Is the Chan/Zuckerberg initiative a game changer?

Originally published in the February, 2016 issue of Twin Cities Business Magazine

What are the ripple effects from Mark Zuckerberg and Priscilla Chan's charitable giving?

When Facebook founder Mark Zuckerberg and his wife, Priscilla Chan, welcomed their baby girl, Max, they simultaneously announced their intent to give away 99 percent of their Facebook shares “to advance human potential and promote equality for all children in the next generation.” The size of this whopping gift was estimated at $45 billion.

It only makes sense that the Chan-Zuckerbergs chose Facebook to tell their story, scripted as a letter to their newborn and accompanied by a picture of the new family. The multi-page letter is worth a read, as it lays out the rationale and likely interests of what will be a major new philanthropy. What’s unusual, controversial, and therefore the focus of most news coverage: the way the couple decided to structure their “gift.”

What the couple announced is the creation of the Chan Zuckerberg Initiative, a Delaware-based limited liability corporation that Zuckerberg will lead while he continues as Facebook’s CEO. Using the LLC structure, the initiative can do things that a traditional foundation or nonprofit cannot.

Like what?

First, the LLC can invest in startups and existing businesses whose purposes align with the initiative’s stated areas of initial focus: personalized learning, curing disease, connecting people through the Internet, and building strong communities.

Second, the LLC can engage in public policy debates and lobbying in ways that are prohibited within the statutes governing the nonprofit sector.

Third, the LLC can operate outside the regulatory environment of the nonprofit sector, which requires transparency with respect to governance, operations, investments and spending. As private entities, LLCs bear none of these reporting burdens.

And fourth, it can make charitable gifts. It can behave like a traditional charitable foundation by making grants to nonprofits and it can fund individuals without the restrictions faced by traditional foundation structures.

Trista Harris, president of the Minnesota Council on Foundations, shared her thoughts about the Chan Zuckerberg Initiative’s impact on the philanthropic sector. “Maybe tech entrepreneurs, in particular, don’t want to be hindered by the tools they use for philanthropy,” she says. “There is more blurring of the lines between business and philanthropy. Entrepreneurs see many ways to make change happen; charitable gifts are one way, but not the only way.”

What does she mean by blurring the lines between business and philanthropy? “The B corporation, in Minnesota, is a good example,” she says. “These are for-profit businesses with a social purpose. People are trying to figure out how to make a difference. They can volunteer, make a gift, invent new things or start a business. These approaches seem equally valid.”

She and Jon Pratt, executive director of the Minnesota Council of Nonprofits, agreed that the most controversial element of the Chan Zuckerberg Initiative is the lack of transparency in an LLC compared with a nonprofit organization. “There is a public trust that happens when anyone gives a gift to a foundation or public charity. The donor gives up control and they receive a significant tax advantage in return,” Harris explains. But in the case of Chan Zuckerberg, “the couple is preserving their options,” Pratt says. “This was not a transfer of control but a structure that allows [them] to maintain it.” Should nonprofits be worried about this? Neither Pratt nor Harris thinks so. “I think it’s generous,” Harris says. “It follows in the tradition of the Dayton family and the Minnesotans who founded the 2 Percent and 5 Percent clubs in the 20th century” with their statements of philanthropic intent.

“It’s a public expression of commitment,” Pratt explains. “It’s a positive development when people of extreme wealth show that their fortunes should benefit the public.” Harris thinks the couple’s move will stimulate other people to give and reflects a willingness to innovate, exploring all the tools available to achieve the desired results.

Traditional philanthropies in Minnesota are already exploring some of the avenues that Chan Zuckerberg can pursue, though again, the LLC structure allows much more freedom and requires less public reporting. For example, in 2014 the McKnight Foundation announced it would invest 10 percent of its $2 billion endowment assets in businesses that can advance its programmatic aims. Further, many local charities and foundations have invested time and dollars in grassroots public policy work. While their activities fall short of the direct lobbying that Chan Zuckerberg can engage in, they’re nonetheless collaborating on major education efforts to inform public policy. The Minneminds’ campaign—aimed at improving families’ access to quality child care in our state—is a strong example.

The Chan Zuckerberg Initiative will allow all these activities, but under one roof. “These folks have transformed entire industries in relatively short periods of time,” Pratt observes. “So when it comes to solving [seemingly] intractable problems like social justice, better educational outcomes, improved health and environmental protection, they think, ‘How hard can this be?’ They want to get going.”

Leveraging Tech for Public Good

Media grantmakers gathered in Silicon Valley to talk civic tech. Here's a recap.

Originally published in Twin Cities Business Magazine, August 2015. 

It’s not often you can go to a national conference about any aspect of the nonprofit sector and find there are no Minnesotans present. Our state’s nonprofit sector is so large and engaged that someone from here is usually present at any national philanthropic gathering, and frequently there’s a large Minnesota contingent. So it was a surprise in June when I attended the Media Impact Forum, a gathering of grantmakers funding in the media sector, and I found no other Minnesotans on the attendee list. It’s too bad, because the ideas percolating at this meeting were exciting, relevant and entirely applicable to Minnesota’s civic, nonprofit and business sectors alike.

Media funding today has moved far beyond grants to documentary filmmakers or public broadcasting entities. It now spans topics such as gaming, apps, digital literacy, access to technology and tech-related public policy. As examples, here are three topics media funders were thinking about when they gathered in Silicon Valley.

Diversity in the technology workplace. Compelling presentations by Van Jones, founder of the Yes We Code initiative, and Emily White, board member of the National Center for Women in Information Technology, offered complementary perspectives on the need to diversify the tech sector workforce.

The Yes We Code initiative targets low-opportunity youth and connects them with local training resources that can help them become world-class programmers. Yes We Code estimates that U.S. businesses will face a shortage of 1 million tech workers within eight years. Yes We Code is building a training network to reach and teach 100,000 youth of color to fill these jobs. Minnesota resources named on Yes We Code’s website include the Digital Empowerment Academy in North Minneapolis, the local chapter of Girl Develop It and Code Savvy, which offers programs in multiple metro locations. These are young Minnesota nonprofits that would benefit from new connections and funding. Look them up and see how you can help.

The National Center for Women in Information Technology provides research, pilot programs and advocacy for increasing the number of women in tech professions. White presented research showing that 88 percent of software inventions were created by male-only teams, 2 percent were created by women-only teams and only 10 percent had mixed-gender teams. African-American women make up only 3 percent of the tech workforce, while 1 percent are Hispanic women and 5 percent are Asian-American women. NCWIT offers resources for employers on recruitment, placement and promotion policies designed to increase gender diversity. Information on recruitment and job descriptions seems widely applicable to our region’s businesses and nonprofits.

Ethics and data privacy. Several speakers proposed ways that journalism and media organizations, whether for-profit or nonprofit, can and should promote stronger protections for consumers by strengthening both ethical codes and data privacy.

Lucy Bernholz, a Stanford-based researcher focused on philanthropy and technology, drew connections among freedom of thought, freedom of speech, freedom to assemble and democratic society as a whole. She called on programmers and policymakers to “encode our values into our systems” and to advocate for citizens to be able to convene in “private space” online.

Why? Within current software systems, everything users view and click on is tracked, whether we are aware of it or not. Bernholz implored grantmakers to advance public policies that require wide adoption of opt-in consent. Arguing that citizens should own their own data, she also advocated for “don’t collect what you can’t protect” policies. She urged grantmakers and the nonprofit sector as a whole to be open and transparent in their own digital dealings with the public—including publishing their data policies—to model the behavior that should be encouraged in the tech industry. What is keeping local foundations and nonprofits from adopting this idea?

Craig Newmark of Craigslist and craigconnects spoke about his nonprofit project aimed at encouraging journalists to take “radical action to ensure trust.” Speaking as a journalism consumer, not a producer, he proposed changes in search engine functionality so that results are delivered according to trustworthiness. Newmark is himself involved as an advisor or board member for numerous nonprofit journalism organizations, and on his craigconnects website he offers a template for journalism ethics in the digital age.

New kinds of nonprofit media organizations “beyond broadcast.” Grantmakers explored ways that existing and new nonprofits are taking creative advantage of digital technology. Examples included the expansion of reach and impact within cultural organizations that increasingly are becoming media producers (this was my own session, conducted in conjunction with San Francisco’s Exploratorium); organizations offering apps and resource hubs for voter education (such as MapLight, a website that aggregates information about money in politics in the U.S., and its project, Voters’ Edge, that personalizes voter information by zip code); and new kinds of public service tech organizations such as Code for America (recruiting technologists to build open-source platforms that improve government services) and Brigade (a new social media platform on which users are encouraged to articulate their stands on political issues to debate public policy).

The Media Impact Forum actively demonstrated the ways the nonprofit sector is changing as technology evolves and makes new kinds of program delivery possible. The forum offered a dizzying set of innovative nonprofits, ideas and projects that together pointed to exciting new applications of technology for the public good. The full program schedule is available at MediaImpactFunders.org, along with video and other presentation information. Check it out to see what forward-thinking grantmakers and nonprofits are doing to advance civil society in the digital age.

Originally published in Twin Cities Business Magazine

Good News for North Minneapolis

Originally published in Twin Cities Business Magazine, April 2015 issue

People describe Sondra Samuels as a force of nature. She’s the visionary president and CEO of NAZ—the Northside Achievement Zone. NAZ has a straightforward but challenging mission: to end multi- generational poverty in North Minneapolis using education as the lever. NAZ is working to create a culture of achievement among families on the North Side, with the goal that all students in the zone will graduate from high school, college-ready.

By working within a designated 255-block neighborhood that has one of the state’s largest concentrations of poverty and lowest measures of success for youth achievement and opportunity, NAZ aims to lift the entire area economically.

Here’s the good news: It was named nonprofit of the year for 2015 by the Minneapolis Regional Chamber, in no small measure because NAZ’s 2014 annual report shows the organization’s efforts are working for the children and families involved. That’s because Samuels, whose husband is Minneapolis school board member Don Samuels, has enrolled an entire community of collaborators in the work.

What does NAZ do, exactly? The organization’s philosophy is that all parents want the best for their children and that community organizations can help actualize that desire if parents have partners providing consistent and coordinated support. Starting with the assumption that all parents want their children—NAZ calls them “scholars”—to go to college, NAZ works through “connectors” who can provide coaching, connections and coordination of resources that families need to succeed. Connectors come from the North Side or similar circumstances, and help families enroll in NAZ. They stay connected with that family until the child or children graduate from high school. Connectors help parents create achievement plans and work with NAZ “navigators” at schools and community organizations to help families reach their goals.

NAZ acts as convener and clearinghouse to provide families with everything from mentoring, parent education, quality day care, after-school programs, academic tutoring, physical and mental health counseling, and housing, job training, and career and financial planning services. NAZ’s roster of coordinated service providers includes child care centers, neighborhood schools and health care providers, as well as a long list of nonprofits such as Boys and Girls Clubs, Big Brothers Big Sisters, College Possible, Project Success and dozens of others that have agreed to coordinate services and share data.

NAZ monitors the effectiveness of the services, sharing results data among its collaborators and developing data on best practices. The “NAZ Seal of Effectiveness” is a results- and evidence-based measure of how well programs are working. The entire NAZ collaborative is focused on specific, measurable results for its scholars, families and the entire zone, all leading to college readiness.

In 2014, NAZ had 740 families enrolled and served a total of 1,735 scholars. The goal is to reach the entire youth population of the zone, some 3,000 children and 1,200 families. Data show that youth enrolled in NAZ have consistently higher results for kindergarten readiness and third-grade reading scores than does the zone at large. The longer children are enrolled in NAZ, the greater the difference. For example, youth enrolled in NAZ for 18 months are scoring even higher in third-grade math and reading than youth enrolled for six months. (NAZ’s complete results report is on their website: northsideachievement.org.)

Samuels cites two sources of inspiration for NAZ, which was founded in 2003 and had, in her words, “a significant reboot” in 2008. First is the documented success of the Harlem Children’s Zone (HCZ), formed in 1970, which in 2014 served more than 13,000 Harlem youth from infancy to age 23. HCZ focused first on a single city block; its geography now encompasses 97 blocks. Last year, 100 percent of children in Harlem Gems, HCZ’s pre-kindergarten program, were tested as “ready for kindergarten.” A whopping 95 percent of HCZ youth were accepted to college in 2013, receiving over $20 million in scholarship support.

The second inspiration is Mark Friedman’s 2009 book, Trying Hard Is Not Good Enough, which Samuels recommends as a good introduction to the “results-based accountability” that’s needed for adults to change outcomes for vulnerable children. “What we have at NAZ,” she says, “is adult-based outcome accountability. We have formed deep relationships between people and among groups involved, and we are responsible to each other for outcomes and accountable to each other for results.”

Pessimism often permeates conversations about changing academic outcomes for poor urban children; blame is assigned to schools, service organizations, parents or the youth themselves. Yet Samuels won’t settle for anything short of success. “I don’t care where the child is from,” Samuels says, “we can have objective and positive conversations about what’s needed for that child to succeed. And they can succeed.”

A Wilder Foundation study recently calculated the return on every $1 investment in NAZ as $6.18 in “societal gain” through increased lifetime earnings and higher tax revenues, health care cost savings, and savings in the criminal justice system and public assistance payments. That’s a return we can all afford to invest in.