Surdna Foundation 2014 Annual Report
Programs > Q&A with Sharon Alpert
Sharon Alpert, Vice President, Programs and Strategic Initiatives

Sharon Alpert, Vice President, Programs and Strategic Initiatives

on Innovation, learning and investing

Sharon Alpert speaks with Communications Director George Soule about how Surdna is thinking about extending its use of market-based solutions to address economic, cultural, and environmental challenges. She also discusses Surdna’s responsibility as a philanthropy to take risks, how the board and staff are focusing on getting the “right insight for the right oversight” and how the foundation has embraced failure as a necessary element of learning.

How is Surdna thinking about impact investing?

Like many other foundations we’ve begun to seriously explore how we can deploy more of our capital toward increasing our impact.  Two years ago, we added program related investments (PRIs) to our toolbox, an additional 2% of our endowment on top of the 5% we allocate for grant making annually, so we can now provide capital to projects that are earning revenue but need investors.   In the last year we made an exciting PRI to support people of color and women running small businesses that allowed entrepreneurs to access government contracts. We also invested in regional food distribution, giving small- and mid-scale food producers a way to sell locally and resulting in more urban neighborhoods with access to affordable, healthy food from their own regions.

We think of impact investing as the next step in what has been a long history of funding market-based strategies, along with policy and practice, to achieve the type of systemic social change we are focused on.  Some of our earlier grant making on smart growth, transit-oriented development and green building paved the way for transformative changes in the marketplace that are now quite mainstream and for which there are new private investment vehicles.  As Tracy Palandjian, one of our newest board members recently noted, we have had a great track record of making ideas investable in the marketplace.  Today, our programs are working on laying the groundwork for new investment in the growing market for local food and for benefit corporations—businesses that meet high standards for social and environmental performance.  And we’re now discussing how we might expand our impact investing even further—beyond PRIs—to include aligning our endowment with our mission. Our board is excited to explore using our investment capital—not just our grant dollars—to contribute to social change. 

Tell us what innovation means to Surdna?

I like to think of risk, innovation and failure as part of a continuum. Sometimes we need to take early-adopter risk to support innovation. And sometimes we need to stay the course, which also involves a degree of risk. For instance, we stuck with our investments in transportation and green jobs when others retreated from them.  Innovations rarely happen overnight. Instead, innovation is a result of iteration, involving some success and some failure. There are examples of short-term innovations that break through with great fanfare. But more often than not, as in our investment in Good Jobs First, the work requires some time to come together before it breaks though as theirs did when they connected tax breaks with inequity. Also, the Community Engaged Design work we now fund in our Thriving Cultures program evolved in part from an earlier focus on placemaking and community engagement in environmental planning.  So innovation requires a lot of patience and a willingness to take on risk.

What helps a foundation become a learning organization?

Our culture of trust has led to us becoming a better learning organization. Surdna’s board doesn’t just acknowledge failure; they celebrate failure for what it can teach us. So our board members encourage us to talk about failure, like when we discussed a transportation ballot initiative that was voted down because a partnership of grantees that we brought together to help pass the initiative failed to develop trust and define a shared purpose.  We are comfortable sharing failures like this among staff and with our board, and are seeing how it improves our work. Now we need to carry this embrace of failure outward by asking our grantees to also share their failures with us. But to do this, we have to establish trust and ensure them that discussing what’s not working is part of moving toward our shared goals, and learning together along the way. And, that it can only benefit their work and not necessarily result in the end of a grant. Our program staff is particularly good at carrying that message.

How are you rethinking the “front end” of grant making?

We are working to reap more learning from the investments we make throughout the life cycle of a grant. To make a good grant, we do everything from carefully building relationships and identifying partners, to conducting due diligence about the organization. But we know we can get better about capitalizing on this front end of grant making, and identifying and sharing what we are learning from our grants, more often. So to unlock more learning and focus more attention on the back end of grant making, we have made a number of changes to streamline our grant-approval process.  For example, our board is now approving fewer individual grants and instead engaging with staff on annual implementation plans that describe what we’re learning, what didn’t work as planned, and how we know we’re making progress. This enables both board and staff to focus more of their attention on learning and oversight of strategy implementation.

What do you mean when you say “the right insight for the right oversight”?

For the past five years we’ve been on a path to strengthen the board’s governance role and understanding of how we’re making progress. Our path began with the adoption of our first strategic plan and the development of a new way of defining our strategies and goals, which was a period of exciting collaboration between board and staff.  Last year, we recognized that we spent a larger percentage of our time producing information about individual grants rather than sharing our insights into what we were learning.  Put all together, this is what I mean by “the right insight for the right oversight.” We have the most impact as an institution when our staff and board are communicating about the big picture.  The board’s hypothesis—and staff’s too—is that they add the most value both in asking and challenging us at the front end of developing a strategy, and also at a portfolio level when we talk about whether we’re on the right track toward achieving our goals.  So we made some reforms this year that we’re very hopeful about, and they’re already proving our hypothesis. Though the board will continue to discuss individual grants and initiatives, they’re now allocating the majority of their time to focusing on progress toward programmatic goals, strategies, clusters of grants, and other ways that put the work in the context of the impact of our grant making.

Is Surdna changing its thinking about risk?

Recently, our board asked us to get clearer about how we’re defining and categorizing risk in our grant making. We know risk is part of our work and is a critical piece of Surdna’s Identity & Method, a document that lays out our values and priorities for what we do and how we work, and is the cornerstone of our strategic plan.  And now with input from other foundations, we’re beginning to create a typology of risk so that we’re much clearer about what it looks like. We’ve identified types of risk from the vulnerability of our reputation to the risk of not making bold enough bets—that’s the risk of not taking enough risk. We approach risk not as something to be avoided, but as a part of our grant making that we want to lift up, understand, and manage appropriately.  And with a more nuanced appreciation of the types of risks and their trade-offs, we can be smarter about using our grant dollars to test new models, tackle complex issues, bet on unusual partners, or elevate new leaders.