Acce­le­ra­ting funding for systems change

A Swiss experience

For most of us, the situa­tion we’ve been living in for the last two years has unde­ni­ably trig­ge­red a lot of self-reflec­tion: about the way we live, work, connect with others, etc. It has also given us an expe­ri­ence of what it’s like to fight the symptoms of a social problem (attempts to flat­ten the curve to keep hospi­tals working so ever­yone can be atten­ded to) and pushed us to inno­vate: tele­wor­king beco­ming the norm in many compa­nies, school clas­ses happe­ning online, travel­ling mostly dome­sti­cally, and so on.

Foun­da­ti­ons are no excep­tion. Because of the urgency, they too inno­va­ted, for instance by trus­ting project holders more – less super­vi­sion, less report­ing. They also deepe­ned their ques­tio­ning of current prac­ti­ces. ‘Is our work addres­sing the root causes of social and envi­ron­men­tal problems?’ For many, the answer was no.

Swiss foun­da­ti­ons are reali­zing other approa­ches and prac­ti­ces are needed to achieve long-term social change

In 2020, Ashoka, the world’s largest network of social entre­pre­neurs, co-autho­red a global report with Cata­lyst 2030, Co-Impact, Echo­ing Green, the Skoll Foun­da­tion and the Schwab Foun­da­tion for Social Entre­pre­neur­ship, which poin­ted to a key obser­va­tion: syste­mic chal­lenges (i.e. biodi­ver­sity loss, growing inequa­li­ties) require syste­mic answers, but curr­ently the domi­nant funding prac­ti­ces are ill-suited to support them. Accor­ding to the report, the majo­rity of systems change approa­ches needs more than five years of finan­cial support to achieve their goals – but few funders commit for the long term. Moreo­ver, this support usually comes with many rest­ric­tions on how it can be used: 72% of the social inno­va­tors who were surveyed repor­ted recei­ving less than 25% unrest­ric­ted funding. Finally, funders seem to actively discou­rage inno­va­tive approa­ches: 87% of the social inno­va­tors repor­ted that they had to adapt their initia­ti­ves to comply with funder requi­re­ments – 43% of all social inno­va­tors repor­ted having to make major chan­ges (Embra­cing Comple­xity, 2020).

Colla­bo­ra­tio helve­tica, a cross-sector plat­form and ecosys­tem for systems change, obser­ved the same issue in Switz­er­land:  the chan­ge­ma­kers they support struggle to get funding for their syste­mic initia­ti­ves. Lukas Hupfer, Co-Direc­tor of the Swiss youth think tank foraus comm­ents: “Orga­niza­ti­ons like ours are limi­ted in their deve­lo­p­ment and impact by the main­stream funding mecha­nisms. Func­tio­ning almost exclu­si­vely with project funding had us overst­ret­ched and running around like chickens at times.”

On the side of foun­da­ti­ons, the topic began to gain trac­tion and was discus­sed at the Swiss­Foun­da­ti­ons Sympo­sium 2020, with Dr. Lukas von Orelli, Presi­dent of Swiss­Foun­da­ti­ons, saying, “if we dare to push the boun­da­ries of what we thought possi­ble toge­ther, we can foster syste­mic change”. Manuela Balett, Leopold Bach­mann Stiftung’s CEO, declared that “how to fund syste­mic change is a diffi­cult ques­tion that preoc­cu­p­ies us and I would wish that as foun­da­ti­ons we would address it toge­ther, do the needed reflec­tion work”. To address this need, colla­bo­ra­tio helve­tica laun­ched a series of work­shops and peer lear­ning sessi­ons for foun­da­ti­ons, on topics such as parti­ci­pa­tory grant-making with SKKG and Crant­craft, and core funding with MAVA and Oak Foun­da­ti­ons. Clearly, the momen­tum was there to move from conver­sa­ti­ons to coll­ec­tive action.

Time for action: embar­king on a one-year coll­ec­tive explo­ra­tion process 

In the summer 2021, 12 orga­niza­ti­ons (see list below) deci­ded to embark on a jour­ney led by Ashoka Switz­er­land and colla­bo­ra­tio helve­tica. Toge­ther, we are explo­ring the topic of how to support systems change, co-lear­ning by sharing insights and best prac­ti­ces, and deve­lo­ping possi­ble new approa­ches for grea­ter impact. 

Over the last two years, we have been reflec­ting on new stra­te­gies and tools how to contri­bute to socie­tal change on a more syste­mic level. We reali­zed that punc­tual project support and bila­te­ral colla­bo­ra­tion, even if the projects thems­elf are trans­for­ma­tio­nal, is not enough. We need cross-sector colla­bo­ra­ti­ons, new crea­tive approa­ches, and longer-term multi-stake­hol­der strategies.

Andrew Holland, CEO, Merca­tor Foun­da­tion Switzerland

The process, follo­wing Theory U’s metho­do­logy, is split into two main steps. We first decon­s­truc­ted the problem – coll­ec­tive lear­ning – between Septem­ber and Decem­ber, before working on possi­ble solu­ti­ons – co-crea­tion. In the Fall 2021 we looked at the issue from diffe­rent angles. We deepe­ned our under­stan­ding of systems change, sought to opera­tio­na­lize prin­ci­ples for funding systems change in our own orga­niza­ti­ons, ​iden­ti­fied the chal­lenges and cons­traints that foun­da­ti­ons are facing, and heard about emer­ging best prac­ti­ces from peers. Addi­tio­nal actors, inclu­ding MAVA Foun­da­tion, Co-Impact, Fonda­tion de France and Inter­na­tio­nal Bridges to Justice (IBJ), enri­ched the discus­sions by sharing their exper­tise and expe­ri­ence too.

As a funder, we are chal­len­ged when trying to fund systems change. We need to over­come inter­nal silos and try new funding approa­ches. I’m exci­ted to be part of this initia­tive, to learn from each other and define proto­ty­pes together.

Adriana Craciun, Senior Advi­ser – Orga­niza­tio­nal Deve­lo­p­ment and Capa­city Building

What have we lear­ned? 5 key dimen­si­ons for funding systems change

We’d like to share our first insights as we believe they might be helpful to others in the ecosys­tem. Here are five dimen­si­ons essen­tial to consider when willing to support systems change:

  1. Change of mind­set
    The basis for funding systems change is a change of mind­set in social inno­va­tors and the diffe­rent actors within foun­da­ti­ons. Without it, any imple­men­ted ‘solu­ti­ons’ are super­fi­cial and unsus­tainable. People working towards systems change need to under­stand the systems they operate in, inclu­ding from the perspec­tive of others. We need to put egos and indi­vi­dual agen­das aside for our coll­ec­tive future.
  1. Trust
    Trust is at the core: trust between staff members of foun­da­ti­ons, between staff and the board, between foun­da­ti­ons and social inno­va­tors, amongst social inno­va­tors, and amongst foun­da­ti­ons. Whilst essen­tial to achieve systems change, it is also one of the grea­test chal­lenges.  Agree­ments should be tied to lear­ning and impact rather than short-term KPIs, whilst also inclu­ding support and room for fail­ure and learning. 
  1. New impact measu­re­ment and lear­ning frame­works 
    Support­ing systems change requi­res lear­ning to be a key part of evalua­tion (e.g. with deve­lo­p­ment evolu­tion or a Lear­ning Ecology approach). Being inten­tio­nal in lear­ning enables to adapt the stra­tegy towards the vision we aim to achieve. Depen­ding on whether projects aim to address roots or symptoms, adapted lear­ning and evalua­tion tools need to be applied.
  1. Eye-to-eye colla­bo­ra­tion
    Power dyna­mics between foun­da­ti­ons and social inno­va­tors need to be addres­sed, as eye-to-eye colla­bo­ra­tion is key to maxi­mize lear­ning and impact. By leading ‘from behind’, focu­sing on the social inno­va­tors needs and hono­ring their exper­tise, foun­da­ti­ons can become experts in asking the right ques­ti­ons and support their part­ners. Addi­tio­nally, foun­da­ti­ons can alter their poli­cies and offer comple­men­tary support to enable know­ledge trans­fer between social inno­va­tors from simi­lar fields and streng­then colla­bo­ra­tion. Part­ne­ring up with other foun­da­ti­ons increa­ses the scale at which systems change work can be done.
  1. Time – long-term hori­zon (no quick fixes)
    As systems change does not happen over­night, a great deal of pati­ence is requi­red. Foun­da­ti­ons, simi­lar to inves­tors in early-stage start-ups, invest in a vision and people they are confi­dent are capa­ble of imple­men­ting it. A failed stra­tegy can be the key to finding the ones that do work. It takes courage to provide long-term funding and to invest in the orga­niza­tio­nal deve­lo­p­ment of part­ners, yet it is key to enable systems change work.

These five key dimen­si­ons may give the impres­sion that what’s needed is clear and moving to imple­men­ta­tion a no-brai­ner. Howe­ver, we also lear­ned that the devil is in the details. As always with systems change work, there is no ‘one size fits all’ — each foun­da­tion will have to assess its impact goals, and design a systems change stra­tegy accor­din­gly. There is high poten­tial if this is done toge­ther with other foun­da­ti­ons and social inno­va­tors from their field. And yet, diffe­rent cons­traints, both within foun­da­ti­ons and from outside, can compli­cate or even halt a tran­si­tion to funding systems change.

We just cele­bra­ted 100 project and 100 million. It has been a long lear­ning jour­ney to get to this point. Still, even if our impact matters and there are inspi­ring stories, there is a long road ahead. We are ready to take it to the next level and I see this initia­tive as an oppor­tu­nity to do so together.

Stefan Schöbi, Mana­ging Direc­tor, Migros Pioneer Fund

In order to move forward, the pionee­ring foun­da­ti­ons and social inno­va­tors part of this group will work on diffe­rent proto­ty­pes toge­ther. Until June, we will test inno­va­tive grant­ma­king proces­ses, launch new rese­arch on systems change, define new models for lear­ning between foun­da­ti­ons and social inno­va­tors, and colla­bo­rate around education.

Our foun­da­tion is in a stra­te­gic process, and seeking new paths to increase our impact. I believe this initia­tive will be a lear­ning jour­ney that will provide valuable insights and support us.

Chan­tal Perro­thon, Project Mana­ger, Drosos Stiftung

We are now buck­ling up for the second part of the jour­ney. Would you be inte­res­ted in joining this coll­ec­tive process or colla­bo­rate on any speci­fic topic? Cont­act any of the co-authors for further infor­ma­tion. We are looking forward to the next steps in this inspi­ring and important deve­lo­p­ment in the Swiss phil­an­thro­pic sector!

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