially to why I
enjoy something like today, so I’ll caution that. Unfortunately, I just have surgery about four weeks ago. So I still have a little bit of a slur. So it’s even a little bit worse. However, my team in Cleveland said, “It’s not bad because it’s causing you “to slow down so we
can actually understand “a few of the words,” so maybe. – [Lowell] So they’re
reaching more surgery for you. – Yeah, of course, yeah. As an individual, the word I’ve heard more in my life than
anything else is what? (panel laughs) That’s besides Lowell. We can go from there, yeah. I’ll kick things off and sort of tell you some background of, my own background, which will give you a context on some of the opinions I’ll share with you. And then hopefully,
that’s 20 more minutes, and Lowell will hit me with, we’ll go through questions and answers, and talk about things and be candid. The idea is what you get, and hopefully, we’ll have half hour left to begin a whole real
good discussion with you, which I love the most to have
that kind of interaction. I retired from business in 1992. I was 49, I was very fortunate. And what I, without knowing any better, I took all of 1993 and half of ’94, and simply met people. In fact, a good friend
of mine, a colleague, joined me for the year,
left his job for a year, and we actually had
individual one-on-one meetings with over 700 people. It was a remarkable period. The amount of advice,
insights were incredible. But I went to them with a question. But it’s important to give you the context that I went to question
with because it was, for some people, it might be
a naive question, I think. But I did have a focus. And my focus was youth
learning and community. I adapted this, if you know me, I write everything down. And before I even left the company, these were defined and I said that because to me, youths, in a trite way, they are our future, but youths are who brings fresh energy. They bring new ideas, they don’t have enough of
the learning liabilities we developed in life to stop themselves. They’ll jump into areas where they shouldn’t and succeed. And youths are the ones
who are gonna drive change. Learning more than education. Education ties you to institution, and learning happens all over. It’s the combined element of learning, that I think changes people’s lives. And so when you can advance that learning is when they grow as individuals. And finally community. And I’m a big believer of that. People will have to be given a chance to be who they are. That comes from who’s around you, the web of family, neighborhoods, the love that you have in your life, the individuals around you, the service you have are what help you become who you are. And without that, it’s
a struggle, it’s hard. So to me, youth, learning, and community are the really key elements of anything we try and take on. But there was another element that moving into that was more of a defined focus on that youth, and that youth was not just all youths, but basically youths
who came from families in poverty or the working poor. Because as an individual there, the deck of life is stacked
against them from day one. It’s a different game, why them? Because I was one of those kids in a different era in the 1950s. If you look at life, I mean, don’t get me wrong I had a wonderful life. I don’t want everybody to confuse that. But I grew up on what we called the other side of the tracks. Okay, if you live in
one part of Cleveland, you didn’t drive to our neighborhood. You didn’t want to come
to our neighborhood. Now, it was an inner city, where the first concentric circle outside of real stuff. But the point is, and
this is the ugly thing, a kid in the same home that I grew up in, with the same family, same intellect has 5% chance of going to college today. And it was the chances I have as a kid, and the chance a kid today has, my life is a hundred times, a thousand times more potential than this kid because of the
surroundings around them. And that’s the level in your battlefield. How can you change that? Now, the other side, when
I came into the sector, without knowing where I was coming into, I wanted to at least have
what I called platform. And I discuss this in two point. One, I would have some money, okay. And that was good because it allows you to fund or invest things
you wanna take on. So that was one element. Two, I would have a base in
knowledge and connections and that came from my work
in the private sector. So I did have a good background in IT. I had a good decent
background in management. But also, more importantly, really rich connections. I mean, Steve Denning, and you know what happened after that. The General Atlantic team’s I knew. Many business people I knew
that were doing things. So that was the second piece. But the third part is I didn’t have, and if you’re gonna have. I knew one thing right away. I wouldn’t have enough
money to be important. And I think a lot of people come in the fact don’t realize that. It’s I was long I did a session with Patty Stonesifer one time years ago. And Patty said, “It was interesting “because I think it was that “the State of California
spent more money in one year “than the Gates Foundation had.” Think about that. So you gotta be realistic
to mission in dollars, what you can do and what you can’t do. So I knew that. So therefore, to have any effect, you had to have a different
base of influence. Now, I go back to our private sector back when we were in a
special sector of the field. But what we did, and thanks to people like John, and Joe, and Terry, we actually built a reputation. And we were known not just as techies, but we were known as to how IT plans, information technology were managed. And that differentiated us. We would have to, my view was to be at all effective. We, I, my team would have to develop a new niche in this space
to earn the respect field. Otherwise, you have no influence. That money can be used for result, which we’ve tried to
this trade to do that. And I’d hope some of that comes out in today’s discussion. But the question with that context I had was this when I go to see somebody. I said, “I’ve just retired from business. “I’m 49 I’m gonna have some money. “I’m gonna have a lot of time. “I’m gonna have a lot of energy. “What do I do? “What do you suggest I do? “And if you do suggest it,
what should I be aware of? “What can you tell me?” Well, I can’t begin to tell you the first six or seven months, there was little cool meetings, a lot of good advice. But somehow, like a switch went off. And after that, I talked to people, and it was like oh, maybe
they realized I was listening. They would just open up. And just remarkable insights
would come out of it. But the trouble was that
period, that 18 months, it was remarkably exhilarating. But it was equally debilitating. Because you saw the remarkable complexity of the issues that
people were dealing with. And I think people come into the field just don’t understand the depth of the complexity with the problems. And two, you also start seeing the weaknesses of the field. And that was, that was hard to take, hard to understand. And I’ll talk to that. And again, my perception
not due to the bad. So I’m gonna give you a couple takeaways from that 18-month period. And again, I want the folks here to say this is not meant to be right or wrong, better or worse. This was just perceptions that that I walked away with, and who I was working walked away with. One, there were truly remarkable, incredible individuals in nonprofit, and said, should be overall. I mean talent was unbelievable. What they were doing was with breadcrumbs was unbelievable at times. I had those in the Ottis
Green Fellowship program, I got a chance to do that
and following Steve Denning, get very involved with that early on. Remarkable talent came out of that. Bas-tor Kerrs, Michelle Obama, name the people who came out of it today. I had the pleasure of meeting Eric Block. Eric Block, at the time I met him, was literally one of the top people of all research in the country. (speaks faintly) I had the honor of meeting Howard Gardner at Harvard with Multiple
Intelligence Theory. I mean Billy Shore, who came on today, wonderful field of hunger. One of the meetings I had was Everett Koop who just resigned as,
he kinda stepped down as the Surgeon General. I spent two and a half hours with him. Everett Koop describing how healthcare would change in the world today. I mean, it was just remarkable it goes. And then but also besides that, remarkable community of
people on the ground, like Henry Fernandez
and Mavin Connecticut. And I know, I mentioned
Sister Cul-Townsend, people who are totally different world. I mean taking me to place like Murder Corner, a project, versus a three-piece suit
in an insurance company. That was number one. Number two was the overwhelming sense and view that mission and
performance were not linked. Mission and performance were not linked. And when you try to link them, people came after you. Like you are blasphemy. Would write to us, and you should see some of the stuff we would get back. I mean, and again, I still think this is a problem today. And we’ll talk to that point. And I guess the problem it gets is in the context of it. This isn’t like, you gotta realize the people in this work
are great individuals. But you gotta also understand how little they’re supported in the work they do. And how we could help them differently. That’s what this gets to. And that’s where you start linking performance and mission. I was gonna put those together. The third point, and this
gets in a little deeper, and I touched on already was, hardly no, no focus on management. Everybody talks leadership but no focus on management. Really good core fundamental management. How you execute, how you plan, how you get things done, how you understand whether
you succeed or not. I’m going back to the early ’90s now. I’m saying about this. You had the Mendel stuff
for nonprofit management, which was still was in fact, you guys introduced me to
part of that way back when. You had Frances Hesselbein’s
work with the Girl Scouts. You had John Sawhill who just come into his own Nature Conversancy. Peter Drucker was just coming out with his books on nonprofit management. This is all pre ’94, okay. There was no Bridgespan yet, none of that occurred at state. There wasn’t a lot of people. Hauser was just getting started. There was not a lot of people talking about management at all. So the next thing was, and this always befuddled me. And it ties back this point. There was great interest in always increasing the
amount of flattening. But how will any
discussion about helping it become more effective? I remember going to a White
House event with Billy Shore. And in fact, First Lady Clinton was putting the event on. And the event was how we’re gonna move the numbers from 200
billion to 300 billion. Well and I asked the question. And it was like, I was, I stepped, I dropped the bomb. I said, “Does anybody care
about the effectiveness?” It was like the wrong
thing to say at that party. It was all about increasing the numbers. And you hear that today. Giving Tuesday, right. What the hell you’re doing with the money? Raise all, what are we gonna do with it? How is it gonna be effectively deployed? I’m not criticizing the increase. I’m saying this, there’s
two parts to that. And there was a blatant
absence of funding leaders to help build the organizations. Yeah, I’m not trying to get over a debate. Put that aside, this is more fundamental. Just a fundamental misunderstanding of what it would take to help good leaders build good organizations in the field. And I still think it plays to this day with all the so-called
progress we’ve made. This will be a hard comment. One of the conclusion I came away from was that one of the reasons for this was the dysfunctional natures of funders as a cause to part of this problem. How are they funded? What they expected? What constraints they put on the donors? How they limited them? Always thinking they were helping them. And many times hurting
the nonprofits a lot. And I got this when I did this 18 months, let me tell you, once
we got people opened up, man, you heard some comments and some feelings that
were really intense. The so-called wonderful relationships of donor and donee was
not a friendly world. And the more you got
deeper into the community, it was a pretty ugly world. I’ll tell you a story. This is I don’t mean to be
blasphemous in this sense. But a prominent vendor had delivered a series of computers and
products to this donor, that helped this group, and
the foundation was there cheering them on, going through it. And they all left, and I was still there
working on something, and the executive director
thought I was there. And when they left, the
woman spit on the boxes. That’s what she thought of the people who just brought that stuff in. Think about what I just said. That was the kind of relationships we were seeing now. Not all of them, I’m just, but this is the kind of
background we’re seeing. So what it gets to is when we have finish this 18 months, one of the things we
wrote a draft white paper we have it published for ourselves. It was called the need for
a youth social venture fund, which would be a fund that would basically we would raise money that would be able to go to leaders or people serving youths, and help them build organizations. Little that I know they would come back 10 years later and actually create Venture Philanthropy Partners. But that was the conclusion,
a naive conclusion. We didn’t know any better, that’s why we wrote. And we wrote that in spring of ’94. So the context of all this is that if you take all this and
you mix my background, with the private sector was
all management and measurement. You take basically growing up with a chip on my shoulder. Growing up in a low-income neighborhood, where people looked out on ya, and the guard have seen houses, homes to my mother and you know what it would be like
to be a domestic help. And you wondered if I
shoot that rich person right in the face, when
you were that young, you didn’t know any better. I’m being honest, I’m just being totally honest with you. Those are the things which have formed where I’m at today. That’s the context that comes together. So as a side of the country and community we faced many critical issues and needs. We have a plethora of
models, and processes, and schemes, and schematics,
and new inventions. We have too many. And funders love to fund new things. We have a great aversion and reluctance, the funding management to helping people build
muscle of organizations. I’m saying in general term. I’m not picking on anybody, I’m just saying in general, that’s my view, in a general term. What we need is we need to be able to support those leaders
who have the will to change, to have the strength and support to have the impact on
the people they serve and the cause they served, better. That to me is where the
bottom line comes into this. So life comes full circle for me. I didn’t come into the field, the last thing I thought I’d be doing in the field was this. I came in thinking with
this rosy eyeglasses, I was gonna come in,
work with kids programs, and do all this work. When I got there, I found
that the very programs I wanted to see if I
could help those leaders who were in great need to help, it had nothing to do with the kids. They knew what to do with kids. Teachers knew how to teach. Community leaders knew
what they needed to do. They need people supporting them to be good leaders. The number of people,
I met heads of schools, who said, “I’ll never
tell this to anybody else “but I am not, I’m a teacher. “I have no idea why I’m doing this job.” Or I’d go to a small hospital and a woman right in the whole center. I’ll name her, Miracle Medicine. She looked at me says,
“Mario, I’m a triage nurse. “I’m running a major operation. “I don’t know what to do.” I’ve never said this publicly, because there was no system to help these people to get there. And that was the issue. So, why I say full circle. I go back to the management. So I’ll just take from the
private sector standpoint, there’s a differential. What we did as a company is we provide products and services that helped the Fortune 1000 globally
run their IT plants, the big information technology
centers of the world. In those days, it was
mostly big mainframes, but it was also moving the
PCs and distributed systems. And what do we do? We help people understand how to make those things work better. We did how they, they had, how would they know how much it costs them to do these things. What things they did with technology? What would it cost? When were they gonna run out of capacity? When will they hit walls? How could you predict their failures? So they wouldn’t go down
with their networks? That’s the things we basically did. What was your impact? What you found though is that our company, all the people we worked
with were the geeks. We were doing all the technical work. We did you know heavy
diagnostics, heavy work. And all my competitors were saying, for whatever reason, I think primarily due to my business partner, who have very a good business mind, he and I, and our teams
were able to abstract, went up a level. We’re able to use that information to help managers more than
just technical people. Yeah, I can give you some
very simple examples of that, I’ll give you one in particular. And again, what you find is we found this. No matter what the technical problem, it related to a person, a manager, or a culture problem. It was never a technical problem. It always related to a people or culture issue in the organization. So that’s the tie-up. Yeah, I give you one funny
story, maybe not funny. I’m at a bank. And I happened to be in a meeting. I could sense they were
using our products, and was called in to talk
to the head of the division. One of these meetings
were very uncomfortable because the head of division didn’t know why he was in the meeting. And they were trying to
just make something happen. And here, this guy was being rotated through all the various parts of the bank to become the new president. I didn’t know that at the time. His name was Rogers. And we’re holding a meeting. And I was describing to him their security problems. And the problem is that this bank could go if there was a disaster of their centers, what would happen. And recently, I’m bringing this up, because at this time, the Postal Service had just had a major
fire in L’Enfant Plaza in Washington D.C. And their whole data center was wiped out. And you know what? They could back up all the systems. You know why they didn’t do? By this time, all these
little distributed systems and PCs were all over the place. All this information was on those systems. There was no backup. They could not bring the whole U.S. Postal Service center up, period. So I started explaining to people the huge vulnerability
of an outage, of a crash. And so this guy, without
knowing any better, turns to his team. He goes, “If that happened to us, “how long would it take
you to get back online?” And this guy made a
career altering comment. He simply said, “72 hours.” And the guy looked at him, he says, and you could see the
guy just turning red. He said, “Are you crazy? “We wouldn’t be here in 72 hours. “We’re out of business.” And so he turns me and says, “What do I need to do?” I said, “Well, you’re running one center. “Double it and create a
whole redundant system.” He said, “What would that be?” I said, “At least four million here, “and probably another
two million to change. “You’re gonna have a lot of it.” Now, here is the point about management and why it relates it to us. If you try this, if you try to sell that four to $6 million and said
it was a performance problem, no one cares too much,
and they’ll just listen. Man, it won’t even make management level. If you sell that four to six million because of a survival issue, you go right from the board of directors, and they approve it like that ’cause it’s a small amount of money. That’s exactly what happened in this bank. And all we did was
paraphrase the same problem that everyone else was dealing with, and we simply said it in a different way, that the executive
management could understand the real vulnerability and
nothing to do with performance. It was really survival if something of significant nature happened. This may sound bizarre
in the nonprofit space. What was it? It was culture, it was
reluctance to explore, it was not dealing with change well, it was not dealing with
repercussions well. Management, good management. So one more story and
we’ll break into this. In ’98, we created a program
in D.C. to try something. And we were trying to help nonprofits, not just use technology,
but to integrate it in a constructive way. Because that point in time, there was all these,
we’re gonna close this, all these issues, my friend. All these BS going on about
social and digital divide. Half of these people couldn’t even knock their way way out of
a paper bag doing this work. And they didn’t say it’s very effective, oh my goodness, huge amounts of mistakes, and deploying computers,
recklessly deployed. So we wanted to see
could we create a project but if we could put
significant resources in, we can help four nonprofits
transform themselves. I mean what, we had six people working full time on this project. And we kicked it off. It’s called the Youth
Development Collaborative. And we kicked it off with a meeting and goes into Washington D.C. It was at Tabard Inn downtown. And these four leaders,
they were our teams. And I didn’t know any of what they want. And before the meeting starts, this is a true story. Two leaders, independent of each other, walked up to me, and quietly, literally whispered said, “In this thing we’re gonna do, “can you help me become a better manager?” Two people out of four. And what they were saying, they could never say publicly because as a manager and yet, you can’t tell anybody,
something that you don’t know. Because you’re now vulnerable at what you don’t know. I’ll never forget that day
because they were honest. And if you ask that question and say, “A lot of people would say the same thing. “Can you help me become a better manager?” I think that’s it, that just me. I think that’s what Duke’s about, people is about, that’s
what CASE is about. Helping these leaders is
really a paramount need we have in the sector thing. So with that, let me involve Lowell, and he can make it honest now. It’s totally your thing. – So this is a real privilege for me. I have been so blessed in my career to have some amazing mentors. Number one, number two. Both here at the same time. So incredibly grateful to both of you. – No number one, number two. (laughs) – And so yeah, so my role is just to bring all this to life. You’ve already shared a number of stories. I’m gonna try to bring
out some other ones, and you promised some
learnings the hard way. So I’ll try to needle you a little bit into sharing some of those. But I wanna start by asking about the linkage between
performance and mission. I wanna make sure this
is really clear here. Why is mission and performance? Why are they seen as sort
of mutually exclusive? I’m not sure it was entirely clear what the divide was that
you’re trying to repair. – Well here is what we observed. Just go ahead, we see really
good people, by the way, good leaders have done. And actually achieved
remarkable results on crumbs. I mean, that’s what you’d
really see with people. And for some reason, the word performance or the word effectiveness
was a slap in the face. And you didn’t mean that. That was not the point at all. These are passionate people. They’re trying to get things done. But you were showing up, if you brought this up, you’re showing a vulnerability. And you really, you’re really exposing their boards who were all asleep. ‘Cause the board never asked
any questions about this. That was the real problem
when you get into it. So and you had this thing
that passionate leaders and performance don’t mix. Yeah, I’m a charismatic leader, I’m gonna get this done. And that’s, and that as I said, you’re gonna hurt somebody
because they’re charismatic. That was just the opposite. We wanna help them. But for some reason, we
confuse that passion, that you didn’t have to be accountable. You’d have to prove yourself. I think that and I think
that was the mismatch. We had, I won’t name the authors. We have authors come after us, and they’re all gonna shoot me because we’re trying to
make the linkage, yeah. We were never trying to be
smart as a nonprofit lead. My God, would you mind
the nonprofit leader? But we had great empathy for what they were trying
to do with so little. And all these people right now is papers. You know what? They should get off their butt and go to all those
communities like I did, and you’d see the problem. But you know, they don’t. They sit in their ivory towers
like this and no offense. Okay and they don’t. And if they go to on tour, they’ll go to the same place. They won’t go to tough
areas, that won’t work. How many here have been to Murder Corner? Have been to Murder Corner in Hartford? I had a 20-year-old community
worker walked me through. And I wasn’t dressed like this. Let me tell you, I had a
sweatshirt and jeans on. And I asked her, “How are
we gonna get through?” She says the gangs have
her back, don’t worry. “You’ll have safe passage today.” It’s reality and yeah, passion really counts
because we’re all passionate and never get what they want. But then what happens when you know, they can get to a certain size, that passion runs out. Now, all of sudden, they
got an organization to run. And guess what? It has to work. I wanna go back, there’s a
if I can remember the quote. It’s a Martin Law. I went through everybody’s
bios as I came in. I went to your website. You have a quote on your
website from Drucker. Can you recall it? (man speaks faintly) – You got it, say it again
loud so everyone hears you. – [Man] Performance is the ultimate test of an institution. – Thank you. – [Man] And then he goes
on to basically say, performance are changing institutions and people.
– Right. And we’re not trying to
affect passion and mission. But if you have a mission, your mission is to do
the best you can, right? And that means performance, Peter Drucker. Denning, Collins, Covey. We read them, all of
them, same methods, so. – So let’s talk about how you’ve turned your passion for performance into VPP’s mode of operation. How has VPP tried to address this performance challenge? What kind of support has VPP provided to its nonprofit partners? – Well, I’ll give a long answer. So pulling back to shorten up. – Sure. – We said Venture Philanthropy Partners. Several things converged. Certain difficulty, actually. But one, you gotta go back to the time it was like ’96, ’97, “Virtuous Capital” was
written from Harvard came out, and everybody was on this bandwagon about venture capital. Yeah, people on my venture capital didn’t have a clue of
what venture capital was but they were talking about it, and they were gonna go do it. So that was a force going on. And the word capacity
building was being used. And seemed like a good word to me. We never used that word
in the private sector. That was gaining a lot of momentum. So initially, the formative years, we were thinking about doing
Venture Philanthropy Partners. So that was a two-problem piece. I want to get to this piece. So we were holding a
meeting on November 5th. And I always remember, November 5th 1999. Billy’s there, Mark Warner is there. Tom Kingsley’s there,
Dave Hodgson is there. All people you know. We had bankers there, we have business people there, we’ve community leaders
there, community faculty. And I’m watching the discussion. I’m watching, you may not know the names, but Dave Hodgson is a Senior Executive of General Atlantic, and Michael Baum from
Si-di-er is in in the room. And General Atlantic was responsible, Hodgson, Denning and Collins
to get Si-di-er started. And I’m watching Hodg, by the way, which took to Michael Baum. As I’m going through all this discussion, it hits me, all this
discussion is side talk. This is what General Atlantic does. It’s like this light bulb goes off. And General Atlantic,
forget venture capital because General Atlantic and a few others are different than most
venture capital crowd. I think VCs are part two mercenary. What it was when General Atlantic looked at an investment, they really bet on leadership. So they definitely bet on leadership, which is similar with Lag-Fra’s review, leaders really matter. But what they also did is they, they were gonna support that leader then, they weren’t gonna shoot him. They came in to invest in that person. And they looked at a long line. They put a lot of capital in. They had a long view of that. And in additional of the capital, they put a lot of sweat and equity in that to help in strategic assistance to leverage that leader. They weren’t trying to
muscle that or take control. In fact, they refused to take ownership control of the company. And I’m thinking to
myself, “Wait a minute. “Long-term capital,
commitment to leadership, “strategic assistance.” That’s what we should be
doing for a nonprofit. That was the linkage. Ironically, in the spring of 2002, Billy and I go to New York. We meet Ed Slooten, we met Mike Bailin. Ed was at As-ce-na, and Mike was at Edna McConnell Clark. And Mike, I think, deserves more credit than almost most people feel. It was Mike did the first true foundation transformation
at Edna McConnell Clark. And Mike was coming at this problem from one way to change and say, “Let’s make rent-making more effective.” Which was looking at the same problem we were looking at. When we’re coming in and say, “Hodg, will you help us out.” And we were so aligned, it was ridiculous. And we just had a mind meld. It was the spring of 2000, and we’ve been friends ever since. And we were always like, we were the small version
of Edna McConnell Clark basically, in the process. Because they were doing the same thing with much larger capital. But that was the deal. How can we take great leaders who wanna go from point A to point B, put significant capital into those over multiple years. Don’t put a lot of constraints. I mean you’re gonna watch them closely but you’re not gonna constrain them, well, not unduly. And you put a lot of elbow grease in, you build a trusted
relationship with them. So you can bring new resources, help that leader succeed
with their organization. That was the link. – Yeah, and I’d like you
to get really specific. So pick an investment that VPP made, Maya Angelou, you choose. To describe, so I’m a
nonprofit leader here. And I wanna understand what VPP is gonna bring to the table in terms of helping me as a leader, helping me to build my management systems, build my culture, what what are you guys gonna bring to the table? – Well, let’s take Maya Angelou, because it was one I was indirectly involved in pretty closely. Maya Angelou was a public charter school. Still is by the way. At the time, it was formed by two young men at the time. Now are really great
leaders in the country. David Domenici and James Forman Jr. They were trying to help, these two guys were
unique because they really were intimately cared about these kids. James was always a prosecutor. He’s watched the kids get
flushed down the drain. Domenici was working with kids and seeing kids be incorrigible, just being thrown off the system. And if they went to
school, they were dead. They weren’t gonna make it
through the school system. So they decided to create a school and the school was aimed to help kids, who were caught in the juvie system. How would they get through? Because the public systems
have given up on these kids. So they were only at
one school just short, it was in D.C., next pretty
close to Howard University. With only 80 students. All right, and we got criticized for picking such a small
nonprofit, by the way. But what we saw there
was these two leaders, who were so unique in this vision. And their vision was
you know what they say about wraparound services? They were literally a complete package of wraparound services, by the way. They had Wednesday mornings were set aside for lawyers who came over a deposition. They have full-time
psychologists on staff. They did breakfast, they did lunch. They had dinner and after dinner, tutors poured into the place, working the kids. They had transit housing if something happen to
the family and everything. 80 kids, right? But they saw a bigger vision. In fact, they didn’t wanna
talk to us in the beginning. They didn’t have time for us, which we love, we love
that cockiness in them. And when we came in to invest, they finally felt it was time because to their credit, they realized that unless they were able to invest to build their
skill with teachers and pedagogy, they wouldn’t have been able to scale them out,
and they needed help. So they were open for the
idea of the investment. But here is where it gets tricky. The idea of a stressful relationship. So we came in, we managed our mistakes. And I’ll be very blunt
with all these things. And our partners screwed up a little bit. No, I personally screwed
up a little bit up front. And we’ll always start these relationships with a big planning effort. In their case, we were
gonna invest $2.8 million. We’re talking about $2.8 million to a group that right now, it’s like it’s not even
as big as this room, this whole school right? That’s a lot of money. None of that’s programmatic. That’s strictly to be used to help build the organization. That’s unheard of money,
in this day and age. So we started the process, and we bring McKinsey in. And we love McKinsey, don’t get me wrong. Unfortunately, Lin Ca-lian-to was the lead on this at Wesley, who
was a great individual. But McKinsey makes it
a really bad mistake. This is, there’s two founders are one’s White, one’s Black. But the kids are primarily Black kids, and they’re a Black community. And McKinsey brings in
five 30-some young MBAs, and they were all White. Shit hits the fan, folks. And to James Foreman’s credit, he simply said, “You’re not
walking into this building. “If you can’t get one person of color, “get the hell out.” This is McKinsey this
guy is talking to, right? And to Lin’s credit, she went through the McKinsey network, and they got people of color to come in and work in the project, and they were right. It was an arrogant mistake
on their part and our part. They walked in, it was all White people, to a community serving Black. It’s just not the right thing to do. Pure stupidity on our part. That was mistake number one. So then, we go in the planning process. And the planning process, what it does is we’re not planning for us, we’re planning for them. And that doesn’t get
all quashed by the way. But when you put the
planning process in place, it goes on for months. You ask them to put a mirror
in front of their face, and get good information, which McKinsey brought really great there. But what happened is
they started saying that some of the teachers weren’t quite as good as they thought. And some of the coursework
wasn’t quite as good. Well originally, David and James have original problem with this. I mean this was like tough. Things started exploding again. And we had what’s called
Come to Jesus meeting, and we finally said, “Look, if we’re doing too much, tell us. “We’re out of here, man, just do it.” And everything calmed down. I think those kind of meetings are good because when you have those kind of hard meetings, it tests the relationship. And we all left quiet. And then, a couple of months later, I think it was James, who called. He called, it was in our apartment. The call was coming in. He says, you know, he said, “We just realized something. “You’re actually trying
to help us, aren’t you? “‘Cause most funders aren’t.” That’s the truth to the case. They don’t trust most funders. Funders come and go. “So you’re actually trying to help us.” Says, “We’re ready to try
to work with you then.” But see, you have to build
the relationship, number one. And by the way, and we did put money in. We helped them but I wanna make it clear, the success they had was because of them. And what they went on to do? They went on to have four
schools, 600 students. They won a major contract
with the D.C. Government to take over a school
within the juvie system that have 5% attendance rate. They out-beat major
competitors for this contract, and they did it because of the capacity we’re able to build, and the strength they were
building in our teams. And they went on, and they
rehabilitated the center. In any case, he calls it one of the greatest
turnarounds in the country. All we did was give two good leaders the chance to be themselves. – That’s great. – That’s it. – We have so many experts here. I really wanna open it up for questions, but I am given that I promised to needle you a little bit, I’m gonna do that. Where were you too arrogant? You’ve talked about
McKinsey and its mistakes, where were you too arrogant when you came into this? Even after 700 great conversations that you had in the community, all the learning, you coming in with a built-in humility
because of your upbringing, but where were you too arrogant? Well, it’s worse than that. Before we did VPP, we did a couple of hundred meetings even. – Yep, right.
– In ’98, ’99, we’re building and Gary
Mo-ha if you remember. Then we were forewarned about things. I just was, I just sucked
too much of the Kool-Aid about the problems with the
foundations and funders, and was too harsh. The reality, if I was
to do all over again, I would spend more time studying some of the foreign experts that we did study much deeper. Not all of them. By the way, not to be
cocky, I wasn’t wrong. I wasn’t, I’ll say this
is that, I wasn’t wrong. But how I did it was wrong. What I did, John, Joel knows this, I can get
pretty confrontational. And–
(audience laughs) You’re not supposed to laugh. (Lowell laughs) And I was getting these meetings, and I’d get wound up, and I’d be mad. And what was happening, I was talking about the problems. Well, here’s there’s two foundations sitting right next to me, and it’s like, I’m really slamming the foundations. I didn’t give the people and the space enough respect and credit. That was really a bad mistake on my part. In fact, the first GEO meeting happened in Washington D.C. I was there with Julie Rogers from– – [Lowell] Tell people what GEO is. – Oh GEO, Grantmakers for
Effective Organizations. And we actually had a, we were doing a fireside chat discussion. And I started to sound the whole audience because they said,
“What about your parts?” Now before my parts, I have
to apologize to everybody. I’ve been far too arrogant. And coming in, I have to learn a lot more from what you’ve done in all honesty. Because you still need them as partners. You have to work with them. And we were just too arrogant. It took Carol years to rebuild the bridges I burned, you know honestly, you know. So you learn. – [Man] Yeah, so you mentioned like continuous relationship that exists between like nonprofits and funders. You even mentioned how you built it, like how you firsthand saw that? So I guess like what are best practices of nonprofits and funders should do to create more transparent trustworthy– – Great, great question.
– It’s a great way to end the conversation,
it’s great, perfect. – I’m gonna talk and then let Lowell talk a little bit. Well, we just, Lowell explained the series the habits of highly effective funders. My own view, number one is much more transparency with each other. I mean just cut through the bullshit and be honest with each other more. And not that people aren’t, they don’t tend to do that. It’s just the system in effect. I think, one, the funders could do more to better understand the grantees, and what the grantees need better. And that’s a function that’s just people are trying to do too much. One program manager has
like 50 organizations as opposed to four or five. So the empathy factor on understanding it. I think foundations could have more people in their units that
understand nonprofits more, as opposed to just be program officers because they’re gonna
have better appreciation for what that nonprofit needs. I think nonprofits have to do a better job of actually building their cases when they present to funders. Fay Twersky from Hewlett. And I always remember
her exchanges with me. She said to me, said, “Look.” She said, “What I did
is we had these issues. “And although they didn’t
wanna take my data, “every time I met with them, “I showed them this information. “I never pushed it. “But over time, they began
to believe the information.” So it’s a learning process on both sides. I mean, that’s a look. Lowell has a really,
why don’t you comment? Because you both spent some time. – Sure and we’d be happy to share some pieces that we’ve worked together that document this
nicely by looking across kind of reverse engineering foundations that do an excellent job of these kinds of practices. We’ve seen some really nice commonalities. And so one of them is foundations that really care about these issues are investing in long-term support. They’re not just giving one-year grants, and they’re giving flexible support, the kind of support
that Mario talked about in the context of Venture
Philanthropy Partners, not a lot of strings attached. A lot of hope, a lot of talk about what would be meaningful accountability. But it’s not to put a lot
of strings on the grant. Would you agree? – Yeah, absolutely and I just, now you mentioned Fay Twersky. The program she started
at the Hewlett Foundation is a very good example of how you can get data from the people you need the data from.
– Right. – And this is in fact, that she’s, how many foundations are now involved with that program?
– Three. – That she’s got involved. – Fund for Shared Insight. – Fund for Shared Insight.
– Yeah, oh yeah. – Fund for Shared Insight.
– Probably it’s 20 or more. – 20 foundations, it started with Hewlett. And it was really Fay’s idea, I think. But any of that, the goal of that is to generate, to create mechanisms, whereby the ultimate beneficiaries of foundation money have to get data back about what they think about
how the program is going. That’s not getting, it’s not getting money from the leaders of the nonprofit, it’s the people the nonprofit is serving. – Right.
– Essentially. And by building in those mechanisms, the Fund for Shared Insight creates a continuing flow of information about what the people who are supposed to be benefiting think
about what they’re getting. And then if you want to
get some understanding of how well the culture is functioning, that’s what you need. – Yeah. – You need to get that feedback. It reminds me of the story I’ve told, I mentioned before here. When Phil Buchanan started the Center for Effective Philanthropy, one of the first, they created a mechanism called Grantee Perception Reports. Grantee Perception Reports were provided anonymous
information to the foundation about how they were perceived as doing by their grantees. And it turned out that the Rip Rapson tells the story because he is the one who commissioned the first Grantee Perception Report for the Kresge Foundation. And it turned out that three quarters of the grantees of the
Kresge Foundation believed that they think this the foundation did not have the slightest idea about what it was that they were doing. Can you imagine that? Three quarters of the grantees getting millions of dollars of money from and they didn’t have. The perception of the receiving community was they didn’t have the slightest idea what the grantees were doing. – And what a wake-up call it is for a foundation that’s used to hearing how good-looking they are, and funny they are, and you know. And here is a real reflection finally, to help them, as Mario said, hold up the mirror and
see what their grantees really think of them. – But it’s really important that information be gathered in an objective, honest way. And I’ll tell you, just
to give you an example. When it’s not, Robert
Wood Johnson Foundation for years used to do that kind of survey of its grantees to get their perception of how they were doing. And it always came back, they were doing a great job. Until they hired the Center
for Effective Philanthropy, who did it, did it for them, and it turned out that they were not doing such a great job. That their grantees self told them they were not doing a great job. And ultimately, led to the
president of the foundation, after they got the
Grantee Perception Report, saying that writing a letter of apology to all the grantees of the
Robert Wood Johnson Foundation. This is a big foundation. It’s the largest health foundation in the United States. And the fact that they did not know what they, how they were perceived by their recipient community tells you something about the lack of data that is coming to the people who are making these decisions. Culture, management, very important. I’m sorry, but going
into the song, swan song but the best is to wait. But if anybody has any
urgent question to ask, I’m happy to have you ask it. But otherwise, if you don’t, I will thank you for coming out. Thank Mario and Lowell for coming. Any of that. Mario, thank you. – Pleasure, Joel. Thank you, Joel.
– Lowell, thank you. – Such a pleasure, thank you.
– Very very stimulating. Raising lots of very very good questions. (audience applauds)
– Thank you, Joel. – You want to?

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